Racial predatory loans fueled U.S. housing crisis: study

Racial predatory loans fueled U.S. housing crisis: study

By Nick Carey CHICAGO | Mon Oct 4, 2010 7:44am EDT

(Reuters) - Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.


Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory -- pawn shops, payday lenders and check cashing services that "charge high fees and usurious rates of interest," they said in the study.

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Source

For the actual study/article published in the American Sociological Review...
wws.princeton.edu...
(Scroll to the bottom of the page and click "Racial Segregation and the American Foreclosure Crisis Article". You'll have to do this because the actual link won't post to ATS correctly since it has brackets in the URL that interfere with bb code)


I think this information largely speaks for itself. Institutionalized racism is alive and well, no matter what form it takes, no matter its motivations or reasons, it still effectively serves to segregate, oppress, and limit people based on their race. This is very REAL, folks. Please don't just shrug it off either or find a way to downplay the effects of this kind of economic tyranny. Do not play the artful dodger by pretending this oppression doesn't really exist or that it's somehow easily surmountable by minorities. If this is a free country for all, then we must all fight for each others' rights and not stop until we get them in full.

I think race is not important, if whites made up the highest poverty group then whites would be the ones targeted. They are simply looking to manipulate the generally poorest members of our society which happens to be blacks and hispanics.

You can thank all the state law makers that got paid off to repeal the usury rates and allow our present situation.

We must reinstate the 10% usury laws along with other laws that protect every one. I wonder if I'll live to see it.

God bless the US Corporation of America.

For every loan that went to a minority neighborhood another loan went to a minority person who bought a house in an area not formerly affordable to them.
Of course any cries of racism tend to get our attention, even though it might be only a partially true allegation.
I have seen many new minority neighbors arrive in our neighborhood which was formerly upper middle class and mostly white. I see no difference in our neighborhood as far as who is being foreclosed on and all the later arrivals seem to be settling in fine.
Perhaps my home isn't representative of the nation but it is the perspective that I know.
Predatory loans were made to those who were either not smart enough to understand the terms or desperate enough to not care if those conditions were invoked. You can be sure that many poorer whites also got burned on these loans as well.
When I can see a breakdown of the figures then I can decide for myself whether or not these loans were "targeted", so to speak.

Here's proof that racism cuts both ways. From their report:

Before the subprime boom, black borrowers were more likely to be denied loans overall, especially in white areas, whereas whites were often denied loans in minority neighborhoods (Holloway 1998).

Not one person was forced to take a home loan............nor were they forced to use a pawn shop, a check cashing place etc, etc. They chose to. Perhaps if they actually had an education, they'd be able to read their contracts and be able to decide for themselves what's affordable or what's not. Racism? I think not, exploiting stupidity, you bet.

Thanks NoHeirarchy. Although I am glad such a study was conducted, which will allow the uninformed to become aware, I think it is sad that such a study even needs to be done. I mean this is quite obvious, even to a person who just drives passed these areas. A few years ago I was on a board to try and get approval from the city council to open a library on the prodominately black side of town. We needed their approval for building permits, community funding and school district access. They turned us down. Last week I just drove by the site where it was supposed to be built and there was a: liqueur store, a payday loan store, a chicken shack (nasty food), and a dollar store. None are black owned, all with either white or middle eastern owners. I almost wanted to cry.

Whoever does not believe racism is still alive and kicking, is obviously sheltered from the truth. Step over to the other side of the railroad tracks and take a wiff of reality.

S&F

reply to post by Asktheanimals


You can see a breakdown of the numbers in the link I provided after the article excerpt. You'll have to scroll to the bottom of that page for the full text of the study by Douglas Massey.

Originally posted by adifferentbreed
Not one person was forced to take a home loan............nor were they forced to use a pawn shop, a check cashing place etc, etc. They chose to. Perhaps if they actually had an education, they'd be able to read their contracts and be able to decide for themselves what's affordable or what's not. Racism? I think not, exploiting stupidity, you bet.

