A 2010 documentary made by Donald Trump’s chief strategist, Steve Bannon, blamed federal rules against racial discrimination for the subprime mortgage crisis.

The film, “Generation Zero,” was written, produced and directed by Bannon during a period when he was rising to prominence as a conservative filmmaker. It aims to link the 2007-08 financial crisis to the cultural liberalization of the 1960s.

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“Generation Zero” lays much of the blame for the crisis at the feet of American financial and cultural elites, but it also points the finger at another culprit: efforts to combat racism. The documentary argues that the subprime mortgage bubble that precipitated the crisis resulted in large part from rules in the Community Reinvestment Act against racial discrimination that led mortgage lenders to make loans to risky borrowers.

Some of Bannon’s critics, citing his leadership of Breitbart News, have portrayed him as a “white nationalist” while Bannon has rejected that characterization and described himself as an “economic populist.”

His documentary’s argument contradicts the conclusion of mainstream experts and the Financial Crisis Inquiry Commission, which found that the Community Reinvestment Act “was not a significant factor in subprime lending or the crisis.”

The commission concluded that only 6 percent of high-cost loans were related to the law. A 2010 study by the Center for Responsible Lending found that while minorities faced a higher per capita rate of home foreclosure, the majority -- 56 percent -- of foreclosures between 2007 and 2009 were on white homeowners, while 12 percent were on black homeowners and 16 percent were on Latino homeowners.

But in telling the story of the near-collapse of the financial system, “Generation Zero” takes a different view.
“This policy that led to the subprime crisis and so forth came out of the fact that the civil rights movement had claimed that blacks were being red-lined,” says one narrator. “Banks then didn't want to lend money to them. Here is another source of black victimization. Here's another place where this fundamentally racist society is keeping blacks down. Since the mid- sixties, white Americans have been in a position where they constantly have to prove that they are not racist. It is that phenomenon of white guilt is what pressures people in the government to say things like, ‘Everybody has a right to a house,’ and unfortunately capitalism doesn't work that way.”

The documentary then links those sentiments to anti-discrimination provisions in the Community Reinvestment Act, a law passed in 1977 to push lenders to serve lower-income borrowers. “When Bill Clinton became president he made turbocharging the Community Reinvestment Act one of his priorities,” the documentary continues. “He got the Justice Department to go after mortgage lenders to say that if these lenders were not making proportionate loans they can be accused of racism. So this had the effect of corroding lending standards. This is what created the explosion of subprime lending during the Clinton years and the Bush administration years.”

The documentary also asserts that community organizers like Saul Alinsky and the group ACORN encouraged borrowers to lie on their mortgage applications, identifying that as another root cause of the crisis. It states black and Hispanic members of the middle class were primary victims of the housing bust.

Bannon did not respond to a request for comment. A spokeswoman, Alexandra Preate, said he was fully consumed by work on Trump’s presidential transition.

Dennis Kelleher, president of the nonpartisan financial reform advocacy group Better Markets, scoffed at the idea that the Community Reinvestment Act and loans to poor minorities were significant contributors to the financial crisis.

“Anybody who looks at the facts knows that only a tiny percentage banks that got into trouble in subprime lending were even subject to the CRA. And of that tiny, tiny minority subject to the Community Reinvestment Act there’s no evidence Community Reinvestment Act lending had anything to do with the trouble they got into,” he said. “It is a favorite crazy conspiracy theory to blame poor minorities for the 2008 crash of the global financial system but it’s as baseless today as it was then.”