Tuesday, October 16, 2007

A New Unmentionable?

From today’s Boston Globe Editorial “Subprime scourge”:

Mayor Thomas Menino of Boston testified that the Ameriquest, Fremont, Countrywide, New Century and Option One mortgage companies dominate the field of foreclosures in the city. Each belongs at the table when Frank convenes his meeting at the Boston Fed.

Do you suppose our politicians could find someone who was well connected with Ameriquest who could deliver this message?

Do you suppose the Boston Globe might report the fact if a former director of Ameriquest was sitting in the same room and testifying at the same hearing with Menino?

No. That fact was not reported.

The Globe is suddenly quite squeamish to mention that Massachusetts Governor Deval Patrick received $360,000 in 2005 for serving as a director of Ameriquest in his own words to “deal with the allegations of predatory lending and to put in place policies that will protect low-income consumers.”

This recent gubernatorial history has apparently become a new unmentionable in the Globe. News stories covering Massachusetts subprime lending in yesterday’s and today’s Globe did not mention it. Nor does the above editorial.

Why not?

6 comments:

Richard Fagin said...

Growing up in Boston, I used to jokingly refer to the Globe as "Pravda."

I am really sorry that I insulted Pravda by comparing it to The Boston Globe

EDH said...

Harry,

Since you are probably riding an "Instalanche" with this morning's post, I'll repeat my comment of yesterday.

The degree to which Patrick is personally responsible for the mortgage crisis, especially in the communities most affected, is understated by his involvement with Ameriquest.

Before Ameriquest -- indeed the route to all of Patrick's lucrative private sector sinecures -- was his stint in the Clinton Justice Dept. There, he wontonly used the cudgel of anti-discrimination law in a way that coerced lenders into making risky loans, epscially in the areas now witnessing the highest default rates.

A 1994 National Review article, "Confiscation by consent decree - Department of Justice extorts money from financial institutions", documents the history and points out that Partick used questionable social science and the discrimination law to force banks into make risky loans. A long excerpt:

"In 1992 Alicia Munnell - then an official at the Boston Federal Reserve Bank and now a temperamental Assistant Secretary of the Treasury for Economic Policy - concocted a "study" that purported to find racial discrimination in mortgage lending. The flaws of the study have been pointed out by researchers at the Federal Deposit Insurance Corporation and by numerous journalists (including Peter Brimelow and Leslie Spencer of Forbes) and scholars (including Nobel Prize-winner Gary Becker). Basically, Miss Munnell concluded that blacks had a higher mortgage-rejection rate than whites and that this was evidence of racial discrimination.

The FDIC discovered that Miss Munnell's data set was contaminated by two institutions that specialized in soliciting mortgage applications from marginally qualified blacks. The higher rejection rate that she found damning stemmed entirely from the active solicitation of applicants who were unlikely to be qualified. Moreover, any economist worth his or her salt would know that a charge of racial discrimination in lending would require that loans to minorities show lower default rates than loans to whites. Lower default rates would be a sign that stricter standards were applied to minorities, which in turn would mean that at the margin where decisions are made, blacks were being turned down in favor of whites who were riskier (and therefore less profitable) prospects."

As the article recounts, these studies were the basis of the "discrimination" claims later brought, and the consent decrees won, by Partick.

So, in sum: Patrick forced lenders into minority communities from within the government, then, once outside government, Patrick made a bundle providing "cover" for one lender as it navigated the landscape of sub-prime lending in minority communities.

Now, as govenor, he's hiding under his desk.

The rest, as they say, is history.

Harry said...

edh,

Thanks for re-posting that perspective.

Besides Governor Patrick, also hiding under their desks in this matter are the self-appointed public servants at the Boston Globe.

This is a big case of omerta on Morrissey Boulevard. Absolutely inexcusable.

Daniel in Brookline said...

How much would you like to bet that Gov. Patrick doesn't complete his term?

The newspapers will hide for as long as they can... but when their hiding starts to make them look bad, they'll be all over him.


respectfully,
Daniel in Brookline

Harry said...

Daniel,

Given Deval's history as a protégé of Bill Clinton, I would count it a certainty that Deval would bail out for most any appointment in a future Clinton administration, especially now that he knows what the job of a Governor is like.

James said...

edh,

What have wontons to do with this? Are you slyly insinuating that the Globe is enabling the Governor to avoid an egg drop?