Racial Coding and the Financial Market Crisis
andré douglas pond cummings
Indiana Tech - Law School
May 17, 2010
Utah Law Review, Vol. 2011, No. 1, 2011
The financial market crisis of 2008 continues to plague the United States and countries around the world. The underlying causes of the 2008 collapse are numerous, intricate and complex. Academic scholars, investigative reporters and leading economists are now deconstructing the multiplicity of failures that enabled the breathtaking meltdown that nearly collapsed the global economy. As this thoughtful deconstruction emerges, a disturbing trend has forcefully surfaced, wherein dozens of writers, scholars and thinkers, motivated by politics, limelight and self indulgence, attempt to fix a singular or foundational cause as “the” reason for the market crisis of 2008. In a current political environment that favors simplicity and scapegoating a certain toxic danger exists when singular blame is fixed to deeply complex failures in order to pander to those in an electorate that live for sound bites and embrace minimalist explanations. Attempting to find singular or primary causation by assigning simple blame for the enormous institutional and personal failures that precipitated the financial market crisis is reckless and ultimately counterproductive.
The magnitude of the collapse and its devastating consequences, many of which continue unrequited, requires a careful and systematic review of causes, impacts, failures and economic breakdowns. The foundational causes of the meltdown are numerous. Despite evidence that literally dozens of failures precipitated what some have now dubbed the “Great Recession,” many on the right and on the left continue to strive to point to individual and singular causes for the economic crisis that serve to forward a political purpose or win for them political points in their current positioning. Still, thoughtful and honest analysis of the meltdown defies easy blame categorization or simple causation bottoming. A sincere commentator, academic or politician will acknowledge the depth of the failures, the breadth of the negligence and ignorance, and the audacity of the greed and avarice that nearly collapsed the global marketplace.
This article aims to be among the first to reject generally the reckless trend toward simple blame causation which has emerged in an attempt to quantify the financial market crisis as an avoidable event but for a particular reason, decision, or legislative enactment. This piece will further challenge specifically one of the most nefarious “the market collapsed because of ‘this’” explanations that emerged with surprising force just moments into the frenzied days of September 2008. In generally rejecting the simplicity approach to causes of the financial market crisis, this article will carefully examine a laundry list of quantifiable failures that enabled the economy to slip to the very edge of the financial abyss just nineteen months ago. In specifically challenging the most nefarious of the primary causation explanations for the meltdown, this piece will explore post-racialism in the United States and will confront the dirty little myth that emerged immediately upon notice that the economy faced certain collapse.
In the early rush by commentators to evaluate the financial market crisis, several startling explanations emerged, primarily from those seeking to assign simple extrapolations. Perhaps the most startling “cause” of the near global meltdown is the “minority borrower” myth that emerged in the very first moments of the September 2008 frenzy that accompanied the Troubled Asset Relief Program (“TARP”) debates. During the tensest moments surrounding the mortgage crisis in September and October 2008, as TARP was furiously debated on Capital Hill, and as doomsday messages were being delivered daily, many pundits on the right named “minorities” and lending to “poor minorities” through the Community Reinvestment Act as a foundation cause for the market collapse. This “dirty little myth” played on loop at Fox News and on the Rush Limbaugh radio program for weeks and months resonating with those Americans that receive their politics and views from such sources.
The dynamism and continuing intensity of American racism is clearly evident in the financial market crisis of 2008. The market collapse was caused by intense and complex economic forces and failures, not by minority borrowers.
Number of Pages in PDF File: 81
Keywords: racial coding, financial market crisis, market collapse, meltdown, community reinvestment act
Date posted: May 17, 2010 ; Last revised: April 27, 2012