The Morals Of A Gnat

copyright © 2009 Forgiven. The Disputed Truth



As I watched the rant of CNBC analyst Rick Santelli concerning the proposed housing bailout of the Obama administration I couldn’t help but think is this where we have evolved to as a country? Where our chief concern is what’s in it for me. Have we gotten to the place where we are taking our moral cues from the same greedy, profit at all cost mentality that got us into this mess? According to this crowd it is now immoral to help those who have become unemployed, sick, or homeless because they have had the misfortune of working for a company that had lay-offs and didn’t have golden parachutes. Because these people are still fortunate enough to be employed and have homes then the rest of the world be damned?

The popularity of this type of behavior illustrates how through the media and our decades of greed we have become desensitized to the suffering of others. We are emulating the attitudes of the “Gilded Age” prior to the “Great Depression” where as long as the misery is affecting others then it is not my concern. This type of behavior is often times seen in courtrooms where we blame the victim in order for us to not believe that we ourselves could be victims of similar mishaps. It is a response to a deep-seated fear and insecurity because deep inside we all know that we could just as easily be that victim. So rather than accept the possibility that it could be us we place blame and give the victims characteristics that reduce their humanity. In this case that all of the people who are being foreclosed on are somehow responsible for their misfortune due to bad decision making or some other moral deficiency.

The problem I have with this guy in particular and with the recent criticism of the economic plans of this administration in general is that people are treating this crisis like it is just another recession and so all we need are a few minor tweaks and the system will right itself. Anyone with the slightest understanding of this crisis and of our history realizes that this is not the 1970’s or 1990’s where we faced market corrections and slight downturns and our solutions did not require radical departures from previous policies. The current crop of naysayers whether they be the greedy or the Republicans seem to be focused on the short-term, for some reason they refuse to look at the overall view.

They take snippets of data and scraps of the solutions and say this does nothing to change the crisis this week as if we got here overnight. The problem with many of them is that they believe the history of America started on January 20th and ignore the systemic problems brought about by years of neglect and greed.

What I don’t understand is when did our morals become everybody for themselves? I find it hard to believe that we have become a nation of such selfish proportions. I was taught and firmly believe still that if my neighbor is struggling and if I can help him then I should. We are being bombarded by article after article and rant after rant about the ignorance of the average American for buying homes they could not afford or speculating on the real estate market. It is a common refrain of the right and the greedy to blame those less fortunate for their circumstances as if they were the ones who brought down our economy. It is like the welfare queens of Reagan claiming that every woman on welfare was a black woman driving a Cadillac and living in some fancy condominium.

The sad part is that it resonates with people. It allows those who are selfish to ignore and overlook the suffering of those they see every day. It allows them to make judgments about those they don’t know and based on those judgments walk by the homeless, the hungry, and the poor without feeling guilty.

Have we become so jaded that our national conscience can no longer be shamed into action on the part of those less fortunate? It is a shame how the wealthy and the greedy have turned this into a referendum of the middle-class and not a condemnation of the greedy who ran our economy into the ground. While the CEO’s are brought before the cameras not to be drawn and quartered for their excesses, but merely to be scolded like unruly children and sent back to their mansions and country club lifestyles. Yet those poor Americans who can and have lost their homes are told you were stupid and we won’t help you. We reward those who have lost billions of dollars of other people’s money and blame those who have lost thousands of their own dollars. Is it me or is there something wrong with this picture?

No Mr. Santelli, the message our government is sending is not that you don’t have to pay your mortgage if you are laid-off or you have a rotten loan, the message that our government is sending is that we care for all Americans not just the greedy and the wealthy. The message we are sending is that we are a compassionate nation and if that offends your delicate sensibilities then maybe you ought to relocate to a country where excess and greed are not frowned upon. Do I think that it is fair that I have to continue to pay my mortgage while others may receive some help? Of course not, but I thank God that I am not in their shoes yet! How about you Mr. Santelli if it is such a great deal why don’t you quit your job and apply for foreclosure assistance?

There are many more wrong answers than right ones, and they are easier to find

~ Michael Friedlander

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.

Reflections

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.

Resources

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

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.

Reflections

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.

Resources

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

One-On-One With Sarah Palin



Exclusive: Sarah Palin

Exclusive: Sarah Palin Part II

copyright © 2008 Betsy L. Angert.  BeThink.org

Americans each have an opinion on Sarah Palin.  The Alaskan Governor has been the topic of conversation for weeks.  The Press pours over her record.  Average Americans read.  Some say she is sensational.  Sarah Palin has sizzle.  Many hockey Moms relate to the woman who worked her way up.  Governor Palin has cracked the glass ceiling.  She has become a celebrity of sorts.  

Several scorn the lovely lady.  Others imitate the daughter of Eve.  No one disputes, Sarah Palin has style.  Yet, few have the opportunity to make an informed judgment.  Less are able chat one-on-one with the Republican Vice Presidential nominee.  Fortunately, two did.  First Lady Laura Bush shares her thoughts after a conversation with Palin.  ABC News Anchor, Katie Couric offers an objective view.  Only a read from interviews with Ms Bush or Ms Couric reveals what each might think.  Please peruse the reflections and dear reader, decide for yourself.  Who might Sarah Palin be to you.

