Ben Bernanke. Bernie Sanders; Who Will Build A Better America?



Sanders outlines his objections to Ben Bernanke re-confirmation

copyright © 2009 Betsy L. Angert.  BeThink.org

The adage is “Time moves on.”  The assumption is all will get better.  However, for the little people in the United States, those who work, pay taxes, and still cannot make ends meet, life has been a backward motion.  Throughout the history of America, it was believed the people, with the assistance of elected Representatives, and well-chosen regulators would ensure that the United States was solid, strong, and fiscally viable.  Currently the public is told. Federal Reserve Chairman Ben Bernanke has saved the country from certain crash.   However, for the first time in generations, the population feels as though it is in free fall.

Children cannot necessarily expect to earn more than their parents.  The plight of average American Moms and Dads is, in 2009, the burden of their brood.  Each asks, as they had not felt a need to do only years earlier.  Who will build a better America?

Policymakers, once thought to have that charge assigned to them , today are insensitive to the needs of the people who labor for a living.  Those in the Halls of Congress and government offices, elected and appointed, disregard the realities of those who reap little if any real rewards.  Public policy officials praise each other, pat the backs of those responsible for the nation’s decline.  Indeed,  Administrators are anointed and then reappointed, just as Fed Chair Ben Bernanke has been and is about to be!

Presidents and Representatives have long reveled in the presence of the Federal Reserve Chairman who helped make the once possible and predictable American Dream, now impossible. This week, as Ben Bernanke’s second appointment was being considered US Senators posed pointed questions in regards to the role Of Fed, But Largely Praise the Chair, Bernanke. A few within the Senate Banking Committee were critical.  Nonetheless, the conventional wisdom was Ben Bernanke would be easily approved again.  Then Senator Bernie Sanders of Vermont spoke.

The Senator pointed out that the Fed Chair has held the position for years.  On this occasion, he, Sanders, would do all he could to stop another Bernanke appointment.  It seemed, until this moment, just as inn the past, no one apart from Bernie Sanders had dared to even stall or block the process.  Certainly, Congress would present arguments, offer advice, grand stand, and then make the supreme gesture.  Ben Bernanke would be anointed in charge of the people’s cash.  With the Senate Floor under his feet and the face of a stunned Bernanke in his sight, Bernie Sanders spoke of what no one else had the courage to do, at least not while in the Congressional Chambers.

“The American people overwhelmingly voted last year for a change in our national priorities to put the interests of ordinary people ahead of the greed of Wall Street and the wealthy few,” Sanders said. “What the American people did not bargain for was another four years for one of the key architects of the Bush economy.”  . . .

“The American people want a new direction on Wall Street and at the Fed.  They do not want as chairman someone who has been part of the problem and who has been responsible for many of the enormous difficulties that we are now experiencing,” . . .

The Federal Reserve has four main responsibilities: to conduct monetary policy in a way that leads to maximum employment and stable prices; to maintain the safety and soundness of financial institutions; to contain systemic risk in financial markets; and to protect consumers against deceptive and unfair financial products.

Since Bernanke took over as Fed chairman in 2006, unemployment has more than doubled and, today, 17.5 percent of the American workforce is either unemployed or underemployed.

Not since the Great Depression has the financial system been as unsafe, unsound, and unstable as it has been during Mr. Bernanke’s tenure.  More than 120 banks have failed since he became chairman.

Under Bernanke’s watch, the value of risky derivatives held at our nation’s top commercial banks grew from $110 trillion to more than $290 trillion, 95 percent of which are concentrated in just five financial institutions.

Bernanke failed to prevent banks from issuing deceptive and unfair financial products to consumers.  Under his leadership, mortgage lenders were allowed to issue predatory loans they knew consumers could not afford to repay. This risky practice was allowed to continue long after the FBI warned in 2004 of an “epidemic” in mortgage fraud.

After the financial crisis hit, Bernanke’s response was to provide trillions of dollars in virtually zero-interest loans and other taxpayer assistance to some of the largest financial institutions in the world.  Adding insult to injury, Bernanke refused to tell the American people the names of the institutions that received this handout or the terms involved.

“Mr. Bernanke has failed at all four core responsibilities of the Federal Reserve. It’s time for him to go.”

