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Thread: Minorities Get Steered to Worst Loans So They Default

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    Default Minorities Get Steered to Worst Loans So They Default

    One of the most pernicious practices in which the nation’ biggest banks engaged during the lead up to the financial crisis was pushing minority borrowers into subprime loans, even when many of them qualified for prime loans. Wells Fargo had perhaps the most horrifying practices in this department, calling the subprime loans that they pushed in poor, black neighborhoods “ghetto loans.” This rampant predatory lending helped inflate the housing bubble; a Center for American Progress investigation actually found huge racial disparities in lending at the big banks that wound up getting bailed out, with minority borrowers far more likely to receive high-priced loans.
    One former banker for Chase — James Theckston — told the New York Times’ Nick Kristof that not only did his bank push minority borrowers into higher-priced loans, but senior executives then tried to cover up the racial disparity in their banks’ lending:
    One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.

    These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

    http://thinkprogress.org/economy/201...bprime-pushed/

    Buyer greed and laziness, etc. wasn't the culprit in most minority defaults. But Lender greed laziness and predatory attitude was.
    “What a caterpillar calls the end of the world we call a butterfly.” - ECKHART TOLLE

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by whirlerz View Post
    Yes, & also low income, people w/bankruptcy, etc. Also, I believe if there's a minimum score requirement, those ppl get thrown under too.
    The borrowers you mentioned are SUPPOSED to get the sub-prime loans. Wells Fargo, Chase, et al were taking borrowers who qualified for the best loan packages and because of their race forced them into the worst loans.
    “What a caterpillar calls the end of the world we call a butterfly.” - ECKHART TOLLE

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    I have to disagree strongly w/ you on this. Being 'pushed' towards a subprime loan =/= being 'forced'. No one put a gun to these ppl's heads & forced them to sign on the dotted line. If they were unable or unwilling to do the math themselves to determine whether taking such loans would be a wise financial decision, that's their own problem.

    Further, I find a sick irony in trumpeting abt 'more unfairness based on race' when your source is directly funded by George Soros.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    My problem with this has been discussed - when , not if , when the loan can't be paid I want the lender to be stuck with the loan they never should have made in the first place. Not the taxpayers .

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Exactly - how does the lender, who is certainly culpable, have no risk, yet they make money? They seem to want to get paid merely for existing

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    As long as loan officers are paid on commission, this will continue. No one learned from the '86 collapse.


    The real problem is the loans should never have been made, regardless of the identity of the borrower.
    Last edited by slowpoke; 08-14-2015 at 10:12 AM.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    This has nothing to do with loan officers paid on commission.

    I have worked at many different kinds of banks. The bank and management determine the culture. If you are a loan officer at a lender who cares about regulations and laws; cutting corners will get you fired in a short amount of time.

    The dirty little secret no one talks about is that 61% of the subprime loans before 2008 were closed by subprime mortgage lenders and not banks. Subprime mortgage lenders were not regulated. Subprime lenders are still not regulated. Which means they can use any means necessary to make sales. Banks are regulated by the Fair Credit Reporting Act, Community Reinvestment Act, The Fair Housing Act, and countless others.
    Subprime mortgage lenders were mortgage brokers without connections to any bank. Think payday lenders vs banks. Without regulation they were not held responsible for anything they did.

    The best example of this process is Country Wide Mortgage. They were the largest subprime mortgage loan processor in the country. When the down turn happened Country Wide was the first to go belly up as well. Bank of America bought them out at the instance of the feds. Only then was Country Wide's actions put under a microscope. Bank of America has had to pay millions in fines for Country Wide's actions. Which gives the illusion they were regulated.

    Many of the banks cried for the bail outs because they did the government's bidding buying up this toxic debt so a collapse wouldn't happen. All the while these banks are making money off of the collapse thru hedge funds and other investments. Now they are crying that regulation is killing them. They constantly use the economy as an excuse for everything.
    If they ever gave a damn about the economy they never would of created these loans. No one held a gun to the head of the subprime mortgage lenders to force them to create these loans.
    Most of the executives involved in this have walked away as billionaires.

