We already know that it’s party time for the financial elite who gave real meaning to the phrase “economic meltdown” in 2008, that bonuses are soaring, that corporate profits for the third quarter of 2010 are beyond the stratosphere, and that the corporate chieftains and Wall Street titans of our new gilded age have, as New York Times columnist Bob Herbert wrote recently, “waged economic warfare against everybody else and are winning big time.”
What we know far less about is the degree of the catastrophe they inflicted on the rest of us. Here’s just one story that should be front-paged in our major newspapers, but for which, at the moment, you have to turn to Dollars and Sense, a modest if intriguing economic publication. There, Jim Campen, professor emeritus of economics at the University of Massachusetts-Boston and an expert on racial discrimination in mortgage lending, has written a piece entitled, “Update on Mortgage Lending Discrimination: After a Disastrous Detour, We’re Back Where We Started.”
It may not sound like much, but what a horror story it tells. If you were black or Latino in the 1980s or early 1990s and wanted to buy a home, the odds were that the banks had “redlined” your neighborhood and were denying you mortgage applications at “disproportionately high rates” compared to whites in similar economic circumstances. In other words, you would have a tough time becoming a homeowner. Then came those high-cost subprime loans whose fine print ensured that you would never be able to pay them back. In a case of “reverse redlining,” they were aggressively targeted at black and Latino neighborhoods in numbers strikingly disproportionate to white neighborhoods. Not surprisingly, when the housing bubble burst, the financial world shuddered, the economy went south, and wave after wave of foreclosures began to sweep across the country, it was black and Latino homeowners suffered the most.
In Boston in 2006, the peak year of the subprime lending boom, Campen discovered that “49% of all home-purchase loans to blacks, and 48% of all home-purchase loans to Latinos, were high-cost loans, compared to just 11% of all loans to whites.” In the carnage that followed, he informs us, nearly 8% of black and Latino homeowners were foreclosed on, compared to 4.5% of whites. In other words, while the people TomDispatch Associate Editor Andy Kroll calls “the New Oligarchs” bought Dom Pérignon and celebrated, they had let loose the financial equivalent of a neutron bomb on nonwhite neighborhoods in America. It’s a scandal that should be at the top of the news, rather than highlighted in modest-sized oppositional magazines or websites -- and it, in turn, is just a part of a far larger, distinctly un-American scandal that has turned the United States into, as Kroll puts it in his latest piece, “a country of the rich, by the rich, and for the rich.”