“Objects in mirror are closer than they appear.” This, arguably, has been the political understatement of the year! With presidential hopefuls fighting for clout among many strong partisan voters, initially the conversation was about their position on the War in Iraq. There is another issue that has rear-ended most of the candidates, and has performed an economic “hit-and-run” on many families across the nation: Subprime Mortgage Lending.
With national enterprises and Fortune 500 companies, like CitiGroup and Merrill-Lynch, report their worse 4th quarter losses ever, and the federal government running from the “R” word (Recession) the political hot topic has everyone scrambling for monetary jumper cables. Foreign policy has taken a back seat to domestic economy issues, and at the forefront is the plan to tackle the subprime mortgage problem and re-boost the current economy out of it’s free fall into recession.
A little too “Econ 101” for you? Let me bring it home…
Subprime lending practices have been an issue among the people for years. You remember those commercials for senior citizens that aired a few years ago – telling them to not be pressured into refinancing? Fast-forward to present day…now all communities are feeling the effects of these predatory techniques. And while senior citizens are definitely included in that group, rising to the top as the hardest hit are African Americans and other people of color. A few days ago, Democracy Now released a story citing the subprime mortgage crisis as the force set to cause African Americans to incur the greatest loss of wealth in modern U.S. History. Home ownership is the number one source and accumulation of wealth in the United States, people of color in general will be suffering and estimated loss of $213 billion (yes, billion with a B) dollars in wealth, accumulated through home ownership.
Initially predatory lenders and the profiteers on Wall Street (we’ll get to this later) fiercely denied the accusation that people of color were purposely sought out as the inheritors of these devastating loans. Evidence and studies have now surfaced to prove the exact opposite – big surprise. According to Federal Reserve data, 55% of blacks–compared with 17% of whites–received subprime loans to purchase or refinance homes in 2005, even if they qualified for lower-rate loans. Communities of color are disproportionately becoming housing wastelands. Inner-city neighborhoods where there are 10 houses on a block, and 7 of them are foreclosed, boarded up, and being auctioned. Which, in turn, has an adverse affect on property taxes, which has an adverse affect on education, which has an adverse affect on employment rates; and the cycle continues…snowball effect.
OK, I know some of you are still stuck on comment about Wall Street – where do they fit into this?
Mortgage lenders previously have steered clear of offering people loans they could not afford, because they were concerned about their monetary return. But, in walks Wall Street, and they strike a deal with mortgage lenders to the effect that Wall Street would buy the debt of the high cost loans, and resell it – which they continued to do over and over and over again. And it came to the point where lenders were not longer concerned about making money off of the initial loan because they were making their real money off the reselling. So you have all kinds of people, at varied stages of this process making money off the plight of this one home owner. Now, multiply that by millions of home owners. What knocked the cycle off axis was that eventually those loans needed to be paid, and despite all of the money being made by the wealthy – we are now seeing the crippling effects of this. Not only on the families that are losing homes, but also the major financial institutions.
Crazy how very few people viewed this as an economic problem while individuals were being affected, and big business was making money. Now the money train has stopped, and there’s a call for collection on all sides, and since Wall Street is being affected there’s a call for all hands on deck to solve a problem that’s been years in the making. And yet again – the economic underclass and people of color get the short end of the stick.
Two Words: Economic Slavery
People in this country are working harder than ever, and all kinds of interest rates are climbing higher and higher. The wealthy are making big bucks off the sweat and tears of the average working Americans, while people’s financial futures are destroyed. And while we are experiencing the relative systematic breakdown in real time, here comes the so-called cavalry.
“Dubya” and his federal goonies – who are more concerned about preventing his presidential legacy from being tarnished by economic recession, than about the economic health of millions in this nation. The proposed solution – tax rebates, which I’m sure, includes those big businesses somewhere in the fine print. Tax rebates, you ask? Yes, because historically when people get rebates from the government they spend it and spend quickly.
Um, excuse me Mr. “Dubya,” the American people do not need $800 tax rebates, though undoubtedly it would be greatly appreciated for a short period of time. I have just a few questions for you Mr. President. Where is this money going to be coming from? The budget is already shot to hell. And what exactly is this supposed to change? People get their measly $800, spend it to rejuvenate the economy, and are back in the same predicament they were in previously. It gets us no where!
Excuse me if I sound a bit perturbed, it’s because I am! What people need is adjustable rate mortgages to become fixed rate mortgages that they can afford, to keep their homes, and a portion of their credit intact. We need a long term solution, not a stop gap tactic to save a presidential “legacy.”
