Racism & Subprime Mortgage Crisis

Subprime Mortgage Crisis: Nightmare of the “American Dream” for Black and Latino People

Ozell and J.W. McBee, a retired Black couple, had lived with their three grandchildren in their South Side Chicago home since 1999. In 2006, they received a call from a “mortgage consulting” company offering to re-finance them into a mortgage with a monthly payment $100 lower than the $700 a month they were paying. But to get that lower rate, the McBees were told, they would first have to be refinanced into a mortgage with payments of $1,400 for two months. Ozell and J.W. signed up, and they borrowed money on their credit cards to make the two $1,400 payments.

But then the mortgage company refused to refinance them into the lower monthly payments. According to the Chicago Sun-Times, “Ozell, 86, a retired nurse’s assistant, and J.W., 67, a retired janitor, couldn’t meet the increased payments, fell behind, the house was foreclosed and they were evicted.” They, along with two of the grandkids and a 21-month-old great-grandchild, had to move into an apartment, paying $975 a month in rent that they can hardly afford. “I can’t sleep at night,” Ozell said. “I’ve just been so worried it’s making me sick.”

Heartbreaking stories like this are being repeated across the U.S. because of the subprime mortgage crisis that could lead to an estimated 2.2 million homeowners in the U.S. losing their homes to foreclosures in the next couple of years. In 2007 alone, “almost 1.3 million properties, or one for every 97 households in the U.S….had some type of foreclosure action taken against them.^”1 And this crisis is hitting Black and Latino people with particularly devastating force.

A recent report titled “State of the Dream 2008: FORECLOSED” by United for a Fair Economy² situates the subprime crisis within “a long tradition of economic, and more specifically, housing discrimination in the U.S.” The report documents how mortgage companies and banks targeted people of oppressed nationalities with predatory subprime loans, and how foreclosures have severely affected Black and Latino communities in the last ten years. The report summarizes that “the subprime lending debacle has caused the greatest loss of wealth to people of color in modern U.S. history…between $164 billion and $213 billion for loans taken during the past eight years.”

Subprime mortgages are a relatively recent development that began in the early 1990s and then expanded greatly during the past few years. These loans have much higher interest rates as well as higher fees and penalties than conventional mortgages. Because people who don’t qualify for traditional mortgages (due to their income or credit history) could get subprime loans, these loans were billed as enabling many more people to buy into the “American Dream” of homeownership. But the higher interest rates and other costs have driven many families who got subprime mortgages into situations where they were forced to give up their houses.

By 2006 more than one-fifth of all mortgages in the U.S. were subprime. The banks and mortgage companies went after middle-class families who had accumulated too much debt to qualify for a conventional mortgage, as well as low-income families who wanted to buy a home in the inflated housing market. In 2007, 11 percent of all subprime loans went to first-time buyers. The rest of subprime loans, 89 percent, went to borrowers who were talked into refinancing their homes, for anything from paying off credit card debt, to dealing with devastating health care costs, to surviving a period of unemployment.

The mortgage industry developed a number of methods to make these subprime loans squeeze the most out of the families who were the most vulnerable economically. These include:

• Prepayment penalties against paying the loan off early, so borrowers were stuck with high-interest loans once they were lured into them (70 percent of subprime loans have prepayment penalties).

• “Exploding” adjustable rate mortgages (ARMs), which come with a relatively low “teaser” rate for the first two or three years. After that initial period, the interest rate increases substantially, by a third or more. Through mid-2006, such ARMs made up 81 percent of subprime loans. Between now and 2009, when 1.8 million ARMs are due to be reset at a higher interest rate, many more people will be unable to make the payments and be forced to give up their houses.

While the subprime crisis affects people of all nationalities, the predatory loans were deliberately targeted at Black and Latino people in particular. More than half of all loans made to Black people in 2005-2007 were subprime.³ The figure for Latino people is two out of five.⁴ This has to do with the fact that because of the history of systematic national oppression in this country, Black and Latino people on average are poorer than white people. In 2005, the per capita income for whites in the U.S. was $28,946 compared to $16,874 for Blacks. The United for a Fair Economy report points out, “Thus, if subprime loans were meant to target households whose income was not high enough to qualify for conventional loans, this meant a majority of households of color.”

The current crisis also highlights a related aspect of the tremendous economic gap that exists between whites and Black people in the U.S.—the fact that the net worth of an average white family is 14 times greater than that of an average Black family.⁵ When you consider that homeownership and home equity is the primary, even sole, asset of many Black and Latino families, this focuses up even more sharply the devastating effect of the subprime crisis on Black and Latino communities.

