Santelli on Predatory Lending: ‘You can’t cheat an honest man’
Look at about the 5-minute mark of this video — Janet Tavakoli debating Rick Santelli about predatory lending. You basically have a whole panel of CNBC goons pooh-poohing the idea that predatory lending took place, setting up the inevitable revisionist history that the 2008 crash was caused by individual homeowners borrowing beyond their means.
My favorite part of this comes roughly at the six-minute mark. Tavakoli has just deftly explained how a lot of the predatory practices worked — people with limited financial literacy were presented with long and complicated mortgage deals, and told they would have a fixed payment in perpetuity or a guaranteed re-finance, or were nailed by fraudulent appraisals. Then she mentioned the big one, the fact that investment banks then took all these mortgages and with eyes wide open securitized them and sold them off as worthy investments to suckers on the other end of the chain.
While she’s saying all this stuff, Santelli, who is one of the fathers of the Tea Party movement, is shaking his head furiously, video-scoffing at everything she’s saying. When he finally does get a chance to speak, this is what he says:
Here’s my problem with this. It takes two to tango. You can’t cheat an honest man.
You can’t cheat an honest man? What the fuck does that mean?
This whole scene sort of encapsulates what’s wrong with the Tea Party movement. The movement, and let’s admit this, has some of its roots in legitimate grievances about government waste and some not-entirely-inaccurate observations about what’s left of the American welfare state. Of course what resonates most with the suburban whites who mostly make up the Tea Party are stories about minorities and immigrants using section 8 housing, food stamps, Medicaid, TANF and other programs, with the Obama stimulus being for them a symbol of this ongoing government largess. The heat of the Tea Party movement comes from the racial frustrations that actually exist out there, in the real world outside New York and LA, as urban expansion and immigration increasingly throw white and nonwhite communities together, with white Tea Party types more and more often blowing gaskets over increased crime rates, declining school standards, and mislaid or wasted tax revenue.
That this perception that minorities are the prime or sole consumers of government entitlement programs is absurdly inaccurate — white people, for instance, are overwhelmingly the largest nonelderly recipients of Medicaid, making up 42.8% of the program’s rolls nationwide, compared to 22.2% for blacks and 27.9% for Hispanics — is beside the point. The point is that the Tea Party is built largely on this narrative of “personal responsibility,” where the central demons are unwed black and Hispanic mothers and absent black and Hispanic fathers, who are, let’s face it, not uncommon characters in the American melodrama.
Which is another subject for another time, but let’s just say this: the Tea Party movement contains a lot of people who are far more impressed by what they can see with their own eyes than with what, for instance, they read about. I’ve been to Tea Party events where global warming was dismissed by speakers who, without irony, pointed to the fact that there was snow on the ground outside. And while very few people have ever actually seen a CDO manager or a Countrywide executive, or were aware if it when they saw them, the Tea Party folks sure as hell have seen who their neighbors in foreclosure are.
The Fox/CNBC types have very cannily latched on this narrative to rewrite the history of the financial crisis. They know that Tea Partiers will go for any narrative that puts blame on poor (and especially poor minority) homeowners, because the idea of poor blacks and Hispanics borrowing beyond their means fits seamlessly with their world view. But this is a situation where poor minorities were really incidental to a much larger fraud scheme that culminated in a welfare program — the bank bailouts — that dwarfs the entire “entitlement” infrastructure. But the millions of people who are actually in the Tea Party movement seem to have absolutely no idea that their so-called leaders, the Santellis of their world, are shilling for tax cheats and crooks and welfare bums of the sort they would despise (perhaps even more than their black and Hispanic neighbors), if they could actually see them.
But thanks to people like these CNBC goons, they don’t see them, and probably won’t. The further we get from the crisis, the muddier all of this stuff is going to get.
p.s. I seem to be getting a lot of mail from Ron Paul supporters about this, claiming that I’m overlooking the early Ron Paul tea parties and suppressing his message. I actually like Ron Paul and have said nothing but nice things about him. I talk to people in his office regularly. But the Ron Paul tea parties and these post Feb-2009 Tea Parties are two different things. Certainly the current Tea Partiers see it that way. While these folks may have lifted some of the Paulian themes, they’re just physically different people. They’re mainstream Palin supporters, and the reason I find them ridiculous is because I was covering these people while the bailouts were happening and remember what was actually on their minds back then. Does anyone remember what the cause of the day was when the AIG bailout took place? It was the uproar from Palin supporters about Obama’s “lipstick on a pig” comment.
The reason I’ve always respected the Ron Paul people is that, even though I don’t always agree with them, they’re intellectually consistent and motivated by actual policy issues. These Teabagger types on the other hand are just a giant herd of video sheep being jerked around by snickering DC-New York types, who are very skillfully playing on their cultural paranoia and their economic and racial frustrations. When they were told to flip out about Obama’s “lipstick” comment, they did. When they were told to flip out about the bailouts, they did. I’m not saying that some of these people weren’t frustrated about the bailouts, to the extent that they even knew about them, before Obama got elected. But they did not coalesce into a mass movement against them until part II of the bailout was passed under Obama’s watch, and one should note also that their keynote speaker in Nashville a few weeks ago, Palin, was a bailout supporter.
The Paul people were upset about deficit spending and Fed corruption throughout and ardently opposed Bush’s policies throughout his presidency. These Teabaggers did not. They were the people inside the rope-lines at McCain and Romney and Rudy events, complaining about “those people” consuming social services money, while the Paul people with their protest placards were physically barred from coming near the events. I must have seen that dynamic a dozen times during the campaign. So to all those Paul people, I hear you. I’m not trying to say you weren’t on these issues beforehand. What I’m saying is, this new Tea Party thing, it’s different from your protests, not necessarily because the message is so different, but because of two things. One, it was inspired by major-network media figures. Two, the people at the protests are overwhelmingly different people. They’re dupes; the Paul movement is more like a real grass-roots organization.