    While all of this is happening the home owners are being lied, manipulated, and pushed into loans they dont understand. These were not 30yr Fixed loans. These were "creative finance" loans that had a ton of paper work, fees, and a rainbow of stipulations. 80/20 piggie backs, 120%, and ARMS were a few of the ways the industry refereed to some of them. People were constantly told if you are unhappy with your loan you can refinance. The less experience and education a home buyer had with the process the worse they were taken.
    The reason I know this is because I helped fix these loans by refinancing people into fixed rate 10,20 or 30 year mortgages. I know all the stories. Minorities were harder hit because many of them were first time home buyers in their own family. They had no experience with the process.

    The only thing that will stem the tide of it happening again is regulation like Glass Steagall. Subprime loans, which marry investment subprime derivatives with retail banking, would be illegal.
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    Default Re: Minorities Get Steered to Worst Loans So They Default

    I have mixed feelings about this. I agree that predatory lending was a real problem pre-2008, but at the same time I don't have a lot of sympathy for people who don't do their homework and figure out what they were getting into. We are all grown adults who need to understand what we are signing. It's not like there wasn't ample information about different mortgage types, and even payment calculators, on the Internet between 2004 and 2008.

    Now I can see a case for doing something to prevent this type of thing from occurring again, but I'm not sure that completely eliminating the sub-prime mortgage market and/or re-adopting Glass Steagall are the answers. The unintended consequence of doing these things could be to shut many more people out of the credit markets altogether, since banks are not going to lend to higher risk borrowers if they cannot collect a greater risk premium and move some of the risks off of their balance sheets altogether.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Aniela View Post
    I have to disagree strongly w/ you on this. Being 'pushed' towards a subprime loan =/= being 'forced'. No one put a gun to these ppl's heads & forced them to sign on the dotted line. If they were unable or unwilling to do the math themselves to determine whether taking such loans would be a wise financial decision, that's their own problem.

    Further, I find a sick irony in trumpeting abt 'more unfairness based on race' when your source is directly funded by George Soros.
    lmbao

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Aniela View Post
    I have to disagree strongly w/ you on this. Being 'pushed' towards a subprime loan =/= being 'forced'. No one put a gun to these ppl's heads & forced them to sign on the dotted line. If they were unable or unwilling to do the math themselves to determine whether taking such loans would be a wise financial decision, that's their own problem.

    Further, I find a sick irony in trumpeting abt 'more unfairness based on race' when your source is directly funded by George Soros.

    Lol Oh okay.Does a open heart surgeon have to put a gun to a patient's head to get them to take their advice? A lawyer? Fitness trainer?

    Nevermind the decade long stats that indeed reveal minorities are purposely targeted (if they are even approved) for subpar loans (feel free to do a google search)

    Licensed Professionals who purposely steer someone in the wrong direction for the sake of greedy, racial or other unethical reasons (lawyers, doctors, loan vendors) deserve to be put on blast.


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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    I have mixed feelings about this. I agree that predatory lending was a real problem pre-2008, but at the same time I don't have a lot of sympathy for people who don't do their homework and figure out what they were getting into. We are all grown adults who need to understand what we are signing. It's not like there wasn't ample information about different mortgage types, and even payment calculators, on the Internet between 2004 and 2008.

    Now I can see a case for doing something to prevent this type of thing from occurring again, but I'm not sure that completely eliminating the sub-prime mortgage market and/or re-adopting Glass Steagall are the answers. The unintended consequence of doing these things could be to shut many more people out of the credit markets altogether, since banks are not going to lend to higher risk borrowers if they cannot collect a greater risk premium and move some of the risks off of their balance sheets altogether.
    Again blaming the victims instead of the licensed professionals gets you nowhere but carry on my privileged posse

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Exxotica View Post
    Again blaming the victims instead of the licensed professionals gets you nowhere but carry on my privileged posse
    Actually, I think I blamed everyone involved. Just wanna' keep it real.

    A "victim" in my book is someone who is forced to do something against his/her will, otherwise coerced, or is flat out lied to. These people signed papers that clearly laid out the terms of their mortgages. If they truly didn't understand what it meant and signed anyway, then they most definitely share responsibility for what happened to them. They could have asked more questions, done research on the InterWeb, obtained competing offers, asked family and friends with better math skills what it all meant, etc., etc. There is no excuse whatsoever for any grown adult to enter into a fully disclosed and negotiated financial transaction like a bleating lamb, especially in this day and age.