The First Lady, Laura Bush mused after her meet and greet with the magnificent Sarah Palin.  The two talked when each attended the Republican Convention held in Minneapolis-Saint Paul.

The First Lady walked away with an impression of Sarah Palin.  Laura Bush observed the Republican Vice Presidential nominee lacks foreign policy experience.  The President’s partner assured Americans, Sarah Palin is a very quick study.  Then, without hesitation Laura Bush reminded the many, fortunately, the maverick, John McCain “does have that sort of experience.”

Ms Bush also expressed her extreme admiration for the qualities Sarah Palin possesses.  “She’s got a lot of really good common sense, and I think that’s very important,” Laura Bush mused.  The woman who has resided in the White House for near a decade avowed, I have “a lot of confidence” in Sarah Palin.

“She also has executive experience from being a governor and a mayor, and I’m thrilled to have the chance to vote for Sarah Palin on the Republican ticket,” said the equally lovely Laura Bush.

When reporters inquired, did the first Lady think Palin was being treated unfairly, might her gender play a role in the way people approached the Vice Presidential nominee, the Laura Bush said, “I do think there’s a little bit of that going on, and I think it’s to be expected.”

CBS Evening News Anchor Katie Couric understands this.  She too has been victim to questionable comments.  The fact that she is female has left her more vulnerable to scrutiny.  Hence, Ms Couric might empathize. She may have another sense of Sarah Palin.  However, her assessment is difficult to ascertain with certainty.  We can only watch as a tête-à-tête unfolds.  Then, we might attempt to determine the actual dynamic.  

What any of us can know for sure is the Journalist was among the scant select individuals who had the chance to interview Alaska’s Governor.  

The two spoke of the Economic crisis.  Afghanistan was also a theme for discussion.  The Alaskan Chief Executive also spoke of the need to “keep an eye on Russia.”  Many recall, as mentioned in her earlier conversation with ABC’s Charlie Gibson, the Governor does watch, the Asian continent from her home shores.

Sarah Palin also observes how the foreclosures in her neighborhood and perchance communities throughout the country have altered what was an American reality.

Couric: Would you support a moratorium on foreclosures to help average Americans keep their homes?

Palin: That’s something that John McCain and I have both been discussing – whether that … is part of the solution or not. You know, it’s going to be a multi-faceted solution that has to be found here.

Couric: So you haven’t decided whether you’ll support it or not?

Palin: I have not.

Couric: What are the pros and cons of it do you think?

Palin: Oh, well, some decisions that have been made poorly should not be rewarded, of course.

Couric: By consumers, you’re saying?

Palin: Consumers – and those who were predator lenders also. That’s, you know, that has to be considered also. But again, it’s got to be a comprehensive, long-term solution found … for this problem that America is facing today. As I say, we are getting into crisis mode here.

Couric: You’ve said, quote, “John McCain will reform the way Wall Street does business.” Other than supporting stricter regulations of Fannie Mae and Freddie Mac two years ago, can you give us any more example of his leading the charge for more oversight?

Palin: I think that the example that you just cited, with his warnings two years ago about Fannie and Freddie – that, that’s paramount. That’s more than a heck of a lot of other senators and representatives did for us.

Couric: But he’s been in Congress for 26 years. He’s been chairman of the powerful Commerce Committee. And he has almost always sided with less regulation, not more.

Palin: He’s also known as the maverick though, taking shots from his own party, and certainly taking shots from the other party. Trying to get people to understand what he’s been talking about – the need to reform government.

Couric: But can you give me any other concrete examples? Because I know you’ve said, Barack Obama is a lot of talk and no action. Can you give me any other examples in his 26 years of John McCain truly taking a stand on this?

Palin: I can give you examples of things that John McCain has done, that has shown his foresight, his pragmatism, and his leadership abilities. And that is what America needs today.

Couric: I’m just going to ask you one more time – not to belabor the point. Specific examples in his 26 years of pushing for more regulation.

Palin: I’ll try to find you some and I’ll bring them to you.

If we are to trust Laura Bush’s evaluation, Sarah Palin will offer the information very soon.  Whence we meet again the Governor will provide answers to questions she had not yet studied  Please, stay tuned.  On-the-job training may be a program worth the watch.  Until then, please enjoy your own research.  Review, reflect, formulate your own opinion and attempt to be open.  Americans can trust, there is more to come.  Let us not study too quickly.

Sources for Sarah Palin . . .

Issue Number One; Economic Insecurity Breeds Bigotry, Bias and Bitterness



Fear Itself

copyright © 2008 Betsy L. Angert

He was a beautiful bouncing baby boy.  He was born to two parents that love him dearly.  Even before his birth, indeed, prior to conception, this little fellow was the apple of his parent’s eyes.  His biological beginning was carefully calculated.  As the seeds of life developed into a bright-eyed baby, the people he now knows as Mom and Dad thought of little else but Maxwell.  The soon to be proud Papa and Momma anxiously anticipated the day they could hold this bundle of joy.  Each of his parents was eager to meet and greet the small, sweet face of the guy that they would call Max.  Maximum value, supreme significance, marvelously magnificent, all this was and would be their son.  After Max was delivered and during any political season, such as this, Mom and Dad feel certain Max is issue number one.