Senator Sanders stressed and asked, under Ben Bernanke, what happened to the middle class.  Average Americans could not sustain a comfortable life.  Mothers and Fathers feel as though they have failed.  Yet, without guilt for abundant greed, the banks flourished.  Parents poured out their hearts and expressed pain to progeny they yearn to support.  Young children learned to fear whether there would be adequate food or shelter.  Adolescents postponed their dreams.  Some near adulthood have come to realize they cannot consider college education an option.  

It is not that teens and twenty-something’s do not work hard enough to succeed in school. Indeed, the young must labor harder and harder.  There are bills to pay.  Moms and Dad’s are often unemployed,, or barely hanging on.   Federal Reserve Chair Ben Bernanke receives accolades from the ruling class, big businesses, banks, and beneficiaries of policies that further profits for the few, and force the many into bankruptcy and foreclosure.

Health care costs have soared in the recent years.  The reality is employers no long guarantee benefits.  Indeed, 0ut of pockets expenses charged to laborers are on the rise.  Companies have cut back.  People are pleased just to have paychecks.  Consequently countless have made the sacrifice.  Less funds, increased hours, such is the life of paid staff in America during an economic recession, or so is the explanation.  

The past is and was prologue.  As the American people reflect on The Great Depression and draw comparisons, they sense the pressure is on.  Vermont Senator Sanders accepts that, and hopes to alleviate the load on the people.  Just as he had tried to do in the Spring of the year Senator Bernie Sanders, on behalf of the American people asked the critical question.  Might the American citizens insist that every Senator and the President pose the same.  Why would we the people, the country wish to hire Ben Bernanke again?  What has he done with the people’s money, to meet the needs of the American population, and why?



Bernanke will you tell American people to whom Fed Res lent $2.2 trillion of their dollars?

The voice from Vermont bellowed what had Chairman Bernanke done and an actual answer could not be heard.  

Americans could know, under the direction of Ben Bernanke financial institutions have been allowed to hide from regulators and regulations.   Banks have built an empire.  Numerous financial firms failed.  Faulty oversight, aggressive acquisitions, and an insatiable hunger for greater profits have driven the country to the brink.

However, most citizens are by necessity concerned with their own daily doings.  The few amongst the electorate who have time or energy to read the papers, listen to the news might acknowledge as Bernie Sanders has.  Ben Bernanke has been lauded with much praise from powerbrokers and The White House under Republican and Democratic rule.  The people could say as the Vermont Senator has; Federal Reserve Chair Ben Bernanke has not built a better America.

This reality is invisible from government limousines, or from the vantage point of officials who walk on the most venerated streets within the District of Columbia.  Thankfully Bernie Sanders has stayed in touch.  He talks of what is real for the American people, those not in the beltway.  Perhaps, the question not asked in the Senate Banking Committee hearing is, who will build a better America, Ben Bernanke, or Bernie Sanders, with the help of the electorate.

References, Regulators, Representatives, and the Republic . . .

“I won!”

IWn

copyright © 2009 Betsy L. Angert.  BeThink.org

Update . . . A bell rings.  The sound reverberates.  A sentiment shared aloud resonates within the heart, mind, body, and soul of persons who heard the message.  No matter the actions taken afterward, sullen statements are not easily erased from memory.  

Days before Congress was asked to pass the stimulus package, the President uttered the now famous phrase; “I won,” Republicans, as could have been expected, expressed resentment.  Immediately, subsequent to President Obama’s statement Democrats were said to have followed the Chief Executive’s lead.  Senate Majority Leader Harry Reid was asked if he thought Republicans might block the initiative.  Empathically, he replied; “No.”  Today we know differently.  In the House, the measure received no support from the Grand Old Party.  

As we await approval from the Senate we may wish to consider, the past.  Words that evoke division have a lasting effect.  

Please peruse a missive penned shortly after President Obama reacted to pressure from the “Right.”

Oh Mister Obama, please tell me it is not so.  Days ago, I read and heard numerous reports.  You made a declarative statement.  Many were shocked.  Anecdotally, Congressman and women stated, when pressed by Republicans who disagreed with your position on economic policy, you said, “I won.”  Will this mean, once again, Americans will be the losers?  

I fear for the future, for I remember when the words were “Yes we can!”  Has this assertion become but an old argot, now trivial or trite?  Please tell me.  Now that you sit solidly in the Oval Office is the achievement of one all that matters?  Perchance, with a “change” in climate, we, the Progressives have become the Party of arrogance.

