At the Washington Post, it is possible to report on the continuing effects of the 2008 housing crash on minority communities with hardly a word about the federal government’s role in the collapse.
Nearly two dozen reporters, photographers, videographers and graphic artists combined earlier this week to produce 8,000-plus words of text, 17 luscious photographs, two videos and seven vividly detailed graphics in a three-part series entitled “Dashed Dreams.”
The compelling series is a deep-dive analysis of the present suffering caused by the 2008 housing crisis among middle class black Americans, as seen in the Fairwood development in Prince George’s County in Maryland. The Post describes Fairwood as “the richest neighborhood in the richest African American county in the United States.”
Many of the 1,800 homes in the division were bought by blacks during the housing bubble in the years prior to the 2008 crisis. These buyers frequently obtained mortgages with little or no down payments. That resulted in their being saddled with huge monthly payments that in time, often through no particular fault of their own, they simply could not afford. A flood of desperation sales and foreclosures has since decimated the neighborhood of its black residents.
The series addresses a long litany of factors, including the high-risk subprime lending practices by banks that fueled Wall Street’s disastrous plunge into exotic and risky mortgage bundling investment tools, no-down-payment marketing and notorious foreclosure practices that left family belongings on the street. Running throughout the analysis, though, is the theme of racial bias as the ultimate source of the problems.
For example, Fairwood resident Kris Marsh, an associate professor of sociology at University of Maryland, pointed to racial bias to account for the disparate impact of the housing crash on blacks.
“As a sociologist and demographer, I am troubled that Fairwood was hit hard in the housing crisis, especially given the number of black Fairwood residents,” she said. “It begs the hypothetical yet sociological question: Would the same magnitude of predatory lending have taken place in Fairwood if it were a predominantly white middle-class area?”
Despite its comprehensiveness, however, the series all but ignored the role of federal regulators, including the U.S. Department of Housing and Urban Development and mortgage giants Fannie Mae and Freddie Mac.
Consequently, readers are told little about the multitude of official and semi-official pressures exerted by HUD and Fannie and Freddie on banks to ease traditional lending standards and approve millions of often-subprime mortgages to minority homebuyers.
The pressure began during President Clinton’s second term in office and continued with President George W. Bush under the banner of expanding home ownership.
Post executive editor Marty Baron acknowledged the paucity of reporting in the series on the role of federal regulators, telling the Washington Examiner media desk that “the [series] speaks for itself. Its purpose wasn’t to review the root causes of the housing crisis. Its purpose was to show the impact over time on the black middle class, most notably in Prince George’s County.”
Whatever the Post intended readers to conclude from its series, a former mortgage regulator thinks journalists short-change readers by not dealing with the government’s role. Additionally, American Enterprise Institute resident fellow Ed Pinto worries that when media fails to highlight government’s role, lawmakers are encouraged repeat past mistakes.
As executive vice president and chief credit officer for Fannie Mae until 1989 and a consultant to the mortgage industry thereafter, Pinto saw firsthand how government policy laid the groundwork for what would eventually become the housing crash of 2008.
“The general narrative that you hear that came out after the crisis unfolded is that government wasn’t to blame because you don’t want to point the finger at the government,” Pinto told the Examiner. “But the evidence of what the government was doing is all on the record.”
The problem is that “it’s not in the government’s or the media’s interest to explain why the crash happened,” he said, adding that the “the narrative was accepted by many that the government had nothing to do with the collapse.”
The Post series did not entirely ignore the role of regulators. The second installment reported that “subprime loans were largely prohibited until Congress in 1980 passed legislation lifting state interest rate controls on out-of-state banks.”
The series also reported that “the mortgage crisis has been blamed on everybody, including lenders, regulators, government policymakers and consumers. But there is wide agreement that subprime lending was a proximate cause.”
Not quite, insists Pinto. “The media takes what the government says at face value,” he said. “So if the government says ‘X,’ [the press] takes it as ‘X.’ I think there’s a lot of that that goes on. The record of the government’s involvement in the crash is complete in terms of what was being done.”
“But it’s clear that there was a push starting in the early 90s to loosen underwriting standards,” he added, “starting with [Fannie Mae and Freddie Mac], spreading to other lenders. This was promoted by the government, and the [U.S Department of Housing and Urban Development], all through the 90s and aught years. And this is what was driving the lead up to the crash — we’re seeing it again today!”