The guardians look over their angel.  They plan for his future, and they are apprehensive, just as their parents and grandparents were before them.  For generations the realities of daily life have shaped parental priorities.  First and foremost, families want to survive, to feel safe and secure.  Yet, much that accounts for stability is beyond the control of a parent or any single person.  Moms and Dads agonize, as do all individuals.  Economic, educational, environmental concerns have an effect on caregivers and all citizens.  Military engagements also affect households, even if only one lives within the domicile.  Mothers, fathers, and babies, boys or girls learn to fear.

Ultimately, in the course of a life, each individual will ask, how does any matter affect me, my family, and friends of mine?  Countless citizens sense we have loss the sense that within a society, each individual works for the commonweal.  The words of Thomas Paine On the Origin and Design of Government in General are principles from the past.  In America today, the common folk feel they can no longer trust the government.  In recent years, people profess too many promises were broken; lies were told.  Intelligence was not wise.  Still, Americans sense there is an enemy.

In the minds of most Americans, the foe exists outside self.  Few have fully internalized the truth of the words uttered by Franklin Delano Roosevelt, “The only thing we have to fear is fear itself.”  As people do, citizens in this country trust themselves.  People know their faith will guide them.  The Almighty will not disappoint them.  Proud of their personal strength and all they survived throughout the course of their lives, the American public, no matter their economic station believes their family will be fine.  All Americans trust in their ability to fight the opposition.  Residents in the United States are not afraid to take up arms if they need to protect themselves from evil forces.

Nevertheless, Americans are “bitter.”  People in the cities, the suburbs, and in the countryside, resent the precarious position their leaders have placed them in.  In the “Land of the free and home of the brave” the public is “looking for strong leadership from Washington.”  Individuals and communities recognize they cannot go it alone.  Sadly, those previously entrusted with Executive privileges have not served the common folk within the United States well.  Citizens have expressed their ample concern for quite a while and no one seems to hear the cries.  While some of the Presidential aspirants wish to believe Americans are not indignant . . .

Poll: 80% of Americans Dissatisfied

By Associate Press.

Time Magazine

April 4, 2008

(New York) – More than 80 percent of Americans believe the country is headed in the wrong direction, the highest such number since the early 1990s, according to a new survey.

The CBS News-New York Times poll released Thursday showed 81 percent of respondents said they believed “things have pretty seriously gotten off on the wrong track.”  That was up from 69 percent a year ago, and 35 percent in early 2002.

The survey comes as housing turmoil has rocked Wall Street amid an economic downturn.  The economy has surpassed the war in Iraq as the dominating issue of the U.S. presidential race, and there is now nearly a national consensus that the United States faces significant problems, the poll found.

A majority of Democrats and Republicans, men and women, residents of cities and rural areas, college graduates and those who finished only high school say the United States is headed in the wrong direction, according to the survey, which was published on The New York Times’ Web site.

Seventy-eight percent of respondents said the country was worse off than five years ago; just 4 percent said it was doing better . . .

The poll also found that Americans blame government officials for the housing crisis more than banks or homebuyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

Americans favored help for people but not for financial institutions in assessing possible responses to the mortgage crisis.  A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.

Intellectually astute, each individual understands to his or her core, a country must work well as a whole.  If we act independently of others, with little regard for those who reside in our nation, we all will realize a reason to feel insecure.  No family can survive alone. Maxwell’s parents can plan and work to provide, but if the country suffers from a crisis, be it fiscal, a protracted feud, the cost of food, or fuel, the family will also find themselves in situation critical.

In a society, we are our neighbors’ keeper, for what affects those in adjacent abodes will influence us.  If one person is poor, so too is his brother.

The tenet is true in the abstract; it is also viable concretely.  We need only consider what occurs when one domicile on the block is in disrepair or foreclosure flourishes in an enclave.  Property values for all homes in the area plummet.  A family functions best as a unit.  A nation fares well when we are one.

Our most conservative estimates indicate that each conventional foreclosure within an eighth of a mile (essentially a city block) of a single-family home results in a 0.9 percent decline in value.  Cumulatively, this means that, for the entire city of Chicago, the 3,750 foreclosures in 1997 and 1998 are estimated to reduce nearby property values by more than $598 million, for an average cumulative single-family property value effect of $159,000 per foreclosure. This does not include effects on the values of condominiums, larger multifamily rental properties, and commercial buildings.

Less conservative estimates suggest that each conventional foreclosure within an eighth of a mile of a property results in a 1.136 percent decline in that property’s value and that each foreclosure from one-eighth to one-quarter mile away results in a 0.325 percent decline in value.  This less conservative finding corresponds to a city-wide loss in single-family property values of just over $1.39 billion. This corresponds to an average cumulative property value effect of more than $371,000 per foreclosure

In 2008, this consideration consumes millions of persons who thought they were safe and secure.  As the subprime debacle ripples through every community, people realize their very survival is at risk.  Everyone, even some of the elite now experience a profound sense of insecurity.  Again, people ask who or what might they trust.  The average American has faith only in what is familiar.  Max, Mom, and Dad, families turn to what is tried and true.  Whatever has protected them in the past, they hope, will save them from what is an uncertain future.

