Predatory Lending and the Deliberate Destruction of Black Economic Power

(Atlanta Blackstar)  Economic exploitation in the Black community is real, and a reminder that racism goes far beyond hating Black people and calling us names. Not to downplay the effects of that individualized, person-to-person discrimination, but we need to focus far more on institutional racism, the policies that pick our pockets and rob us blind for generations. Old patterns of systemic discrimination continue, stealing from the Black community and placing it at a disadvantage with wealth accumulation.

Financial institutions still engage in the economic exploitation of Black America, a reality which was brought home amid the devastation of African-American and Latino communities during the Great Recession. As was published in the most recent edition of the journal Social Problems, Black borrowers in segregated cities have been preyed upon with subprime mortgages, destroying families and entire communities. The U.S. housing meltdown and the foreclosure crisis was a racialized process.

Blacks and Latinos Will Suffer When the Student Debt Bubble Bursts

When the housing bubble burst, the resulting foreclosure crisis was a disaster for black and Latino families, who lost 53 percent and 66 percent of their median household wealth, respectively, between 2005 and 2009.  As a result, the racial wealth gap is widening, with white households enjoying 18 times as much wealth as their Latino counterparts, and 20 times more than African-American households.

There is every indication that the bursting of the student debt bubble, like the housing bubble before it, is imminent.  And when it happens, it will send shockwaves throughout the financial markets. People of color will be especially vulnerable.

Although education is widely viewed as a way up and a way out for poor, working-and middle-class students, the prohibitive cost of college tuition has created a virtual debtors' prison for many.  Loan defaults and delinquencies are on the rise in America, and are only expected to worsen.

A recent report from Moody's Analytics says that tuition has doubled since 2000 -- that's a 10 percent increase every year -- causing student debt to accelerate during the recession. In contrast, other types of consumer debt such as mortgages, credit cards and auto loans have decreased sharply. Outstanding student loans have increased 25 percent since 2008. Student debt now exceeds total credit card debt, and is likely to reach $1 trillion this year, with the average debt for a bachelor's degree at $24,000.

To add to the problem, unemployment is high and there are no jobs for recent graduates. And in the lucrative for-profit college industry where students of color predominate at 54 percent, graduation rates are lower than traditional institutions of higher learning. So, students leave without the benefit of a degree, but with the debt burden just the same.  

For blacks and Latinos -- who suffer from lower pay and double the unemployment, and must assume larger debt loads to pay for school -- the deck is stacked against them.  According to a Georgetown University study, blacks and Latinos earn less than whites, even with advanced degrees. Moreover, members of these groups who have earned a master's degree earn less than whites with a bachelor's. It is no wonder that their default rates are higher. In a 2007 survey, black students had a default rate five times higher than whites and nine times higher than Asians, with the Latino rate double that of whites and quadruple that of Asians.    

This talk of student default goes far beyond dollars and statistics. These are human beings who are thrown into hopeless life situations because the tuition is too damn high. Recently I had the pleasure of reviewing the new film Default: The Student Loan Documentary. I appreciate the film's clarity in spelling out the nature of this American crisis and its impact on ordinary people. Borrowers break down and cry in front of the camera as they reveal the amount of money they owe in student loans. Some were brought to financial ruin as the result of prohibitively high monthly loan payments, compounded by illness or some other setback. Others are unable to get married and start a family because their loan payments prohibit it. One has to take a step back and ask if this is really what America has become.  

"The private loan industry, they don't care about people," said Carmen Berkley, who appeared in the film. Carmen, who is African-American, has $80,000 in student loan debt, in addition to $5,000 in credit card debt and thousands in medical debt due to an illness. "I told them, 'Look I don't make that much money. I make $34,000 a year. There's no way I can spend 600 or 900 dollars a month just for loans.' And they said, 'Well there's nothing we can do about it.'"

Default touches on far more than the inability of college graduates to afford to repay their loans, and the financial ruin they face as they must choose between paying their rent, eating or paying off their mortgage-sized school debt. Although that heart-wrenching part of the story by itself is enough to warrant a documentary, the problem is even deeper, as the movie points out.

Ultimately, the student debt crisis is a product of the union of greed and corruption -- the banking industry and the politicians they have purchased for the purpose of carrying their water. Colleges and universities do their part by hiking up tuition far in excess of inflation. Meanwhile, private lenders exploit financial realities where students can no longer work to pay their way through college, and federal loans no longer pay for most or all of a college education. Moreover, these lenders benefit from loan defaults, as the fees and penalties that rack up can double or triple the amount of the original loan.