It is not just low-income Blacks and Latinos who have been victimized. In a practice known as “steering,” mortgage brokers push higher-cost subprime loans on middle-income families that qualify for conventional loans. In 2005, Black homeowners earning more than $100,000 a year were more likely to get high-cost loans than white homeowners earning less than $35,000.

The subprime crisis is hitting Black and Latino communities that were already hard-hit by the recession of 2000-2001, when Blacks and Latinos lost 27% of their net worth.⁶ And there is a “spillover effect” from the increasing number of foreclosures: whole communities where houses stand vacant, stores and businesses close, the value of the remaining houses goes down, and the tax base that pays for schools and city services shrinks. The mayor of Cleveland recently said that the city can’t afford to board up all the houses that have been foreclosed. Baltimore is suing Wells Fargo Bank, “contending that the bank’s lending practices discriminated against black borrowers and led to a wave of foreclosures that has reduced city tax revenues and increased its costs.” The mayor of Trenton, New Jersey, called the subprime crisis “an economic tsunami that is hitting our cities.”⁷

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For decades, the financial institutions of U.S. capitalism carried out “redlining”—systematically denying mortgages, business loans, and other services to people living in minority neighborhoods. This was a conscious discriminatory policy as well as part of the deindustrialization and other aspects of the profit-driven workings of capitalism that have devastated the inner-city communities of oppressed people.

The exponential growth of subprime mortgages in recent years has been a perverse sort of redlining in reverse. Instead of being denied loans, certain sections of Black and Latino people have been flooded with predatory loans and promises of a piece of the “American Dream”—even as the poorest strata of those communities have been hit hard with the gutting of public housing and other government social programs. Now, as the subprime crisis hits, a nightmarish “economic tsunami” is further devastating the oppressed communities of America.

Green Jobs Video

Peep our 10 min. youtube video on Green Worker Cooperatives which is fighting poverty and environmental injustices in the South Bronx, the poorest and most polluted area of new york city. The country needs to scrap the old dirty economy and build a new socially inclusive green-collar economy:

http://www.youtube.com/watch?v=60_Wj2sHy5c

Fidel Castro's Reflections on the 60th Anniversary of the Victory of Socialism in China

REFLECTIONS OF FIDEL
(Taken from CubaDebate)

THE 60th anniversary of the People’s Republic of China was commemorated this past October 1.

On that historic day in 1949, Mao Zedong, as leader of the Communist Party of China, presided over the first parade of the People’s Army and the people of China in Tiananmen Square. The victorious soldiers bore the arms seized in combat from invaders, oligarchies and traitors to their homeland.

At the end of World War II, the United States, one of the countries that suffered the lowest material losses in the battle, had a monopoly of nuclear weapons, and more than 80% of the world’s gold, and enjoyed considerable industrial and agricultural development.

The victorious Revolution in a country as immense as China, in 1949, nourished the hopes of a large number of colonized countries, many of which lost no time in shaking off the imposed yoke.

Lenin had foreseen the imperialist stage of developed capitalism and the role that corresponded in world history to the struggle of the colonized countries. The triumph of the Chinese Revolution confirmed that foresight.

The People’s Republic of Korea was created in the year 1948. Representatives of the USSR, which gave more than 20 million lives to the battle against fascism; those of the People’s Republic of Korea, which had been occupied by Japan; and Vietnamese combatants who, after fighting against the Japanese, heroically stood up to the French attempt to re-colonize Vietnam with the backing of the United States, were all present at the first commemoration of the Chinese victory.

Nobody imagined then that, less than four years after that memorable date, without any link other than that of ideas, the assault on the Moncada Garrison would take place in distant Cuba on July 26, 1953 and that, barely nine years after the liberation of China, the Cuban Revolution would triumph 90 miles from the imperialist metropolis.

It is in the light of these events that I observed with particular interest the commemoration of the 60th anniversary of the Chinese Revolution. Our friendship with that country of millenary culture, the oldest civilization known to humanity, is well known.

In the 19th century, tens of thousands of Chinese citizens were sent to our country as semi-slaves, deceived by British merchants. Many of them joined the Liberation Army and fought for our independence. However, our links with China are based on the Marxist ideas that inspired the Cuban Revolution and were capable of passing the difficult tests posed by the division between the two great socialist states, which inflicted so much damage on the world revolutionary movement.

In the difficult days of the disappearance of the USSR, China, like Vietnam, Laos and Korea all maintained their fraternal relations of solidarity with Cuba. They were the only four countries that, together with Cuba, maintained the banners of socialism on high through the dark days when the United States, NATO, the [International] Monetary Fund and the World Bank were imposing neoliberalism and the plunder of the world.