Certainly, people have no confidence in government.  Many are frustrated.  They resent those who placed them in such a precarious situation.  Mothers, fathers, sons such as Max, and daughters are reminded, without regulations only the few profit.  Dreams die.  Witness the subprime debacle.

Mortgage companies and banks, such as Wells Fargo, have twisted the average prime mortgage loan into something much more incapable of paying by the recipient, but profitable to the company. Subprime loans, as “adjustable rate mortgages,” are packed with deceiving modifications that have low “teaser” rates that expand in interest exponentially after an initial low pay period.  Families that have received Subprime loans have bit into a bitter center of the sugar-coated American dream.

Citizens in this once prosperous country wonder whether they will ever again be able to trust that they can aspire to greater heights.  Homes are no longer worth what they were at the time of purchase.  Payments on adjusted rate mortgages [ARM] are exorbitant and balloon expenditures are now due.  Americans feel pinched.  Businesses are also affected by a slowed economy and bad investments.  Bankruptcy is an option, although brutal.  As the cost of fuel and food rises, financial fears become more real.  Existence takes a toll.  As Americans assess the circumstances within their home region, they realize there is reason to hold on tightly to what they know and love.  

Perchance G-d and country are all citizens can believe in, and maybe there is no longer reason to believe either of these will save them.  Certainly, Administrations in the recent past and present have not protected us well.  After all, our Presidents, Congress, and the Federal Reserve were responsible for the Demise of Glass-Steagall Act.  This law once regulated banks and limited the conflicts of interest created when commercial depositories were permitted to underwrite stocks or bonds.  Without such oversight, Americans lost their security.  Survival no longer seems possible.  The American Dream is a nightmare.

The Next Slum?

By Christopher B. Leinberger

Atlantic Monthly

March 2008

Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses, they front have gone vacant. Signs of physical and social disorder are spreading.

At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in.  In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville.  I never imagined in my wildest dreams that stuff like this would happen.”

In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge-many once sold for well over $500,000-but the phenomenon is the same.  At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others.  Graffiti, broken windows, and other markers of decay have multiplied.  Susan McDonald, president of the local residents’ association and an executive at a local bank, told the Associated Press, “There’s been gang activity.  Things have really been changing, the last few years.”

In the first half of last year, residential burglaries rose by 35 percent and robberies by 58 percent in suburban Lee County, Florida, where one in four houses stands empty. Charlotte’s crime rates have stayed flat overall in recent years-but from 2003 to 2006, in the 10 suburbs of the city that have experienced the highest foreclosure rates, crime rose 33 percent. Civic organizations in some suburbs have begun to mow the lawns around empty houses to keep up the appearance of stability. Police departments are mapping foreclosures in an effort to identify emerging criminal hot spots.

The decline of places like Windy Ridge and Franklin Reserve is usually attributed to the subprime-mortgage crisis, with its wave of foreclosures.  And the crisis has indeed catalyzed or intensified social problems in many communities. But the story of vacant suburban homes and declining suburban neighborhoods did not begin with the crisis, and will not end with it. A structural change is under way in the housing market-a major shift in the way many Americans want to live and work.  It has shaped the current downturn, steering some of the worst problems away from the cities and toward the suburban fringes.  And its effects will be felt more strongly, and more broadly, as the years pass. Its ultimate impact on the suburbs, and the cities, will be profound.

Perchance, more weighty than the influence of a social degradation on a community is the impression such dire circumstances leave on a little lad such as Maxwell. Young Max will learn, just as his parents had.  Likely, he too will come to believe that he can only depend on himself.  An older and wiser Max will not fully grasp how extraordinary he is, or perhaps he will know all to well that no matter how glorious he is, someone might jeopardize his stability.  No matter how well he lives his life, another force, power, person, or authority might cause his dreams to go awry.  

Maxwell sees how hard life is for his parents.  He comes to understand that he too will always and forever, need to prove his worth.  How else might he hold onto his job, his home, his money, or his sense of self?  For Maxwell, as for us, anyone, innocent as they may be, might seem a threat.  His Mom and Dad, fearful that they might lose their livelihood, health care benefits, the family home, and their ability to provide, let alone survive, teach their young son trepidation.

Mom and Dad look around the neighborhood and they see society is shifting.  People of other races, colors, and creeds are destined to overtake the white majority.  This can be nothing but trouble, or so they think.  Maxwell trusts this sentiment to be true.  The parents wonder; might immigration and  Free Trade deprive them of their life style?  In the United States, Anglo Americans react more to what they muse might be so.  However, ample evidence affirms the contrary.  A 2006 study, by the Pew Hispanic Center avows, the sudden rise in the foreign-born population does not negatively effect the employment of native-born workers.