It seems you personally have adopted an individualistic platform.  Peace and process talks will be less diplomatic.  Discussions will be more reflective of Obama rule or Democratic control.  After he left the White House, House Majority Whip James Clyburn of South Carolina was said to have “echoed” your sentiment.  He may not have used your exact words; nevertheless, the sentiment was clear, the Progressive Party will dictate the rule of law.  Congressman Clyburn said, “The American people didn’t listen to them [the Republicans] too well during the election.”  The implication being, so why should the Progressives who represent them.

My concern extends beyond the language.  It is the intent I lament!

I had hoped that sooner than later, the Obama Administration would recognize individualism, as we all saw, did more harm than good.  ‘I envisioned “Mavericks no more,” would be the mantra of an Obama Administration.  

As a Democrat, devoted to progressive platforms, I imagined peace was a prospect we would no longer ignore.  Admittedly, as I say this I cannot help but think of the quagmire that Afghanistan is, and I fear will be worsened

You may recall, President Obama, when we go for the unilateral kill, as we did in Iraq, innocents, foreign born and our own die.  The terrain is devastated.  The cost cannot be accurately calculated.  The price humans pay for victory is incomprehensible, at least it is to me.  I inquire; how does one place value on lives, limbs, and a sense of security, serenity, and safety lost.  It seems in America, most rarely do the math.  We want only to overcome, to be the victor.

Hence, with a note of superiority, supremacy, and self-importance, we say we, he, or “I win.”

I heard the reaction on November 4, 2008.  As the election results came in, your constituents chanted “We won!”  You too must have felt concern as the crowd cheered.  You spoke to such a perspective often.  A triumphal tune closes doors and ends discussion.  President Obama, these are your words.  “Let us resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long.”  

The electorate, I recognize is new to the novelty of inclusively, but you, Mister President.  What of your core beliefs?

President Obama, I could understand such a statement from a Republican, not yet ready, to put aside differences after what seemed to be a defeat.  Elections, by their very nature, are divisive.  However, even Conservatives for Change concluded this year was different.  Republican Senator Mitch McConnell even offered his open hand.  I suspect with word of your “win” that will not last.

Oh, Mister President, until I heard word of how you spoke of “your” feat, I truly believed that change had come.

I wonder, with all the work to do, has anyone won?  There has been too much despair, too much distress, disparity that is incomprehensible, and all this has existed for far too long.  

Please Mister President,  travel back, into the future, with me.  Do you recall the deregulations and the economic downfall?.  In the recent past, as a country, we experienced the dire effects of a Republican victory.  It seemed obvious, a conquest breed certain vanity.

Persons within the Grand Old Party are not alone when it comes to excessive pomposity.  Hence, my apprehension.  In modern times, Americans have seen the ill inflated egos can cause.  Democrats, equally haughty, ultimately embraced policies that ended an era of effective oversight.  Do the words Glass-Steagall Act remind you of how arrogant, those replete with power might be,  Does the taste of the Depression era law President Clinton repealed linger on your lips?

Those who no longer have a legal right to redeem a mortgage might caution against a prizewinning irrational exuberance.  

Perhaps you may recall predatory lending.  Winners on Wall Street thought this idea fine.  Home foreclosures flourished.  Bank failures became common.  Unemployment rates rose.  Workers received less benefits before businesses finally closed the doors.

It was not that long ago.  Think back.  During the Bush reign the Conservatives were in power.  For decades, Republicans won most every Presidential election.  On the one occasion when a Democrat occupied the Oval Office and Congress was mostly Progressive, defiant winners were only able to do so much.  Soon after, Democratic “control” was easily lost.  

Perhaps, the people felt the Administration to full of itself with the win.  You may remember President Obama, “The Republican Contract with America.”  In the past, a practiced politician or a Political Party may have said they won.  However, what really happened was America lost.

President Obama, you spoke of this in your more recent book, The Audacity of Hope.”  Remember?

“In the back-and-forth between Clinton and Gingrich, and in the elections of 2000 and 2004, I sometimes felt as if I were watching the psychodrama of the Baby Boom generation – a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago – played out on the national stage. . . .what has been lost in the process, and has yet to be replaced, are those shared assumptions – that quality of trust and fellow feeling – that bring us together as Americans.”

Mister President, you also addressed the issue of the ownership society.  You must remember this.  You stated what I often say; however, more eloquently.

Barack Obama these are your words.  “In Washington, they call this the Ownership Society, but what it really means is – you’re on your own. Out of work? Tough luck. No health care? The market will fix it. Born into poverty? Pull yourself up by your own bootstraps – even if you don’t have boots. You’re on your own. Well it’s time for them to own their failure. It’s time for us to change America.”

