Warren slams Bloomberg for blaming 2008 financial meltdown on end of redlining policy

Sen. Elizabeth Warren slammed former New York Mayor Michael Bloomberg in front of a cheering crowd of 4,000 supporters in Arlington, Virginia Thursday for the billionaire's recently-resurfaced comments about discriminatory housing practices.

Bloomberg's 2008 suggestion that "redlining" kept the mortgage industry and Wall Street solvent for decades should be disqualifying in the Democratic presidential primary, Warren said. The practice was used for decades in the mid-20th century, with mortgage lenders and the federal government drawing borders poor and black communities on maps and refusing to lend to people there.

Contrary to Bloomberg's belief, the Massachusetts Democrat said, the financial crisis of that year "would not have been averted if the banks had been able to be bigger racists, and anyone who thinks that should not be the leader of our party."

Bloomberg made the remarks, first reported on by the Associated Press this week, at Georgetown University in September, 2008—the same month of the financial crash that was brought on by the subprime mortgage lending industry that Wall Street invested in.

"It probably all started back when there was a lot of pressure on banks to make loans to everyone," Bloomberg said. "Redlining, if you remember, was the term where banks took whole neighborhoods and said, 'People in these neighborhoods are poor, they're not going to be able to pay off their mortgages, tell your salesmen don't go into those areas.'"

After public officials spoke out about the practice, "banks started making more and more loans where the credit of the person buying the house wasn't as good as you would like," Bloomberg said.

"Michael Bloomberg is saying, in effect, that the 2008 financial crash was caused because the banks weren't permitted to discriminate against black and brown people," Warren told the crowd in Arlington.

The senator posted a "history lesson" on redlining, in case "any presidential candidate needs a refresher."

Warren criticized the former mayor on social media, posting on Twitter a video from last year in which she visited a Detroit neighborhood which had been redlined.

"We need to confront the shameful legacy of discrimination, not lie about it like Mike Bloomberg has done," Warren tweeted.

Author Anand Giridharadas called Bloomberg's remarks "appalling and disqualifying."

Warren's housing plan includes provisions to strengthen fair housing laws so the Department of Housing and Urban Development can end "modern-day redlining," which, along with the lasting effects of the official practice, has caused a 30% home ownership gap between black and white Americans.

Bloomberg's 2008 comments resurfaced as he was condemned for more recent remarks about the NYPD's practice of "stop-and-frisk" when Bloomberg was mayor.

The former mayor said in 2015 that stop-and-frisk was a necessary measure in largely black and Hispanic neighborhoods because that's "where the crime is."

Bloomberg apologized for the policy on the campaign trail Thursday after addressing the controversy before announcing his run last November, but Warren's surrogate, former presidential candidate Julian Castro, said the late apology would likely not go over well with voters of color.