Much of this new financial crisis really speaks to the power of the lenders, who receive their money's worth from their investment in Congress. There is a reason why student loans are the only type of debt that cannot be discharged in a bankruptcy. The banks paid for the laws that exempt such loans from fundamental consumer protections. Even gambling debts can be discharged in a bankruptcy, as is mentioned in Default.

And in the irony of all ironies, the banking institutions that were "too big to fail" enjoy their federal bailout funds. This, as they continue to extract additional profit from human suffering, whether by exploiting homeowners with predatory mortgages, or bilking students with predatory school loans.  These bailout recipients are making everyday people suffer, yet where is the bailout for the students?

New study finds racism behind black-white wealth gap

From theGrio:

Why are white families $95,000 richer than black families? This is a question that a recent study tries to answer.

According to a report by the Institute on Assets and Social Policy at Brandeis University, the wealth gap between African-American families and white families has jumped dramatically in 23 years.In fact, the difference in financial assets between these two groups has increased over four times in a generation, from $20,000 in 1984 to $95,000 in 2007.

The Brandeis report also found that middle-income whites experienced a greater increase in net worth than high income blacks. Average white families earning $30,000 had accumulated $74,000, while blacks earning more than $50,000 owned only $18,000, for a wealth gap of $56,000.

To make things worse, 10 percent of African-Americans owed at least $3,600 in debt, nearly doubling their debt burden since 1984. And sadly, at least a quarter of black families had no assets to rely upon when times get rough.

So, what's the problem here? The problem is that income equality is not translating into wealth equality and economic security for black households. Some of this is due to bad public policy, including tax breaks for the wealthiest Americans, and other measures that have redistributed wealth upwards-- to those who are already rich and arguably don't need more.

But there is another reason, namely, institutional racism in housing, labor and lending. The deregulation of the lending market has resulted in systemic discrimination against people of color and the poor, who pay more for credit. Those who live paycheck to paycheck borrow just to make ends meet, depending increasingly on payday lending, a.k.a. legal loan sharks, and check cashing stores that prey on these poorer communities. Blacks and Latinos have been steered into risky, costly and sketchy subprime mortgages, more than twice the rate of whites with the same income. The foreclosure crisis has wiped out what little wealth many of these families owned, placing a stranglehold on the ability of the African-American community to build wealth.

Similarly, according to another report, communities of color were disproportionately cut out of conventional mortgage loans after the housing bubble burst. A collaborative effort of several nonprofit groups, the study is called Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color. From 2006 to 2008, prime lending in minority areas decreased 60.3 percent, compared to 28.4 percent in predominantly white areas.

What are the solutions? Well, to their credit, the researchers at Brandeis recommend the use of public policy to close the racial wealth gap. For example, wealth-building policies must specifically target families of color. And an effective Consumer Financial Protection Agency would guarantee fairness for consumers who borrow money to pay for basic expenses and necessities. Additionally, the American Dream study recommends stronger fair lending enforcement; requiring banks to fund the revitalization of damaged neighborhoods; halting foreclosures; expanding the Community Reinvestment Act to promote responsible lending and investment, and expanding the Mortgage Disclosure Act to shed light on discriminatory practices.

These suggestions make a great deal of sense, but since public policy alone is not enough, I would take it a step further. Over the years, African-Americans have found themselves in a recession or depression, regardless of the general state of the U.S. economy. Needless to say, when America catches a cold, black America catches pneumonia, as the old adage goes. Perhaps the black community should consider a two-pronged strategy in turning their economic lives around.

First, "do for self" and "cooperative economics" make more sense now than ever before. What better time is there than the Great Recession to embark on a plan for economic empowerment? Black folks had their backs against the wall since day one in this country. During Jim Crow segregation, the African-American community banded together out of necessity and supported one another. They created businesses and services that the community relied upon, causing dollars to circulate throughout the community. Some black enclaves, such as Black Wall Street in Tulsa, Oklahoma, were burned down to the ground by white mobs who hated on their success. However, this is not to romanticize a difficult period for black America. Nor am I advocating some Booker T. Washington-esqe, self-help, up-by-the-bootstraps approach that ignores racial injustice and systemic inequality.