If someone, anyone wins or owns the rights to run the show, we are all doomed. Currently, we witness the woes of a win in our Health Care systems.   Medical coverage is a service available only to the privileged.  There is income for triumphant Insurers. Pharmaceuticals profits have paralyzed this country.  Disparity in healthcare devastates the impoverished, the ill, and the injured, millions of whom have no medical coverage.  More Americans are underinsured.  Even more are likely to lose what they have as the economy weakens.  In this country, cash divides winners and losers.  

Mister President, you might understand this.  Consider the dollars needed just to get a candidate elected, to have him or her heard.  Please also ponder what was once more important to you and the electorate than dough.  The community carried the message.  Without the strength of unity, we as a country crumble.

The deterioration has already begun.  President Obama, do you remember the dream?  You must recall; Civil Rights Leader Martin Luther King Junior taught us to believe in the dream of equality. Reverend King avowed, “I can never be what I ought to be until you are what you ought to be.  This is the way our world is made.”  Doctor King did not praise personal wins or commend clannish conquests.

Yet, today, in America, where a President proudly proclaims “I won,” children of all colors, their elders of every hue, are not afforded a chance to succeed.  In a country where Progressives posture, “We won,” we do not consider what a coup d’état mentality means to a country, or to the children who inherit a nation torn asunder.

Mister President and Progressives proud of what it means to win, please consider the ominous shadow cast by a Supreme Court decision, Parents v. Seattle and Meredith v. Jefferson,  The Court and the prideful parents who championed a cause ensured only the wealthy and the white would receive a quality education.  Separate and unequal services are again sanctioned in city schools.  The judgment sealed a subterranean deal that has long been in effect.  The rich triumph; the poor will not have equal opportunities.  

In America, we have seen the destruction wrought by our culture of conquests.  Yet, as a nation we continue to ignore what might be obvious.

Perhaps, this is why, as your proclamation filtered through the airwaves, Mister President, many Progressives applauded what was familiar and what they had waited for.  Republicans who had come to believe there was reason to hope for true change were struck by the divisive rhetoric.  Your disdainful remark was like a slap in the face, a stab in the back, or the statement that would bring resentment back to Washington, Those still bruised by the political battle never forgot that they wanted to be the ones, or at least “That one.”  

I recall history and recoil at what could be our future if we affirm as you did days ago.  “I won?”  

Oh please President Obama, remember your own reflection.    “What began twenty-one months ago in the depths of winter must not end on this autumn night.  This “victory” alone is not the change we seek – it is only the chance for us to make that change . . . ”

I beg you to consider, the power of words.  Ponder; can we be “victorious,” and will such a triumph leave many behind; or we can we be successful together.  Can one “I” prevail or will we, the people achieve when we unite.  

Please tell me it is true.  Government can be of, by, and for us all, or an Administration, and Americans can be partisan.

Please President Obama, let us not suggest that we, or “I won!”  I implore you to reflect or your own words.. “(The change we seek) that cannot happen if we go back to the way things were.  It cannot happen without you (the American people).”  

President Obama, you did not win.  Progressives did not prevail when you were placed in the Oval Office.  We the people will not meet the challenges through conquest.  Nor will we be the change we can believe in if you, or any of us, declaratively deems, “I won!”

Americans did not vote for the arrogance we heard and saw for eight long years,  We had hope.  We had a dream.  In the White House, in the people’s house, in Congress, and in our local communities, we could become  genuinely united, integrated, and inclusive.  Yes we can, and I think we must.

References for realities that divide us . . .

Praise Song For the Day



Elizabeth Alexander 2009 Inauguration Poem

copyright © 2009 Betsy L. Angert.  BeThink.org

As Americans go about their day, they chortle, croon, and chatter.  Conversations are constant.  Hymns are hummed.  People sing even when there is no tune.  There is much said, and little heard.  Cries may strike a chord; yet, these too may be perceived as silence.  People talk.  They wail; and no one listens  to the lovely lyrics are sung.  

Everyone is hurried.  Most are worried.  They fear the mundane that threatens their very existence.  Moms, Dads, even teens who must help provide for the family anxiously ask, will I have a job tomorrow.  Singles are not exempt.  Children too are concerned for they feel the disquiet amidst the noise.  The murmur that moves us might be summed up in a sentence.  ‘Will there be money in my pocket today?’  

