According to Adam Serwer over at The Root, the NAACP's suit against Wells Fargo for deliberately trawling black neighborhoods to sell subprime mortgages "proves me wrong."
That is, I am wrong for arguing, as I did some months ago here, that the NAACP should let go of the dramatic punch of chasing discrimination and redirect their considerable resources to giving black America what it needs today as opposed to 1909, social services.
I don't think so. The question here is what discrimination is in 2009 and what you do about it.
For one, if subprime mortgages in themselves are discriminatory, then I myself am a racist. Plenty of black people, taking out subprime mortgages, do just fine. As recently as five or six years ago, the term subprime did not yet have the stench about it that it does now with the financial collapse such loans have been at the center of. Back then I was one of many who spoke up for helping poor black and brown people to buy houses with the help of subprime arrangements.
One organization at the forefront of this, which I have talked up endlessly, is Operation Hope. Its founder John Bryant last year underlined that subprime loans, done right, are good for black communities, and that the problem is predatory lending - foisting subprime loans on people unlikely to be able to handle the interest or the eventual jump in monthly payment.
I am the last one to deny that when it turns out that bank officials are being explicitly told to give mortgages to black people without checking to see if they are likely to be able to keep up with their payments, they should be made to stop.
However, there is something else I cannot deny, which I'm afraid those focused on "discrimination"--rather than problems more broadly--insist on carefully denying. That is that discrimination today is of a radically different sort than what it used to be, not as central to what holds blacks back as it once was, and requiring different responses than what made sense fifty years ago.
That is: there was a time when discrimination meant keeping most black people from voting on the pain of violence and possible murder. There was time when discrimination meant denying black people service at restaurants and hotels. More to the point, there was a time when discrimination meant denying mortgages point blank to all people in black neighborhoods regardless of income.
Today, the subprime affair is a matter of steering black people into buying a house for the highest possible interest rates, hoping they will pay off the loans at those rates, but not caring whether they end up defaulting. This policy singles out struggling black people in a cynical fashion out of greed.
This is ugly, and I'd be the last person to condemn the NAACP's lawsuit. But unlike old-time racism, what happened here was not a matter of barring black people from opportunity or dignity. The people in this case were offered a choice, and made a bad one.
Namely, a key factor here was a lack of knowledge on the part of the people who took these loans. The "racist" analysis will naturally seem wisdom incarnate to many, and more "interesting." But alone it carries a rather nauseating implication: that it is inevitable that poor black people will take mortgages that they can't afford.
It's more of the subtly internalized inferiority complex that elsewhere leads to conclusions such as that if black people don't do well on a test then the solution is to discount the test results.
John Bryant readily argues that part of what faces us is "financial illiteracy" and getting the word out to struggling people of color to not take such loans. This would be as effective a response to the problem as suing a bank.
"Why not both responses?" OK--but only if we really mean that getting the word out is as important, despite its lack of drama, as high-profile court cases.
After all, greed will continue, and it will never respect racial etiquette. Cover one gopher hole and up a critter will pop from another one on the other side of the yard--mortgages today, car loans tomorrow, artery-clogging fast food outlets on every block in poor neighborhoods today, cigarette-ad billboards in the same neighborhoods tomorrow.
If we want real uplift, then we want to teach people how to avoid exploitation, and we are as viscerally, implacably interested in that as filing suits.
Is there perhaps a sense that the black community isn't cohesive enough to get the word out in any real way? Well, apparently it is: part of how Wells Fargo did its dirty doings was tipping off black church preachers. Surely someone could get the word out about watching out for shady mortgages via the same channels.
Someone--how about, say, the largest and most prestigious black advocacy organization in the United States? And while they're at it, why not get the word out about a few other things? Like, pretty much all of the things that bedevil the black community? Even Serwer agrees with me on this.
In my last post I argued that four years of college as default would not be how we do things in America if we started over. In the same way, imagine deciding what a black organization would focus on now in June 2009, starting with a clean slate.
We would think of schools, crime, AIDS. Talk about root causes--the financial illiteracy that Bryant has been addressing for years now is a product of rickety public school education.
We would have a mission to teach people what to watch out for, what choices not to make. We would be like middle-class black people in northern cities eighty years ago focused on making life as comfortable as possible for poor migrants from the South.
Our new organization might well sue Wells Fargo too. But the key point is this: people founding this new organization would be perplexed to be told that addressing "discrimination" should be a major plank of their work.
That's because of what older organizations accomplished. The irony is that in some circles it's considered so "controversial" to acknowledge that very accomplishment and join the twenty-first century.
