Did Racism Help Cause the Mortgage Crisis? Conclusion

copyright © 2008 Ralph Brauer. The Strange Death of Liberal America

The quest for a culprit in the financial mess continues to occupy the press and financial analysts. “How,” they ask again and again, “Could America have gotten itself into this mess?” Much attention has focused on the institutions and CEOs who are at the center of the current crisis. The feeling is growing that providing bailouts to financial giants and CEOs such as Citi and Sandy Weill is to reward those who engaged questionable and even illegal behavior.  

The Inability of Fines to Stem the Practice

The previous three essays laid out the case that the mortgage crisis began with discriminatory lending and redlining during the post World War II housing boom. What was one of the greatest mass social movements in history, one that made home ownership a reality for millions of Americans, unfortunately came with a heavy price,for it shut out people of color.

Wide swaths of America were segregated by race. This was not merely due to the prejudices of local home builders or lending institutions but came from the FHA and the federal government. It was a national policy. In systems terms people of color faced two restrictions that served to reinforce each other–they could not move from where they were which left them at the mercy of those who controlled both lending and real estate and they had no access to the government programs that were available to whites and when they did they found the price was often too high.

This influenced the growth of loansharking or what people have relabeled predatory lending or subprime lending. Which terms you use does not really matter because the results were the same: people of color faced exorbitant terms, shady practices such as Sandy Weill’s tactic of coupling insurance with loans and “closed book” closings, and finally just old-fashioned ripoffs.

We have seen in the history of loan sharking that many of these firms paid fines for their illegal practices, but the threat of fines apparently did little to stem the practice. In many cases the fines were so small that corporations easily paid them off. In other cases they became part of the balance sheet of doing business. Sandy Weill, for example, bought a company that already had been fined for deceptive lending and yet instead of ceasing such practices Weill continued them into the next decade culominating with the huge fine levied against Citi in 1999. Other companies were undaunted by the fine levied against Citi and continued to engage in loansharking resulting in this year’s judgment against Bank of America which will far surpass the fine levied against Citi.

A Civil Rights Issue

Given that racial discrimination lies at the heart of these illegal practices, perhaps a heavier stick is needed to curb them.

South Carolina Representative James Clyburn, one of the deans of the Black Caucus, has testified:

We must now begin to address predatory lending practices that overwhelmingly affect blacks by instituting laws that will make what are already unethical practices illegal. If not, the government will continue to be a partner in yet another tragic black land takings saga.

Section 804b of the Fair Housing Act states:

It shall be unlawful to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin.

Section 805 begins:

It shall be unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.

While the Act provides only monetary civil penalties, thus far those have been used mainly against organizations and not individuals. But what if the individuals who sanctioned such acts were prosecuted?

There needs to be in inquiry into who took part in loansharking, but not merely for financial misdeeds but also for violation of Civil Rights laws. If a Sandy Weill or some other CEO or former CEO could be indicted on a civil rights violation it would send a clear message about the roots of this crisis.

It is interesting that the way our current Civil Rights laws are written, someone can go to jail for burning a cross in someone’s front yard, but not for predatory lending that has the impact of stealing that front yard from the homeowner. Also it is criminal to lie on a loan application but not to lie about the loan itself (i.e. “closed folder” closings). The National Consumer Law Center has drafted model legislation aimed at the business of predatory “payday loans,” but what it says in the final paragraph of the model legislation could just as easily be applied to home mortgages:

Criminal penalties are an important deterrent to lender abuse. Any knowing violation of the act is a misdemeanor and subjects the violator to a $1,000 fine or imprisonment not to exceed six months or both.

A few states have begun to institute criminal penalties for predatory lending. Last year my home state of Minnesota passed a bill prohibiting what it termed “residential mortgage fraud.” It provided:

Whoever violates this section shall be sentenced as provided in section 609.52, subdivision 3, based on the aggregate economic loss suffered by any person as a result of the violation. However, the maximum sentence of imprisonment for the offense may not exceed two years. A person convicted of a violation of this section shall be ordered to pay restitution to persons aggrieved by the violation. Restitution shall be ordered in addition to a fine or imprisonment but not in lieu of a fine or imprisonment.

Yet there still is no similar federal statute. Until there is the people involved will have the fines paid by their corporations and retire on their golden parachutes. Sandy Weill is leading a comfortable retirement. Before he retired, Forbes ranked the man who owes his fortune to predatory lending at 377th in its survey of the richest people in the world and 162nd in the United States.  Today he is worth around $1.5 billion and owns a $42 million dollar penthouse that includes more than 2,000 square feet of terraces.

Zeroing in on Glass-Steagall

Another remedy is that no one associated with the repeal of Glass-Steagall shall have a role in the upcoming administration. For many Americans, Barack Obama represents a new hope that business as usual will end. Having someone involved with the repeal of Glass-Steagall in his administration will send the wrong message.

The answer to the question “How did we get into this?” is quite simple. The warning signs were there as long as a decade ago in reports and investigations by people like Hudson, the Woodstock Institute and others.  But then the subprime crisis was primarily a problem for people of color and like many problems for people of color this one was ignored or downplayed.

You would have thought that Katrina would have taught us the error–if not the immorality–of such thinking, but it did not. As long as whites and the high rollers still believed the playing field was level for them they did not care about the unlevel playing field that had existed for half a century and more in communities of color.

The fatal mistake came with the repeal of Glass-Steagall, for suddenly formerly segregated loans became all mixed up as loansharking morphed into the more respectable-sounding euphemism of subprime. Financial threads became so entangled that no one could unravel them, not even the so-called wise men such as Robert Rubin, who continued to provide Citi with advice even as it expanded its loansharking operations.

The repeal of Glass-Steagall ironically accomplished what people of color had been attempting since before Dr. Martin Luther King served time in that Birmingham jail–it irrevocably tied the fates of white and black America together. The last time that happened on such a scale is when a grizzled old Southern firebrand named Edmund Ruffin had the honor of lighting the fuse on the first cannon that fired on Fort Sumter.

There are already more proposals on the table to solve the current crisis than the already fragile legs of the table can hold. We’ve had a so-called bailout which some banks used to buy other banks and continue business a usual.  Three banks are in violation of federal law prohibiting them from controlling more than 10% of the market. We’ve even heard proposals for mortgage relief, but those have been met by cries that if people got themselves into a mess it’s their own fault and they should not expect any help.

The Final Judgment

According to State of the Dream by United for Fair Housing, in the quarter century from 1970-2006, white home ownership increased from 65.4% to 75.8% while African American home ownership increased only from 41.6% to 48.4%–or less than half the white rate. This is not merely a national embarrassment but an indictment of American social policy. It is the single greatest policy failure of the post World War II era.

From it stem a host of interrelated problems that definitively prove that discrimination rots the very foundation of democracy–the idea of the level playing field. According to a report released in 2004 by the Corporation for Enterprise Development, the government spends $335 billion on asset-building policies that:

Disproportionately benefit those who already have assets. Analysis of the largest spending categories shows that over a third of the benefits go to the wealthiest 1% of Americans-those who typically earn over $1 million per year. In contrast, less than 5% of the benefits go to the bottom 60% of taxpayers.

In his last book, Dr. Martin Luther King, jr. wrote:

Now we realize that dislocations in the market operation of our economy and the prevalence of discrimination thrust people into idleness and bind them in constant or frequent unemployment against their will.

A case cited by Mike Hudson provides an illustration. It involves an elderly African America woman with a sixth grade education whose vision was so bad she could hardly see the documents. The company’s attorney asked her:

“Did you tell him that you couldn’t understand basic sentences in the English language well enough to make decisions about it?” She acknowledged she hadn’t, but said the loan officer should have explained things better. “He should have did right,” she said.

“He should have did right.” Those words now echo across America not merely in the concrete canyons of the inner city but in cul-de-sacs in neighborhoods that sport “For Sale” signs among the crabgrass that is reclaiming what used to be golf-course lawns. Just as no one wants to talk about the elephant in the room, no one wants to talk about the solutions.

The financial crisis grew from redlining and racial discrimination and only when redlining and its evil stepchild, loansharking, are suspended will we have rooted out the cause of the crisis. Right now what the experts are proposing is a bit like trying to rid a lawn of dandelions by pulling on their tops. These solutions may get rid of the visible problem, but not the roots. Until we dig them out for good we can expect that after some time the weeds will grow back–only this time they will be more resistant because the roots will have grown deeper.

So the solution is quite simple: the time has come to put home ownership on a level playing field. That does not mean valuing an inner city home the same as a suburban McMansion or not applying the same qualifying standards to everyone. It does mean no more “closed folder closings,” no more 40% APRs, no more ingeniously-worded contracts, no more unnecessary insurance or other costs and no more redlining.

This series began with a painting of the signing of the Constitution. While many of the gentlemen whose names are on that document were unrepentant slave holders, the words they wrote and the government they created have endured precisely because they have transcended the human frailties of those who founded this nation.

They may not have fully honored the ringing preamble with its immortal words:

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

Yet the words are still there–especially “establish justice.” As America prepares to inaugurate its first African American President we need to remember that when he takes the oath of office to uphold and defend the Constitution, he does so on behalf of all of us. For we are not a dictatorship but a democracy and in a democracy all of us must see to it that those words mean what they say.

Crossposted: My Left Wing

Did Racism Help Cause the Mortgage Crisis? The Bubble Bursts

Carter Glass

copyright © 2008 Ralph Brauer. The Strange Death of Liberal America

In 1997 the FDIC published an imaginary interview with Carter Glass that predicted what would occur with the repeal of the Glass-Steagall Act two years later.

Banks lent their names, prestige, and tradition of sound banking operations to these affiliates, and on that basis did people invest and transact business with them. When calamity struck, not all bankers felt a responsibility to the citizens they had enticed.

This imaginary interview would prove especially prescient about people of color.

With Glass-Steagall out of the way, mainstream banks began getting into the loansharking business in a big way. In a paper for the St. Louis Federal Reserve System, Souphala Chomsisengphet and Anthony Pennington-Cross point out:

The market share of the top 25 firms making subprime loans grew from 39.3 percent in 1995 to over 90 percent in 2003. Many firms that started the subprime industry either have failed or were purchased by larger institutions.

A 1999 article “Banks Take  Over Subprime” in National Mortgage News captures how the repeal of Glass-Steagall changed the market:

Among the top 25 sub prime lenders in the third quarter of 1999, ten are owned by either a bank or thrift.  A year ago, just three of the top 25 were owned by depository institutions.

The myth persists that the victims of this boom in loansharking ended up in that position because they could not have qualified for other loans. Yet data from a 2002 Fannie Mae report dispels this notion. It found:

Credit quality alone therefore does not fully explain the extreme reliance of black households on the subprime market. Further research by Freddie Mac reports that as much as 35 percent of borrowers in the subprime market could qualify for prime market loans. Fannie Mae estimates that number closer to 50 percent.

There are others who have confirmed that the myth is false, most notably the Wall Street Journal, whose analysis of credit scores is one of the most widely-used sources. Authors Rick Brooks and Ruth Simon reported that the study of more than $2.5 trillion in subprime loans made since 2000 showed:

In 2005, the peak year of the subprime boom, the study says that borrowers with such credit scores got more than half — 55% — of all subprime mortgages that were ultimately packaged into securities for sale to investors, as most subprime loans are. The study by First American LoanPerformance, a San Francisco research firm, says the proportion rose even higher by the end of 2006, to 61%. The figure was just 41% in 2000, according to the study.

The repeal of Glass-Steagall did not change one fact–the prime victims of predatory lending remained people of color. A 1999 Woodstock Institute Report on lending in Chicago noted:

The restructuring of financial services industries and the failure of federal and state regulators to respond to these changes have increased the ability of certain lenders and brokers to exploit homeowners, particularly in minority and modest-income communities.