Society, it seems, is engaged in selfish pursuits.  Personal survival is a more significant motivator than service.  There is no harmony in the hullabaloo that surrounds us.  The hum of reverence remains hidden.

The butcher, the baker, and the candlestick-maker move through the day with one song in mind.  How might I provide food for the family, and find shelter from all the storms? What of schools for my children, and an education for myself?  In the pandemonium, the only sound that echoes is a irksome song,

Most citizens of this country know not what will come.  Nor do individuals recognize the love that was and is.  Thus, they do as was done before them.

Just as their parents did, the tired, the hungry, the poor and downtrodden, talk of a secure future.  They walk towards what they want, or try to.   Heads are held high.  People work in factories.  They stitch finery.   Some drive trucks or taxis.  Others teach.  Builders construct edifices that will be too expensive for them to occupy.

Countless serve .  As they do so many deeds, they sing the customary song.

Farmers plant crops for a country starved for nourishment.  Field-workers pick the harvest.  Waiters and waitresses dish out the chow.  Chefs cook.  The rewards are paltry.  The reality is stark. All have hope for a better day.  Each looks out on the horizon.

Everyone strives to see the grass that certainly must be greener on the other side of the street.

Few realize that today was tomorrow.  All that they have was given to them with thanks to yesterday.  Ancestral devotion, dedication to the Seventh Generation has served society well..

The blood, sweat, and tears of persons who toiled in the past, gave birth to a nation that believes in love, liberty, and the light that everyone seeks.  The truth is, the sound often muffled by expressions of personal misery were lovely songs.

Today, as citizens consider the crisis that has become common in American lives, they hope for change.  No one noticed within the noise, was transformation.  Fondness for a shared future originated a renaissance that, as a country, we celebrate today.  

Collectively, we, the people have inaugurated a President that taught Americas, “Yes they can; Yes we can!”  A Poet, Elizabeth Alexander, who stood on the stage with the nation’s newly installed leader helped the country to understand, that no one man could, or would do what the populace had already done.  In the name of love, on this very significant day, the American people could chant “Yes we have, and tomorrow we will again!”

Please peruse the poem, Praise Song for the Day.  Ponder what the American people have accomplished.  Imagine what we can achieve.


Inaugural Poem

By Elizabeth Alexander

January 20, 2009

The following is a transcript of the inaugural poem recited by Elizabeth Alexander, as provided by CQ transcriptions.

Praise song for the day.

Each day we go about our business, walking past each other, catching each others’ eyes or not, about to speak or speaking. All about us is noise. All about us is noise and bramble, thorn and din, each one of our ancestors on our tongues. Someone is stitching up a hem, darning a hole in a uniform, patching a tire, repairing the things in need of repair.

Someone is trying to make music somewhere with a pair of wooden spoons on an oil drum with cello, boom box, harmonica, voice.

A woman and her son wait for the bus.

A farmer considers the changing sky; A teacher says, “Take out your pencils. Begin.”

We encounter each other in words, words spiny or smooth, whispered or declaimed; words to consider, reconsider.

We cross dirt roads and highways that mark the will of someone and then others who said, “I need to see what’s on the other side; I know there’s something better down the road.”

We need to find a place where we are safe; We walk into that which we cannot yet see.

Say it plain, that many have died for this day. Sing the names of the dead who brought us here, who laid the train tracks, raised the bridges, picked the cotton and the lettuce, built brick by brick the glittering edifices they would then keep clean and work inside of.

Praise song for struggle; praise song for the day. Praise song for every hand-lettered sign; The figuring it out at kitchen tables.

Some live by “Love thy neighbor as thy self.”

Others by first do no harm, or take no more than you need.

What if the mightiest word is love, love beyond marital, filial, national. Love that casts a widening pool of light. Love with no need to preempt grievance.

In today’s sharp sparkle, this winter air, anything can be made, any sentence begun.

On the brink, on the brim, on the cusp — praise song for walking forward in that light.

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

Dear Red States



Dear Red States

copyright © 2008 Betsy L. Angert.  BeThink.org

Mail entered my inbox.  No postage was necessary for this delivery.  The carrier was not a pigeon or the United States Postal Service.  The sender made use of the Internet.  Jayne hoped for a speedier means to share what brought her such smiles.  The enclosure began with an enthusiastic note from my friend.  Jayne wrote of the glee she felt after she read “Dear Red States.”  Jayne was joyous.  Who might have inscribed such a communiqué, she thought.  Excited, as she studied the information offered in the script, Jayne was inspired to share the imaginative request for unity rather than investigate its origin.  The passage was quickly  forwarded to others, me included.  

