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A recent study points toward predatory lending practices aimed at minorities as the main reason for the U.S. housing meltdown.

Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.

The financial institutions likely to be found in minority areas tended to be predatory — pawn shops, payday lenders and check cashing services that “charge high fees and usurious rates of interest,” they said in the study.
“By definition, segregation creates minority dominant neighborhoods, which, given the legacy of redlining and institutional discrimination, continue to be underserved by mainstream financial institutions,” the study says.

So it’s those fat cats in their suits that have caused this ruckus.

Sure, I wouldn’t doubt that there is some predatory lending going on out there and it should be severely punished, but I’d bet dollars to donuts that Fannie Mae and Freddie Mac had some part in this as well. Either by being passive and not informing buyers about predatory loans or by not insuring that lenders did not carry on with such practices.

I dropped the ball last week and did not post any links, mostly because I had been out of town and did not bookmark anything. This week’s links will try to make up for it.

  • Four Fannie Mae Execs to Get Big Bonuses – There seems to be some disconnect between the media and this story. AIG execs get bonuses and they are essentially burned at the stake, but a government backed agency gives out bonuses and the story is a blurb. People should be more up in arms about this than the AIG debacle.
  • Colleges Duck Tough Cuts, Keep Hiking Pay and Tuition – An interesting and, in my opinion, necessary opinion piece in USA Today about the cost of college tuition continuing to rise all while schools give out raises. We’re taking something that we claim should be the “right of everyone” and turning it into a corporation. There is little reason to cut spending when the money flows in, except for the fact that federal money is dwindling.
  • The Pioneer Woman Cooks! – I was browsing some food blogs during lunch (the best time to do it, to avoid the hunger it causes) and came across The Pioneer Woman. Her writing is interesting and she makes Texas favorites look easy.
  • Why to Startup in a Bad Economy – This was posted in the latter half of last year but I think it is just as relevant today as it was then.
  • Facebook Fallout: Is it time for Zuckerberg to go? – I’ll admit that I am not as big of a user of Facebook as I was in college. My interest peaked and now I only occasionally look up old friends and see what they are doing. After multiple redesigns and the usability taking a nosedive, I just lost the desire to visit the site. Maybe it is time for Mark Zuckerberg to go.

Leave a comment with your thoughts!