In October 2002, ACORN (Association of Community Organizations for Reform Now) released “The Great Divide,” a report on 2001 national loan data for 68 metropolitan areas. The report found continuing and even growing racial and economic disparities in home mortgage lending. Nationally, African-American mortgage applicants faced rejection 2.31 times more often than white applicants, and Hispanics were denied 1.53 times more often than whites.

For those who hold an economic or class-based analysis of the subprime market targeting people of color, the ACORN study is an eye-opener, for it found income made little difference. ACORN notes in Chicago African-Americans earning more than $84,600 had 2.06 times more likelihood of being turned down than whites earning less than $28,450.  The report said:

The rise in subprime and predatory lending has been most dramatic in minority communities. Subprime lenders account for half, 51 percent, of all refinance loans made in predominantly black neighborhoods, compared to just 9 percent of the refinance loans made in predominantly white neighborhoods. Subprime lending, with its higher prices and attendant abuses, is becoming the dominant form of lending in minority communities.

The Community Reinvestment Association of North Carolina adds their study to the evidence:

In North Carolina, the incidence of high cost loans originated by African-American borrowers are more than four times (4.15) greater than for whites in North Carolina.

Foreclosed: State of the Dream 2008 by United for a Fair Economy has a graph that shows the pattern

The study goes on to point out:

We estimate the total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. We believe this represents the greatest loss of wealth for people of color in modern US history.

The banking industry has tried to explain these figures in a variety of ways, the main one being the old dodge of shifting the argument from race to class, but the North Carolina study and others refute this theory.

We also staunchly argue that continuing discrimination and corporate practices are a factor in the loan pricing disparities by race. The history of racism in finance continues to play a role in access and cost of credit.

In 2007 testimony before the House Financial Services Committee Jim Campen, Executive Director Americans for Fairness in Lending, reported on results of an ongoing study his group is conducting in the Boston area:

The black/white denial rate ratio, which averaged about 2.0 during the 1990s, was 2.34 in 2005, while the Latino/white denial rate ratio, typically about 1.5 during the 1990s, was 2.07 in 2005.

In the highest income category, consisting of borrowers with incomes above $150,000, black applicants experienced a denial rate of 25.9%, almost triple the 8.9% denial rate experienced by their white counterparts; the 20.7% denial rate for Latinos with incomes above $150,000 was 2.3 times greater than the white rate.

I have focused my analysis on mortgage lending in Massachusetts, with particular emphasis on the city of Boston and the Greater Boston area, but I believe that a detailed examination of mortgage lending patterns in other cities and states would reveal qualitatively similar findings.

Again, a chart tells the complete story. Note what is essentially a flat line as income increases. The message to people of color is clear: not matter how much you make you will face discrimination in getting a mortgage.

In short, not only did the repeal of Glass-Steagall open the floodgates for banks to enter into loansharking, after the repeal the discrimination against people of color became worse!

Another graph from the Center for Responsible Lending shows the impact of discrimination:

Michael Hudson found that Citi was right in the middle of this:

In 1999, the company agreed to pay as much as $2 million to settle a lawsuit accusing Commercial and American Health & Life of overcharging tens of thousands of Alabamans on insurance. Beasley, Allen, claim[ed] nearly 1,500 clients in Alabama, Mississippi, and Tennessee who had Commercial Credit or CitiFinancial loans.

In 2002 Citi bought Associates First Capital, a sleazy Texas firm that had paid over $33 million in settlements to Georgia and North Carolina lawsuits. Martin Eakes of North Carolina’s Self-Help Credit Union even directly challenged Citi head Sandy Weill at a stockholders’ meeting in April 2001:

No company that values its good name would have bought Associates.

In the fallout over the merger and Citi’s own subprime branch CitiFinancial (which had been created from the original Weill loansharking operation), Citi agreed to a $240 million settlement with the Federal trade Commission. Hudson noted that despite all the big numbers, each victim ended up with an average of $120 and the cost to Citi was two week’s profits.

Jodie Bernstein, director of FTC’s Bureau of Consumer  Protection, said Citigroup’s newly acquired  affiliate-Associates First Capital-engaged in a wide variety  of deceptive practices:

They hid essential information from consumers,  misrepresented loan terms, flipped loans and       packed in  optional fees to raise the costs of the loans.

And where was Robert Rubin during all this?

The True Impact

This essay has featured an unusual number of quotes, charts and statistics, which at times march down the page one after the other. There are editorial and rhetorical reasons for this: editorially I have always believed in quoting directly from the source when writing on the web so readers can see what someone said and rhetorically I wanted readers to feel the weight of this evidence piling up.

For that is exactly the situation people of color find themselves facing. The real implications of the mortgage crisis press down on families and communities,  suffocating dimensions of life that white suburbanites take for granted–good schools, easy access to shopping, and, most of all, choices.

We need to remember that behind the numbers lie people. Their personal experiences testify to the real consequences of the problem. One story comes from Michelle Allison of the NAACP’s Merced Branch in California, who was locked into a prepayment loan and now owes $100,000 above what she initially requested:

It’s like being over a barrel. I just wanted to be treated fairly and receive the best service. I was not given options or enough information for me to make an alternate decision. I want to get back to where I was financially before I received my loan.

The AARP has another story:

Betty Cooper was an older, wheelchair-bound African-American widow, living on a monthly pension. She experienced a bait and switch of her interest rate that resulted in unaffordable monthly payments. In addition, she was charged a hidden broker fee that cost her a steep 8 percent of the mortgage, and an unexplained balloon mortgage payment.

Multiply stories like these by the numbers in the statistics above and you have some idea of the trail of misery that has been left by loan sharking in communities across the country.

The Web of Deceit

The real shock is that many of these studies data back to as long as a decade ago, with each subsequent study piling on more evidence to support the previous ones.  After much time spent reading all this evidence you begin to wonder if anyone else has read it. Yet some of the studies such as the North Carolina one were inserted into the Congressional Record where they lie today, largely unknown to the general public.

This is evidence of discrimination on a scale resembling the mountain of evidence marshaled for Brown v Board or the abuses of Reconstruction or the evils of slavery. In 1944 Gunnar Myrdal referred to the problem of race as an “American dilemma.”  Sixty years later the dilemma has become quite simply one of economic survival and with it the survival of our democratic society.

Sandy Weill built a financial empire on loansharking. Even long after Citi had merged and acquisitioned its way to the very top of the American financial industry, Citi continued to engage in loansharking. And they are far from alone. Bank of America recently agreed to a settlement that will probably be the largest in history over the loansharking activities of its subprime affiliate, Countrywide.

Weill could not have done this alone. Instead he had help at the highest levels, including the three Congressmen whose names are on the bill that repealed Glass-Steagall to then Secretary of the Treasury Robert Rubin to the many economists and policy wonks who were gung-ho for securitization in all its manifestations. Rubin joined Citi shortly after leaving Treasury to become one of its most trusted advisors. Did he know about the loansharking or was he looking the other way?

Given the huge increase in subprime mortgages and the role they played in Citi’s portfolio along with the mountain of evidence showing their disproportionate impact on people of color it is hard to believe anyone in the financial industry from regulators to bankers was not aware of this. Yet they chose not merely to look the other way, but to allow it to continue until the elephant in the room became too big to ignore.

This is what researchers mean when they speak of “structural racism,” for it is not merely a matter of personal prejudice. Many of the people involved–including Sandy Rubin–would vehemently deny that they are racists. The ugly reality of structural racism is that like termites infecting a house it gnaws away at institutions until they weaken and threaten to topple.

Right now the entire American economy may topple because it is infected with the termites of structural racism. In a recent paper Rick Cohen writes:

The subprime crisis carries the seeds of structural racism not from discriminatory intent, but from ostensibly racially benign or supposedly ameliorative policies and programs. This is a difficult message for the nation to hear. The pushback has been strong.

Jim Campen agrees:

The enormous racial disparities in mortgage lending and the dramatic shrinkage of the portion of total mortgage lending that is subject to evaluation by bank regulators under the provisions of the Community Reinvestment Act (CRA) indicate the need for major changes in public policy toward the mortgage lending industry.

The final installment of this series examines some of these policy changes.

Crossposted: My Left Wing

“Right of Conscience” Protections; Be Patient


copyright © 2008 Betsy L. Angert.  BeThink.org

She said, “If one is to pass, it will have to be my sister.”  Jennifer would not allow a baby to die.  Although the newborn had yet to take a single breath, and was still safely tucked away in her mother’s belly, Jenn decided the infant must live.  Had she been an employee of one of more than 584,000 health-care organizations her word would have been considered a “right of conscience.” Jenn would not be held responsible if she refused to treat the soon-to-be Mom who was also her sibling.

A Bush Administration rule would protect physicians, nurses, pharmacists and other employees who decline to participate in care they think ethically, morally or religiously objectionable, from any repercussions.

Medication, information, or any other assistance need not be given to someone a medical staffer considers immoral.  If the Bush Bill is allowed to stand, those who take the Hippocratic Oath and those who work with Doctors need not do a deed they believe violates personal beliefs.  On December 18, 2008, the White House decreed it would protect all Health Care Workers.  This provision is thought to be a gift from G-d for those who are as Jennifer was, pious believers.

As a devoutly religious soul, when confronted with the choice of who might live or who would die, Jennifer decided the relative she knew and loved for all her life could go.  Jenn announced, “Babs had been a beautiful child, terrific as a teen.  As an adult, Barbara was the best.  Her existence on Earth had been short.”  “Yet,” Jennifer cried with tears in her eyes, “Now, it is time for the baby to realize the joy of an Earthly existence.”  Jennifer had faith.  ‘G-d knows’ were the words she oft uttered.  It is not ours to question why.  “The Lord giveth and the Lord taketh away.  Blessed me the name of the Lord,” was the sentiment secure in the heart of one who saw herself as mere mortal.

However, hurt by the thought that their beloved Barbara might pass, and Jenn would embrace such an event, relatives attempted to reason with the woman who would refuse her own sister’s life.  Jennifer, certain of her “Right to Conscience,” made it clear she knew.  The baby-to-be must have the same chance to evolve that Barbara had.  She or he, since at that moment the sex of the fetus was unknown, must survive and thrive just as G-d planned.”  Jennifer reminded her relatives, “Barbara was in her twenties,” at the time of this crisis.  Jenn was near thirty, old enough to have experienced life, and established enough to be considered for her wisdom.  The religious woman recognized, she too had rights. Now, under the new Bush Administration imposed rule. Jennifer, or hospital staffs of today, will have more power to exercise their conscience then they had in the past.

Leavitt [Mike Leavitt, Secretary of the Department Health and Human Services, which issued the novel rule] initially said the regulation was intended primarily to protect workers who object to abortion. The final rule, however, affects a far broader array of services, protecting workers who do not wish to dispense birth control pills, Plan B emergency contraceptives and other forms of contraception they consider equivalent to abortion, or to inform patients where they might obtain such care. The rule could also protect workers who object to certain types of end-of-life care or to withdrawing care, or even perhaps providing care to unmarried people or gay men and lesbians.

While primarily aimed at doctors and nurses, it offers protection to anyone with a “reasonable” connection to objectionable care — including ultrasound technicians, nurses aides, secretaries and even janitors who might have to clean equipment used in procedures they deem objectionable.

However, in that moment, , the family was aghast.  They could not come to terms with what Jenn believed best.  Thankfully, Jennifer did not have the authority to choose what would be done, as medical workers might if the “Right to Conscience” is made law.  Family, and the patient herself, had the power to select what for them seemed the best treatment.

Apprehensive, as she contemplated assessments that seemed purely emotional, Jennifer, worked to put her personal feelings aside.  She trusted human sensibilities could not be her priority.    G-d would show her the way.