Growth in the Foreign-Born Workforce and Employment of the Native Born

By Rakesh Kochhar, Associate Director for Research

Pew Hispanic Center

August 10, 2006

Rapid increases in the foreign-born population at the state level are not associated with negative effects on the employment of native-born workers, according to a study by the Pew Hispanic Center that examines data during the boom years of the 1990s and the downturn and recovery since 2000.

An analysis of the relationship between growth in the foreign-born population and the employment outcomes of native-born workers revealed wide variations across the 50 states and the District of Columbia. No consistent pattern emerges to show that native-born workers suffered or benefited from increased numbers of foreign-born workers . . .

The size of the foreign-born workforce is also unrelated to the employment prospects for native-born workers.  The relative youth and low levels of education among foreign workers also appear to have no bearing on the employment outcomes of native-born workers of similar schooling and age.

Nevertheless, people continue to fear what is less than familiar.  Maxwell’s mother and father often speak of the immigrants.  The words voiced are unkind.  Assessments often are unrealistic.  In this country, on this globe, our apprehensions, our insecurity, the fear that we might not survive divides us.  Self-surety is issue number one.  

When individuals do not feel as though all is fine, when distressed, emotional reactions may be exaggerated. Many persons prefer to deny that they feel distraught.  The press, the powerful, and persons who wish to be more prominent understand this.  Each is expert in the art of persuasion.  Tell us that we are doing well, that we are strong, that they will help bring certainty, security, and safety to our lives, and to our country, and we will croon along with them.

Anxious Americans, at home and abroad, such as the parents of young Maxwell attack.  Anyone can be considered the enemy.  Bankers, big business, bureaucrats, billionaire oil magnates, migrants, and of course, mutineers of Middle Eastern descent.  Our fellow citizens are easily terrorized, if not by the persons who they think might destroy the neighborhood, or take their job, the people who crashed a plane into the Twin Towers must be a target.  Since September 11, 2001, Maxwell parents have thought it wise to protect United States shores.

Some Americans say we must stay the course in Iraq and Afghanistan.  These persons may fear terrorists from the Persian Gulf.  There is great consternation when people do not think they are physically safe.  

Citizens feel a greater concern when they discover the reasons we went to war are invalid.  Again, the people in this country recognize the adversary is the American Administration.  Lie by lie, the Iraq War Timeline reveals greater reason for antipathy.

Those who cite security and survival as the primary concern proclaim, “It is the economy.”  They say, this is the number one issue Americans must address.  Too many persons, today, cannot even live paycheck to paycheck.  Disposable income, discretionary spending, savings to fall back on are luxuries of the past.  People dream of the cushion they hope to create.  Yet, in the back of their minds, they fear.  Again,  foreclosures are in the forefront in people’s minds.  Many are mired in debt.  In February 2008, another sixty percent (60%) of Americans concluded they could no longer pay the mortgage.  Mortgage Woes Boost Credit Card Debt. Balances on charge cards cannot be reconciled.

Plastic Card Tricks

The New York Times

March 29, 2008

Americans are struggling with a very rocky economy while they are also holding almost $1 trillion in credit card debt. In most cases, those cards provide a little flexibility with the monthly bills. But an increasing number of people are defaulting because of the “tricks and traps” – soaring interest rates and hidden fees – in the credit card business.

Before more Americans get in so deep that they cannot dig out, Washington needs to change the way these companies do business to ensure that consumers are treated fairly.

The stories about deceptive practices are harrowing. At a recent news briefing in Washington, a Chicago man told about what happened when he charged a $12,000 home repair bill in 2000 on a card with an introductory interest rate of 4.25 percent. Despite his steady, on-time payments, the rate is now nearly 25 percent. And despite paying at least $15,360, he said that he had only paid off about $800 of his original debt.

Once more Americans are confronted with what causes great bitterness.  No one, not Congress, the companies that lend citizens cash, the corporate tycoons, or candidates can imagine why Americans might be bitter. None of these entities care enough to help the average Joe, Jane, Maxwell, or his parents.

Why might inhabitants in this Northern continent be cynical, or feel a need to cling to religion, weapons, or hostility.  Perhaps, these sanctuaries feel  more tangible.  Faith, as an arsenal, and anger too, are at least more affordable than other options.

Petroleum prices are also an issue of import.  Citizens cry, I now work for fuel.  Only four short month ago, oil hit $100 a barrel for the first time ever.  The rate charged for petroleum continues to climb.  Now the expense exceeds what was once unimaginable. The cost of crude is the cause.  The effect is, Mommy and Daddy do not drive much anymore.  Each trip is evaluated.  Carpools are common considerations.  Vacations are not thought vital.  Parents who had hoped to show Max the seashore this summer cannot keep the promise they made to themselves and their progeny.  Plans did not prove to be predictions.

In 2008, the inconceivable is classified as inevitable.  Scientists share a stingy assessment.  The environment is no longer stable.  Nor are our lives on the planet Earth.  We, worldwide, have passed the point of no return.  Globally, groups and individuals pooh-pooh this determination.  For them, immediate concerns take precedence over the future.  

