Jun 27, 2008
Throughout the presidential primaries, while politicians amassed millions from both corporate and private sources, how many times did you hear the sub-prime lending disaster discussed?
Over a million homeowners, most of them Black or brown, faced foreclosures and the loss of their most valuable financial asset, and most politicians passed over it in relative silence, while they begged or lied for votes.
How can this be, unless they, like most pols, were the paid for property of corporations?
When the sub-prime mess hit, in a matter of hours, the Federal Reserve Board's head, Ben Bernanke, slipped $200 billion in government guarantees to keep the mortgage loan industry afloat. Thus, the U.S. government used its power to back the banks' hustling of what were essentially junk bonds.
A fifth of a trillion bucks to back those who ripped off a million people with loans designed to fail; and for those who got ripped off, nothing.
Indeed, the only politician who was attacking this practice was New York's former Attorney General (and later Governor), Eliot Spitzer. But once caught in the web of a hooker's scandal, this threat melted away into mist.
These sub-prime loans, saddled with balloon-like expanded repayment rates, were designed to fail (at least for the borrowers), and these legalized hustles were steered at an astonishing rate, at 73% of high-income African-Americans and Hispanic families. Among white high-income homeowners, only 17% were recipients of sub-primes. Should we chalk this up to coincidence?
This Greed Riot has sent shivers throughout the economy, not just in America, but overseas as well, because foreign companies and governments invested in these junk mortgage bonds.
The foreclosure crisis has slowed housing construction; loans are almost impossible to get, and the International Monetary Fund (IMF) estimates banks and investors will lose $1 trillion.
But for nearly a million families their losses will be infinitely greater. They lose their dreams, their homes, and perhaps their very families. How many divorces have been spawned by these foreclosures? How many families have been split asunder? How many suicides?
These things do not fall on the cold pages of a business ledger.
These non economic losses can be traced to pure, unmitigated greed of bankers, investment houses, and the willing blindness of a government addicted to deregulation.
(c) '08 maj