Her faith in the Almighty, and Jenn’s belief that a new life cannot be aborted, were her only considerations.  She had no animosity towards Barbara, not then, or ever.  Indeed, she loved her sister’s sensational soul.  Even in the moment she declared, it is better that Barbara’s life be sacrificed, Jenn thought of her young sibling as a close friend.  Yet, no matter how she felt about the person who was so real to her, Jennifer was sure G-d would want the newborn to survive.  “He” had given Babs a good life.  Now it was time for her to go home, to be with her savior once more.

It hurt Jenn’s heart to think of her sister’s departure.  When Babs was but a tot, Jennifer, the older sister, served as a second Mom to the sweet little bambina.  She was as fond of Barbara throughout their younger years, just as she was on that day. However, her affection for the woman who now held an infant in her womb could not negate what Jennifer thought G-d had decreed. A new life must not be killed.  

During that turbulent time, Jennifer might have said as Deirdre A. McQuade of the U.S. Conference of Catholic Bishops declared when news of the “Right of Conscience” proposal was released. “Individuals and institutions committed to healing should not be required to take the very human life that they are dedicated to protecting.”

This moral, ethical, Christian woman trusted as many do today; people enter this world and then, when they have completed their mission, the Lord invites them to return home to the heavens.  We all must depart when it is our time, Jennifer intellectualized, or justified what she thought to be true.  Had this conversation taken place in late December 2008 any hospital employee, even a hospital custodian could refuse Barbara care.  All those years ago, Jenn was certain she would have let her sister die.  

David Stevens of the Christian Medical Association would concur.  As the “Right of Conscience” becomes reality, a leader of the faithful reminds opponents, “We will do all in our power to ensure that health-care professionals have the same civil rights enjoyed by all Americans. These regulations are needed, do not change the law, but simply stop religious discrimination.”

Jenn did not think she needed to be a victim of circumstance.  She too would wish to invoke her “Right of Conscience.”   She did not share her family’s sense of fairness.  Favoritism for the born seemed principled to one so dutiful.  Jenn thought it essential to honor the divine, and not discriminate against her for the values she held dear.

An allowance for a mother did not make sense to Jenn when she was but a young lovely.  Nor does the unexpected exodus of a baby seem reasonable to the more mature Jennifer.  Nonetheless, the daughter of Eve, who today maintains her faith in Jesus wonders whether a medical professional should have the power to chose what is right for another human being.  At this time in her life, Jennifer fears what would have been had the “protection” for someone such as her been in place.  Today, she inquires; what of the patient.

As she aged, Jennifer experienced what she could not have imagined all those years earlier.  Barbara, who lived, gave birth to one, then another bouncing beautiful baby.  As an Aunt, Jenn learned to love these children as if they were her own.  Upon reflection, she felt sorrow when she thought of what she might have missed had her sister passed.  Time with her treasured sibling Babs had truly been a treasure.

Jennifer also realized she was the Aunt to a lesbian woman.  No, the niece was not Barbara’s daughter.  Jenn’s sister Kathy had two children.  Susan, born before Babs was ever pregnant, developed into an intelligent, insightful, inspirational female whose gender preference was also female.

Years ago the religious person she is would have perhaps rejected and other relative.  However, she could not.  It was never a thought in her mind.  Jennifer helped raise the younger lady, now classified as gay.  Oh, how she was.  Susan was and is a bundle of joy.  Yet, a hospital worker may think her gender preference alone is despicable.  Jenn wondered of the care her loved one might not receive in a time of need.  She knew that a “Right of Conscience” provision might protect a physician, a nurse, a pharmacist or a janitor, but what would become of Susan if she were to be hospitalized or even enter a clinic for emergency care,

Then there was Susan’ significant other to consider.  The two became Mom’s, twice.  Susan carried each child to term.  Their children, conceived through artificial insemination, were the apples of Jenn’s eye.   What might have been were a medical worker to invoke her or his “right of Conscience” when Susan was a patient.  Great Aunt Jennifer shudders to think.  Instead, she takes pleasure in the time she spends with the littlest ones.  She frequently volunteers to baby-sit for children who, had a health care worker snubbed Susan, might not exist.  

Jenn has come to realize she feels no obligation to be there for her family, gay or straight.  She no longer ponders protections from what the Almighty did not prevent.  Her conscience is not troubled by the circumstances.  Jennifer had grown to see G-d, and all life in a different light.  Perchance Jenn thinks, she had become more enlightened.  However, no one could have told her then, when Babs first baby was born, that one day her beliefs might change.

Often, over the years Jenn had to grapple with her truth.  She remained forever faithful to the Lord and his teachings.  Tradition, for her was paramount.  She did not think herself omnipotent; yet, earlier in her life she was certain of what was right.  Her scruples dictated her decisions, and Jenn, of then, was decisive.

Today, as she is confronted with novel truths, she wonders of what might have been the error of her ways.  More than one physician has advised Jenn to seek relief for feminine problems.  Although, she is considered a middle age woman, Jennifer has only engaged in intimate sexual contact with one man, and even then, for only one year of her life.  Near celibate, it has been a score since Jennifer might have thought to use a contraceptive to avoid pregnancy.  Today, however, she is urged to ingest the birth control pill.  Were it not for the pain she experiences without the medication, Jenn would simply say “No!”

After much personal conflict, trials, and tribulations, Jennifer decided she would succumb. Yet, as she attempts to fill her prescription she is confronted with what was once her truth.  Might this believer in G-d repeat, “We reap what we sow.”  Jenn who teaches in a Catholic institution cannot obtain medicine that might prevent fertilization of an egg.  That she has no eggs to fertilize is for her Insurer and employer a moot point.  The Bush Administration thinks the regulations that restrict Jenn are just.

The rule comes at a time of increasingly frequent reports of conflicts between health-care workers and patients. Pharmacists have turned away women seeking birth control and morning-after emergency contraception pills. Fertility doctors have refused to help unmarried women and lesbians conceive by artificial insemination. Catholic hospitals refuse to provide the morning-after pill and to perform abortions and sterilizations.

Experts predict the issue could escalate sharply if a broad array of therapies becomes available using embryonic stem cells, which are controversial because they are obtained by destroying very early embryos. Obama is poised to lift the Bush administration’s restrictions on federal funding of embryonic stem cell research.

“Doctors and other health-care providers should not be forced to choose between good professional standing and violating their conscience,” said Mike Leavitt, Secretary of the Department Health and Human Services.

As Jennifer reflects, she knows not whether to laugh or cry.  She has rights; she has a conscience.  Yet, she has discovered one may not preclude the other.  She wonders how many will realize as she has before it is too late.  How many might die at the hands of professionals who think themselves principled.

References for Rights and Conscience . . .

Did Racism Help Cause the Mortgage Crisis? Part One

I am honored to present the work of Ralph Brauer.  For some time I have marveled as I read his research and reflected upon his work.  Today, this author of note shares with readers at BeThink.  I welcome Ralph Brauer.  May I invite you to peruse his prose.  Please ponder; then share your thoughts.

copyright © 2008 Ralph Brauer. The Strange Death of Liberal America

There is an elephant in the room no one wants to mention when you bring up the housing crisis.  It is the same elephant that has occupied the room since the very beginning of this nation.  Yes, it was there that hot Philadelphia summer when they drafted the Constitution.  Maybe that is what Ben Franklin is gazing at as he sits in the center of the famous painting of the signing of the Constitution by Howard Chandler Christy that hangs today in the House of Representatives east stairway.  Certainly the elephant had haunted Franklin much of his life causing him to call it “a constant butchery of the human species” in an anonymous letter written in 1772.  That elephant that haunted Franklin and continues to haunt us today is racism.

The economic crisis we face today has produced countless essays analyzing its origins and proposing all manner of cures, but almost no one has dared to mention the elephant in the room.  As I researched this topic I found only one person who seemed to be on to it: John Kimble, who wrote an excellent op ed piece in the New Orleans Times Picayune in October that should be required reading for everyone.  One sentence gets to the heart of the matter:

What few today remember is that one of the government’s central goals in undertaking mortgage market reform was to segregate American cities by race.

That such a piece should come from New Orleans does not surprise me; that few have sought to connect what to me seem rather obvious dots is more of a mystery to me.  But that is the power of that elephant in the room.

Perhaps now with an African American President we will finally have more open discussion of the elephant in the room and that discussion should begin by acknowledging that the elephant played a significant role in causing the mortgage crisis which in turn has toppled financial giants as if they were a row of dominoes.  To understand why we need to go back to the years immediately after the Second World War when the housing boom began.

The Creation of the Suburb

The discussion of the role of racism in America should begin by confronting the most important social, cultural and political reality of the past half century: the American suburb is largely a creation of racist loan policies that came from none other than the federal government.  The suburban migration stands as one of the largest freely-undertaken, government-subsidized mass social movements in history.  It accomplished by democratic means what dictators over the ages have tried to accomplish by force: alter the physical, economic, and social environment to create a unique culture.  As Kenneth Jackson writes in Crabgrass Frontier, his history of the American suburb:

Suburbanization was not an historical inevitability created by geography, technology, and culture, but rather the product of government policies.  (p. 293)

Through a variety of government subsidies, the creation of the suburbs allowed people of modest means to attain what real estate ads have christened the American dream.  The immensity of this achievement is only beginning to dawn on us, for it constituted the kind of land and social reform that governments everywhere still try to accomplish.  Kenneth Jackson notes:

Single family housing starts in this country rose from 114,000 in 1944 to 937,000 in 1946, 1,183,000 in 1948, and 1,692,000 in 1950.  (p. 233)

The federal government financed this growth through the Federal Housing Administration, an agency created during the New Deal to help spur the growth of home construction.  During the postwar housing boom Jackson points out:

The main beneficiary of the $119 billion in FHA mortgage insurance issued in the first four decades of FHA operation was suburbia.

Drawing the Color Line

A half century before the creation of suburban America, W.E.B. DuBois had written in the very first sentence of The Souls of Black Folk the immortal and prescient words:

HEREIN lie buried many things which if read with patience may show the strange meaning of being black here at the dawning of the Twentieth Century.  This meaning is not without interest to you, Gentle Reader; for the problem of the Twentieth Century is the problem of the color-line.

Little could DuBois have predicted that the color line would become a red line drawn around the American suburb by none other than the FHA.  The name redlining actually dates back to the 1930s when the FHA first began using color codes to designate areas where they should not invest.  Red areas were off-limits.  Jackson states:

FHA also helped to turn the building industry against the minority and inner-city housing market, and its policies supported the income and racial segregation of suburbia.

Even as the suburbs mushroomed across the American landscape, a few were asking questions.  In 1955 Columbia Professor Charles Abrams charged:

From its inception, the FHA set itself up as protector of the all white neighborhood.  It sent its agents into the field to keep Negroes and other minorities from buying houses in white neighborhoods.  (Jackson, pp. 213-214)

In what has become the classic source on FHA discrimination, The Politics of Exclusion, Michael Danielson quotes an FHA underwriting manual:

If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes.  A change in social or racial occupancy generally leads to instability and reduction in values.(p. 203)

FHA policies also required appraisers to determine the probability of people of color moving into a neighborhood and even forced homeowners to agree not to sell their property to someone of another race.  According to one commentator,

“[T]he most basic sentiment underlying the FHA’s concern was its fear that property values would decline if a rigid black and white segregation was not maintained.

With the rise of the Civil Rights movement in the 1960s, the FHA began to make some attempt to right these wrongs, but with the election of Richard Nixon in 1968, the so-called “Southern Strategy” soon put a stop these efforts.  Chris Bonastia documented Nixon’s dismantling of FHA’s residential integration efforts in his paper, “Hedging His Bets: Why Nixon Killed HUD’s Desegregation Efforts.” Nixon’s refusal to back HUD’s reform efforts would have an impact on American society that ranks right up there with the decision by President Rutherford B. Hayes to abandon the South to the segregationists, essentially ending Reconstruction.

