January 24, 2008
- Issue 261 |
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People of
Color Sacrificed on the Altar of Predatory Capitalism Color of Law By David A. Love BC Editorial Board |
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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 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 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 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 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. BlackCommentator.com Editorial
Board member David A. Love, JD is a lawyer and prisoners’ rights
advocate based in
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