Now, I share “Dear Red States” with you.

Dear reader, resident of a Stated dominated by Republicans, or those amongst  the Progressive population, you too may wish to pay particular attention to the text that has delighted many across America.  Please travel through this “link” or follow along the path of words that will lead you to the ultimate “Dear Red State” recitation[s].

The first “Dear Red States” letter may have appeared on Craig’s List in June 2005.  Other variations have emerged as sentiments evolve.  In 2008, as the nation is perhaps more divided or more desirous of togetherness rationalizations for secession and reasons to unite are revealed.  

Persons in the self-defined Red States may resent being but a fraction in a formidable county, one that is ostensibly “ruled” by a central government.  These strong individualists perhaps, do not realize the benefits they reap by being part of a Union.  People in the Blue States, may marvel a bit more when they consider what communities can produce when they recognize that each individual contributes to the greater good.  

For those in territories, which have expressed a want for independence, times may be tough if they choose to go it alone.  Those who populate the provinces which traditionally adopt Progressive policies, although more physically able to thrive autonomously would rather not.  Perchance a paradigm shift advances with awareness.

Please peruse what might be thought a parody, or a plea to the Conservative constituency in this country.  Ponder the satire that invites residents to consider the State of the Union.  Reflect on what might already be a reality, the statistics may offer a truth.  Contemplate what could be a nation divided.  Review the rhetoric.  Reflect.  Revise the language.  Rewrite the exposition and expand the references.  Share the epistle with friends and family.  Smile, sigh, express your sensibilities, and hopefully enjoy the essay titled, “Dear Red States.”


Dear Red States . . .

We’ve decided we’re leaving. We intend to form our own country, and we’re taking the other Blue States with us.  In case you aren’t aware, that includes Hawaii, California, Oregon, Washington, Minnesota, Wisconsin, Michigan, Illinois, New York, and all of the Northeastern states. After this election, we’ll be adding Colorado, and New Mexico.  We believe this split will be beneficial to the nation, especially to the people of our new country – Nuevo California.

To sum up briefly: You get Texas, Oklahoma and all the slave states; we get stem cell research, the best beaches, and the best ski resorts. We get Elliot Spitzer; you get Ken Lay.  We get the Statue of Liberty; you get Dollywood. We get Intel and Microsoft; you get WorldCom. We get Stanford, Harvard, Princeton, Yale, Cal Tech, MIT and Columbia; you get Ole’ Miss. We get 85 percent of America’s venture capital and entrepreneurs; you get Alabama. We get two-thirds of the tax revenue; you get to make the red states pay their fair share.

Since our aggregate divorce rate is 22 percent lower than that of the Christian Coalition, we get a bunch of happy families and you get a bunch of under-educated single moms.

Please be aware that Nuevo California will be pro-choice and anti-war, and we’ll need all of our citizens back from Iraq at once.

If you need people to fight, ask your evangelicals. They apparently have kids they’re willing to send to their deaths for no purpose, and they don’t mind if you don’t televise their kid’s caskets coming home.  We do wish you success in Iraq and hope that those Weapons of Mass Destruction turn up for you, but we’re not willing to spend any more of our money in Bush’s Quagmire. ??

With the Blue States, we will control 80 percent of the country’s fresh water, 90 percent of pineapple and lettuce, 92 percent of the nation’s fresh fruit, 97 percent of America’s quality wines (you can serve French wines at your state dinners), 90 percent of all cheese, 90 percent of the high tech industry, most of the U.S. low-sulfur coal, all living redwoods, sequoias and condors, and all the Ivy League and Seven Sister schools.  We also get New England, the Great Lakes, and Yosemite, thank you very much.

In the Red States, you will have to cope with 88 percent of all obese Americans and their projected health care costs, 92 percent of all U.S. mosquitoes, 100 percent of tornadoes, 94 percent of hurricanes, 99 percent of Southern Baptists, virtually 100 percent of all televangelists, Rush Limbaugh, Bob Jones University, and Clemson.

Additionally, in the Red States, 38 percent actually believe Jonah was swallowed by a whale; 62 percent believe life is sacred unless it involves the death penalty or gun ownership; 44 percent claim that evolution is only a theory; 53 percent insist that Saddam Hussein was involved in 9/11; and 61 percent of you crazy bastards believe you have higher moral standards than those of us on the left.