Yet to see one man and one decision as a historical lynch pin is to take an outmoded view of history, for the truth is that by 1968 the die had already been cast and DuBois’ color line had been drawn like a moat around the suburbs designed to keep people of color from entering. It would have taken considerable political will–and perhaps even federal law enforcement–to desegregate the suburbs by then.  Dr. Martin Luther King, jr.’s infamous march into the Chicago suburb of Cicero, where he was met with bricks and catcalls, showed the depth of that moat. There is a moment in the video of that march when you hear what sounds like a shot and King turns suddenly as if wondering where the shot came from.

This does not excuse Nixon’s actions, which at best were misguided and at worst cowardly and racist. While historians debate how much Richard Nixon personally bought into the Thurmond catechism, his elevation of Thurmond aide Harry Dent to the White House staff after the election sent a clear signal of his alliance with Thurmond. Dent was the one who sat outside the Senate chamber with a pail in case Thurmond needed a quick bathroom break during his record-setting filibuster. Nixon himself put it bluntly:

I am not going to campaign for the black vote at the risk of alienating the suburban vote.

For the federal government to go further than the law, to force integration in the suburbs, I think is unrealistic. I think it will be counter-productive and not in the interest of better race relations. [quoted in Charles M. Lamb, Housing Segregation in Suburban America Since 1960, p. 4, p. 9]

Still, as Lamb would point out in a footnote, two decades later a University of California study found that 44% of white Americans favored encouraging African Americans to move to the suburbs.

The Creation of the Subprime Market

Yet the FHA did not just discriminate against people of color who sought to live in the suburbs, it also made  it more difficult for them to obtain loans, period, by refusing to insure loans in areas with high concentrations of people of color.  The systemic impact of this is still reverberating through America’s inner cities.  Without FHA insurance, no reputable bank would issue a home loan to someone living on the other side of the “color line.” This in turn had a host of social and cultural impacts, from resource-poor schools to lack of jobs because businesses would not build where the FHA would not write loans.

You don’t need to be a systems modeler to see how each of these came to feed on each other. In the last decade scholars have begun to refer to this as “structural racism,” by which they mean a convergence of forces and policies that conspires to sustain the color line. Just imagine one systemic loop: you cannot get a good job because you live in a neighborhood with substandard housing and were educated in a substandard school and so you cannot qualify for a loan for better housing which in turn further reinforces the substandard housing. Structural racism is also not a bad metaphor, either, for it suggests the immense weight of these multiple factors that presses down on people living inside those red lines drawn by the FHA.

Where legitimate businesses and institutions are prevented from entering, illegitimate ones will grow. Since regular banks would not lend to people of color in inner city neighborhoods and FHA policies kept them from lending to the few people of color who could afford suburban housing, there obviously was a need for someone to supply these loans and so we have the growth of the so-called subprime market, only back in those days they were known as loan sharks and other unprintable words and had reputation to rival check cashing operations, greedy landlords and take and bake furniture renters. Anyone who has grown up in the inner city can tell stories not only about price-gouging home loans, but high-priced loans for everything from cars to buying furniture or clothes on credit.

What Is Subprime Lending

Subprime lending is a mixture of old-fashioned altruism and blatant thievery with an American twist. Some entered into the business of making loans to people of color because they genuinely believed people deserved an equal opportunity, others saw a chance to make a quick buck. The reality of the situation was that without FHA insurance even the most well-meaning lenders still had to charge more than they would have for a white suburban home-buyer.

A 2003 study for the Lawyers Committee on Civil Rights Under Law reported:

While red-lining has served to exclude poor and minority residents from the benefits of mainstream mortgage lending, purveyors of predatory lending (or so-called “reverse red-lining”) practices have targeted many of the same poor and minority households that traditional lending institutions have ignored or excluded.

In testimony before the House Committee on Banking and Financial Services in 2000 Bill Brennan of the Atlanta Legal Aid Society outlined how subprime lending works for lenders:

Here is what these companies do, the predators. They overcharge on interest and points, they charge egregiously high annual interest and prepaid finance charges, points, which are not justified by the risk involved, because these loans are collateralized by valuable real estate.

Since they usually only lend at 70 to 80 percent loan-to-value ratios, they have a 20 to 30 percent cushion to protect them if they have to foreclose. They usually always buy at the foreclosure sale and pay off the debt and sell the house for a profit.

As for those taking out the loans, Gary Gensler, Undersecretary for Domestic Finance at the treasury Department, told the same Committee:

Borrowers in these markets often have limited access to mainstream financial services. This leads to two things, as the Senator said earlier. Some borrowers who really would qualify for prime loans-we estimate anywhere between 15 and 35 percent of the subprime market could qualify for prime and cannot get that prime loan. Second, the rate and term competition is limited. Subprime lenders don’t tend to compete as much on price.

Beyond preying on vulnerable populations, beyond the limited access to mainstream financial services, is that abusive practices tend to be coupled with high-pressure sales tactics, whether by a mortgage broker, a home improvement contractor, sometimes a lender themselves in the local community.

Perhaps the most extensive and longest longitudinal study of predatory lending practices has been the Woodstock Institute’s periodic reports on Chicago.  It’s 1999 report “Two Steps Back” was among the earliest to blow the whistle on predatory lending.  They found:

Documented cases of abuse include fees exceeding 10 percent of the loan amount, payments structured so that they do not even cover interest (resulting in increasing principle balances), and flipping a loan numerous times in a couple of years.

At the same time, lending to lower-income and minority communities is often viewed as an isolated line of business, in which the focus is on the short term transaction and associated fees. Lenders active in such communities tend to be mortgage and finance companies subject to much less regulation than banks and thrifts. The increased scale of the subprime industry itself has resulted in a larger number of abuses. Moreover, there has not been a proportionate increase in regulation or regulatory resources devoted to this new industry.

As usual, graphs and tables tell the story in black and white:

The date on the graph may be a little difficult to see. It is 1998. On the first table, the percentage of subprime loans going to African American communities is 53%. Only 9% went to predominantly white communities. The Woodstock study went on to deal with the obvious question: is it race or income that is the strongest determinant of who receives a subprime loan? They found it was the former:

Thus, whether a neighborhood is predominantly African-American explains the greatest amount of variation in subprime lending,

The Final Results

In 1997 Bill Brennan could tell the New York Times:

We have financial apartheid in our country. We have low-income, often minority borrowers,  who are charged unconscionably high interest rates, either directly or indirectly through the cover of added charges.

Three years later Census data would confirm Brennan’s charge. The Lawyers Committee on Civil Rights Under Law found:

The typical white person lives in a neighborhood that is overwhelmingly white, with a few minorities (80.2% white, 6.7% African American, 7.9% Hispanic American, and 3.9% Asian American), the typical African American lives in a neighborhood that is mostly black (51.4% black, 33.0% white, 11.4% Hispanic American, and 3.3% Asian American). By comparison, the typical Hispanic American lives in a neighborhood that is more evenly Hispanic American and white (45.5% Hispanic, 36.5% white, 10.8% black, and 5.9% Asian American); and the typical Asian American lives in a neighborhood that is mostly white (17.9% Asian American, 54% white, 9.2%  black, and 17.4% Hispanic American).

In a study released this year by United for a Fair Economy, the authors note:

According to federal data, people of color are more than three times more likely to have subprime loans: high-cost loans account for 55% of loans to Blacks, but only 17% of loans to Whites.

This is a decade after the Woodstock study identified a similar pattern in Chicago.


This history makes you wonder what kind of country we might have become had racism not pervaded the home mortgage market. The United for a Fair Economy study puts it eloquently:

While the housing crisis has affected all sectors of society, it has disproportionately affected communities and individuals of color. For them, the dream that Martin Luther King, Jr. once spoke of has been foreclosed.

Now the injustices white America heaped on black America for half a century have come home to roost. The sobering thought to ponder is that what you have read so far is merely the very tip of a rather large iceberg, for there are literally dozens and dozens of books and countless articles on racism and housing. If you enter “racism” and “housing” in Google you will find over four million entries. Yet despite over half a century of studies, reports and papers about discriminatory lending, little was done about it.

The most damning piece of evidence in this entire story is not that racism fostered predatory loans, but that like organized crime going from petty bootleggers and drug dealers to big time operators, the practice of predatory loan sharking expanded and went mainstream– moving from being the providence of small-time shady operators to mainstream banks. Essentially, loan-sharking cast off its sleazy past and the bigger it became the more people looked the other way.

That is until it suddenly threatens to take down the entire American economy. Now like the figures in that painting of Constitution Hall, fingers are pointing and people are staring.

If racism played a big role in creating the mortgage crisis, the solution to our current problems will prove tougher to deal with than what the so-called experts have been telling us. We could be witnessing the fourth American revolution. The first was the war for independence, the second the Civil War, the third the Great Depression and now the present crisis which combines the themes of the previous two–race and economics.

The next essay in this series focuses on how we got here and why, for only by understanding that journey can we see a way out of the current morass. What is clear so far is that this crisis is not merely the fault of a few misguided CEOs, but rather the culmination of decades of discrimination in which all of us are culpable.

Now the time has come to stop pretending there is no elephant in the room and deal with it.


For a good bibliography on the subject click here.

Crossposts: The Strange Death of Liberal America, My Left Wing, Progressive Historians, The Wild, Wild Left

Did Racism Help Cause the Mortgage Crisis? The Rise of Sandy Weill and Citigroup

Photo: United for a Fair Economy The State of the Dream

copyright © 2008 Ralph Brauer. The Strange Death of Liberal America

Sandy Weill’s story tells how racially-biased predatory lending lies at the center of the economic crisis.  A third-generation American, Weill grew up on the streets of Brooklyn where for some the road to success was a place whose name came from a structure built to protect the city from Indians, pirates and other invaders and whose die was cast when a small group of men met in secret under a buttonwood tree: Wall Street.

Like the hero of a Horatio Alger tale, Weill began his climb to success not in the proverbial mail room but as a $35 a week clerk, eventually clawing his way to become second-in-command at American Express. But Weill had an itch for more so he cashed in his chips and set about looking for his own business. In 1986 he settled on a Baltimore loan company named Commercial Credit that specialized in predatory lending.

The tale of how Weill would use Commercial to build the financial empire that became Citigroup is the story of the financial crisis and at the heart of that story is racial discrimination and predatory lending. In short, predatory lending made Citi into one of the nation’s largest financial institutions and now is responsible for its downfall.

The Beginnings of Citi

If Weill did any due diligence at all, he knew quite well he was buying a company whose entire existence was predicated on ripping off people of color. Commercial already had a shady reputation when Weill moved in on it. In 1973 the FTC had issued an order demanding Commercial cease using deceptive and hardball tactics to entrap those in search of a loan. In his article “Banking on Misery Citigroup, Wall Street, and the Fleecing of the South,” Michael Hudson  relates that Weill’s assistant, Alison Falls, was appalled at the idea of buying Commercial:

Hey guys, this is the loan-sharking business. “Consumer finance” is just a nice way to describe it.

After Weill bought the company did he seek to curb these practices? Quite the contrary, Commercial became even more aggressive. After all, Weill’s whole business plan was predicated on using Commercial to launch a larger company and in order to do that he had to get as much as he could out of Commercial, which meant squeezing clients even more.

Some of Weill’s former employees tell stories of being pressured into steering clients into dubious deals. Hudson quotes Sherry Roller vanden Aardweg, who worked for Commercial in Louisiana from 1988 to 1995. She agrees there was “a tremendous amount of pressure” to sell insurance: That insurance was issued by another Weill acquisition American Health & Life.

We kept adding insurance that we could offer. It just kept growing. It was beginning to get a little bit ridiculous.

