America’s Financial Crisis and the Implications for Sustainable Advocacy for Fair Credit and Fair Banking
The nation’s response to the “Great Recession”1 has been surprisingly short-sighted. The news stations are starting to report that recovery has begun, albeit slowly, and that the country is getting back on track.2 But getting the country “back on track” is likely the wrong goal. After all, getting back on track only means getting some people stabilized again – back in homes, back in jobs – and does not address the structure of racial and class segregation in America that helped get us into this mess in the first place. Indeed, getting “back on track” is just a Band-Aid, potentially setting us up for another crisis.3
For those paying attention, the foreclosure crisis has done more than remind us that there is still a race problem in America — it has unmasked the power of the financial elite and their ability to exploit us all. The patterns of foreclosures and predatory lending, after all, have most affected people of color and lower-income individuals. The Kirwan Institute, drawing on a report by United for a Fair Economy, indicates that “people of color are more than three times as likely as whites to have subprime mortgages.”4 Our own research on this issue, done as part of an analysis of regional equity in the Bay Area, indicates that people living in the highest foreclosure ridden areas were 72 percent people of color.5
But it is more than foreclosure and the disappearance of wealth that this disproportionate impact on people of color signals. Our financial system has a distinctly racial character, one that requires a response rooted in racial and social justice. After all, this is coming on the heels of a history of trying to keep these same individuals from buying homes in certain neighborhoods through redlining – and when community push led to bank shove, the opening to credit meant that many were pushed into loans that were detrimental to their livelihoods and their asset accumulation. Nationally, African Americans are 2.7 times more likely to have a high-cost loan than whites, and Latinos are 2.3 times more likely (ACORN 2007:2). What’s even more interesting: when that data is disaggregated into income bands, the discrepancy in loan issuance by race is greatest in the wealthiest bracket (see the figure below). Clearly, this is more than an income affect – there are discriminatory factors in play.