The question we all inevitably ask, even if not expressed aloud, is, “Will I continue to exist?”  If so, “Will my family and I be comfortable?”  The answers shade our sense of what is right or wrong.  Maxwell hears his Mom and Dad speak of free trade.  This is another hazard that haunts them.

The link between economic integration and worker insecurity is also an essential element of explanations for patterns of public opposition to policies aimed at further liberalization of international trade, immigration, and foreign direct investment (FDI) in advanced economies. Economic insecurity may contribute to the backlash against globalization in at least two ways.  First is a direct effect in which individuals that perceive globalization to be contributing to their own economic insecurity are much more likely to develop policy attitudes against economic integration.

Second, if globalization limits the capacities of governments to provide social insurance, or is perceived to do so, then individuals may worry further about globalization and this effect is likely to be magnified if labor-market risks are heightened by global integration.

It seems every issue intimidates us.  Each challenges the security we crave.  All beckon us and cause us to question whether we, Maxwell, or his parents will survive.  Our serious fears force us to believe we must separate ourselves from others, from our brothers and sisters.  In an earlier speech, echoing the words of Franklin Roosevelt, the eloquent Barack Obama spoke of this situation and how our own anxiety harms us.[ The Presidential hopeful offered solutions.

[W]e need to come together to solve a set of monumental problems – two wars, a terrorist threat, a falling economy, a chronic health care crisis and potentially devastating climate change; problems that are neither black or white or Latino or Asian, but rather problems that confront us all . . .

Understanding this reality requires a reminder of how we arrived at this point. As William Faulkner once wrote, “The past isn’t dead and buried. In fact, it isn’t even past.”  We do not need to recite here the history of racial [or economic] injustice in this country. But we do need to remind ourselves that so many of the disparities that exist in the [any] community today can be directly traced to inequalities passed on from an earlier generation that suffered  . . .

Legalized discrimination . . . That history helps explain the wealth and income gap  . . . and the concentrated pockets of poverty that persists in so many of today’s urban and rural communities.

A lack of economic opportunity  . . . and the shame and frustration that came from not being able to provide for one’s family, contributed to the erosion of [all] families – a problem that welfare policies for many years may have worsened. And the lack of basic services in so many urban [and now with “no new taxes” suburban] neighborhoods – parks for kids to play in, police walking the beat, regular garbage pick-up and building code enforcement – all helped create a cycle of violence, blight and neglect that continue to haunt us.

Potential President Obama understands and hopes to help all American realize that we are one.  While this vocalization was meant to focus on the more obvious rift between the races, the Senator from Illinois, the community organizer, attempted to advance awareness for what troubles Americans as a whole.

In fact, a similar anger exists within [all] segments of the  . . . community. Most working- and middle-class white Americans don’t feel that they have been particularly privileged by their race. Their experience is the immigrant experience – as far as they’re concerned, no one’s handed them anything, they’ve built it from scratch.  They’ve worked hard all their lives, many times only to see their jobs shipped overseas or their pension dumped after a lifetime of labor.  They are anxious about their futures, and feel their dreams slipping away; in an era of stagnant wages and global competition, opportunity comes to be seen as a zero sum game, in which your dreams come at my expense . . ..

Americans, no matter the color or circumstances might contemplate that anger is “often proved counterproductive” as are resentments.  These attitudes distract attention and widen any divide.  If Americans are to find a path to understanding, we must accept that our insecurity, our fears need not distract us.  We will survive if we work as one.

This time we want to talk about the crumbling schools that are stealing the future of [any child] black children and white children and Asian children and Hispanic children and Native American children. This time we want to reject the cynicism that tells us that these kids can’t learn; that those kids who don’t look like us are somebody else’s problem.  The children of America are not those kids, they are our kids, and we will not let them fall behind in a 21st century economy . . ..

This time we want to talk about how the lines in the Emergency Room are filled with whites and blacks and Hispanics [poor and those the government classifies as affluent] who do not have health care; who don’t have the power on their own to overcome the special interests in Washington, but who can take them on if we do it together.

This time we want to talk about the shuttered mills that once provided a decent life for men and women of every race, and the homes for sale that once belonged to Americans from every religion, every region, every walk of life.  This time we want to talk about the fact that the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit.

This time we want to talk about the men and women of every color and creed who serve together, and fight together, and bleed together under the same proud flag.  We want to talk about how to bring them home from a war that never should’ve been authorized and never should’ve been waged, and we want to talk about how we’ll show our patriotism by caring for them, and their families, and giving them the benefits they have earned.

Today, we must be honest with ourselves.  We can admit that we are incensed, irritated, infuriated, and irate.  These feelings do not immobilize us.  Nor do we necessarily need to fight, and be combative.  It is time we teach Maxwell and also Maxine, distress can inspire us to dream the of impossible and make it our truth.  We, Americans can rise above our bitterness and build bridges to a fine future if we unite.

It is not elitist to speak truth.  It is ignorance and obfuscation to deny how we feel and what we fear.  We cannot change what we do not acknowledge.  Elusion will not bring bliss.  We may be insecure; we may question whether we can survive.  Indeed, if we act as we have in the past, if we focus on our faith and antipathy, there will be no reason to hope.  Americans, divisions have distracted us for too long.  To negate our natural response is to restrict our growth.  This time citizens of the United States, let us come together.  Bitterness can become sweet.

