Bloomberg Once Blamed The Financial Crisis On Rules That Prevented Racial Discrimination In Real Estate

In resurfaced remarks from 2008, presidential candidate Michael Bloomberg said that pressure on banks not to discriminate against low income and minority borrowers or engage in a practice called “redlining” contributed to the Great Recession, the billionaire’s second potentially damaging comment on race that has reemerged this week.

  • At a forum at Georgetown University in September 2008, then-New York City Mayor Bloomberg said the financial collapse started in part because banks began issuing loans to borrowers with poor credit after Congress banned “redlining,” a discriminatory practice describing how lenders would systematically deny mortgages to low income and minority neighborhoods.`
  • Experts say the 2008 financial crisis was caused by banks making predatory loans to borrowers—many of whom were low income and minorities—they knew could not pay them back, but most do not blame the abolition of a policy meant to end discrimination as the reason why banks issued those predatory loans.
  • Bloomberg campaign spokesperson Stu Loeser defended Bloomberg. “Mike wasn't in any way supporting redlining  and in fact fought hard against predatory lending as Mayor and helped other cities find ways to keep people in their homes as a philanthropist.”
  • The remarks were first reported by the Associated Press.

Crucial quote: “It all started back when there was a lot of pressure on banks to make loans to everyone. Redlining, if you remember, was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas,’” he said. 

“And then Congress got involved —local elected officials, as well—and said, ‘Oh that’s not fair, these people should be able to get credit.’ And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.”

Key background: Bloomberg is facing a barrage of news stories scrutinizing his past, specifically his record on racial issues. On Monday, leaked audio revealed Bloomberg defending New York’s controversial “Stop and Frisk” policy against minorities. “And the way you get the guns out of the kid’s hands, is to throw them up against the walls and frisk them,” he said. Bloomberg is also being criticized for the New York Police Department’s surveillance program targeting Muslims, which began under his tenure as mayor.

Chief critics: Rival candidate Elizabeth Warren, whose career in Washington was made on going after big banks and Wall Street, was the first to criticize Bloomberg for the remarks. 

“The end of redlining didn't cause the 2008 crash. Out-of-control greed by Wall Street and big banks, and the corruption that lets them control our government, caused the crash. Predatory lenders steered families of color into the worst loans and those families lost billions,” she tweeted.

This article originally appeared on Forbes.


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