While there is some logic to what you say... largely you're only viewing a VERY SMALL part of the big picture of how economic racism works. You can just look at the post right after yours for a real account of how these communities get screwed over. Governments won't help them help themselves, businesses wont, and the real parasites are from non-black races who exploit alcoholism in the poor, homeless, and/or unemployed. This isn't about legitimately exploiting stupidity (which in and of itself is unethical)... this is about illegitimately reinforcing racial poverty by VERY SERIOUSLY limiting the options and opportunities of minorities in their own communities. I advise you try to walk a mile in their shoes, live like they do and then try and tell me they're just stupid and don't know how to pull themselves up. The issues are much more complex and embedded and people feel understandably hopeless in those circumstances.

reply to post by NoHierarchy


Throwing good money after bad is always a waste...........why build resources for people who will not appreciate them, use them, or may not even want them. It's just not stupidity that's being exploited, it's laziness as well. When you have a culture that is content living in a state of perpetual welfare, why expend frther resources to be destroyed? It's easier to keep a group down that you've helped place there, ala the dems and the blacks, than it is to build them up. However now, since this was made a racist issue, perhaps it is time for them to pull themselves up and do something for themselves. What, in 2050 are we gonna have yet nother generation of people who have never worked and lived off of the government from the cradle to the grave? Blame is always a two way street................if they don't like it and expect more, perhaps they might change themselves......it's not like they don't have the time, advantages or resources.

reply to post by NoHierarchy


They don't know how to pull themselves out of the hole they dug.

I grew up in a bad neighborhood, was very poor (5 of us in a one bedroom home), my dad was in prison 10 years of my life (from 5-15) and we managed to work hard (all of us) and move away from all of that crap.

Of course being the only white kid in a 4 block radius didn't help very much. You think blacks have it tough in a black neighborhood, try being a white kid in one.

reply to post by NoHierarchy



So, a study done by the Woodrow Wilson school of progressives is attempting to blame the banking industry of giving loans to poor people.

Who's idea was this to begin with, OH YEAH, that would be the progressives. They forced banks to give loans to those that could not afford them, now this ignorant thinks they can label it as institutional racism.

What a load of crap.

Why don't people live within their means? Save until they can afford a house. Maybe put down 30-50% and get a ten year loan. That way you do not have to pay three times the amount of the asking price.

NOPE, call it racism. Idiocy!

Originally posted by adifferentbreed
reply to post by NoHierarchy

 

Throwing good money after bad is always a waste...........why build resources for people who will not appreciate them, use them, or may not even want them. It's just not stupidity that's being exploited, it's laziness as well. When you have a culture that is content living in a state of perpetual welfare, why expend frther resources to be destroyed? It's easier to keep a group down that you've helped place there, ala the dems and the blacks, than it is to build them up. However now, since this was made a racist issue, perhaps it is time for them to pull themselves up and do something for themselves. What, in 2050 are we gonna have yet nother generation of people who have never worked and lived off of the government from the cradle to the grave? Blame is always a two way street................if they don't like it and expect more, perhaps they might change themselves......it's not like they don't have the time, advantages or resources.

So blacks are just lazy and stupid? Jesus Christ, man... did you even read the article I posted? Obviously not. Like I said, please don't just shrug off REAL RACISM because you don't want to face up to it and admit it's a problem, because it is.

Originally posted by Becoming
reply to post by NoHierarchy

 

They don't know how to pull themselves out of the hole they dug.

I grew up in a bad neighborhood, was very poor (5 of us in a one bedroom home), my dad was in prison 10 years of my life (from 5-15) and we managed to work hard (all of us) and move away from all of that crap.

Of course being the only white kid in a 4 block radius didn't help very much. You think blacks have it tough in a black neighborhood, try being a white kid in one.

Yes, I think it's a huge problem that poor people dont have the knowledge, resources, support, or leeway to pull themselves out of their holes. Are poor people also responsible for their own plights? Yes. Is it SOLELY their own fault? Hell no. Like I've said, the issues (even though they're made to be in so many despicable ways) are NOT black and white.