Frank Smith, who worked for Weill in Mississippi, put a perspective on ripoffs such as “closed folder closings” in which documents adding to the cost of the mortgage were kept from the client:

They need the money or by God they wouldn’t be at the finance company. They’d be at a bank.

Weill used the money milked from Commercial’s clients to acquire insurance and finance company Primerica. In 1990 he acquired Barclay’s Bank. Meanwhile the stories told by African Americans victimized by Weill certainly sound like loan sharking. Two Mississippi clients of Commercial signed on for Annual Percentage Rates (APR) of 40.92 and 44.14. Another client paid $1,439 for insurance on a $4,500 loan.

Ripoffs like this attracted the attention of attorneys and law enforcement officials, especially in the South, where Commercial had a large presence. Hudson reports:

In 1999, the company agreed to pay as much as $2 million to settle a lawsuit accusing Commercial and American Health Life of overcharging tens of thousands of Alabamans on insurance.

Jackson, Miss., attorney Chris Coffer says he obtained confidential settlements for about 800 clients with claims against Commercial Credit or its successor, CitiFinancial.

How much money African Americans probably overpaid Commercial can be glimpsed from one study by the Community Reinvestment Association of North Carolina. Testifying before a 2006 hearing of the Federal Reserve in Atlanta, CRA-NC Community Organizer Richard Brown cited the findings of the study, Paying More and Getting Less: An Analysis of 2004 Mortgage Lending in North Carolina:

Our key finding is that disproportionately, by a ratio of more than 4 to 1, African Americans pay more interest on home loans than whites do in North Carolina.

Cultural Impacts

Like some modern plantation, subprime lending was built on the enslavement of African Americans, only instead of being field hands or sharecroppers their lives were indentured to loan sharks. Like the infamous overseers who ruled plantation life with the crack of a whip, the loan sharks ruled the lives of African Americans with whips woven together with words the way real whips are woven from strips of leather. While these words might not have inflicted the physical wounds overseers specialized in, the mental scars inflicted by the words woven into loan sharking mortgages were socially and psychologically devastating.

Like slavery, loan sharking helped to turn the African American family into a hot-button issue whose implications are still the subject of volatile debates within and outside the community. Yet while the particular sociological and cultural impacts of loan sharking may be the subject of some debate, there is agreement about the big picture: the impact rippled through families and communities like a rogue wave bringing misery and destruction. In the inner city and some rural communities, especially in the South, African American families faced two equally devastating choices when it came to housing: deal with the loan sharks or deal with the slum lords.

Loan sharking also rippled through American culture. Call it apartheid or something else, whatever label you assign to it the forced separation of whites and people of color is the number one issue of post World War II America. As surely as South Africa carved out “homelands” for its black citizens, so FHA and others carved out the equivalent through redlining.

In the South African Americans and whites lived together but interacted through the elaborate codes and rituals of Jim Crow, but in the North the races were physically separated so a white suburbanite could grow up without having much association with people of color. As a result, while white Southerners saw African Americans as inferior, white Northerners saw them as abstractions.

The 90s Boom in Subprime Loans

Meanwhile Sandy Weill continued building Citi through mergers and acquisitions. In 1993 came the controversial merger with Travelers followed four years later by Citi’s acquisition of Salomon Brothers. At the same Weill was building Citi, the mortgage market was undergoing some dramatic changes. Researchers began identifying a huge spike in the number of subprime loans. Loan sharking had come from back streets and low budget store fronts to the center of America’s financial empire: Wall Street.

A graph from the Woodstock Institute tells the Story:

This graph raises two obvious questions: what was fueling the growth and who was providing those new subprime mortgages? The first is still the subject of some debate among economists and others.  For example, some have tied it to an increase in interest rates. In its explanation accompanying the graph Woodstock states:

Despite increasing rates in 1994, 1995, and 1997, however, subprime lenders continued to increase their refinance volumes. This suggests that subprime refinancings are not driven by homeowners refinancing to save money during times of declining rates and that subprime lenders are aggressively marketing loans regardless of the rate environment.

In part, the growth of predatory activity stems directly from the development of an increasingly specialized and segmented mortgage market, especially for refinance and home equity loans.

What was in it for others is the same thing that was in it for Sandy Weill–profits. Forbes reported that in the boom of the 90s, subprime companies enjoyed returns up to  six times greater than those of the best-run banks.

United for a Fair Economy put it more bluntly:

The subprime lending crisis has occurred because a financial product intended for limited use by a limited number of people has been parlayed into another ill-fated bubble by some mortgage lenders lacking in integrity, foresight, and any vestige of civic concern.

What made this possible was the packaging and trading of loans, which goes under the fancy name of securitization.  A Federal Deposit Insurance Company report describes how this process works:

Thirty years ago, if you got a mortgage from a bank, it was very likely that the bank would keep the loan on its balance sheet until the loan was repaid. That is no longer true. Today, the party that you deal with in order to get the loan (the originator) is highly likely to sell the loan to a third party. The third party can be Ginnie Mae, a government agency; Fannie Mae or Freddie Mac, which are government sponsored entities (GSEs); or a private sector financial institution. The third party often then packages your mortgage with others and sells the payment rights to investors. This may not be the final stop for your mortgage. Some of the investors may use their payment rights to your mortgage to back other securities they issue. This can continue for additional steps.

As usual a graph tells the story of the growth of these new investment vehicles.

The FDIC goes on to explain how various pooling tactics package subprime loans, taking you into a thicket of acronyms like (MBSs), collateralized debt obligations (CDOs), and structured investment vehicles (SIVs)–all essentially are ways of spreading the risk of pooled mortgages. Notice that the initial upswing in MBS begins in the late 1980s. That was due to the tax reform act of 1986.

Ginnie Mae (Government National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) had been involved with MBS before the 1986 bill, but the Reagan Administration’s gift to the home mortgage industry introduced another acronym into the mix: REMIC–Real Estate Mortgage Investment Conduit, which is yet another tool for pooling and packaging mortgages. None other than Freddie Mac described the importance of the 1986 bill:

The REMIC law was passed as part of the Tax Reform Act of 1986 and marked the beginning of the growth of the CMO [Collateralized Mortgage Obligation] market.

Once financial institutions began to catch on to this and entered the thicket of securitization in a big way, there was no turning back. The American economy would never be the same.  Put the two graphs above together and you have the story: the initial growth of the subprime market was enabled by the growth in MBS. There remained only one regulatory hurdle in place, one that had been there since the Great Depression.

The Repeal of Glass-Steagall

Had Carter Glass been alive in the 1990s it is doubtful any of this would have happened, but by the time he put his name on the Glass-Steagall Act during the Depression, Carter Glass was an old man. He had actually been a delegate to the 1896 Democratic National Convention when William Jennings Bryan gave his “Cross of Gold” speech and most of his political life he had a Bryan streak in him that included a distaste for banks. When he left Woodrow Wilson’s cabinet at the end of Wilson’s term he was already warning of the dangers of uncontrolled banking, particularly banks getting involved in the stock market and other financial dealings.

Carter Glass would not have liked Citi or Sandy Weill. Weill, in turn, had little use for what Glass had created, seeing it as an obstacle that stood in the way of his fulfilling his vision of the kind of “full-service” banking Carter Glass had feared.

The Glass-Steagall Act was designed to keep banks out of the securities business because Carter Glass and New Deal officials including President Franklin Roosevelt believed that one of the causes of the Depression was that banks had strayed too far from their original functions during the 1920s.  According to a paper by Jill M. Hendrickson:

in 1932, 36 percent of national bank profits came from their investment affiliates (Wall Street Journal 1933, p. 1).

Glass-Steagall built a wall between banking and other financial services and the ink on the paper was barely dry when the bankers and their allies in the Republican Party began howling.  Over the next half century there were numerous attempts to weaken or scuttle Glass-Steagall, but in the midst of the securitization boom the cries to tear down the wall of Glass-Steagall grew louder.  In 1990, the Fed, under former J.P. Morgan director Alan Greenspan, permitted guess who–J.P. Morgan–to become the first bank allowed to underwrite securities.

It would be none other than Sandy Weill who would put in motion the forces that ended Glass-Steagall when he essentially gave the federal government the equivalent of an upraised finger by proposing the most audacious financial merger in American history: he would merge one of the largest insurance companies (Travelers), one of the largest investment banks (Salomon Smith Barney), and the largest commercial banks (Citibank) in America. The problem was the merger was illegal in terms of Glass-Steagall.

Weill convinced Greenspan, Robert Rubin, and President Bill Clinton to sign off on a merger that was illegal at the time, with the expectation that Congress would repeal Glass-Steagall. That would happen with a big push from Sandy Weill. First, he spent over $200 million in lobbying fees to convince Congress to go along with his merger. It still ranks as the largest single amount spent by one firm on one bill over the shortest period of time in American history.

When the conference committee charged with reconciling the House and Senate versions of the repeal bill seemed stalemated, it was Sandy Weill who applied the final push needed to get the bill passed. Here is the now oft-quoted Frontline report of what happened:

On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill’s effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

The Aftermath

With Glass-Steagall out of the way, Sandy Weill had his merger and the American financial industry now had a green light to enlarge on subprime lending. Some followed Weill’s model of consolidating loan and insurance companies as he had done with American Health & Life and Travelers, taking loan sharking to a level those who had engaged in it back when it was done in storefronts with peeling paint could have never imagined.

More money than any organized crime syndicate could have dreamed of flowed into the coffers of the subprime lenders. What had been an activity aimed mainly at people of color now became linked to complex financial instruments such as tranches and derivatives, that to an uninitiated mind resembled nothing so much as the old shell game. Where’s the mortgage? Under this fund? No. guess again. Inner city and suburb which had been separated by redlining became linked by acronyms–MBS, CDOs, CMOs. But as we shall see in the next essay, ripping off people of color would continue.

Postscript: The Revelations of Language

Some reading this essay might object to my linking loan sharking and subprime mortgages, but Sandy Weill from the streets of Brooklyn would get it. Subprime is perhaps one of the most misleading euphemisms ever devised, because it means exactly the opposite of what the term implies. The Investopedia offers a succinct definition:

A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans.

As for loan sharking, a definitive definition is a little more difficult to come by. Investopedia says it is anyone who charges above the legal interest rate (which is set by some states). Several others add that it also involves an implied or real threat to injure the person who doesn’t pay off.  As if to throw a ringer into that definition there are dozens of references to “legal loan sharking.” Perhaps the broadest definition is at Wiktionary:

Someone who lends money at exorbitant rates of interest.

These definitional niceties represent not merely semantic nit-picking, but in fact provide a vital piece to understanding the cultural shifts that have accompanied the economic crisis. One of the unspoken theses in this series of essays is that by clothing loan sharking in the more respectable term of subprime, it suddenly made it not seem so bad to lend money to people–especially people of color–at higher rates. It is reminiscent of the semantic games segregationists used to play with strategies like the “literacy law.” CNN even named “subprime” the word of the year. Can you see them doing that for loan sharking?

In a fascinating article, Ben Zimmer explains how subprime came to have its present meaning, noting that the earliest use of the term was in industry to describe something below grade while in the 1970s banks used it to refer to loans below the market rate.

Something happened to the word in the 1990s, however. Now it was the borrowers themselves who were being classified as “less than prime” based on their shaky credit histories. [My underline]

Zimmer is on to something when he says the term was applied to people, because as we have seen, a high percentage of subprime loans were aimed at people of color.  So the phrase about borrowers being “less than prime” has more meaning than Zimmer perhaps realized when he wrote that sentence.

At the same time that subprime underwent a shift in meaning it is quite clear that so, too, did loan sharking. The earlier references clearly have a criminal tinge to them. In old crime movies “loan sharking” was always thrown in with other nasty activities gangsters perpetrated on the innocent and not so innocent. Yet the recent references seem to take the gangster and the “enforcer” out of the term, so loan sharks just charge higher rates without threatening to break your legs or worse.