History cannot be ignored. Despite the huge contribution of the people of China and the political and military strategy of Mao in the struggle against Japanese fascism, the United States ignored and isolated the government of the most inhabited country of the planet and deprived it of the right to participate in the United Nations Security Council; it interposed its squadron to prevent the liberation of Taiwan, an island that belongs to China; it backed and supplied the remnants of an army whose chief had betrayed all the agreements signed in the struggle against the Japanese invaders in the course of World War II. Taiwan received and still receives the most modern armaments of the U.S. military industry.

The United States not only deprived China of its legitimate rights: it intervened in Korea’s internal conflict, sending in its forces which, heading a military coalition, advanced defiantly toward the proximities of the vital points of that great country, and threatened to deploy nuclear weapons against China, whose people contributed so much to the defeat of Japan.

The Party and the heroic people of China did not hesitate in the face of the gross threats. In an energetic counterattack, hundreds of thousands of volunteer Chinese combatants forced the yanki forces to retreat to the current limits of the two Koreas. Hundreds of thousands of valiant Chinese internationalist fighters and a similar number of Korean patriots died or were wounded in that bloody war. Later on the yankiempire killed millions of Vietnamese.

On October 1, 1949, on proclaiming the People’s Republic, China did not possess nuclear weapons or the advanced military technology that it now possesses and with which it is not threatening any other country.

What would the West say now? The corporate media of the United States was, in general, hostile. Its principal print media headed their editorials with phrases like: "…little interest in ideology," "…a show of strength," "Communist China celebrates 60 years with a military show."

However, it was impossible to ignore the fight. The idea was reiterated via all the media that it was a show of strength. The news was above all centered on footage of the military parade.

They did not conceal their admiration for the wide coverage of the parade that Chinese television offered international public opinion.

It did not pass unnoticed, but was rather a motive for surprise, that China should have presented 52 new types of armaments, including the latest generation of combat tanks, amphibious vehicles, radars, reconnaissance aircraft and sophisticated communication systems.

The press highlighted the presence of DF-31 intercontinental missiles, capable of striking targets located at a distance of 10,000 kilometers with nuclear warheads, as well as medium-reach missiles and anti-missile defenses.

The 151 hunter aircraft, the heavy bombers, modern means of aerial observation and helicopters surprised avid news seekers and military technicians. "The Chinese army now possesses the majority of the sophisticated weapons that make up the arsenals of the Western countries," read a statement from the Chinese Ministry of Defense, which the Western press echoed.

The 500 armored tanks and the 60 armored cars that paraded past the mausoleum made a profound impact.

The advanced technology was irrefutable evidence of the developed military capacity, which started from zero a few decades ago. What was unsurpassable was the human factor. No developed Western country could have reached the level of precision and organization demonstrated by China that day. With a certain disdain, there was talk of officers and soldiers marching at 115 goosesteps per minute.

The distinct forces that paraded there, men and women, did so with unsurpassable bearing and elegance. Anybody could have refused to believe that thousands of human beings were capable of achieving such perfect organization. Both those marching on foot and those parading in their vehicles passed before the tribunal and saluted with a precision, order and martialism hard to attain.

While those qualities would seem to have been the fruit of military discipline and the rigor of practices, more than 150,000 citizens from the enormous human beehive of civilians – in their majority young men and women – surprised everyone by their ability to achieve en masse the level of organization and perfection attained by their armed compatriots.

The beginning of the commemoration, and the saluting of the troops by the head of state and general secretary of the Communist Party, was an impressive ceremony. One could appreciate a tremendous identification between the leadership and the people.

Hu Jintao’s speech was brief and precise. In just under 10 minutes he expressed many ideas. That day he surpassed Barack Obama in the capacity for synthesis. When he talks he represents a population almost five times greater than that of the president of the United States. He does not have to close down torture centers, he is not at war with any other state, he is not sending his soldiers more than 10,000 kilometers away to intervene and kill with sophisticated military means, he does not possess hundreds of military bases in other countries or powerful fleets plowing through all the oceans; he does not owe trillions of dollars and, in the midst of a colossal financial crisis, he is offering the world the cooperation of a country whose economy is not in recession and is growing at an elevated rate.

Essential ideas transmitted by the president of China:

"On this day 60 years ago, after more than one hundred years of bloody battles waged since the beginning of contemporary history, the Chinese people finally achieved the great victory of the Chinese revolution and President Mao Zedong proclaimed, in this very spot, the founding of the People’s Republic of China which, from then allowed the Chinese people to stand up and the Chinese nation, which has a history of civilization dating back more than 5,000 years, to enter a new era of development and progress."