This leads to my second point. We also have a need to acknowledge and combat institutional racism. Racism in this country is not merely a few nutty Klansmen sporting white sheets and burning crosses. Rather, we are dealing with institutions and structures in society that discriminate against certain people based on race, and in a material, dollars-and-cents way. We should fight institutional racism by holding our elected officials' feet to the fire in terms of public policy reforms. In addition, we must hold corporations accountable for their business practices, and boycott those financial institutions that exploit people of color.

Only then will we begin to close this ever-widening racial wealth gap.

A lack of legal assistance fuels the foreclosure crisis

From The Progressive:
http://www.progressive.org/mplove101409.html

Will Obama Save America From Capitalism?

Michael Moore’s new film Capitalism: A Love Story looked and sounded a lot like a huge conspiracy theory.  Too bad all of it was true.

Missing this time around were the legions of corporate shills employed to discredit this film, the way they tried to do with Moore’s previous film about the healthcare industry, Sicko.  Maybe they just gave up.  There comes a time when no amount of spin will cover up the truth.  You can sprinkle sugar on a turd and call it candy, but in that moment of reckoning, the truth becomes self-evident.

American-style capitalism is the system that gives you airline pilots buying groceries with food stamps; sheriffs and robber barons throwing families out of their homes and into the street; corporations taking out insurance policies on their own employees; corporations slashing jobs to earn record profits; college loans the size of mortgages, and people dying because they have a pre-existing condition, or can’t afford to get sick.

For a number of years, the boosters, the sales representatives, the pimps and prostitutes of this deeply flawed system did a great job of convincing the rest of us that no one else in the world had it better.  This is the land of opportunity, they told us.  The reality is that for all of its rhetoric, America is more unequal in terms of wealth and income than other industrial democracies.  Far more economic mobility is to be found in those “socialist” European nations that conservatives are so loathe to emulate.

America is a nation of sharecroppers.  Not in the pull-yourself-up-by-the-bootstraps sort of way, either.  The few at the top now have more than ever because they stole it from the many, typically by highway robbery.  And every day, they continue to dupe the many into giving more.  Many at the bottom actually believe that they will emerge at the top someday, so they don’t make a fuss.  Capitalism, American-style, is that great big Ponzi scheme.  And apparently, we was had.  This is what they do, unfettered, unaccountable, and unconcerned.

Elizabeth Warren, chair of the Congressional Oversight Committee that is investigating the $700 billion bank bailout giveaway, a.k.a., Troubled Assets Relief Program (TARP), told the Washington Post that “the middle class is under terrific assault.”  Middle class families are actually earning about $800 less than a generation ago.  This reality precipitated the need to have two wage earners in each family, and to borrow more and save less just to stay above water.  But people are drowning by the millions.

Meanwhile, the economic puppeteers seem to gloat over the fact that they are stealing an ever-increasing part of the economic pie at the expense of the multitude.  On March 5, 2006, Citibank—a TARP welfare recipient of late— issued a memo to investors entitled Revisiting Plutonomy: The Rich Getting Richer. Plutnomy is defined as “An economy that is driven by or that disproportionately benefits wealthy people, or one where the creation of wealth is the principal goal.”  The Citibank memo proclaimed that

The latest Survey of Consumer Finances, for 2004, has been released by the Federal Reserve. It shows the rich continue to account for a disproportionately large share of income and wealth in the US economy: the richest 10% of Americans account for 43% of income, and 57% of net worth. The net worth to income ratio for the richest 10% of Americans increased from 7.4x in 2001, to 8.4x in the 2004 survey. The rich are in great shape, financially.

Perhaps the most invidious part of the report warns that electoral democracy threatens to disrupt the wonderful party the rich are having:

Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

Capitalism is as capitalism does.  Maximization of profit above all else— to the exclusion of ethics, morality and the public good—is the mark of a vulture society.  And this arrogant, coldhearted endeavor has been a bipartisan effort.  Beginning with Reagan, Republican administrations have championed drastic cuts to the social safety net and massive tax cuts for the wealthiest Americans.  Meanwhile, the Clinton years ushered in deregulation of the financial markets, and an end to welfare as we know it.  Corporations have far more power than a free society can tolerate.  And both major political parties are the water carriers of this plutonomy.  They are the field hands for the financial interests that currently run the show and drive public policy—and are driving this nation into the ground.

The U.S. economy is worse than at any time since the Great Depression.  In fact, as Simon Johnson of MIT recently told Bill Moyers, we are currently experiencing elements of a depression.

But in this jobless recovery, where there is one job for every six job seekers, Wall Street is doing well because its fate is not dependent upon the employment of everyday working people.  Rather, its fate is dependent upon government handouts, paper shuffling, and the exotic hustling instruments to which they have grown accustomed.