By the way, we’re taking all the good pot, too. You get that dirt weed from Mexico and Kansas ditches.

Peace out,

The Blue States

References for the read . . .

2008; Unprecedented



McCain Does Not Get It That Americans Say Country Off Course

copyright © 2008 Betsy L. Angert

The consensus is this election year is like no other.  It is more dynamic than those in the past.  The times they are a changing.  Indeed, there is much to substantiate this proclamation.

It can be argued; Hillary Clinton was the first woman Presidential candidate with a chance.  The New York Senator proved that females are free to be strong.  Ladies are able to look to the skies.  Glass ceilings have been shattered since Hillary Rodham Clinton took the political stage.  A former First Lady may be the right person for the job.  Some say she is better than her husband ever was.  A few claim the Clinton of extraordinary excellence is not Bill; it is Hillary.  The daughter of Hugh and Dorothy Rodham proved what was posited in prior years.  A Presidential aspirant need not be a man.  The climb to the Executive Branch can be achieved in a skirt or a pants suit.

A case could be made for the novelty that is Barack Obama.  Some say the Illinois Senator is the only African-American Presidential hopeful to truly have a chance.  Barack Obama is not as any other man of color who rose through the ranks.  Senator Obama is a scholar and sensitive to a system that must be delicately stroked.

Verification for this stance is often offered.  Comparisons are made to other candidates of color.  Prominent persons have presented the perception Jesse Jackson was not to be taken seriously.  A few counter what they think an unconscionable contention.  Civil Rights Leader Jesse Jackson was a contender and could have been President of the United States.  The number of delegates Presidential candidate Jackson received in 1984 is impressive.  Whether he could have or would have won may forever remain a question.  The narrative validates or negates the contention the election of 2008 is truly exceptional.  Conclusions, just as opinions will vary.  

A few will surmise perhaps, the skin color of a candidate does not make this election year unique.  Others will assert gender has not been an issue for years.  The fairer sex broke barriers long ago, as did African-Americans.

Citizens in the States might further muse Congresswoman Chisholm was a great challenger.  She could have reached the Oval Office decades earlier.  Shirley Chisholm would have received more votes if the electorate believed it was possible to elect a Black woman President.  Possibly, if the Representative thought herself more than  the aspirant who wished “to give a voice to the people the major candidates were ignoring,” she might have waged a fully organized effort.  Instead, the Chisholm campaign was exclusively, a grassroots endeavor.  

After the process was over, Shirley Chisholm questioned whether she might have done better if her operation were not under-organized, under-financed and unprepared.  Perchance, Congresswoman Chisholm could have been so much more if she and the nation trusted she was a serious candidate and threat to the presumed nominee.  Hindsight is that.  We may realize much after the fact.  We may also understand that frequently, history repeats itself.

While the 2008 Election may, or may not be a distinctively different campaign in the obvious sense, milestones are evident.  A New York Times – CBS poll presented only two short months ago revealed Americans do not think themselves better off.  81% in Poll Say Nation Is Headed on Wrong Track.  Today, the news is unprecedented.

Dissatisfaction with the direction of the country hit an all-time high this month, with 84 percent saying the nation is now seriously on the wrong track.

Registered voters polled in a Washington Post – ABC News poll  say the time for change is now.  Perchance there is more agreement in this nation than ever before.  Americans want to take a path that differs from the one we now travel.  Citizens are tired of living in a country that does not serve the constituents.  In 2008, contentment and complacency are difficult to find.  

The challenge to get people to the polls may be less critical this year.  A transformation too long in coming is welcome.  That point is one I think those who care about this country will not dispute.

Sources for discussion . . .

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 . . .

Why Do We Hate Poor People?

copyright © 2008 Forgiven. The Disputed Truth

Why is it that when we encounter poor or homeless people they make us cringe? Why do we want to make them disappear into shelters or remove them out of our sights? Since the Reagan revolution we have instead of being at war against poverty, we have been at war with poor people. They litter our streets like so many abandoned cars at a salvage yard. Why has it been so easy to sell the false narrative that people are poor by choice and that if they would just work harder they wouldn’t be poor? I think that our reactions to the poor says more about who we are than who they are. Let’s face it there have been poor people throughout recorded history, so what’s the big deal? The big deal is not that there are poor people, but that there are poor people we could help and don’t.