    I don't take everything from my doctors, lawyers and others as spoon fed gospel either and neither should anyone else. If I did, my oldest kid would have had many more pointless invasive procedures performed on her as a young child than I allowed. Also, my first divorce would have cost me a lot more as I pushed my lawyer, against his advice, to settle for an agreed upon fixed alimony deal on the first court date (my income was about to jump dramatically).

    Moral of this long winded post: It is incumbent upon grown adults to make informed decisions for themselves and their dependents, regardless of who they are dealing with.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    Actually, I think I blamed everyone involved. Just wanna' keep it real.

    A "victim" in my book is someone who is forced to do something against his/her will, otherwise coerced, or is flat out lied to. These people signed papers that clearly laid out the terms of their mortgages. If they truly didn't understand what it meant and signed anyway, then they most definitely share responsibility for what happened to them. They could have asked more questions, done research on the InterWeb, obtained competing offers, asked family and friends with better math skills what it all meant, etc., etc. There is no excuse whatsoever for any grown adult to enter into a fully disclosed and negotiated financial transaction like a bleating lamb, especially in this day and age.

    I don't take everything from my doctors, lawyers and others as spoon fed gospel either and neither should anyone else. If I did, my oldest kid would have had many more pointless invasive procedures performed on her as a young child than I allowed. Also, my first divorce would have cost me a lot more as I pushed my lawyer, against his advice, to settle for an agreed upon fixed alimony deal on the first court date (my income was about to jump dramatically).

    Moral of this long winded post: It is incumbent upon grown adults to make informed decisions for themselves and their dependents, regardless of who they are dealing with.

    Licensed Professionals who purposely steer someone in the wrong direction for the sake of greedy, racial or other unethical reasons (lawyers, doctors, loan vendors) deserve to be put on blast.

    I said what I said. Good day.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    Actually, I think I blamed everyone involved. Just wanna' keep it real.

    A "victim" in my book is someone who is forced to do something against his/her will, otherwise coerced, or is flat out lied to. These people signed papers that clearly laid out the terms of their mortgages. If they truly didn't understand what it meant and signed anyway, then they most definitely share responsibility for what happened to them. They could have asked more questions, done research on the InterWeb, obtained competing offers, asked family and friends with better math skills what it all meant, etc., etc. There is no excuse whatsoever for any grown adult to enter into a fully disclosed and negotiated financial transaction like a bleating lamb, especially in this day and age.

    I don't take everything from my doctors, lawyers and others as spoon fed gospel either and neither should anyone else. If I did, my oldest kid would have had many more pointless invasive procedures performed on her as a young child than I allowed. Also, my first divorce would have cost me a lot more as I pushed my lawyer, against his advice, to settle for an agreed upon fixed alimony deal on the first court date (my income was about to jump dramatically).

    Moral of this long winded post: It is incumbent upon grown adults to make informed decisions for themselves and their dependents, regardless of who they are dealing with.
    The moral of the story is that any victim of a "professional" who acts with lack of judgement or with poor character has the right to sue. But feel free to carry on about how you yourself "do your research" in such cases and wouldn't dream of getting caught up in any financial, legal or health mess as a result of bad professional advice.

    Congratulations.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Exxotica View Post
    Licensed Professionals who purposely steer someone in the wrong direction for the sake of greedy, racial or other unethical reasons (lawyers, doctors, loan vendors) deserve to be put on blast.

    I said what I said. Good day.
    Quote Originally Posted by Exxotica View Post
    The moral of the story is that any victim of a "professional" who acts with lack of judgement or with poor character has the right to sue. But feel free to carry on about how you yourself "do your research" in such cases and wouldn't dream of getting caught up in any financial, legal or health mess as a result of bad professional advice.

    Congratulations.
    Being a "professional" and/or holding some license does not confer either divine knowledge or altruistic characteristics upon an individual. It is important to use judgment when acting on recommendations provided by others. It is called personal responsibility. The buyers damned well should have known that the mortgage brokers were not performing charity work and were getting paid for selling these loans, so it was incumbent upon them to do their own thinking too.

    They had agreements that fully spelled out the terms of the mortgages. If they didn't understand what they were about to sign, then they should have held off until they did. Now I want to be clear that I agree that the mortgage brokers in question were scumbags. I also agree that there should be rules in place to limit their ability to offer different types of deals to people with the same risk profiles. But that doesn't make what the buyers did OK when they blindly signed this stuff. Again, personal responsibility.