But we have been here before.  Eighty years ago, on October 24-29, 1929, the stock market collapsed.  It was a testament to an economic system run amok, unregulated and unrestrained, for the benefit of concentrated, monopolistic power.  President Franklin D. Roosevelt ushered in the New Deal— a series of economic programs and initiatives based on relief to the unemployed and farmers, reform of business, banking and finance, and economic recovery.  The New Deal meant public works and infrastructure programs, economic planning by the government, social security, and labor standards that favored union growth.  There was a sense that workers, consumers and farmers should have influence with the government, not just corporations.

Today— with the erosion of the New Deal legacy creating the huge mess that is early twenty-first-century America—President Obama has a golden opportunity to make things right.  But will his administration step up to the plate and bring in the necessary reforms?  Just as F.D.R. saved capitalism from itself, will Obama save America from capitalism?  Or is the game already too fixed?

These times scream out for a “new” New Deal.  Jobs are sorely needed by millions, but will not appear out of thin air.  The foreclosed and unemployed middle class are joining the ranks of the poor and the homeless.  The national infrastructure is crumbling.  And the cartels and monopolies of old have returned.  A paltry and ineffectual stimulus package, accompanied by some tweaking at the edges of a carnivorous, predatory system, will not make a difference.

If the Obama administration wants to be a truly transformational force in American history, rather than a slightly-better-than-average, one-term presidency with good intentions, it will give America the new New Deal.  The Obama administration will find the intestinal fortitude to take on the banking system, and divest itself of Wall Street enablers and Goldman Sachs cronies.  It will cast out such underwhelming individuals as Timothy Geithner and Larry Summers, and seek the advice of Nobel laureates such as Joseph Stiglitz of Columbia, and Paul Krugman of Princeton.  It will go beyond its laudable plans for a consumer protection agency, and either reform the current economic system, or replace it entirely with one that reduces the status of corporations, and brings economic fairness and justice to the people.

In other words, President Obama will do what the people voted for in November.

(From BlackCommentator.com.)

Progressives Must Claim the Political Center

By David A. Love
BlackCommentator.com Editorial Board
July 17, 2008

What’s all this talk about politicians moving to the political center?

Every four years, we hear about the need for presidential candidates to move to the center in order to appeal to the audience beyond their party’s base.

I think that Texan populist Jim Hightower said it best when he suggested that “there’s nothing in the middle of the road but yellow stripes and armadillos.”

A variation on that theme is from the late Republican Barry Goldwater, who said “extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue!”

Political observers ask if Barack Obama is moving to the center. I don’t know, and it is not my concern. But I will say that the strategy of going down the middle to score points and win elections, changing one’s positions, and flip-flopping, is a time-tested failure. The political graveyard is strewn with the careers of poor souls who followed “conventional wisdom” or the advice of highly paid strategists with their poll-driven drivel. Al Gore and John Kerry - who snatched defeat from the jaws of victory by becoming wooden centrist caricatures - are two names that come to mind, Bush election stealing notwithstanding. And Hillary Clinton torpedoed her quest for the brass ring from the jump, by positioning herself as a virtual man and a warmonger in support of America’s exploits in Iraq. The “conventional wisdom” endorsed this path, but public opinion ultimately did not.

And what exactly is this conventional wisdom? In my humble opinion, it amounts to two things: First, there is the water cooler talk from a manufactured, media-driven punditocracy - “experts” who claim to know, yet possess few if any qualifications for their supposed knowledge, and make their arguments out of thin air. These are the people who will, for example, engage in a lengthy Sunday-morning television discussion on the problems facing the Black community, without a single African American (or anyone who knows a single African American) participating in the discussion. Second, there is the effort to cater to the so-called swing voters, people who are uninformed about politics and the issues, and will vote for the candidate with whom they would prefer to have a beer.

Ultimately, this talk about the fictitious center is unproductive. Rather, the center must be redefined.