"The development and progress achieved during the 60 years of the New China has fully demonstrated that only socialism can save China and that only reform and openings can permit the development of China, of socialism and of Marxism. The Chinese people have the confidence and the ability to construct their country well and make their due contributions to the world."

"We firmly adhere to the principles of peaceful reunification…"

"…We shall continue working, alongside the diverse peoples of the world, to promote the noble cause of peace and the development of humanity and the construction of a harmonious world based on lasting peace and shared prosperity."

"History has shown us that the road of advances is never smooth, but that a united people who take their destiny into their own hands will overcome, without any doubt whatsoever, all difficulties, continuously creating great historic feats."

They are lapidary responses to the bellicose and threatening policy of the empire.

Fidel Castro Ruz
October 6, 2009
5.35 p.m.

Translated by Granma International 

http://www.granma.cu/ingles/2009/octubre/mier7/Reflections-6OCT.html

Chavez in US

Venezuela’s Chavez Invites U.S. Labor Unions to ALBA, Invites Obama to “Peace Dialogue”

September 25th 2009, by James Suggett

President Chavez speaking to U.S. union leaders on Wednesday (Telesur)

Mérida, September 24^th 2009 (Venezuelanalysis.com) -- During a meeting with U.S. labor union leaders in New York on Wednesday, Venezuelan President Hugo Chavez invited the unionists to participate in the fair trade integration bloc known as the Bolivarian Alliance for the Americas (ALBA), and he invited U.S. President Barack Obama to hold a "peace dialogue."

"Groups of unions, groups of workers from the United States, could incorporate themselves into the ALBA, because the ALBA has a council of social movements in addition to its council of presidents," said Chavez in response to a participant who asked how U.S. and Latin American social movements could work together more.

The first such opportunity for U.S. labor leaders to participate could be in the ALBA meeting scheduled to take place on October 16-17^th in Cochabamba, Bolivia, said the president.

"The ALBA, the Bolivarian Alliance, is much more than an alliance of governments," the president explained. "We must fill it with people, from below, from the roots... because you are the ones who construct these alternatives."

The ALBA was created in 2004 by Venezuela and Cuba to provide an organization for cooperation-based trade between countries as an alternative to the U.S.-dominated free trade agreements, and to promote regional integration on the basis of solidarity. The bloc now has nine members in South and Central America and the Caribbean.

Chavez, who was wearing a red and white striped tie and blue suit, told the U.S. unionists that Venezuela is not an enemy of the U.S., as the media portray it to be. "One thing is the empire and another is the people of the U.S.," he said. "We are enemies of imperialism, of hunger, of misery, of exploitation," said the leader of Venezuela's drive toward "21^st Century Socialism."

Turning his comments to the U.S. government, Chavez said he hopes to have a positive relationship with the Obama administration, but that President Obama will have to assure that the actions his administration takes are in line with his call for "a new era of engagement" during a speech before the 64^th U.N. General Assembly in New York this week.

"Sometimes one gets the sensation that there are two Obamas. One, who gave the speech, is good. The other makes decisions that are contradictory to his speech," said Chavez.

As an example, Chavez cited a recently signed deal to expand the presence of the U.S. military on seven Colombian bases. "If you promote peace, then why the seven military bases in Colombia?" he asked.

"Obama, Obama, wake up! Open your eyes!" Chavez exclaimed. "Don't send any more soldiers or war planes to Colombia, that is throwing gasoline on the fire, and that affects us all in South America... Let's talk about peace, let's set up a peace dialogue," he suggested.

"The world has begun to change, and the United States is part of the world, it cannot remain behind," Chavez said, emphasizing that he is optimistic that the 21^st Century will bring substantial improvements and that "the process of building unity cannot be detained."

"In the first ten years of the 21^st Century, we have been able to advance on what could not be achieved in the two hundred previous years," he said, mentioning as examples the Union of South American Nations (UNASUR), the Bank of the South, and the Latin American television news station Telesur, in addition to the ALBA.

"The next ten years will be decisive," he said. "I feel optimistic, and I ask all of you to feel optimistic, but to struggle hard."

This struggle includes that of Puerto Rico to become an independent republic, said the Venezuelan leader, after recognizing that September 23^rd is the anniversary of the day when Puerto Rican leaders declared the island independent from Spain in 1868. "Who said history has ended? History has re-begun," Chavez said. "Someday, Puerto Rico should be a republic." His comments were followed by strong applause.

Wednesday's event took place in the office of Venezuela's ambassadorship to the United Nations. The participants included labor leaders from the national and multi-national electricity, food, commercial, automobile, public, and university sectors, as well as organizers of African-American and Puerto Rican worker unions. Chavez also came to New York to address the 64^th United Nations General Assembly meeting on Thursday.

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