The reason I think we hate poor people is that rather than reminding of us of the blessings we have received, they instead remind us of our vulnerabilities and our insecurities. They remind so many of us that we are only one missed paycheck or one serious health issue away from their lot and it scares the hell out of us. We need so badly to believe that this could never happen to us, that we are so insulated from them and their fate that it could never be our fate. When the reality is too frightening to consider we create these illusions to placate ourselves. The greatest illusion is that we live in a society that if anyone is willing to work hard enough they can overcome the poverty of their birth. We regale ourselves with these fables of rags to riches, never considering the reality of these tales. The reality is a far cry from the false narratives being maintained by those who would keep us ignorant of the truth.

We are constantly fed the fairy-tale of the poor kid who signs a million-dollar sports contract, the million-dollar recording contract, or the Ivy League scholarship. And for those who have desires that steer towards more iniquitous pursuits we even have the “gangster” or drug dealer chronicles. In other words there is money and wealth to be had by all except the most slothful of our fellow citizens. How prevalent are these scenarios in modern America? The truth is that very little has changed for poor people, the majority of children born into poverty will remain in poverty. How can they not? They are provided with in many cases inferior homes, schools, and sometimes parents. The deck is stacked against them from the moment they take their first breath.

Sure we occasionally give a few dollars here and there with moral superiority and discuss how unfortunate those people are. All the while hoping they would just disappear and not remind us of how tenuous our hold on the American Dream is. Not only do they remind us of our perilous situations they also remind us of our conspicuous consumption and how truly far we have bought and sold the lie of more is better. The truth of this is in the fact that many of us believe that today’s poor are not really poor. We look at poverty in the third world and convince ourselves that those are truly poor people, the ones here are just whiners.

Robert Rector, a Senior Fellow at Heritage and a leading force behind welfare reform, similarly argued that federal studies should highlight the consumption-rather than income-of impoverished households. Many poor families do not record ‘gray area’ earnings because the federal wage threshold provides a disincentive to report joint income or informal earnings. Also, purchasing power varies across metropolitan, suburban, and rural communities. Rector’s study, which utilizes data provided by the U.S. Census Bureau, demonstrates that many allegedly impoverished households live in decent-to-comfortable conditions, making poverty somewhat different from John Edwards’ “terrible condition struggling against incredible poverty.”

Rector’s report shows that the “typical,” median poor household owns a car, air-conditioning, a refrigerator, a stove, a washer and dryer, a microwave, two color televisions, cable or satellite television, a vcr or dvd player, and a stereo. The typical poor family’s house is in good repair and the family is able to afford both food and medical care throughout the year.

With living standards such as these, poverty in America may actually be an enviable state compared to living standards in other nations. According to the Census Bureau, 15.2% of immigrants live in poverty, whereas only 11.9% of natives are below the poverty threshold. Rector claims that 1 in 10 of immigrants in poverty is likely an illegal immigrant, but estimates remain vague; the U.S. census declines to ask immigrant responders whether they have documentation. Heritage Organization

So being poor in America is an enviable state? The Bible says, “Blessed is the poor”. How many of us actually drive by a poor neighborhood or a homeless person and say, “Boy, those folks are really lucky”? I wonder if the author of that report is willing to exchange places with one of these lucky poor people? The reason we need to deny their pain and hopelessness is so we can deny our greed. If poor people aren’t really poor, then I am not actually consuming too much. The world is made up of balances, there is only so many of anything. In order for someone to have more, someone has to have less. We assuage our guilt at ignoring their plight by criminalizing them or demonizing them. We don’t want them around us or bothering us. The thing I don’t like about poor people is that they are so needy. They are always asking for stuff.

We hate them because of what they tell us about ourselves and our lives. How we can live in a country that thinks nothing of spending over 700 billion for wars and war machinery, billions in corporate welfare, and every year we cut programs to help the poor. They don’t need early childhood intervention, better schools, or financial assistance. What they need is a swift kick in the butt to get them motivated. It’s no wonder that children born poor suffer from stress related brain trauma. Despite popular opinion being poor even as a child is stressful. We bombard the airwaves with these images of consumption, we tell our children you are not cool, hip, or anybody if you don’t wear these shoes, these clothes, or have these things. Then we act surprised by their actions to get them and call them animals and lock them up. And we’re the civilized ones. There, but for the grace of God, goes I.

Many of us believe that wrongs aren’t wrong if it’s done by nice people like ourselves.  – Author Unknown