Media Bias is Bigger Issue than Racism in Boston

In Boston, folks are often charged with being racist. The allegation comes from old misunderstandings and misrepresentations -- and from the Boston Globe!

Earlier today, esteemed (and whack-job) Harvard Professor Henry Louis Gates Jr. was arrested for apparently trying to break into his own home.

Police arrived at Gates’s Ware Street home near Harvard Square at 12:44 p.m. to question him. Gates... had trouble unlocking his door after it became jammed.

He was booked for disorderly conduct after “exhibiting loud and tumultuous behavior,” according to a police report. Gates accused the investigating officer of being a racist and told him he had "no idea who he was messing with,'' the report said.

Gates told the officer that he was being targeted because "I'm a black man in America.''

Sounds like a straight-forward case of Arrested for Being Black, right?

The arrest of such a prominent scholar under what some described as dubious circumstances shook some members of the black Harvard community.

Not so fast. It seems the Globe "neglected" to include some key facts from its story, as detailed in the Boston Herald:

An officer ordered the man to identify himself, and Gates refused, according to the report. Gates began calling the officer a racist and said repeatedly, "This is what happens to black men in America."

Officers said they tried to calm down the 58-year-old academic, who responded, "You don’t know who you’re messing with," according to the police report.

These sound like the actions of a stable, respected individual don't they?

Oddly, the Globe did link to a copy of the Boston Police Incident Report:

(The 911 caller) said she observed what appeared to be two black males with backpaks on the porch (of the house)...

Office James Crowley noted that he stood in plain view of the man... I asked him if he would step out on the porch and speak with me. He replied: "No, I will not."... I asked Gates to provide me photo identification so I could verify he resided (in the house). Gates initially refused...

I could hear Gates demanding my name (for a third time) I again told Gates that I would speak to him outside. His reply was: "Ya, I'll speak with your mama outside."

For what reason could the Boston Globe have for omitting all these details about Gates' action leading up to his arrest? Gates wasn't arrested for breaking-and-entering, he was arrested for Disorderly Conduct. He wasn't arrested for being black, he was arrested for being a pain in the ass.

Why do I have the sense that Officer Crowley will face more of a reprimand than will Gates?

A man -- any man -- is trying to pry open the front door of a house with a crowbar, refuses to identify himself, refuses to provide proof that he lives in the house, and gets belligerent with the police; damn straight they better arrest him.

Who's Fault is this Financial Mess? Everybody's! -- Part 1

A Moron's Guide to the U.S. Financial Crisis

The current financial mess on Wall Street is everyone's fault:

• the people who took out loans they can't afford
• the banks who tool advantage of the deregulated environment
• the politicians who forced banks to make loans to people who should not have qualified
• the voters who kept putting these political nit-wits back in office

The cause of the problem is quite simple, if you stand far enough away.

The Root Cause

In the 1990's and 2000's especially, there was a move from Washington D.C. to increase home ownership in lower-income and minority neighborhoods.

A good instinct on the surface. Many studies -- and common sense -- have shown that home owners take better care of their residences than renters, and home-owners are more concerned about their neighborhood and city. Stability is good for any community.

However, to meet this lofty goal, the federal government forced banks and mortgage companies (Sec 807.a.1) to grant mortgages that the lenders would normally have denied. The feds required lenders to give money to people who could not afford the mortgage, and to ignore an applicant's lack of credit history or worthiness.

One piece of evidence is this 1992 set of guidelines from the Federal Reserve Bank in Boston. The Boston Fed "encouraged" lenders to ignore the typical standards applied when reviewing mortgage applications, and in fact should give "special consideration" to lower income applicants:

Lenders should:

• Ignore higher debt obligations, because "lower-income households are accustomed to allocating a larger percentage of their incomde to rent (p. 13)." And stated that the secondary market (read: Freddie Mac and Fannie Mae) is willing to allow borrowers to commit more than 36% of their income to mortgage.
• Allow charitable gift and government grants to cover down payments (p 14). Standard practice disallows the use of gifts as down payment.
  
• Disregard lack of credit history (p 14). A borrower's complete lack of credit history "should not been seen as a negative factor," because of cultural differences. Some cultures discourage borrowing, preferring to "pay-as-you-go." If a person pays their $200 phone bill, he should have no problem paying the $2,000 mortgage.
• View credit counseling as equal to credit history (p 15). Participation in credit counseling means a borrower has the "ability to manage their debts." Taking a class on paying debts is the same a actually paying them.
• Evalutate properties based on their "potential" value, not current market appeal (p 15). A bad house in a bad neighborhood should be judged the same as a nice house in a nice neighborhood, as long as someone thinks the bad neighborhood could get better.
• Ignore an applicant's unstable work history (p 14/15). Just because someone hasn't stayed in a job very long does not mean that he can't keep a job.
• Accept temporary sources of income (p 15). For lower-income applicants, temporary income should be accepted, such as "overtime," "welfare payments," and "unemployment benefits." Someone who is receiving 30-weeks of unemployment should be given a 30-year mortgage.
• Don't take No as an answer. When it comes to appraisals and primary mortgage insurance, the lender should find another source, particularly appraisers or insurers "experienced...in minority and lower-income neighborhoods. (p. 22)" Why stop at 2, just keep looking until you find an appraiser that will give you the answer you want: Yes!
  

Among the initiaves, this one from the Clinton administration, would have allowed people to take money from their 401K account without penalty to make a down payment.

So, if I am reading this right, the Federal Reserve Bank of Boston wanted lenders to grant mortgages to people with no credit history, no job history, too much debt, and cannot make any down-payment on their own so he can buy a house that has no market appeal and is in a neighborhood that might be improved in the future. For the borrower, his first foray into the world of credit is a 30-year mortgage that he, by definition, does not need to be able to afford.

Gee. I wonder why this didn't work?