We live in extreme times, and positive action of an extreme nature is needed. Capitalism once again is unraveling, as corporate greed and policies of upward wealth distribution take their toll on the common folk. Dinosaur industries such as Big Oil are rewarded for their damage to the environment and are profiting from our misery. Meanwhile, the U.S. auto industry - the people who killed the streetcars and the electric cars throughout the nation, and offered you Hummers while other nations were investing in alternative fuel technology - is repeating the 1970s, collapsing under the weight of its own arrogance and inaction. As the government bails out the mortgage giants Fannie Mae and Freddie Mac, and the failing Indymac Bank, where is the relief for ordinary citizens who are losing their homes and their jobs and livelihood, those who can no longer afford to live in America? Conditions suggest that with a low-wage job at Wal Mart or McDonald’s awaiting them, in a country that does little else than buy cheap foreign goods and make hamburgers, these people are not seeking modest milquetoast solutions to these crises.

Obama has been able to seize on this discontent and desire for change. Certainly, the Republican Party has revealed itself as nothing more than a vehicle for the delivery of corporate largesse - with lip service paid to religious fanatics and the Archie Bunkers of America - and is headed for a well-deserved implosion. But if the Democratic Party - also known too often for cow-towing to corporate interests, failing to seriously pursue a Bush-Cheney impeachment, and capitulating on the Iraq War and immunity for telecom companies that spied on Americans - does not seek meaningful, systemic change, then it won’t be far behind on the road to the chopping block.

Progressives find themselves with a golden opportunity to become the new center in American politics. When I say progressives, I mean independents, Greens and other third parties, the Democratic Party base, labor, and other groups. There is much hope that the pernicious Bush era will come to an end with the coming election. When that happens, then the hard work begins, as a quadrennial contest alone does not a movement make. A progressive-led coalition must create a movement that takes back the country, infuses the national dialogue with progressive values, permeates the national consciousness with progressive language, and shapes public policy in a deliberate, long-term manner. Such action will be necessary even under an Obama administration, to ensure that a progressive agenda comes to fruition and has the broad-based support to sustain itself.

Democrats do not need to run to the center, but progressives need to become the new center and lead the way.

In Philly, They’ll Cut Off Your Gas For A Laugh

Color of Law
By David A. Love
BlackCommentator.com Editorial Board
June 26, 2008

Recently, in Philadelphia I heard the most insulting radio commercial of all time.

It was an ad for Philadelphia Gas Works, or PGW, a local city-owned utility. The narrator, a woman, lectures to the audience that if they do not pay their gas bill, PGW will cut off their service. In the background, throughout the commercial, is the sound of a man singing in the shower. Suddenly, towards the end of the commercial, he starts screaming in agony, presumably because PGW shut off his hot water.

Now, PGW tried to make light of a matter which is anything but amusing. It would seem to represent the worst, most inappropriate and most poorly timed public relations strategy in recent memory, but no one seems to talk about it. The PGW people are inferring that people are trying to beat the system, to have gas heat without paying for it.

Here’s a novel idea: perhaps poor and working people cannot afford fuel costs. Philadelphia, like other cities, is hurting from the recession, but for many people, every day is a recession. One-third of the city is mired in poverty, and the city has the highest per capita incarcerated population in the nation. There are no summer jobs for the kids, and for many of them there may not be any free bus passes when they return to school.

But the problem is bigger than Philly. The city’s current administration is as able as any, and seemingly abler than those who preceded it, but they inherited problems that are shouldered by states and localities throughout this nation. It will take a national strategy to solve them.

To make it simple, people cannot afford to live in America.

There is the energy crisis, where profiteers and speculators are making out like bandits from the high price of oil, and companies such as Exxon Mobil are posting record profits, while common people cannot afford their energy needs. Alternative fuels will save the environment and unleash new industries and spur job creation, but the corporate giants that killed the street cars throughout the nation, and the electric cars in California, stand in our way.

The energy crisis relates to the food crisis, because the high cost of energy increases the cost of food.

Then, of course, there is the subprime mortgage crisis, where the financial giants and Wall Street banks defrauded millions of people with home loans with unconscionable terms they could not possibly afford. These people are continuing to lose their homes in cities throughout the country, in what has become a loss of wealth of historic proportions.

Related to the mortgage crisis is the emerging school loan crisis, where colleges and universities make unholy alliances with lenders. The result is tuition that rises well in excess of the rate of inflation, and students that graduate with a mortgage-sized, high-interest loan. The massive amounts of debt with which these young people are saddled - before they even start their career in a job market of fewer opportunities and outsourcing abroad - will gravely affect their life choices and career choices.

Finally, there is the crumbling infrastructure crisis. The levies broke in New Orleans following Hurricane Katrina, but now the levies are breaking everywhere. And our children and families are levies, too, and they cannot stand the pressure. There are inadequate public investments in physical infrastructure such as roads and bridges, and spending for social welfare and education takes a back seat to prison and war profiteering.