Also, we're not going to have a pissing contest over who has it worse in a black neighborhood. Sure it might've sucked for you and you might be bitter over it (I probably would be too), but that's not what we're talking about.

Originally posted by saltheart foamfollower
reply to post by NoHierarchy

 

So, a study done by the Woodrow Wilson school of progressives is attempting to blame the banking industry of giving loans to poor people.

Who's idea was this to begin with, OH YEAH, that would be the progressives. They forced banks to give loans to those that could not afford them, now this ignorant thinks they can label it as institutional racism.

What a load of crap.

Why don't people live within their means? Save until they can afford a house. Maybe put down 30-50% and get a ten year loan. That way you do not have to pay three times the amount of the asking price.

NOPE, call it racism. Idiocy!

Seriously? You're going to play the "it's just a progressive/commie conspiracy" card?? I give no credence to that line of logic whatsoever. This study is about reality, whether or NOT it's comfy with your worldview.

Both right and left wing political forces are responsible for the banking fiasco, however, a LACK OF REGULATION on usury (as a previous poster mentioned) is a huge part of this as well. It's funny how you defend the most despicable party in this issue (i.e. the predatory banks) and blame the victim... it's almost like you unconsciously trust/respect any entity which is of authority or wealth over the poor/minority/needy victim. You need a real shift in such perceptions, no matter how uncomfortable it might be for you.

Stop trying to turn a very obvious issue into something totally different. You're setting up straw men and false arguments based on irrelevant talking points. The talking point of this thread can be found in the article and the study. If you want to change the subject, start a new thread, if you want to discuss the REAL INSTITUTIONALIZED RACISM as evidenced by these racially targeted toxic loans then do so.

You are also vastly oversimplifying this issue as simply about people not living within their means... as if they live in a vacuum and everything that happens to them is internal. Sorry but I don't play that new-age self-help crap, I live in the real world and I see very messy/complex issues that NEED to be addressed as they stand. If people don't really have many or any means then how the hell do they live within them when they need more? How do they save up for and find a decent loan when banking institutions PURPOSELY TARGET THEM for bad loans? How can they do their homework when they are uneducated and/or kept in the dark about what's really going on? This is about whistleblowing, which means even intelligent, aware, and educated people have no clue what's goin on till somebody reveals it.

Once again- no matter which way you cut it, these banking practices ARE racist... at LEAST admit that.

Seriously people, we're not talking about whether or not it's all black peoples' fault for the troubles they face or whether it's tough being a white kid in a black neighborhood. We're talking about banks preying on those in poverty, and specifically targeting based on race... so, please stick to the actual topic.

It is NOT black peoples' fault that banks are preying on them and segregating them in secret, BOTTOM LINE.

There is a terrible/insane culture of blaming the victim in this country and I'm far beyond sick of it. If you can't muster the simple common sense/empathy to side with a victim and criticize a victimizer then you don't have a legitimate role in the discussion. Don't let ideology cloud the truth.

Man NoHierarchy, you are doing an excellent job! You made some very great points while still staying reasonably in the middle, that is very hard to do with this topic. This forum seems to be filled with privileged white folks who love to cry about their own hard comings but cannot for a minute imagine the extent of others suffering. Especially over racial issues. Can you say out of touch with reality? I mean come on! Our entire history is filled with racial conflicts and dilemmas. America had the largest, longest, most institutionalized form of racial slavery of anywhere in the world. The Civil Rights movement was the largest, longest, most talked about resistance of racial injustice in the worlds modern history. I often wonder to myself if people are really that sheltered from reality to the point they become this tremendously ignorant, or if they are just that intolerable and insensitive of human beings. Maybe its both, but it is extremely disheartening either way.