This linguistic convergence of loan sharking and subprime reflects an economic and social convergence, for it seems to date from about the time Sandy Weill first bought Commercial. So as Weill took what his own assistant termed a loan sharking operation to the pinnacle of corporate success, the financial industry adopted the euphemism of subprime just as it was getting into this type of lending.

In truth it is the financial industry itself which has helped to blur the distinction between conventional lending at a higher rate and the hardball, card-sharp techniques of the loan shark. That in turn has given rise to a new term “predatory lending” which has largely replaced loan sharking in our vocabulary, creating a living for economists and others who write papers dissecting the differences between the two as if they mattered to those who have to pay exorbitant rates.

As we plunge deeper into the financial crisis, two things are clear: it takes a pretty good lawyer to decipher the standard mortgage agreement and an even better wordsmith to explain if an agreement charging more than the standard interest rate is an innocent subprime mortgage or predatory lending. For me I will continue to use loan sharking with its connotations of shady activity until the financial industry cleans up its act.

Zimmer ends his article by observing:

Here’s hoping that in the not-too-distant future we can look back on the current usage of subprime as a quaint artifact of the late 20th and early 21st centuries.

Twenty years ago the mainstream financial industry would have nothing to do with subprime lending.  Now they are using language much like the defenses of the original loan sharks to defend it, talking about how they are performing a service for people who cannot get loans any other way.

In the next essay we will look at the consequences of the Glass-Steagall repeal, the fall of Sandy Weill and Citigroup, and the growth of so-called subprime lending. Then you can make up your own mind about whether to call it loan sharking or continue to use that other euphemism.

Crossposts:  The Strange Death of Liberal America, My Left Wing, Progressive Historians, The Wild, Wild Left

Katrina’s [America’s] Hidden Race War

Katrina’s Hidden Race War: In Aftermath of Katrina, Vigilantes Shot 11 Blacks in New Orelans (1 of 2)

copyright © 2008 Betsy L. Angert.  BeThink.org

Racism, in reality, is fear of the unknown.  It is apprehension for what is alien to us.  A bigot is often one who claims to be colorblind.  However, indeed, he or she is more likely colormute.  Rarely do persons who think themselves tolerant speak of the scorn they feel for those who differ from them.  Often the intolerant are not aware of the rigidity that rules their lives.  Few amongst Anglos in America, since most appear as they do, consider what the life of one whose complexion is cause for rejection experience.  However, in an exposé, A.C. Thompson muses of what most rather not mention.  The author addresses “Katrina’s Hidden Race War.”  

Through the tales told, after a tumultuous tempest, readers learn of what they may know, and just not discuss freely.  In this land of the free and home of the brave, few people of color are truly free.  Yet, these same individuals are genuinely brave.  They have to be.

It is common to hear Caucasians say, “Some of my best friends are Black, Brown, Yellow, or Red.” People hope to create an impression.  Most wish to prove they willingly accept those unlike themselves.  However, the acquaintance they speak of may be the one and only person of color that they know.   People may think the person that they associate with is the exception to the rule.  He or she is a good gal or gent.  All other folks who do not don a pinkish hue are not to be trusted.

In this country, to publicly proclaim a hatred for a person whose complexion is dark is just not done.  That is unless a person can conceive of a circumstance that allows for a reasonable abhorrence.  Hurricane Katrina afforded such an opportunity for white residents of Algiers Point, Louisiana.

Algiers Point has always been somewhat isolated: it’s perched on the west bank of the Mississippi River, linked to the core of the city only by a ferry line and twin gray steel bridges. When the hurricane descended on Louisiana, Algiers Point got off relatively easy. While wide swaths of New Orleans were deluged, the levees ringing Algiers Point withstood the Mississippi’s surging currents, preventing flooding; most homes and businesses in the area survived intact. As word spread that the area was dry, desperate people began heading toward the west bank, some walking over bridges, others traveling by boat. The National Guard soon designated the Algiers Point ferry landing an official evacuation site. Rescuers from the Coast Guard and other agencies brought flood victims to the ferry terminal, where soldiers loaded them onto buses headed for Texas.

Facing an influx of refugees, the residents of Algiers Point could have pulled together food, water, and medical supplies for the flood victims. Instead, a group of white residents, convinced that crime would arrive with the human exodus, sought to seal off the area, blocking the roads in and out of the neighborhood by dragging lumber and downed trees into the streets. They stockpiled handguns, assault rifles, shotguns, and at least one Uzi and began patrolling the streets in pickup trucks and SUVs.

The newly formed militia, a loose band of about fifteen to thirty residents, most of them men, all of them white, was looking for thieves, outlaws or, as one member put it, anyone who simply “didn’t belong.”

The Nation Magazine, in the January 5, 2009 issue, recounts tales as told by those foreign elements who, while residents of the broader community, were shot as though they were criminals.  Their crime was perhaps only their skin color.  

The way Donnell Herrington tells it, there was no warning. One second he was trudging through the heat. The next he was lying prostrate on the pavement, his life spilling out of a hole in his throat, his body racked with pain, his vision blurred and distorted.

It was September 1, 2005, some three days after Hurricane Katrina crashed into New Orleans, and somebody had just blasted Herrington, who is African-American, with a shotgun. “I just hit the ground. I didn’t even know what happened,” recalls Herrington, a burly 32-year-old with a soft drawl.

The sudden eruption of gunfire horrified Herrington’s companions–his cousin Marcel Alexander, then 17, and friend Chris Collins, then 18, who are also black. “I looked at Donnell and he had this big old hole in his neck,” Alexander recalls. “I tried to help him up, and they started shooting again.” Herrington says he was staggering to his feet when a second shotgun blast struck him from behind; the spray of lead pellets also caught Collins and Alexander. The buckshot peppered Alexander’s back, arm, and buttocks.

Herrington shouted at the other men to run and turned to face his attackers: three armed white males. Herrington says he hadn’t even seen the men or their weapons before the shooting began. As Alexander and Collins fled, Herrington ran in the opposite direction, his hand pressed to the bleeding wound on his throat. Behind him, he says, the gunmen yelled, “Get him! Get that n*gg*r!”

Persons who were presumed guilty, merely by their presence, were neighbors from another section of town.  The poorer people sought safety and shelter after the storm placed them in a precarious situation.  Contrary to reports, the Black population did not loot or engage in thievery.  African-Americans did as the Anglos who were also chest-deep in floodwaters.  They “found” food and fluids to drink from a local grocery store after Hurricane Katrina destroyed all they had.  However, trepidation distorts perception.  Frequently, white Americans are apprehensive when they consider African-Americans.  

From birth, children are taught not to talk to strangers.  Little ones are cautioned to beware.  Different is dangerous.  Perchance, the Associated Press Reporters or Editors who covered the Katrina story were Anglos.  Hence, when Journalists, just as the residents of Algiers Point, saw persons who look as they do, they defined their actions as honorable.  However, the sight of a Black individual in a similar situation was not viewed through a clear lens.  The question might be asked, in America will it ever be.

Please ponder the images.  Then, consider the captions.


Shared By Dustin

Some, of every complexion, did take possession of life’s littlest necessities.  In a few neighborhoods, not Algiers Point, white persons were benevolent towards those “others” of color.  However, Caucasian citizens might contemplate the reality that, before Katrina, the plight of Black Americans was hidden, and it is again.  

The depth of poverty experienced by many African-Americans, the people whose ancestors physically built this nation, was not realized until a natural storm churned up a crisis so critical.

White Americans acknowledge that in some areas, a bridge was built.  Yet, few wish to admit this association only appears in a time of crisis.  While a scant few channels were opened another, many more were closed.  In other locales, where dark skinned persons were presumably welcome, the Anglo inhabitants roared with resentment.  Reports offered the rationale for what in America is the conventional wisdom of an apprehensive Anglo populace. Karina victims are to blame for an increase in Houston crime.  Certainly, these same “undesirables” would propagate misdeeds wherever they may be; hence, we have Algiers Point.

Granted, pinkish persons in other neighborhoods, even in New Orleans, opened their hearts.  A restaurant proprietor, aware of the depth of destruction, 80 percent of the city was under water, opened their eateries to anyone in need.

Tommy Cvitanovich, co-owner of Drago’s Seafood Restaurant, is but one of what might be many.  This sympathetic fellow spoke of the reason he, his family, and his staff felt they must serve all survivors.  For the entrepreneur, there was no reason to fear.  Mister Cvitanovich, when confronted with the circumstances of his fellow man, felt he could not turn away.  Nor could he, his kin, and the folks they worked with grab a gun and shot at persons who sought food and a safer shelter.  The tale is beautiful and worth a peek.

“For eight weeks we gave away meals.  People were waiting in line,” he says.

For five weeks, the meals were given outside the restaurant.  When the restaurant reopened, Drago’s moved the effort to Lakeview where the need was greater.

“There were no fast food restaurants, no convenience stores or grocery stores open,” he says.  “Most people brought food (from outside the area) Food sources were non-existent.”

In a moment of horror, what is often hidden, good, and bad is revealed.  Honorable Americans such as Tommy Cvitanovich are to be thanked for what their endeavors can teach.  Some persons pale of skin felt the pain of the poorer, less protected population.  However, when the waters receded, might residents of the United States inquire; would benevolence still prosper.  

Several, such a Tommy Cvitanovich might show compassion as they had done in the past.  Yet, we cannot be certain.

In America, sweetness is often subdued by racism.  Much is restrained, not realized, or hidden from view when consternation is prevalent.  When people react to anxiety, rather than act and discover we are not that different, we have what we had in Algiers Point, guns ablaze

Inside and outside of a New Orleans enclave, Caucasians are challenged to conceive that persons of color did not seek to violate the law.  Indeed, white vigilantes victimized those who have, for centuries, been casualties in a civilized American society.

What received less attention from the press and from the paler people is Whites Sought More Katrina Aid Than Blacks.  African-Americans, too often buried by the burden of bigotry, did not know that they might be able to apply or appeal a decision for inadequate assistance.  Nor did some have the means before the tempest to secure property or proper insurance.  What also was and remains out of sight are the financial abuses brownish-purplish persons are victim to.  Credit is not colorblind.

In America, privilege is a white man’s prerogative.  Prosecution is reserved for “other” races.

Tulane University Historian Lance Hill, who runs Tulane’s Southern Institute for Education and Research, has studied the city’s racial divide.  He understands why Algiers Point gunmen have avoided arrest.  “By and large, I think the white mentality is that these people [the Anglo lawbreakers] are exempt–that even if they committed these crimes, they’re really exempt from any kind of legal repercussion.” People of color only commit crime, in the mind of many.

Professor Hill ponders and proclaims; “It’s sad to say, but I think that if any of these cases went to trial, and none of them have, I can’t see a white person being convicted of any kind of crime against an African-American during that period.”  Such is the sound of silence.  When people are blind, or white, racism becomes a more colorful spectrum.

The stories of Algiers Point, and the plight of Katrina, tell a tale too terrible to imagine.  Perchance, that is why in America people prefer to remain colormute.  To report as The Nation did is to attest to what most prefer to hide.  Racism remains rampant in the land of opportunity.  In a country considered great, bigotry is not criminal.  Fear is not a felony.  Trepidation, even with a gun in hand, and shots fired, is fine in United States.  

Apparently, as long as Caucasian citizens transgress only against the unfamiliar, the supposed unruly, persons whose only crime is that his or her skin color is not white will suffer fates so ghastly, even storm waters will not wash the stain away.

Please peruse the portrait of America, “Katrina’s Hidden Race War.”  Ponder what might be too true.  If Americans do not love thy neighbor, if fright rules, no one is authentically free and fewer are brave.

References for Racism . . .

