The Bank of America has apparently not learned any of the lessons from the 2008 subprime mortgage crisis, announcing this week that it is launching a new loan program targeting Black and Hispanic families with zero-down mortgages and other generous terms unavailable to whites and Asians.
While critics rail against Bank of America’s racist policy, the bank stated on Tuesday that it is offering a generous plan for first-time home buyers, “which will be available in designated markets, including certain Black/African American and/or Hispanic-Latino neighborhoods in Charlotte, Dallas, Detroit, Los Angeles, and Miami.”
Although the bank does not strictly exclude whites and Asians, it is advertising a new policy to blacks and Hispanics by mentioning them explicitly in its marketing and focusing its deployment to majority-minority neighborhoods from low-income backgrounds.
“Our Community Affordable Loan Solution will help make the dream of sustained homeownership attainable for more Black and Hispanic families, and it is part of our broader commitment to the communities that we serve," stated AJ Barkley, chief of Bank of America's neighborhood and community lending.
The bank stated that it intends to use “credit guidelines based on factors such as timely rent, utility bill, phone and auto insurance payments” to determine the eligibility of qualified loan applicants.
As detailed in the 2015 movie “The Big Short,” the subprime mortgage crisis was buy-and-large caused by banks that provided attractive low-cost loans and cheap mortgages to poor Americans, many of whom were first-time buyers, who were unlikely to be able to pay back the loans. The situation was exacerbated by hedge fund managers who bid on these subprime loans and inflated their value. When the bubble inevitably burst, the Obama administration provided the banks with taxpayer-funded government bailouts because they were “too big to fail.”
It would take roughly two hours to explain the whole thing, so just go watch the movie.