Look at it like this, for over 80 years white folks ignored the reality of inequality for black folks even though it was plain to see for all. It wasn't until the black community came rushing into the white community holding hands shouting "we shall overcome..." and sometimes even wielding weapons, before the white community gave notice and started to consider that there was in fact a problem. It took many decades of people willfully putting their life on the line, and sometimes even losing it, before people started to have compassion for their rights. It seems we never do what is right, we never see things as they truly are, until it is staring us in the face and we have no choice but to act accordingly. This is the flaw of humanity.

Keep your head up brother. In the end we will prevail, I am sure of that.

Again, this has nothing to do with race.....................
If you can't afford it, don't buy it.
If you buy a house you can't afford, who's fault is it......................at the end of the day, it's yours.
Foisting the blame off on the bankers is a joke, they didn't go round up anyone and force them to take a loan.
As far as the longest running slavery.............um, think ya might be mistake there.

reply to post by adifferentbreed


When standing on a hill it takes very little effort to kick rocks down on the heads of the people below. But to be standing on the bottom of the hill and knock the man at the top off, that takes great patience and skill.

You have much to learn about life my friend, and claiming you have the answers without any actual substance to back that claim up, is like saying you have giving up on life and secluded yourself in ignorance. Honesty is the first step towards breaking away from those chains of ignorance you have been placed in by society. Free yourself!

Originally posted by adifferentbreed
Again, this has nothing to do with race.....................
If you can't afford it, don't buy it.
If you buy a house you can't afford, who's fault is it......................at the end of the day, it's yours.
Foisting the blame off on the bankers is a joke, they didn't go round up anyone and force them to take a loan.
As far as the longest running slavery.............um, think ya might be mistake there.

How many times do I have to say- IT'S NOT THAT SIMPLE. You don't seem to have any clue about the people you're talking about, the circumstances involved, and the predatory/deceptive practices that serve to screw people over.

Yeah... guess you're right, the bankers are innocent angels who are OH SOOOOOO oppressed by taxes and regulations and it's those damn minorities and poor folks who are oppressing everyone else. I hope you are totally screwed over by a bank, corporation, or other private institution so you'll learn that even people who believe they're doing the right thing can get totally screwed by advertising, salesmen, legal loopholes, fine print, and the hidden fist of the market.

Originally posted by adifferentbreed
Not one person was forced to take a home loan............nor were they forced to use a pawn shop, a check cashing place etc, etc. They chose to. Perhaps if they actually had an education, they'd be able to read their contracts and be able to decide for themselves what's affordable or what's not. Racism? I think not, exploiting stupidity, you bet.

My take on this is that no one is ever, generally, forced to buy a house, a college education or even a car. And for the vast majority of us, all of these things necessitate going into debt.

And for the vast majority of us, unless we possess remarkably pioneering and innovative intellect, rebelliousness and courage, we don't consider it unusual or wrong to want to live in a house, go to college and have a car for transportation. Yes, there are cheaper ways to do these things.

No one asks to be born into the world in which they live, yet we all are. To suppose that a typical person should or could buck the system to avoid being taken advantage of, not by companies providing normal business services, but by criminal, predatory and deliberate deceitful practices is topsy-turvy.

Victims could have avoided their plight by never going into debt (including taking out a mortgage on housing). But why should anyone, including and particularly minorities, be expected to have some sort of magical resolve that the rest of us do not? Why can't they take out mortgages and be treated fairly like people who have more than enough money to pay theirs? Does it really seem fair for it to be OK for the people who struggle the hardest to be charged higher rates and provided lesser services ... and subsequently, to have much more at stake when something goes wrong?

Sure, people shouldn't have bought houses they couldn't afford. But white people do that, too. It's just they are (typically, in general; and specifically, as relates to this study) provided and aware of better services.

Reminds of the arguments against affirmative action. The little minority kid growing up on the wrong side of the tracks can do the Horatio Alger thing and live the American Dream ... grow up to be Clarence Thomas, even! Sure, it happens. It's just that why do those kids have to have so, so much more than the average kid does (intelligence, dedication, charisma, luck) ... to get to the same places?

All Americans can be said to have opportunity. But, it's not equal.

This study is a big, glaring example of why.