Sources of insecurity.  Resources for survival . . .

The State of the Union is Strong?



The Real State of the Union… Call Bush’s Bluff

copyright © 2008 Betsy L. Angert

In 2007, the State of the Union was not as we were told it was; nor is it as we were told it would be.  Each year, and for eight long years, George W. Bush promised to unite us, and perhaps he has more so than most other Presidents.  Collectively, Republicans and Democrats alike understand that as a nation we are not strong.  

We have not been judicious with our capital.  The President has not provided financial security as promised.

To extend this nation’s prosperity; to spend the people’s money wisely; to solve problems, not leave them to future generations; to guard America against all evil; and to keep faith with those we have sent forth to defend us. (Applause.)

A Nobel laureate, Joseph E. Stiglitz, believes Americans will not recover economically from a George W. Bush presidency for at least a generation.  The next President, the person who follows that individual into the Oval Office, and even those who enter the White House later will be part of a struggle to recover from the economic catastrophe this President created.

The Economic Consequences of Mr. Bush

By Joseph E. Stiglitz

Vanity Fair

December 2007

When we look back someday at the catastrophe that was the Bush administration, we will think of many things: the tragedy of the Iraq war, the shame of Guantanamo and Abu Ghraib, the erosion of civil liberties. The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.

I can hear an irritated counterthrust already. The president has not driven the United States into a recession during his almost seven years in office. Unemployment stands at a respectable 4.6 percent. Well, fine. But the other side of the ledger groans with distress: a tax code that has become hideously biased in favor of the rich; a national debt that will probably have grown 70 percent by the time this president leaves Washington; a swelling cascade of mortgage defaults; a record near-$850 billion trade deficit; oil prices that are higher than they have ever been; and a dollar so weak that for an American to buy a cup of coffee in London or Paris-or even the Yukon-becomes a venture in high finance.

And it gets worse. After almost seven years of this president, the United States is less prepared than ever to face the future. We have not been educating enough engineers and scientists, people with the skills we will need to compete with China and India. We have not been investing in the kinds of basic research that made us the technological powerhouse of the late 20th century. And although the president now understands-or so he says-that we must begin to wean ourselves from oil and coal, we have on his watch become more deeply dependent on both.

Up to now, the conventional wisdom has been that Herbert Hoover, whose policies aggravated the Great Depression, is the odds-on claimant for the mantle “worst president” when it comes to stewardship of the American economy. Once Franklin Roosevelt assumed office and reversed Hoover’s policies, the country began to recover. The economic effects of Bush’s presidency are more insidious than those of Hoover, harder to reverse, and likely to be longer-lasting. There is no threat of America’s being displaced from its position as the world’s richest economy. But our grandchildren will still be living with, and struggling with, the economic consequences of Mr. Bush.

Nonetheless, a man who reminds us that his legacy is not important to him, a President who frequently states, history will decide how well he did, performed miserably.  Some believe we are in a recession.  Others claim the economy is decidedly depressed.  So too are the people.  The common folk are perhaps in greater need of mental health care services.  Daily stresses in America have taken a toil.  Physically, we fare no better.  The expense of medical insurance and the cost of services to aid in our well being cripple our citizenry.  When ill or injured, millions delay before they see a physician.  The expense is thought more painful than a cure.  In the last state of the Union, President Bush addressed this issue.

A future of hope and opportunity requires that all our citizens have affordable and available health care. (Applause.) When it comes to health care, government has an obligation to care for the elderly, the disabled, and poor children. And we will meet those responsibilities. For all other Americans, private health insurance is the best way to meet their needs. (Applause.) But many Americans cannot afford a health insurance policy.

Our offspring can least afford Health Care Services.  The babies are dependent on Mom and Dad for medical coverage.  Parents can no longer provide as they did years ago.  Jobs no longer last for life.  Benefits are not a given.  Employers, who feel the impact of an economy gone wrong, also understand the problem with the current Health Care system.  Numerous corporations and institutions have dropped insurance plans from personnel contracts. Our little ones are in dire straits.  While the Federal government once helped to ensure that, at least the children would be cared for, since the Compassionate Conservative concluded he was the ultimate decider, our progeny suffer in silence.

Bush Vetoes Children’s Health Bill

By David Stout

The New York Times

October 3, 2007

President Bush vetoed the children’s health insurance bill today, as he had pledged to do, setting the stage for more negotiations between the White House and Congress and sparking unusual dismay from some prominent Republicans.

Mr. Bush wielded his pen with no fanfare just before leaving for a visit to Lancaster, Pa. The veto was only the fourth of Mr. Bush’s presidency, and it may have spawned the most anger, not just from Democrats but also from some members of Mr. Bush’s own party.

To cause confusion among colleagues once was not enough.  To hinder parents whose only desire was to provide for their progeny did not seem Presidential.  To repeat the practice would be unthinkable.  America wept for her children and will the stroke of a pen continues to cry.  