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COMMENTS (7)
Subprime mortgages are a function of the free market and are a desirable thing. It satisfies both parties - lenders get higher rates, borrowers get mortgages. Without subprime mortgages, no one would lend, in which case that would be even more "racist. "
Face it, life is about risk and reward. If I take more risk, I expect a greater reward. If I take more risk in lending to someone with bad credit, I expect to be compensated for it. The NAACP and these other activist groups are idiotic. If it were up to them, the gov't would be directly lending money to them at regular rates. And what would happen then? They'd default on their loans meaning ... view full comment
Subprime mortgages are a function of the free market and are a desirable thing. It satisfies both parties - lenders get higher rates, borrowers get mortgages. Without subprime mortgages, no one would lend, in which case that would be even more "racist. "
Face it, life is about risk and reward. If I take more risk, I expect a greater reward. If I take more risk in lending to someone with bad credit, I expect to be compensated for it. The NAACP and these other activist groups are idiotic. If it were up to them, the gov't would be directly lending money to them at regular rates. And what would happen then? They'd default on their loans meaning that the taxpayers would be footing the bill for ALL of these mortgages.
Let's see. First, you loan a substantial amount of money with repayment secured by potential loss of the family home to people who by definition have a demonstrated inability to handle money (that's why they are subprime in the first place) and then, in order to make it work, you charge tham a huge amount more than you charge those who are financially capable, the true cost of which you cleverly disguise in hideously complex financial instruments, with hidden and delayed time bombs, all of which is buried among a three inch stack of paper written in legalese that we flash by them in a rush at closing. Doesn't sound like a "desirable thing" to me. It sounds like a ... view full comment
Let's see. First, you loan a substantial amount of money with repayment secured by potential loss of the family home to people who by definition have a demonstrated inability to handle money (that's why they are subprime in the first place) and then, in order to make it work, you charge tham a huge amount more than you charge those who are financially capable, the true cost of which you cleverly disguise in hideously complex financial instruments, with hidden and delayed time bombs, all of which is buried among a three inch stack of paper written in legalese that we flash by them in a rush at closing. Doesn't sound like a "desirable thing" to me. It sounds like a recipe for disaster. To make matters worse, we offer used car salesman masquerading as "loan officers" an obscene amount of money to tell any lie they can think of to sign up these unsuspecting borrowers.
It didn't seem like a good deal in 2001 when I first started investigating these transactions for my state's consumer protection division. I didn't think any better of the idea when I joined a multistate task force to pursue the largest of these lenders (HFC, Ameriquest and Countrywide) and now that the whole house of cards has collapsed, it strikes me as downright stupid, not to mention venal.
As for racial discrimination, many of the minority loans I've seen were made to folks who qualified for a prime loan but didn't understand the market and didn't have the kind of banking relationships that have been my birthright, so when the nice young man or woman lied to them they were unable to appreciate what they were being conned into.
I am sure there is room for targeted, regulated, honest programs to lend money to people who have experienced minor financial difficulties and are now on the road to recovery but the ubprime industry as we have known it is not it.
The problem with McWhorter's pieces about the NAACP is that they come off as attacking the NAACP rather than recognizing its great legacy and then suggesting that it should broaden or shift its focus. Now McWhorter is constrained to concede that actual discrimination continues afoot in our society, and that there is a role both for litigation/advocay and social services. But he criticizes the NAACP for not doing it ALL. Come on. Is the NAACP the only repository of creativity, energy and social consciousness in the black community? Is it realistic to expect one organization to do it all? The NAACP should continue to do what it does best. Others can ad ... view full comment
The problem with McWhorter's pieces about the NAACP is that they come off as attacking the NAACP rather than recognizing its great legacy and then suggesting that it should broaden or shift its focus. Now McWhorter is constrained to concede that actual discrimination continues afoot in our society, and that there is a role both for litigation/advocay and social services. But he criticizes the NAACP for not doing it ALL. Come on. Is the NAACP the only repository of creativity, energy and social consciousness in the black community? Is it realistic to expect one organization to do it all? The NAACP should continue to do what it does best. Others can address the social pathologies.
hey jwl, wrong again: Face it, life is about risk and reward. The banks are covered by the Government, if they fail the government just bails them out, and if they are lucky they reap the rewards. That is the trouble with subprime loans.
"I am sure there is room for targeted, regulated, honest programs to lend money to people who have experienced minor financial difficulties and are now on the road to recovery" yep, that is right. Is that really so hard to figure out?
hey jwl, wrong again: Face it, life is about risk and reward. The banks are covered by the Government, if they fail the government just bails them out, and if they are lucky they reap the rewards. That is the trouble with subprime loans.
