By Eugene T. Lowe
November 11, 2008

President of the National Urban League, and former mayor of New Orleans, Marc H. Morial on October 16 testified before the Senate Committee on Banking, Housing and Urban Affairs in defense of the Community Reinvestment Act (CRA).

Passed in 1977, the CRA encourages banks to make loans to persons in low and moderate-income neighborhoods. But in recent weeks, commentators and news analysts such as Neil Cavuto, George Will and Washington Post columnist Charles Krauthammer have charged that the present financial crisis is the fault of minority buyers who went after loans they could not handle. These commentators also claimed that CRA is the law that made it possible for these borrowers to buy homes beyond their means. This, Morial said in his testimony, is a “Financial Weapon of Mass Deception.” He added that it is an “ugly and insidious and concerted effort to blame minority borrowers [and the CRA] for the nation’s current economic straits.”

The facts, Morial told the Banking Committee, are plain and simple. Morial said, “While minorities and low-income borrowers received a disproportionate share of subprime loans, the vast majority of subprime loans went to white and middle and upper income borrowers.” Morial further said, “The vast majority of subprime loans were originated in largely white census tracts, i.e., census tracts less then 30 percent minority.” He added, “Contrary to popular belief, low income borrowers had the lowest share of subprime rate loans.” Finally, Morial contended, “Non-CRA financial services companies were major originators of subprime loans between 2004 and 2007, the period for which data is available.”

Morial spoke of his “aggressive campaign” to dispel the myth of CRA regulation and minority homebuyers as being the causes of the economic crisis in America. In letters to Treasury Secretary Henry Paulson and Federal Reserve Chairman Benjamin Bernanke, Morial said he requested “that they both publicly refute claims by some conservative pundits and politicians that most of the defaulted subprime loans at the root of the crisis were made to African-Americans, Hispanics and other so-called ‘unproductive borrowers’.”

Morial said to Senator Chris Dodd (CT), Chairman of the Banking Committee and other Committee members, “I urge you, in the strongest possible terms, to join me in standing up to this big lie, this Financial Weapon of Mass Deception. It is your duty to stop the precious waste of time and energy being spent on blaming the victims and force a healthy debate on what must be done to curb too much Wall Street greed and too little Washington oversight. This hearing is an important step toward that end and I applaud you for holding it.”