Domino Effect
United for a Fair Economy has come out with a new report detailing the disparate effects that the current subprime crisis is having on people of color. They estimate that people of color will lose 164 to 213 billion dollars of accumulated wealth -- a loss, the report says, that will be the largest displacement of wealth for that community in history.
In one interview, author Dedrick Muhammad points out that historic racism has led to low wealth accumulation for African Americans nationwide. He describes how mortgage lenders steered families of color with good incomes but no accumulated savings "into a high-cost loan and for a property that they really could not afford."
In that same interview Muhammad predicted that "just as Katrina a few years ago revealed the great wealth divide and how racialized this wealth divide is in this country, we're going to see the subprime crisis do similar things."
this is the kind of post that wins kudos for gross irresponsibility. Miss Montagnes quotes some guy named Derrick Muuhammed -- who? Nobody's ever heard of this guy -- nor do we recognize him as an expert to voice an opinion on anything. These Fair Economy folks are just as obscure. You can make statistics prove any point you want these days, if you slice them up the right way. Unless they come from a verifiably unbiased source, they really mean nothing.
More Black Americans own homes than ever before in the history of this country. So this is a racial divide how? It's only a racial issue if black homeowners are losing value faster than white homeowners. Is this the case? Are they really being foreclosed on faster than other ethnic groups? I'd like to see at least three other sources to back this data up, besides a special interest group report. Anyone who knows anything about Fannie Mae and the FHA knows they bend over backwards to try and help minorities own a home. Property ownership makes better citizens. The left and right agree on this.
The recent campaign race debate debacle should clue everyone in that race is a dangerous pot to stir and can boil over on you very quickly. Americans for the most part are sick of it, and very offended by those who engage in it.
It appears Miss Montagnes is very young and Canadian, but she better learn quick you don't engage in racially divisive and bitter rhetoric here, unless you know what you're talking about, and you need a lot of research data. I would encourage her to think more carefully in the future.
January 23, 2008 7:39 PM | Reply | Permalink
It's only a racial issue if black homeowners are losing value faster than white homeowners. Is this the case? Are they really being foreclosed on faster than other ethnic groups?
Since African-American families tend to be, on average, substantially more "asset poor" than white families, it makes sense that they would be carrying a higher proportion of subprime mortgages than would white families.
It makes sense, as well, that neighborhoods where subprime lending was substantial will see more foreclosures and thereupon, greater declines in all home values in those neighborhoods.
And since cultural groups tend to conglomerate, African-Americans -- both the borrowers losing their homes and the paid-up owners whose home values fall due to the comparable prices offered for neighboring foreclosed properties -- stand to be harmed the most.
Now, whether that fact calls for some form of redress specific to the African-American community is another matter.
January 23, 2008 8:07 PM | Reply | Permalink
okay, but a 75 pt cut (and another 50 around the corner) has reset the ARM issue for every homeowner -- which according to this article would mean minority families are benefiting disproportionately from the rate cuts. Maybe we should post a blog about that inequality. I think you know what I'm saying here.
You've got this Fair Economy organization -- which by it's definition operates from the premise the economy is unfair, which means all their studies search for evidence to support a foregone conclusion. Then you've got the activists who rush to a news camera every time something happens to support an oppressed point of view. They have to project their relevance whether real inequality exists or not.
What terrifies these individuals is an America where the majority of non-minorities actually see them and treat them as equals. I believe we have crossed that threshold, and that these groups are actually more heavily engaged in creating division than bridging it.
January 24, 2008 6:17 AM | Reply | Permalink
. . . a 75 pt cut (and another 50 around the corner) has reset the ARM issue for every [subprime mortgagor] . . . .
True, CMT and COFI will fall but we don't yet know whether LIBOR will fully follow. And whether the lower reset rate (still, perhaps, above the introductory teaser rates) will be enough to avoid foreclosures when unemployment rises during the coming recession is still an open question.
January 24, 2008 6:35 AM | Reply | Permalink