Recently I was researching the Bushwick section of Brooklyn for an unrelated project when I stumbled upon this little gem from The Newspaper Of Record.
I’ll just include the portion that raised my eyebrow here:
Both in the 70’s and 80’s, real-estate operators used payoffs, ruses and fraudulent statements to secure inflated amounts of F.H.A. mortgage insurance for hundreds of clients, overwhelmingly lower-income members of minority groups who stood little chance of meeting mortgage payments on their often dilapidated houses. In many cases, prosecutors charged, the ”clients” were fictitious.
The results have been huge numbers of defaults that have left the real-estate operators collecting millions of dollars in insurance payments from the Federal Government, while hundreds, if not thousands, of families have lost their dreams of owning homes, as their houses, in already hard-pressed neighborhoods, fell vacant.
The Brooklyn scenario, which Federal prosecutors estimated led to 5,000 vacant houses and defaults on mortgages totaling $100 million in 1968 and a similar amount in 1970 and 1971, was repeated in so many other cities that it became an issue in the 1972 Presidential campaign.
So to sum it up, a Great Society program aimed at providing mortgages for minorities who would not have otherwise qualified was ultimately taken advantage of, putting people into homes they could never afford. This boosted home sales and prices in the short term but ultimately caused a massive collapse of the market.
As we all know, the Great Society was a pet project of Lyndon Johnson who was naturally a member of the Party of Unintended Consequences.
Thank goodness that party learned its lessons and didn’t try taking the same sort of program national just a few decades later.
What’s that? They did?
Here’s a hint to our friends from the left: perhaps the happy, cheery “everyone gets a house and if you don’t agree, you’re a racist” stuff doesn’t work and we shouldn’t try it again.
As was pointed out on this blog last October, strangely not mentioned in all of that was the then-governor of Texas, upon whose feet this whole mess is now being laid.
A further example of how the modern version of the POUC is repeating itself is explained better here than I could.
The key bit here is that if the Feds had not been guaranteeing mortgages (bailing out banks for taking reckless risks), blockbusting could never have happened. The FHA, in effect, financed the destruction of Bushwick and countless other communities across the country. The fires, the vacancies, all those empty lots — point your blaming fingers at the federal government for way overstretching its bounds. This world is littered with the ashes, rubble, and corpses of good intentions, and for a long time in Bushwick you could find all three.