Breathe easy, Bear Stearns, Countrywide, shoddy rating agencies, easy-money Fed, high-pressure loan originators, and other titans of the financial world who aided and abetted selling tens of millions of anti-consumer subprime loans since 2001. The far right pundits have finally revealed who really is to blame for the near-ruin of our financial system: illegal immigrants!
You see, the mainstream media have all been trying to mislead us, talking about years of deregulation and other laissez-faire policies allowing subprime lending to explode and become nearly half of all new home mortgages by 2006.
With Tom Tancredo no longer running for president, Michele Malkin has stepped forward to set the record straight: "illegal immigration, crime-enabling banks, and open-borders Bush policies fueled the mortgage crisis."
The shocking conclusive evidence? Apparently, a lot of Hispanics live in some of the places with high foreclosure rates.
Malkin first cites that recently nearly half of home mortgage loans to Hispanics were subprime loans. She also tosses out an unrelated statistic that one-quarter of subprime loans are in default (the figure is actually about 19 percent). But do these two statistics connect to lay blame on illegal immigrants -- and in her mind, are all Hispanics undocumented workers?
And the loans in default -- are those just the ones made to borrowers without immigration papers? Apparently the connection is so obvious that nary a shred of evidence is needed, we are just supposed to know that "it's no coincidence."
Never mind that the real data contradicts what we are all supposed to know.
An exhaustive study of 1.9 million subprime loans showed "roughly 56 percent went to non-Hispanic whites. Affluent borrowers, those with annual income at least 120 percent of their given area's median income, meanwhile, took out more than 39 percent of the loans." According to the same study, "Hispanics constituted 14 percent of the borrower community and received 20 percent of the subprime loans."
In other words, the vast majority of borrowers getting subprime loans -- and therefore most of those going into default -- were not Hispanics, let alone illegal immigrants.
Consider a few of the high foreclosure rate states she conveniently forgets to mention. Michigan is one of the states with rampant foreclosures, but Hispanics make up less than 5 percent of the population. In Ohio -- another state unfortunate enough to be in the top five or six foreclosure hot spots -- Hispanics make up under 3 percent of residents.
Cause and effect are confusing topics, apparently. True, Hispanics and other minorities turned increasingly to subprime finance companies to get home loans that many of them could not find in the traditional home mortgage markets.
Worse yet, as the Wall Street Journal has reported, over 60 percent of borrowers who ended up taking out subprime loans actually had credit scores that qualified them for fixed-rate, more consumer-friendly prime loans. Unscrupulous lenders were allowed by the current administration's hands-off regulatory approach to prey on Hispanics and other communities traditionally poorly served by mainstream home mortgage lenders.
But aside from a few anecdotes of small-scale mortgage fraud and a five-year-old quote from an unnamed official, Malkin cites no real evidence that illegal immigrants made up any significant portion of the pool of subprime borrowers to begin with, nor that they are the primary group now in default or foreclosure.
Rather, as Forbes reports, upscale neighborhoods of seemingly well off, largely white borrowers are often foreclosure breeding grounds. Perhaps Malkin wants us to believe the maintenance crews are causing these affluent borrowers to default?
One of her most vivid claims is of advertisements in Spanish periodicals reading "Sin verificación de ingresos! Sin verificación de documento!" -- which she tells us "loosely translates as, 'Income tax forms are not required, nor are immigration papers.'"
Now, my high school Spanish is rusty, but that phrase really translates as: "No income verification! No documentation!" -- an ad text that ran on a lot of English billboards, as well, in the wide open world of unregulated mortgage lending.
This predictable "blame the Hispanics" rhetoric would all be so laughable if we didn't have an astoundingly dangerous economic situation rooted in plunging home values and foreclosures facing America today.
Several million American families have already been foreclosed on. Out of roughly 51 million families who still have mortgages, nearly 5 million are either in default or at the edge of foreclosure. Undoubtedly, some of these borrowers in trouble entered the country without documentation -- but those peddling the myth that "illegals brought down the mortgage market" need some facts if they want us to believe there are millions of such borrowers.
At a time when serious economic remedies are needed, the right wing fringe wants to blame the immigrant workers for our market meltdown. This is a clever tactic if it gets some portion of the public to forget about the titans of industry who created the entire financial house of cards falling down around us. But you could deport every illegal immigrant with a defaulted mortgage and we would still have a national housing market crisis.
Many conservatives have been trying to shift the housing crisis blame to Fannie Mae and Freddie Mac -- but that sleight of hand doesn't hold up. Now Malkin tries to blame Hispanics and illegal immigrants into one blurred-together culprit. Anyone want to take a bet that before this is over, someone will find a way to blame it on gay marriage?
David Abromowitz is a Senior Fellow at the Center for American Progress. This post originally appeared on the CAP website www.americaprogress.org