Confessions of Dick Cheney

Dick Cheney Interview ABC News

Cheney Aware of Gitmo Waterboarding

copyright © 2008 Betsy L. Angert.  BeThink.org

There was a break in the news.  On Cable News Network Wolf Blitzer was noticeably moved.  He excitedly reported; Dick Cheney confessed.  Broadcaster Blitzer’s words were a bit more tempered.  He said, “This just coming into The Situation Room.  The Vice President, Dick Cheney, has given ABC News an interview and confirming now publicly that the Bush administration did engage in the very controversial interrogation tactic of waterboarding.”  The Commentator then asked America to listen to the clip.  ABC News Correspondent Jonathan Karl inquired of the outgoing high-level government official, “Did you authorize the tactics that were used against Khalid Sheikh Mohammed?”  Without hesitation, the Vice President responded.  “I was aware of the program, certainly, and involved in helping get the — the process cleared, as the agency, in effect, came in and wanted to know what they could and couldn’t do.  . . .  (T)hey talked to me, as well as others, to explain what they wanted to do.  And I supported it.  

Viewers vented.  Some shifted nervously in their seats.  However, The Judicial Watch was not amused.  Nor were they elated.  The answer was not the one this Conservative organization, hoped for, groped for, and searched for though the courts, for all these many years.  Vice President Cheney did not confess to sins conceived long before September 11, 2001.  He told said nothing of the maps and charts of Iraqi oil fields.  Foreign suitors for Iraqi oilfield contracts were not discussed as they had been in March 5, 2001, six months and six days before the infamous September 11 attacks.

No, Dick Cheney, spoke of none of what might have interested Judicial Watch.  Perchance, those involved with this institute listened and wondered of the Iraq oil map. would the Vice President confess to knowledge of these?  From appearances, it seemed he would not.

Seeming pleased with his decision and participation, the man second to the Commander-In-Chief avowed, “It’s been a remarkably successful effort and I think the results speak for themselves.”  Indeed, the consequences do speak volumes, as does Dick Cheney’s willingness to disclose what for so long has been an elusive truth.  Yet, a few wondered; was this statement a confession, or merely a confirmation of what had long been known, an acknowledgment of sorts?

As the words tripped off Dick Cheney’s tongue, the public began to talk.  Millions were ecstatic.  He admitted it, they declared.  Throughout cyberspace and in local communities people were all abuzz.  Announcers throughout the airwaves and people on the streets pondered.  “Did he just say that?”  The answer was, of course he did.  Richard Bruce Cheney knew, as he has reason to understand.  He is indeed, above the law.  A myriad of moments affirmed this for him.  Given years of opportunities, the Democrats consistently have chosen not to touch him.

Oh, a few tried.  More might insist that Dick Cheney be removed from office, just as many attested to the need to indict the President.  However, nothing was done.  

Former Senator and nominee for the President, George McGovern could not convince the Democratic leadership.  Florida Congressman Robert Wexler actively campaigned to, at least, begin hearings.  In November 6, 2007 Dennis Kucinich offered a Privileged Resolution in his attempt to avail the Congress of the need to censure Cheney.  However, the Democrats averted the opportunity.

Hence, Dick Cheney trusted he was safe to speak of virtually anything.  Specifically, the Vice President was certain he was safe to discuss his role in ‘purposeful persecution.’  Mister Cheney recalled that the Democrats decreed by their silence that torture was sanctioned.  In reality, Progressives presented the President and his Cabinet with a dictum of faith in the practice.  Those who supposedly sit on the Left side of the aisle signed, sealed, and delivered a permission slip for abusive behaviors on the part of Americans in December 2002, almost six years to the day from what some had hoped was a confession.

The news today that leading Democrats, including Jane Harman and Nancy Pelosi, were informed about the torture of military prisoners and allegedly didn’t just acquiesce but actually approved it is not something that particularly surprises.  The descent into war crimes under this administration provoked very little public Democratic anger or resistance for the years in which it was used most promiscuously.  The presidential campaign of John Kerry offered only token opposition.  The subject never came up in a single presidential debate in 2004.  And the way in which the torture issue has subsequently been raised by Democrats bespeaks opportunism as much as principled outrage and opposition.

What was perhaps more extraordinary and less discussed from the ABC interview was the anomalous question posed to a reflective Vice President Cheney, had he changed.  Earlier in the interview, Dick Cheney had offered that the 9-11 terrorist attacks had definitely became “a prime motivation” for his future decisions.  He said, the events that occurred on that September day in 2001 ‘critically shaped his actions in the years that followed.’  Yet, concurrently, he attested to the fact he had not changed.  

Dick Cheney’s answer was accurate and insincere, all in the same breath.  Judicial Watch, Incorporated, “a Conservative, non-partisan educational foundation, [which] promotes transparency, accountability and integrity in government,” might say this man is a marvel, an artist, and an articulate obfuscator.  Judicial Watch should know.  

When the Bush Administration formed the National Energy Policy Development Group and then proceeded to hold meetings in private, Judicial Watch sensed a clear violation of the Freedom of Information Act.  The foundation took legal actions.  “Unfortunately, on May 9, 2005, the United States Court of Appeals for the District of Columbia ruled that the Vice President’s Energy Task Force did not have to comply with the Federal Advisory Act.”

Hence, with a history of the Democrats and the Courts on Cheney’s side the man felt no compunction to share what might have caused some havoc, were there any mayhem to be had by opponents of the Administration.  Jonathan Karl, the ABC News Journalist, who some thought captured a confession on tape affirmed and asked for another perchance candid comment,  Mister Karl stated, “You probably saw Karl Rove last week said that if the intelligence had been correct, we probably would not have gone to war.”  He was greeted with what is arguably not a confession; nor is the retort correct, or incorrect.

Cheney: I disagree with that.

This portion of the answer is true.  Dick Cheney did differ with the notion that, were the intelligence correct, the United States would not have gone to war with Iraq.  However, his reason was not as he went on to state.  Stockpiles, an intent on the part of Saddam Hussein to supply terrorist organizations with arms or money did not incite the Vice President or likely the Administration.  Granted, Dick Cheney did and does believe as he shared on air.

This was a bad actor and the country’s better off, the world’s better off, with Saddam gone, and I think we made the right decision, in spite of the fact that the original NIE was off in some of its major judgments.

What the Vice President neglected to say was what the Courts ruled he did not need to reveal.  ““Executive privilege was improperly invoked by Richard Nixon, Bill Clinton, and now the Bush administration,” Judicial Watch President Tom Fitton stated.  No, Dick Cheney did not, would not say that.  A confession of such clarity certainly would not come from this public servant, at least not yet.  That admission would be breaking news.  Cable News Network Wolf Blitzer and every other Broadcaster, were that declaration of guilt to occur, would have a real reason to be excited.  The Judicial Watch Educational Foundation would be elated.  Were that to happen, perchance, the American people would be moved to finally act.  For now, the public acquiesces while they sit and await an authentic confession.

Confessions and Concessions . . .

A Critical Moment; Can Hope Survive?

Hope: It Could Happen To You

copyright © 2008 Betsy L. Angert.  BeThink.org

We had hope.  For some, the dream was fulfilled.  For millions more desperate and devastated by a multiplicity of issues that confront them each a day, a President, a single person cannot make a difference.  MoveOn.org understands that.  Thus, they sent out an appeal, as though that might help.

You may have received the mail.  It appeared in my cyberspace box late last evening.  I was tired.  The day had been long.  I thought to delete what seemed one more correspondence, one more plea, possibly, another request for a contribution.  As a MoveOn member I take delivery of what, at times, seems to be millions of requests for action, reactions, or donations.  With the election over, I trust there is far more work to be done.  Yet, in a moment of personal weakness or just a want for sleep, I went to bed.

The morning came.  I awoke.  Still, I did not return to read the MoveOn mail.  When I did I realized the weight of this written communication.  I was asked to consider as millions were, what are we to do.

We have some important decisions to make together. Our country is at a critical moment: The opportunity for change has never been greater. But there’s a lot that needs to be done and we have to decide where we should focus first. Click below to nominate a big goal for us to focus on next year:

As I traveled through the net neighborhood, what did I behold.  An inquiry.

1. What should MoveOn’s top goal be in 2009? (10 words or less)

I thought and then penned . . .

Let us ensure Barack Obama pursues Progressive peaceful policies!

The next question was a bit of a challenge.

2. Which category is your goal in?

A screen full of options, all separate and, in my mind, definitely equal.  What was I to do.  Throughout the last few years this question has come up.  How do I choose a singular focus?  Are not all aspects of our lives interrelated.  Fortunately, I saw the possibility that might advance an awareness for what is too often defined as  the impossible dream.

I chose from the list of issues, “other”

Then there was the optional response, the one I thought most essential to share.

3. What would you tell other MoveOn members about why this is important?  (Optional) We’ll post your comment on the next page.

If citizens do not actively demonstrate, each and every day, that we crave change, the President will not have the power to transform this country. No matter the issue the public must be motivated to insist that government acts in accordance with our needs and desires. We, the people, must be out on the streets, in the Halls of Congress, on the Hill, vocal in our local communities, inclusive of cyberspace, if policies are to be altered.   Nothing occurs without our consent.  Barack Obama can be a cautious man. Congress is often more concerned with “matters of consequence” and compromise.  Lobbies loom large.  Corporate campaigners know how to garner influence.  We the people must be the power as the Constitution defines.  No President can do what we do not allow through apathy or action.  If we are to MoveOn, we must be the change we wish to see.

I invite you to share your thoughts on MoveOn or here, at BeThink.  I must admit, I think the Political Action website interface could be much improved.  The software, apparently, does not allow for robust interaction.  

If only each of us could see a list of all the nominations rather than click through each thought separately as it appears, then perhaps we could truly be an active community, connected, and able to communicate our concerns.

Perchance, if change is to come within Washington, if transformation is to arrive nationwide, it might better begin with us.  We, the people must practice what we preach.  If the dream is to survive, it must live.  The vision must thrive through us.  [MoveOn, might we truly assess the importance of issues, see the responses and not search for these?]

I thank MoveOn, members of the Political Action organization.  I appreciate the many who share thoughts no matter who you are or where you may be.  I am grateful the encouragement to think beyond the present.  May we each do more than hope.  Let us MoveOn so that the aspiration may be achieved.

So? So what?


Cheney; So . . . Bush: So What?

copyright © 2008 Betsy L. Angert.  BeThink.org

The Bush Cheney Administration rewrote history even as it occurred.  In the waning hours of their shared reign, a committee was formed to secure their legacy.  Technically, the work to revise the past began only weeks ago.  In truth, the men in the Executive Branch endeavored to deliver a message of accomplishment from the first.  

On every occasion, when asked of the public umbrage for the Iraq War, President George W. Bush and Vice President Dick Cheney offered a similar answer.  “So.”  

Shocked by the cold-hearted reactions, Americans were moved to speak of the lack of care.  Yet, no one, at least not those in Congress who could challenge such a cavalier attitude, responded in a meaningful manner.  No matter the widespread antipathy for the Presidential pair, the American people settled into apathy.  Most did not think censure was wise.  Countless claimed impeachment was impossible.  A glimpse into the souls of two men who voluntarily chose to slaughter innocents in Iraq and Afghanistan did not move people to take action.

There was an air of acceptance in America.  The people felt they could do nothing.  Hence, they did not.  Citizens of this country listened.  They sigh.  A few chuckled.  Most just ignored what they characterized as classic arrogance.  Thus, the haughtiness grew.  In March 2008, the Vice President knew the public was indifferent.  He had reason to believe that the American people thought the dream of prosecution was impossible.

When asked how that assessment comports with recent polls that show about two-thirds of Americans say the fight in Iraq is not worth it, Cheney replied, “So?”

“You don’t care what the American people think?” Raddatz asked the vice president.

