National Review asks: Did WaMu fail because it employed minorities?

And a conservative professor warns that Barack Obama was assisted by affirmative action and has a "thinly veiled hatred for this country's unique culture and institutions."

Published September 26, 2008 1:28PM (EDT)

(updated below - Update II)

National Review's Mark Krikorian notes that (1) Washington Mutual became the largest bank to fail in American history yesterday and (2) its last press release touted the fact that it was named one of America's most diverse employers, having been "honored specifically for its efforts to recruit Hispanic employees, reach out to Hispanic consumers and support Hispanic communities and organizations"; for being "named [one of] the top 60 companies for Hispanics"; for "attaining equal rights for GLBT employees and consumers"; for having "earned points for competitive diversity policies and programs, including the recently established Latino, African American and GLBT employee network groups"; and for being "named one of 25 Noteworthy Companies by Diversity Inc magazine and one of the Top 50 Corporations for Supplier Diversity by Hispanic Enterprise magazine."

While juxtaposing these two facts -- (1) WaMu has a racially and ethnically diverse workforce and (2) WaMu collapsed yesterday -- the National Review writer headlined his post: "Cause and Effect?" He apparently believes that the reason Washington Mutual failed may be because it employed and was too accommodating to large numbers of Hispanics, African-Americans and gays. Is that why Lehman Brothers, AIG, Bear Sterns and so many others also failed -- too racially diverse of a workforce? Ironically, the night before, National Review's Mark Steyn and Hugh Hewitt agreed with one another that The Atlantic Monthly was forever destroyed as a journalistic entity because it employs Andrew Sullivan, whose writings about Sarah Palin are "a form of mental illness."

At roughly the same time, Law Professor Glenn "Instapundit" Reynolds promoted this article by University of Oklahoma Professor David Deming, which described "Obama's thinly veiled hatred for this country's unique culture and institutions" and said he was "a hollow man that despises American culture," and the article predicted that "more Americans will come to this realization and elect McCain/Palin in a landslide." Professor Dunning explained that Sarah Palin compares favorably to Obama because she -- unlike he -- was "unassisted by affirmative action" and "is not embarrassed by being an American." Then, this shining light of the right-wing blogosphere lavished praise on that article in a post entitled "Alien Obama" and explained that "Barack Obama despises America and American values because he has never known or experienced them, as he did not grown up in a normal American culture"; that "Obama is un-American"; and that "[Obama] is not one of us" (Professor Reynolds then linked to that "analysis," too).

Yesterday, The Atlantic's Ross Douthat argued -- more or less persuasively -- that both presidential campaigns have decided, for different tactical reasons, that it's in their interests to ensure that the election entails no real substantive differences between the two candidates and that the election has therefore become "an election about nothing." Even if that's true, the need to banish the faction that has been driven by drooling, ugly cretins like these -- the people whose twisted mentality brought us torture and rampant lawlessness and endless authoritarian destruction and who crave still more of all of that (and economic crises always exacerbate hatemongering extremists and render their bile infinitely more dangerous) -- is, by itself, reason enough to care about the outcome.

UPDATE: Yves Smith posts this informed speculation:

I understand that the explosion in the OIS spread is a reflection of the fear banks have for each others solvency. And it makes sense that it exploded right after the bankruptcy of [Lehman Brothers] -- it was not the bankruptcy per se, IMO, but the that $110b of senior LEH debt went from trading .95 to .12 in a matter of days that concentrated the market's attention. If you include the less senior debt that is trading at essentially zero, LEH had $110b hole in its balance sheet. And just days before this, the market was being told and was believing that the $10b disposition of Neuberger was going to solve their funding problems.

Now is there a precedent in this history of bankruptcy -- excluding cases of accounting fraud -- where bonds collapsed like this once a bankruptcy court opened up the books? I'm thinking the answer is 'no.' Which then makes you re-evaluate the premise that there wasn't fraud at LEH in marking the value of their assets.

Now extrapolate this reasoning across the entire banking system and, voila, you have the seizure of the interbank lending market.

Now this leads me to the question: if the OIS spread represents eminently legitimate fears of inaccurate marks on banks books, how is a commitment from the treasury to buy hundreds of billions of distressed assets from the banks any assurance to a counterparty that that bank will not still become insolvent.

There are all sorts of reasons that led us to this financial crises -- including, quite possibly, pervasive fraud at the highest levels of the financial world in how these "assets" were valued and, most certainly, a reckless institutional pursuit of endless profits by exploiting illusory financial instruments. Trying to blame it on the fact that home loans were made to racial minorities -- or, worse, that these institutions employed too many racial minorities, as National Review's Krikorian did -- is demagoguery so vile and reckless that it defies description.

UPDATE II: Digby has more on the Right's strategy -- including from National Review -- to blame minorities for the financial crisis, here and here.

And good for conservative Professor Stephen Bainbridge, who says about the likes of Krikorian and Malkin: "They make you embarrassed to be a Conservative" and: "the freezing up of the credit markets doesn't have anything to do with either affirmative action or illegal immigration, and people who believe it does are on a par with the conspiracy theorists who think flouridation is a Chicom plot."

By Glenn Greenwald

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