What caused this problem? To make a long story short, much of it has to do with the conservative revolution, perverse public policy choices that shift wealth upward, deregulation, hatred of government as a force for social change, and unscrupulous politicians who run the track each and every day to make that money for their corporate pimps.

The PGW commercial represents the common Dickensian strategy, American-style, of callously blaming the poor for their own problems, calling for personal responsibility, and criminalizing them as a means of shutting them up, shutting them down and keeping them in line. But what do you do when most people are poor or are becoming poor, as is the case with the U.S.?

But there is a better way. In this election season, as we are about to witness a potentially dramatic pendulum shift in the United States, there are clear choices as to what direction Americans want for the country. Whatever happens, people of good will must be part of a movement that brings sustained economic and social equity and justice, seeks quality jobs, healthcare and education as a human right, and ensures that government serves the people and is no longer used as a casino for multinational conglomerates. Although the next occupant of the White House can go a long way in setting the tone, an election result is not a magic wand, and there are no shortcuts for the hard work which must be done on the ground.

People of Color Sacrificed on the Altar of Predatory Capitalism

By David A. Love
Published By The Black Commentator
January 24, 2008

It should come as no surprise that free-market capitalism — predatory, unchecked, unregulated, and like any other hustle, dependent upon winners and losers for its bread and butter — chooses to prey on the most vulnerable members of society. We were aware that homeowners of color, steered into unconscionable subprime mortgages and targeted for economic exploitation, are bearing the brunt of America’s foreclosure crisis.

But a new report now tells us exactly how much damage has been done to these families.

According to a report by United for a Fair Economy entitled, “Foreclosed: State of the Dream 2008,” the subprime lending debacle is causing the greatest loss of wealth to people of color, primarily African-Americans and Latinos, in modern U.S. history. In dollars, the loss amounts to somewhere between $164 billion and $213 billion over the past eight years.

To be sure, White Americans are also being devastated by subprime mortgages, an inherently flawed, expensive and predatory product with exploding adjustable rates, balloon payments, and penalties for early repayment that cripple their victims and make it unlikely that they will repay. And in some cities, foreclosures have increased as much as 300 percent since 2000. Over half a million borrowers in the U.S. have lost their homes since 2006, and up to 1 million could lose their homes by the end of 2008.

There is clear evidence that there is racial discrimination (and gender discrimination) on the part of mortgage lenders, those who steer their victims into these horrible loans. People of color are more than three times as likely to have subprime loans. These loans account for only 17 percent of loans to Whites, but 55 percent of loans to Blacks. Given people of similar financial circumstances, Whites are steered into safer, less expensive loans. If subprime loans were distributed equally, losses for Whites would increase 44.5 percent, while losses for people of color would decrease 24 percent. Before this economic crisis, Blacks were 594 years behind Whites in terms of Median Household Net Worth. The subprime crisis will only worsen this gap. And at current rates, parity in home ownership between people of color and Whites will not be reached for another 5,434 years.

Institutional racism is costly, and the home foreclosure mania is destroying families and communities, eroding the tax bases and revenue streams of American cities, leading to an increase in crime, and causing cuts in government services. A number of cities, including Cleveland, Baltimore and Buffalo, are suing mortgage lenders for the damage caused by their predatory and discriminatory practices.

Meanwhile, as hundreds of thousands of families lose their homes, and millions more are affected by a chronic financial crisis in which their wages are dropping, the five largest Wall Street banks awarded themselves a record $39 billion in bonuses in 2007. This, despite the fact that 2007 was the financial industry’s worst year since 2002, and a year in which shareholders lost more than $80 billion. These corporations have caused great destruction, and yet have not been held accountable for their actions.

The answer to this problem lies with public policy decisions. American history is rife with the promulgation of bad public policy in the name of the unbridled free market: slavery, genocide, land stealing, wage exploitation, sweatshops, union busting, child labor, health and environmental hazards, etc. Then, as now, predatory capitalism has benefited a chosen few at the expense of the many. If the federal government can promote policies that benefit the rich and the corporate conglomerates, then certainly we can adopt policies which eradicate systemic economic inequality and racial discrimination, mandate corporate responsibility, encourage low-income home ownership, and repair the victims of subprime lending.

America, resist your antidemocratic tendencies. The subprime crisis is the tip of the iceberg in a nation which touts equality and fairness, and yet hustles its people with a game of loaded dice.