FacebookTwitterGoogle+RedditEmail

King’s Dream Foreclosed

Owning a home is the essence of the American dream. It represents economic achievement and security. The dream holds true across races, ethnicities, and genders. But the implementation does not.

We know society has historically worked against people of color. Examples include a century of legal slavery and exclusion from participating in wealth-building programs like the 1862 Homestead Act and the 1944 GI Bill. These programs gave millions the assistance and tools needed to improve their economic lives. A strong, flourishing middle class, a hallmark of America’s prosperity, arose as a result.

Today, in a new millennium, millions at the lower end of the economic spectrum face a new obstacle: the sub-prime mortgage crisis.

The crisis occurred because a financial product intended for limited use has been disproportionately marketed to many. The crisis has ruined many economic lives and communities, and cost the financial institutions that underwrote massive numbers of shaky sub-prime loans hundreds of billions. These losses triggered a global economic crisis, the end of which is not in sight. The next chapter could well be about a deep US recession.

The resulting human cost is less often mentioned. Yet, the targeting of people of color and poor people as the best candidates to sign up for one of these loans is emerging as an indisputable and reprehensible fact. In the hands of the mortgage lending industry, sub-prime loans became predatory loans–a faulty product that was ruthlessly hawked even though financial institutions were aware of its defects. Even a surface check of the demographics shows that, in city after city, a solid majority of sub-prime loan recipients were people of color.

Hungry for new and different product, the financial services industry added features to sub-prime loans–exploding adjustable rates, balloon payments, penalties for early re-payment–that hobbled their recipients financially and made it unlikely that they would be able, after a brief honeymoon period, to repay the loans at all.

A deeper look into the crisis reveals that the sub-prime lending debacle has caused the greatest loss of wealth to people of color in modern US history. The estimate is that, so far, blacks have lost between $72-83 billion; Latinos, $75-98 billion.

There is also a spillover effect from the wholesale writing of bad loans: communities are torn apart. As one house after another in a neighborhood goes vacant, squatters move in, crime spikes, local stores close. The value of other people’s houses in the vicinity, even those who have not taken out sub-prime loans, deteriorates by thousands of dollars. The local tax base erodes, since fewer people are living there and paying taxes. This in turn leads to revenue shortfalls which mean budget cuts in public services, teachers, police and firefighters, repairs to bridges and schools, and other government activities that offer residents quality of life.

But the government has remained silent and inactive in the face of the crisis. There are, however, things that can be done.

Just as rules have favored one group or another throughout US history, so can rules now help crisis victims regain productive lives, wealth, and homes. Residents and their government, working together, can alleviate the crisis with new rules like regulating the mortgage industry, federal investment in financing homes, lowering the cap on the mortgage deduction, providing incentives for developers to build affordable homes, and dedicating federal estate tax revenues to housing disaster relief.

The hundreds of billions in short-term gains reaped by the financial industry didn’t even last as long as ice cream in the sun. But cleaning up the mess they made will take the taxpayers and their government a long time.

CHRISTINA KASICA works with United for a Fair Economy is a non-profit that spotlights the growing wealth divide. She can be reached at: ckasica@faireconomy.org

 

 

 

 

More articles by:

Weekend Edition
November 16, 2018
Friday - Sunday
Jonah Raskin
A California Jew in a Time of Anti-Semitism
Andrew Levine
Whither the Melting Pot?
Joshua Frank
Climate Change and Wildfires: The New Western Travesty
Nick Pemberton
The Revolution’s Here, Please Excuse Me While I Laugh
T.J. Coles
Israel Cannot Use Violent Self-Defense While Occupying Gaza
Rob Urie
Nuclear Weapons are a Nightmare Made in America
Paul Street
Barack von Obamenburg, Herr Donald, and Big Capitalist Hypocrisy: On How Fascism Happens
Jeffrey St. Clair
Roaming Charges: Fire is Sweeping Our Very Streets Today
Aidan O'Brien
Ireland’s New President, Other European Fools and the Abyss 
Pete Dolack
“Winners” in Amazon Sweepstakes Sure to be the Losers
Richard Eskow
Amazon, Go Home! Billions for Working People, But Not One Cent For Tribute
Ramzy Baroud
In Breach of Human Rights, Netanyahu Supports the Death Penalty against Palestinians
Brian Terrell
Ending the War in Yemen- Congressional Resolution is Not Enough!
John Laforge
Woolsey Fire Burns Toxic Santa Susana Reactor Site
Ralph Nader
The War Over Words: Republicans Easily Defeat the Democrats
M. G. Piety
Reading Plato in the Time of the Oligarchs
Rafael Correa
Ecuador’s Soft Coup and Political Persecution
Brian Cloughley
Aid Projects Can Work, But Not “Head-Smacking Stupid Ones”
David Swanson
A Tale of Two Marines
Robert Fantina
Democrats and the Mid-Term Elections
Joseph Flatley
The Fascist Creep: How Conspiracy Theories and an Unhinged President Created an Anti-Semitic Terrorist
Joseph Natoli
Twitter: Fast Track to the Id
William Hawes
Baselines for Activism: Brecht’s Stance, the New Science, and Planting Seeds
Bob Wing
Toward Racial Justice and a Third Reconstruction
Ron Jacobs
Hunter S. Thompson: Chronicling the Republic’s Fall
Oscar Gonzalez
Stan Lee and a Barrio Kid
Jack Rasmus
Election 2018 and the Unraveling of America
Sam Pizzigati
The Democrats Won Big, But Will They Go Bold?
Yves Engler
Canada and Saudi Arabia: Friends or Enemies?
Cesar Chelala
Can El Paso be a Model for Healing?
Mike Ferner
The Tragically Misnamed Paris Peace Conference
Barry Lando
Trump’s Enablers: Appalling Parallels
Ariel Dorfman
The Boy Who Taught Me About War and Peace
Binoy Kampmark
The Disgruntled Former Prime Minister
Faisal Khan
Is Dubai Really a Destination of Choice?
Arnold August
The Importance of Néstor García Iturbe, Cuban Intellectual
James Munson
An Indecisive War To End All Wars, I Mean the Midterm Elections
Nyla Ali Khan
Women as Repositories of Communal Values and Cultural Traditions
Dan Bacher
Judge Orders Moratorium on Offshore Fracking in Federal Waters off California
Christopher Brauchli
When Depravity Wins
Robby Sherwin
Here’s an Idea
Susan Block
Cucks, Cuckolding and Campaign Management
Louis Proyect
The Mafia and the Class Struggle (Part Two)
David Yearsley
Smoke on the Water: Jazz in San Francisco
Elliot Sperber
All of Those Bezos
FacebookTwitterGoogle+RedditEmail