    And what makes personal responsibility even more important is that, in most cases, we will NOT win a lawsuit against another party in a financial transaction unless we can prove fraud (that they outright lied or omitted critical aspects of the deal), which is virtually impossible when you sign legal documents that spell everything out. In this country, simply offering a bad deal to someone is not illegal.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    Being a "professional" and/or holding some license does not confer either divine knowledge or altruistic characteristics upon an individual. It is important to use judgment when acting on recommendations provided by others. It is called personal responsibility. The buyers damned well should have known that the mortgage brokers were not performing charity work and were getting paid for selling these loans, so it was incumbent upon them to do their own thinking too.

    They had agreements that fully spelled out the terms of the mortgages. If they didn't understand what they were about to sign, then they should have held off until they did. Now I want to be clear that I agree that the mortgage brokers in question were scumbags. I also agree that there should be rules in place to limit their ability to offer different types of deals to people with the same risk profiles. But that doesn't make what the buyers did OK when they blindly signed this stuff. Again, personal responsibility.

    And what makes personal responsibility even more important is that, in most cases, we will NOT win a lawsuit against another party in a financial transaction unless we can prove fraud (that they outright lied or omitted critical aspects of the deal), which is virtually impossible when you sign legal documents that spell everything out. In this country, simply offering a bad deal to someone is not illegal.
    Being racist under a professional setting is.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    Moral of this long winded post: It is incumbent upon grown adults to make informed decisions for themselves and their dependents, regardless of who they are dealing with.
    Rick, I think it's fair to say that you're well above average in financial experience. I like to think of myself and the people that work for me well equipped to make good financial decisions. I (along with many other people) was caught up in the ARS liquidity meltdown in 2008. It's easy to say let the buyer beware but sometimes the person selling a financial product goes out of his way to obscure the details.

    At a minimum the loan industry needs to be required to explain to people exactly what they are getting themselves into. They need to do this using terms that a low-income, perhaps uneducated person will understand. Hiding behind "let the buyer beware" doesn't cut it for me. How many times have the large banks been fined for betting against their customers interests?

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by NoRegrets View Post
    Rick, I think it's fair to say that you're well above average in financial experience. I like to think of myself and the people that work for me well equipped to make good financial decisions. I (along with many other people) was caught up in the ARS liquidity meltdown in 2008. It's easy to say let the buyer beware but sometimes the person selling a financial product goes out of his way to obscure the details.

    At a minimum the loan industry needs to be required to explain to people exactly what they are getting themselves into. They need to do this using terms that a low-income, perhaps uneducated person will understand. Hiding behind "let the buyer beware" doesn't cut it for me. How many times have the large banks been fined for betting against their customers interests?
    Rick slithers with these snakes, hence his passionate defense of them

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Exxotica View Post
    Being racist under a professional setting is.
    I meant in general. I agree that racial profiling in lending, or in most any other commercial settings, is illegal. Indeed, most of the larger banks have been sued by, and already settled with, the DOJ for this very issue. But even the borrowers who got something from those settlements would have been better off if they never signed those documents in the first place.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Exxotica View Post
    Rick slithers with these snakes, hence his passionate defense of them
    I think I've made it clear that I blame everyone for what happened, including disreputable mortgage brokers.

    Quote Originally Posted by NoRegrets View Post
    At a minimum the loan industry needs to be required to explain to people exactly what they are getting themselves into. They need to do this using terms that a low-income, perhaps uneducated person will understand. Hiding behind "let the buyer beware" doesn't cut it for me. How many times have the large banks been fined for betting against their customers interests?
    I agree with some of this as well. In the mutual fund industry, fund offering documents are required to disclose fees and expenses, including a chart that illustrates them over time. I wonder if something similar could be required in mortgage documents, where projected payments (including adjustments and rate increases) could be illustrated over time.

    But I still don't believe that the relative difficulty in understanding current mortgage documents alleviates someone from personal responsibility. They had any number of options before signing bad deals, including seeking other advice. This is how people who take responsibility for their own well being behave.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by rickdugan View Post
    But I still don't believe that the relative difficulty in understanding current mortgage documents alleviates someone from personal responsibility. They had any number of options before signing bad deals, including seeking other advice. This is how people who take responsibility for their own well being behave.
    I'm all for personal responsibility. But I work with disadvantaged people. I think that working with the upper classes for so long can make us forget how difficult it is day to day for the people at the bottom of society. They don't have the options that you and I take for granted. They don't have access to people that can give good financial advice. They haven't been education like you and I have. Some of then aren't able to read at a high school level.

