President Barack Obama was a pioneering contributor to the national subprime real estate bubble, and roughly half of the 186 African-American clients in his landmark 1995 mortgage discrimination lawsuit against Citibank have since gone bankrupt or received foreclosure notices.
As few as 19 of those 186 clients still own homes with clean credit ratings, following a decade in which Obama and other progressives pushed banks to provide mortgages to poor African Americans.
The startling failure rate among Obama’s private sector clients was discovered during The Daily Caller’s review of previously unpublished court information from the lawsuit that a young Obama helmed as the lead plaintiff’s attorney.
Since the mortgage bubble burst, some of his former clients are calling for a policy reversal.
“If you see some people don’t make enough money to afford the mortgage, why would you give them a loan?” asked Obama client John Buchanan. “There should be some type of regulation against giving people loans they can’t afford.”
Banks “were too eager to lend to many who didn’t qualify,” said Don Byas, another client who saw banks lurch from caution to bubble-inflating recklessness.
“I don’t care what race you are. … You need to keep financial wisdom [separate] from trying to help your people,” said Byas, an autoworker.
Nonetheless, Obama has pursued the same top-down mortgage lending policies in the White House.
Obama’s lawsuit was one element of a national “anti-redlining” campaign led by Chicago’s progressive groups, who argued that banks unfairly refused to lend money to people living within so-called “redlines” around African-American communities. The campaign was powered by progressives’ moral claim that their expertise could boost home ownership among the United States’ most disadvantaged minority, African-Americans.
Progressive activists’ ambition instead contributed greatly to a housing bubble that burst in 2007, crashed the nation’s economy in 2008, wiped out at least $4 trillion in equity, kept unemployment above 8 percent for four years, and damaged the intended beneficiaries of looser mortgage lending standards.
In the White House, Obama has continued to intensify regulatory pressure on banks to provide more risky loans to African-Americans and Latinos. He has used lawsuits to fund his allies. And taxpayers are now unwittingly contributing to a re-inflation of housing prices.
Meanwhile, the president has blamed the housing bubble on supposed GOP deregulation, even though President George W. Bush expanded the regulation-expanding, anti-redlining policies established by progressives during Bill Clinton’s presidency.
“Governor Romney’s plan would… roll back regulations on big banks,” Obama says of his Republican challenger Mitt Romney in a 2012 TV ad titled “The Choice.”
“But you know what? We tried that top-down approach. It’s what caused the mess in the first place.”
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