Wealth Gaps, "Predatory Lending Schemes", and a Housing Crisis (Glen Ford)

The following article by Glen Ford looks deeply at innequality and
offers a dynamic lens on lending schemes that have devasted communities
throughout the country. How do these trends play out in Amherst?

By Glen Ford
Black Agenda Radio
January 24, 2008
http://www.truthout.org/issues_06/012308LA.shtml

The subprime lending debacle should cause massive
rethinking among those who have long proclaimed
that the route to Black equality is through wealth
accumulation. In a report titled, "Foreclosed:
State of the Dream 2008," United for a Fair Economy
details the catastrophic losses inflicted on Blacks
and Latinos in the U.S. at the hands of predatory
lenders - "the greatest loss of wealth to people of
color in modern U.S. history." With more than half
of Blacks in many cities caught in the subprime
trap - and with even these usurious financing
schemes disappearing in the wake of the bubble-
burst - the prospects for Blacks to amass wealth
have grown bleaker than at any time in living
memory. At the current rate, it will take 5,423
years for Blacks to achieve homeowner parity with
whites.


"It could take more than 5,000 years before Blacks
achieve homeowner parity with whites!"


The core institutions of American capitalism have
condemned Black and Brown America to further
centuries of wealth disparity. Now standing at
about ten-to-one, the wealth gap between African
American and white median households cannot but
grow bigger in the wake of the subprime lending
catastrophe. The Boston-based United for a Fair
Economy recently released a report, detailing the
carnage wreaked on people of color by predatory
lenders - and it is mind-boggling.


The report, titled "Foreclosed: State of the Dream
2008," shows definitively that banks and other
lending institutions trapped Blacks and Latinos in
predatory lending schemes as a matter of policy.
"Even a surface check of the demographics shows,"
the report says, "that, in city after city, a solid
majority of subprime loan recipients were people of
color." The very scope of the crime proves that the
lending crisis is not the product of Black
"culture," but the result of calculated policies,
near-uniformly carried out by virtually all of the
nation's mortgage lending institutions. This is
institutional racism writ large, and indisputable.


The money-lenders have already sucked the value out
of whole communities, urban and suburban. The
wealth loss is staggering: People of color have
collectively lost between "$164 billion to $213
billion over the past eight years," with Latinos
losing slightly more than African Americans.


Before the crisis hit, it was estimated that it
would take 594 years - more than half a millennium!
- for Blacks to catch up with whites in household
wealth. Now, in the aftermath of the home mortgage
massacre, it could take ten times as long - more
than 5,000 years! - before Blacks achieve homeowner
parity with whites. Looking backward, that
stretches from now to when the great pyramids were
built.


"People of color have collectively lost between
$164 billion to $213 billion over the past eight
years."


If Black wealth creation through home-owning is
central to the drive for equality, then the private
sector cannot be allowed free reign; they have
already proven themselves criminally culpable in
the death of dreams. And the crisis is by no means
over. The rot extends to the non-mortgage practices
of global financial institutions, that bundle
worthless paper and trade it like real money. So
deeply corrupt are the mega-banks, brokerage houses
and finance capitalists of all kinds, the entire
planetary house of cards is in danger of collapse.


Domestically, cities are already feeling the crunch
of diminishing home property taxes - having long
ago given away much of their tax base to attract
many of the same corporations that created the
current crisis. Boarded up houses destroy property
values in the surrounding neighborhood, but there
are at present no reliable private mechanisms to
reverse the devastation. The banks aren't even
taking each other's paper - knowing it is as
worthless as their own.


Forget the sales sloganeering, that owning a home
is the "American Dream." Affordable housing is what
the people need, whether rental or family-owned -
many millions of new units. The private sector
cannot - will not - provide affordable housing,
since it is more concerned with creating
artificially high sale values than with meeting the
public's crying needs. Now that the bubble has
burst, it should never be allowed to be re-
inflated. There is only one alternative, and that
is massive public spending on housing that fits the
actual needs and budgets of the citizens. That's
the very least one can demand from one's
government.


For Black Agenda Radio, I'm Glen Ford.