“You can’t be blown off course by polls,” said Cheney, who is currently on a tour of the Middle East. “This president is very courageous and determined to go the course. There has been a huge fundamental change and transformation for the better. That’s a huge accomplishment.”

The Administration was steadfast, and said so frequently.  They would stay the course.  The mission was accomplished, although altered for the benefit of an audience.  George W. Bush and Dick Cheney, always cognizant of how history might judge them practiced the proper posit.  Indeed, in the closing days the Administration may have perfected the posture.  On December 14, 2008, little more than a month before the President leaves office, he again spun an improved interpretation of his-story.

Bush:Clearly, one of the most important parts of my job because of 9/11 was to defend the security of the American people. There have been no attacks since I have been president, since 9/11. One of the major theaters against al Qaeda turns out to have been Iraq. This is where al Qaeda said they were going to take their stand. This is where al Qaeda was hoping to take  . . .

Raddatz: But not until after the U.S. invaded.

Bush: Yeah, that’s right. So what?

So what?  What does it matter what the truth might be, or what the American people might think.  It is of little consequence that innocent Iraqis and Afghanis were killed needlessly.  For the two Executives, neither of whom ever fought on a frontline, a deception that led to the deaths of American soldiers was but a necessary deed, a patriotic pact. Certainly, there is no reason for criticism or a critique.  

“So?”  “So what?”  The antagonistic, supercilious actions of George W. Bush and Dick Cheney have caused so many sorrows for the common folk torn by combat.  Yet, the mantra of the men who supposedly serve a nation, who continue to occupy the Oval Office, is essentially, ‘Oh well.’  Were that it was “so”.  If only the world had not accepted such a self-serving stance from the Bush Administration, perhaps, all would have been and be well.

So? Sources . . .

Clean Coal and the Clause

(Today it is oil.  Just as President Bush, Mister Obama is concerned only with the use of “foreign” oil, or fossil fuels brought to our shores from abroad.  Domestic fuels, fossil or otherwise, for him, are fine.

Obama’s Oil Drilling Plan Draws Critics From Both Sides

The plan, which Mr. Obama said would balance the need to produce more domestic energy while protecting natural resources, would allow drilling along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska. It would end a longstanding moratorium on exploration from the northern tip of Delaware to the central coast of Florida, covering 167 million acres of ocean.

– promoted by Betsy L. Angert)

Barack Obama Supports Developing Clean Coal Technology

copyright © 2008 Betsy L. Angert.  BeThink.org

You better watch out!

Better not cry!

Better not pout!

I’m telling you why,

Santa Claus is comin’ to town.

He’s making a list

and checking it twice.

He’s going to find out who’s naughty and nice.

Santa Claus Is Comin’ To Town.

We better watch out.  We better not cry.  While Santa checks his list twice, so too might you and I.  The ebony chunks Old Saint Nick might place in our stocking, contrary to what coal corporation sponsored commercials might claim, are not clean.  Nor is this source of energy cheap.  When used as a resource for power, this sedimentary rock is dirty, deadly, and digs deep into the pocketbooks, and personal lives, of those the industry touches.  In America, that may be you and me.

  • Millions of acres across 36 states have been dynamited, torn, and churned into bits by strip mining in the last 150 years.
  • More than 60 percent of all coal mined in the United States today, in fact, comes from strip mines.
  • In the “United States of Coal,” Appalachia has become the poster child for strip mining’s worst depravations, which come in the form of mountaintop removal.
  • An estimated 750,000 to 1 million acres of hardwood forests, a thousand miles of waterways and more than 470 mountains and their surrounding communities — an area the size of Delaware — have been erased from the southeastern mountain range in the last two decades.
  • Thousands of tons of explosives — the equivalent of several Hiroshima atomic bombs — are set off in Appalachian communities every year.
  • More than 104,000 miners in America have died in coal mines since 1900.
  • Twice as many have died from black lung disease.
  • Dangerous pollutants, including mercury, filter into our air and water (through mining practices.)
  • The injuries and deaths caused by overburdened coal trucks are innumerable.
  • A recent report reveals that in the last six years the Mine Safety and Health Administration decided not to assess fines for more than 4,000 violations.

Source . . . Washington Post.  Jeff Biggers is the author of “The United States of Appalachia: How Southern Mountaineers Brought Independence, Culture and Enlightenment to America.”

Mister Claus; however, will not ignore the signs or signals.  He knows when we are sleeping.  He knows when we are awake.  Jolly Old Saint Nick also knows we have been bad or good; thus, he shrugs as he says, ‘for heavens sake.’  

The man in the red suit, from his North Pole residence, feels the effect of Americans who have been naughty, not nice, to the planet.  He wonders why, after all these centuries, citizens of the United States do not grasp the notion he has thought to teach for all these years.  Coal is not a gift.  The petroleum product is placed in the stockings of children who have been cruel, adults too.  Old Saint Nick sighs for he sees that his message has been long lost.  

Yes, tis true; just as people sing; Santa Claus is comin’ to town.  However, while his sleigh is weighted down with packages, his heart is heavy with woe.  Will the reindeer soon be extinct?  Might the air be too contaminated for his herd and him to breathe?  Could it be children will no longer be snug in their beds. Might the visions that dance in little ones heads be horrific reminders of what has aired on the news.  The ice shelves collapsed and seawaters rose.

As the 2008, Presidential election came to a close Mrs Claus told her husband, Santa, to hope.  She said, on January 21, 2009, President Elect Obama’s first full day in office, certainly, there would be a change.  However, Saint Nick saw reason to think otherwise.  He has listened to Barack Obama for quite some time.  Mister Claus has looked at the soon-to-be Chief Executive’s record, and he realizes there has been little for him to believe in.

Kriss Kringle is optimistic as he contemplates the recent energy appointments.  Steven Chu, a Nobel Prize-winning physicist, who heads the Lawrence Berkeley National Laboratory, and proclaims to be on a “mission” to ensure the United States is “the world leader in alternative and renewable energy research, particularly the development of carbon-neutral sources of energy,” was selected to be the next Energy Secretary.  

Carol M. Browner, an Administrator from the Environmental Protection Agency under Bill Clinton, who worked vehemently for stringent air pollution standards, will direct a new White House position.  She might be considered the Czar of Energy, Environmental, and Climate Policies.

Lisa P. Jackson, former head of the New Jersey Department of Environmental Protection, and a fervent advocate for green energy, has been asked to head the Obama Environmental Protection Agency.  Nancy Sutley, a Deputy Mayor of Los Angeles for Energy and Environment, with a long record on environmental and natural resources policy, will Chair the White House Council on Environmental Quality.   Santa says, that is all good.  Yet, he still feels great concern.  Can Barack Obama change his ways.  Aware of the fact that Americans are comfortable with coal, will the President Elect continue to pacify the people who selected him to serve?

Mister Claus is less buoyant when he considers Congress, which has, for so long strengthened the hold the industry has on energy policies.  Coal lobbyists, Kriss Kringle muses, are a powerful bunch.  All of those who support the status quo, which includes the use of fossil fuels are as children coddled and content, even when given a gift of coal.

Hence, Santa is apprehensive.  Will policies change?  Climate certainly has.  For decades, Mister Claus has pretended to be happy when in the presence of little ones.  In public, he bellowed a blissful “Ho, ho, ho.”  However, when at home, alone with the Missus, the man in the red flannels and furs spoke of his truer trepidation.  Santa, quotes, Stanford University biologist Terry Root; “We’re out of time.  Things are going extinct.”

The once jolly man reads the gloomy reports in the press.  He peruses the United States Enviornmental Protection Agency literature in his desire to verify the conclusions.  Unlike the skies and seas, it seems clear.   Climate change, he contends, is real.

“U.S. emissions have increased by 20 percent since 1992.  China has more than doubled its carbon dioxide pollution in that time.  World carbon dioxide emissions have grown faster than scientists’ worst-case scenarios.  Methane, the next most potent greenhouse gas, suddenly is on the rise again and scientists fear that vast amounts of the trapped gas will escape from thawing Arctic permafrost.

The amount of carbon dioxide in Earth’s atmosphere has already pushed past what some scientists say is the safe level.”

Santa wonders of what the future might bring.  Missus Claus again avows, there is reason to hope.  However, Saint Nick reflects on what he thinks an apt comparison.  A proud parent will ignore obvious impish behaviors.  A mother or father will consider imprudent actions acceptable.  Papa or Mama will tell themselves a child has potential.  A devoted Mommy or Daddy will declare their progeny are decidedly different.  He, or she, will be unlike any other offspring who might misbehave.  

Caregivers will do as Barack Obama has done in the past, posit policies that while profound do not alter behaviors.  Indeed, strategies that lack the substance that sustains a transition encourage greater mischief.  Mister Claus cannot forget what remains on Barack Obama’s webpage even after he announced a change in energy consultants; Develop and Deploy Clean Coal Technology

President Elect Obama has said we can grow clean coal expertise.  Americans, reluctant to authentically change agree.  Santa pleads, “Please!”

Days ago, is a moment of deep despair Kriss Kringle turned to the television.  He endeavored to lose himself as Americans have, in thoughts of whimsy.  Yet, as he tuned in, he is horrified to see what reminds him of the power of persuasion.  Misinfomercials market; coal is clean.  Little lumps of black carbon sing.

Frosty the Coal Man, is a jolly happy soul.

He’s abundant here in America and he helps our economy roll.

Frosty the Coal Man, is getting cleaner every day.

He’s affordable and adorable and helps workers keep their pay.

There must have been some magic in clean coal technology,

For when they looked for pollutants there was nearly none to see.

Santa grimaced and cringed.  While he welcomed the American Coalition for Clean Coal Electricity decision to suspend the spirited campaign intended to convince Americans that coal is clean and good, Saint Nick surmised, the people and perchance the nation’s newer Chief Executive will continue to ignore obvious, and intentionally invisible behavior.  

Santa ponders; the past has long been prologue, regardless of what is experts, said to former Presidents and the one soon-to-be.  Chief Executives were told just as Barack Obama is today.  There is ‘little time left to curb’ the crisis.  ‘(T)he world has just a few years to make deep cuts in emissions.’ If few or no changes are made, worldwide people and creatures will perish.  

Other Officers of the people postured as the President Elect did, after a conference with former Vice President Al Gore, winner of a Nobel Peace Prize for his work on global warming.   The President Elect stated, “The time for delay is over; the time for denial is over.”  

However, Kriss Kringle contends, this suggested commitment to transformation could be challenged and Santa Claus offers his arguments.  He checked his list.  He reviewed it twice.  After a through assessment, Mister Claus is hesitant to believe that Barack Obama will be the clean, the green, change the globe needs.  

Santa knows what records reveal.  As a Senator, and as a Presidential candidate, Obama supported clean coal.  The American people had been persuaded to depend on the fossil fuel.  Congress was convinced coal was clean, cheap, and worth the investment.  Indeed, Saint Nick knows, Congress loves coal.  That, the man in the red suit says, as he mounts his sleigh, and heads for hills whose tops have been removed for coal excavation, is naughty not nice.

Overwhelmed with woe and wonder, as Old Saint Nick flew through the sky he pondered the many lumps of coal he had planned to deliver.  He wondered.  Might there be a better way to communicate his concern for behavior that is bad.  Could he part the seas, pummel the terrain with snow, sleet, and hail?  Might he move mountains, melt the frozen masses at the poles?  Would wind gusts be the best way to warn the American people, Congress, coal corporation campaigners, and the President Elect?  No, he concluded; Mother Nature tried each of these.

So Santa surmised, all he could do was to shout; “Merry Christmas, Happy Holidays, a Cherished Chanukah, a Joyous Kwanzaa, a Cheery Ramadan to all, and to all, if you prolong a confidence in coal for power, this may be our last night.”

Resources for coal; clean and dirty . . .