"I am sure there is room for targeted, regulated, honest programs to lend money to people who have experienced minor financial difficulties and are now on the road to recovery" yep, that is right. Is that really so hard to figure out?
dhurtado, you misread McWhorter if you think he's asking the NAACP to do it all; and, the idea that lawsuits against banks and other institutions is what the NAACP "does best" is just plain bizarre. Perhaps you're remembering the NAACP of the 1950s and before, when legal challenges were its specialty. But that hasn't been the group's focus and certainly not what it did best in over 50 years. Now, sadly, the group is known as much for its financial mismanagement and fecklessness as for anything else.
"The non-profit rating organization Charity Navigator lists the NAACP as #7 on their list of "10 Highly Paid CEOs at Low-Rated Charities".Charity Navigator rates the NAAC ... view full comment
dhurtado, you misread McWhorter if you think he's asking the NAACP to do it all; and, the idea that lawsuits against banks and other institutions is what the NAACP "does best" is just plain bizarre. Perhaps you're remembering the NAACP of the 1950s and before, when legal challenges were its specialty. But that hasn't been the group's focus and certainly not what it did best in over 50 years. Now, sadly, the group is known as much for its financial mismanagement and fecklessness as for anything else.
"The non-profit rating organization Charity Navigator lists the NAACP as #7 on their list of "10 Highly Paid CEOs at Low-Rated Charities".Charity Navigator rates the NAACP's finances at zero out of four stars, in part because only 52.8% of the NAACP expenditures go towards programs, with the rest going towards administration and fund raising."
And as for McWhorter's criticism, he's not asking the NAACP to expand its mission so much as he's asking it to get one -- and one that is relevant and reasonably calculated to achieve some practical results.
The problem is that so often those of us who have been trained to keep our bigotry antennae on alert (and justifiably so) cannot distinguish between construct criticism and the other kind.
McWhorter is an ally, plain and simple. And this post is more evidence of the fact.
mbhoman, I do not think I am misreading McWhorter. He talks about the need to educate the black community about predatory lending and then states:
"Surely someone could get the word out about watching out for shady mortgages via the same channels. . . . . Someone--how about, say, the largest and most prestigious black advocacy organization in the United States [the NAACP].? And while they're at it, why not get the word out about a few other things? Like, pretty much all of the things that bedevil the black community?"
He then talks about "what a black organization would focus on now in June 2009, starting with a clean slate." The obvious implication ... view full comment
mbhoman, I do not think I am misreading McWhorter. He talks about the need to educate the black community about predatory lending and then states:
"Surely someone could get the word out about watching out for shady mortgages via the same channels. . . . . Someone--how about, say, the largest and most prestigious black advocacy organization in the United States [the NAACP].? And while they're at it, why not get the word out about a few other things? Like, pretty much all of the things that bedevil the black community?"
He then talks about "what a black organization would focus on now in June 2009, starting with a clean slate." The obvious implication is that the NAACP, to be relevant, should assume this new focus. With regard to this new black organization, he says:
"We would think of schools, crime, AIDS. Talk about root causes--the financial illiteracy that Bryant has been addressing for years now is a product of rickety public school education.
"We would have a mission to teach people what to watch out for, what choices not to make. We would be like middle-class black people in northern cities eighty years ago focused on making life as comfortable as possible for poor migrants from the South.
"Our new organization might well sue Wells Fargo too. But the key point is this: people founding this new organization would be perplexed to be told that addressing "discrimination" should be a major plank of their work."
I think it is a fair reading that McWhorter believes that either the NAACP or some new organization should focus both on addressing "discrimination" (which he places in quotation marks to imply that discrimination no longer exists to any significant degree) AND on all of the social and educational issues that he identifies. That amounts to an unreasonable criticism of the NAACP because it is completely unrealistic to think that one organization, whether the NAACP or someone else, is equipped to tackle all of the issues.
I cannot agree that McWhorter has shown himself to be an ally of the NAACP. Setting aside the tone of his several posts about the NAACP, he is fundamentally opposed to the NAACP's mission -- which is primarily to address racial discrimination -- because he believes discrimination is no longer a significant issue. He is an "ally" only in the sense that he wants to transform the NAACP into something that it is not.
Finally, I did not say that "lawsuits against banks and other institutions is what the NAACP" does best. I said that litigation AND advocacy is what the NAACP does best. I have no knowledge of the NAACP's financial woes, which is not the subject of McWhorter's post. But litigation and advocacy are unequivocally what the NAACP is best suited to do. Heaping new obligations on it will only make it more difficult for it to pursue its mission.
The Supreme Court’s decision in favor of the New Haven firefighters whose test results were discounted
The Supreme Court’s decision in favor of the New Haven firefighters whose test results were discounted