As Expected, Bush Vetoes SCHIP Bill Again

By Martin Kady II

CBS News

December 12, 2007

(The Politico) For the second time, President Bush has vetoed a major expansion of the children’s health insurance program, making it clear that the debate will linger as a political issue throughout 2008.

In 2008, and far beyond this New Year, Americans will feel the pain of policies invoked by the Bush Administration.  We may recall, that in 2000, two oil men entered the White House.  With the Blessings of oil magnate Bush, Vice President Cheney met with other industry leaders and devised an energy policy for the benefit of friends and family.  The White House did not seek to invest in alternative fuels.  The profits from petroleum were great.  There was no reason for change. Corporations prospered and the people need only line the pockets of those in power.  While the President’s words were wondrous . . .

On Oil Prices Topping $100 a Barrel

By Speaker Pelosi

Wednesday, January 2nd, 2008

It is unfortunate that President Bush opposed our legislation to repeal multi-billion dollar subsidies given to Big Oil companies. We will again seek to repeal these subsidies and to enact strong legislation to stop price gouging at the pump and pursue anti-trust actions against OPEC entities that fix the price of oil.

Perchance oil has always been the main issue.  Originally, for George W. Bush, crude would certainly help America to remain on the road to prosperity, or at least the United States citizens who own petroleum pumps would do well.  Indeed, for those at the top, times are good.

This economy is on the move, and our job is to keep it that way.

Indeed, it is Mister President.  Economically, America spirals downward.  There is no stability in the  market or market place.  Our scant dollars are in decline.  Our hopes and dreams have been all but destroyed.  The average citizen cannot be certain from day-to-day whether they will have a job.   If an individual is privileged enough to work, will their income remain the same.  Some workers are asked to labor for less.  New hires are offered a lower wage.  More Americans live without a job, and without hope.  This tumble downward began early in the Bush Years.

Poverty rate in U.S. rises as median income falls

Weak economy trimming middle class earnings, too

By Robert Pear

?New York Times

September 25, 2002

Washington – The proportion of Americans living in poverty rose significantly last year, increasing for the first time in eight years, the Census Bureau reported Tuesday.

At the same time, the bureau said that the income of middle-class households fell for the first time since the last recession ended in 1991.

The Census Bureau’s annual report on income and poverty provided evidence that the weakening economy had begun to affect large segments of the population, regardless of race, region, or class. Daniel Weinberg, chief of income and poverty statistics at the Census Bureau, said the recession that began in March 2001 had reduced the earnings of millions of Americans.

The report also suggested that the gap between rich and poor continued to grow.

All regions except the Northeast experienced a decline in household income, the bureau reported. For blacks, it was the first significant decline in two decades; non-Hispanic whites saw a slight decline. Even the incomes of Asian and Pacific Islanders, a group that achieved high levels of prosperity in the 1990s, went down significantly last year.

The Census Bureau said the number of poor Americans rose last year to 32.9 million, an increase of 1.3 million, while the proportion living in poverty rose to 11.7%, from 11.3% in 2000. Median household income fell to $42,228 in 2001, a decline of $934, or 2.2%, from the prior year. The number of households with income above the median is the same as the number below it.

We continue to bleed.  Americans can no longer find shelter from the storm of Bush, his policies, and the ploys now in place, each of which favors big business, banks, and balloon payments.  Citizens of this country find themselves out on the streets, or in homes that are not worth what they once were.

America’s Hardest-Hit Foreclosure Spots

Matt Woolsey

Forbes

January 28, 2008

What could be worse than getting behind on mortgage payments? Owing your lender more than your home is worth.

That’s what’s happening to homeowners across the country, many of whom just a couple of years ago opted for interest-only or adjustable-rate mortgages. For them, just as their loans reset and interest rates rose, home values began to plummet, leaving them with negative equity; this is where their mortgage is greater than the value of their home.

Of course, some homeowners started off walking a shakier tightrope than others. Many subprime borrowers acquired piggyback mortgages, where a second mortgage covered the downpayment, leaving them with negative equity from the beginning. Congress’s Joint Economic Committee estimates that 2 million Americans will lose their home over the next two years, a figure in line with most research firms and rating agencies.

Who is most feeling the crunch? Using data from RealtyTrac, a national firm that tracks foreclosures using data from multiple listing services, bank-owned property records, bankruptcy records, loan histories, tax liens and lender information, we evaluated which of the nation’s counties had the most negative equity loans, by examining all loans currently in foreclosure.

Our President failed us economically.  He failed to ensure our energy independence.  Mister Bush did not provide adequate Health Care for our children or us.  George W. Bush moved us closer to poverty and kicked Americans to the curb.  We need not delve into the subject of war or Iraq.  There is enough pain without that discussion.  The President of the United States, George W. Bush has failed us, or perchance we, the people have caused our own demise.

America, we have done nothing to prevent this President from acting as though he has absolute power.  We have but a year left in this term.  Will we, the people continue to watch George W. Bush destroy the nation and shred the Constitution.  Citizens of this once great country, you have a choice.  Move to impeach this Administration, or watch as we wane further.  The future is in your hands.

The State of the Union, The Slide, The Sources . . .