The Atlantic recently ran an article touching on another possible cause for the housing bubble and our economic troubles. It had an arresting title: Did Christianity Cause the Crash?
In what is to me an aggravating and enlightening article, Hanna Rosen does a great job of covering at least two big issues – the prosperity gospel and the national demographics of foreclosures. You might be able to guess the thesis of the article. Rosen details how several hot spots of the prosperity gospel overlap the foreclosure hotspots. Is it possible that this way of preaching the gospel encouraged people to seek subprime loans and banks to offer them in unusual numbers?
As it turns out, I think she has a case. A couple of excerpts from her article:
Demographically, the growth of the prosperity gospel tracks fairly closely to the pattern of foreclosure hot spots. Both spread in two particular kinds of communities—the exurban middle class and the urban poor. Many newer prosperity churches popped up around fringe suburban developments built in the 1990s and 2000s
Nationally, the prosperity gospel has spread exponentially among African American and Latino congregations. This is also the other distinct pattern of foreclosures. “Hyper-segregated” urban communities were the worst off, says Halperin. Reliable data on foreclosures by race are not publicly available, but mortgages are tracked by both race and loan type, and subprime loans have tended to correspond to foreclosures. During the boom, roughly 40 percent of all loans going to Latinos nationwide were subprime loans; Latinos and African Americans were 28 percent and 37 percent more likely, respectively, to receive a higher-rate subprime loan than whites.
And it’s not just that a prosperity gospel may have encouraged people to seek these loans, but banks saw an opportunity afforded by these churches.
The idea of reaching out to churches took off quickly, Jacobson recalls. The branch managers figured pastors had a lot of influence with their parishioners and could give the loan officers credibility and new customers. Jacobson remembers a conference call where sales managers discussed the new strategy. The plan was to send officers to guest-speak at church-sponsored “wealth-building seminars” like the ones Bowler attended, and dazzle the participants with the possibility of a new house. They would tell pastors that for every person who took out a mortgage, $350 would be donated to the church, or to a charity of the parishioner’s choice. “They wouldn’t say, ‘Hey, Mr. Minister. We want to give your people a bunch of subprime loans,” Jacobson told me. “They would say, ‘Your congregants will be homeowners! They will be able to live the American dream!’”
[As a side note, you might wonder why banks would seek such risky loans when they inevitably default. The answer to that question leads you directly to the root cause of the housing bubble and the current crash. The only reason a bank would buy those loans is because, as a result of the Community Reinvestment Act run by Senator Dodd and Rep. Frank, banks were promised that if they provided “affordable housing” (the same thing as subprime loans to people who couldn’t pay them back), the federal government would buy those mortgages through Fannie and Freddie. Over a short period of time the Fed government had millions of dollars worth of worthless paper, several financial institutions got caught in the mix, and things went downhill from there.]
But back to the problems of the prosperity gospel. I have a deep and dark spite for that kind of spiritual vomit, and I have no problem believing it played a role in the financial destruction of thousands of people in the pews. Rosen visited one such Latino church and pressed the pastor, Garay, about the failings of the whole prosperity system. His answer qualifies him for a punch in the mouth, which I am more than willing to take care of.
Once, I asked Garay how you would know for certain if God had told you to buy a house, and he answered like a roulette dealer. “Ten Christians will say that God told them to buy a house. In nine of the cases, it will go bad. The 10th one is the real Christian.”