    Before I started doing charity work I would have been right with you Rick. I've come to learn that things are quite as simple. IMHO

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by NoRegrets View Post
    I'm all for personal responsibility. But I work with disadvantaged people. I think that working with the upper classes for so long can make us forget how difficult it is day to day for the people at the bottom of society. They don't have the options that you and I take for granted. They don't have access to people that can give good financial advice. They haven't been education like you and I have. Some of then aren't able to read at a high school level.

    Before I started doing charity work I would have been right with you Rick. I've come to learn that things are quite as simple. IMHO
    I have ample experience with poor and uneducated folks. I grew up among them and I know exactly what you are talking about. But the presumption in this country is that anyone 18 years or older may legally enter into contracts, which they will be bound by. So the cold reality is that poor and/or uneducated people have to learn to look out for themselves too and that means not putting their signatures on anything that they don't understand. Otherwise they are at the mercy of any number of unsavory types, which extends far beyond mortgage brokers.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Whether you feel sympathy for dooped borrowers is irrelevant.

    The reality is you, and every other tax payer, have paid billions in bailouts (not all of which had to be paid back), FDIC closure of nearly 500 banks, bailing out failed bankrupt pensions in the PBGC, QE/QE2, and the various programs to keep the economy from tanking completely.

    2008 cost the U.S. economy as a whole $22 trillion dollars. All the while executives are making billions. That bothers me alot.
    Glass Steagall was enacted 1933. The start of the dismantling of it started under Reagan in the 1980s. Yes credit was tight while it was in force. That is because banks could not gamble without risk, like they do now. If you have no sympathy for borrowers who are lied to, why do you think they deserve credit? During Glass Steagall we did not have a bubble and burst economy. Economic growth had to be made the old fashioned way, you had to earn it.

    I would prefer that the banks didnt gamble with tax payer money. Banks too big to fail are too big to exist. They can destroy the whole economy without proper regulation.

    Hell im to the point i would be happy with settling for lenders outside banking being held to the same laws and regulations as banks. At least it would slow down the process.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Minorities Get Steered to Worst Loans So They Default

    Quote Originally Posted by Exxotica View Post
    The moral of the story is that any victim of a "professional" who acts with lack of judgement or with poor character has the right to sue.
    Tell that to any of the poor sods who are getting hustled in SCs all over the country.

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    Default Re: Minorities Get Steered to Worst Loans So They Default

    R
    Quote Originally Posted by Exxotica View Post
    lmbao
    Quote Originally Posted by Exxotica View Post
    Rick slithers with these snakes, hence his passionate defense of them
    Do you have any kind of sense-making argument on the subj, or is it just abt LOLing & name-calling any person who doesn't agree?

    I am w/ Vamp & Rick on this. Unscrupulous lenders do absolutely need to be held accountable for their unethical actions. None of us are arguing against this, or even hinting at sm ::wink wink:: ::nudge nudge:: sentiment that they should be left off the hook.

    That said, even if you(speaking generally) were to argue that a person is being targeted for whatever reason, race or otherwise, that has the lender thinking 'Easy day -- this guy's a total dumbass, watch him go right for it' … the ppl who actually took the bait sort of proved them right. Want to argue that X group is 'targeted' bc they are seen as inferior? OK. You belive that this group is actually equal to [whoever else isn't seen as inferior]? Excellent -- I agree. But if they are really equal, then let them take equal responsibility to what any other person would be saddled w/ in the same circumstances. Don't infantilise the 'targeted' group, regardless of who it is, by implying that 'They can't handle it!!!! ' Make a grown-up mistake? Then take grown-up responsibility for both mistakes & the steps that can be taken to prevent those mistakes.

    Further, the POS who funds the linked website (& many others in that vein -- will post a link later) is a racial + economic shit-stirrer of epic proportion. He sent dozens of his own ppl to the Nazi ovens & wrecked more than one country's economy by completely devaluing their currency. That alone should speak volumes to any person as social-justice-conscious as yourself … yet you seem to swallow his crap hook-line-sinker.

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