By Arsalan Iftikhar
Date Posted: March 25, 2008
As the price tag goes up on the federally sponsored merger deal between JPMorgan Chase and Bear Stearns, many are questioning the bailout, saying the government has done little to help Americans facing foreclosure.
At a recent teleconference, Rep. John Conyers, D-Mich., pointed out that Bear Stearns’ lending practices helped to create the problem. “At a crucial point where Bear Stearns [is] receiving billions of largesse,” Conyers said, “I won’t say they are the most predatory of the lenders … But they certainly are way up there at the top.”
Civil-rights leaders and economic experts joined Conyers on the teleconference about the subprime-lending crisis and its devastating effects on low-income Americans, especially in the Black and Latino communities.
The 2007 subprime-mortgage-market collapse is hurting Blacks and Latinos worse than others, according to Wilhelmina Leigh, senior research associate for the Joint Center for Political and Economic Studies. She said the crisis may ultimately reverse the gains in homeownership these two groups have made since 1995.
Leigh pointed out that although homeownership is a core component of the American Dream, this dream has “persistently remained out of reach for many African Americans.”
According to her research, only slightly more than 46 percent of Blacks owned homes in 2000, while white homeownership rates were close to that as far back as 1940 (45.6 percent). In other words, homeownership acquisition among Blacks “lags homeownership acquisition among whites by roughly 60 years.”
Hilary O. Shelton, Washington, D.C., director for the NAACP, said that “predatory lending is a major civil-rights issue today.”
Blacks were 3.2 times more likely to receive a subprime mortgage in 2005 than their white counterparts, Shelton said. Furthermore, one-half of all Black households held more than 88 percent of their total net worth in their home equity.
With one out of five mortgages destined for foreclosure, Shelton said, “Predatory lending is devastating to families, [their] neighbors and even our nation.”
Conyers is urging the passage of the Emergency Home Ownership and Mortgage Equity Protection Act of 2007, a bill he cosponsored with Rep. Steve Chabot, R-Ohio.
The bill would give qualifying homeowners who file for bankruptcy a way to reduce high mortgage rates and modify their principal mortgage so they can hold on to their homes.
Additionally, Conyers and the civil-rights leaders highlighted the work of former Democratic presidential candidate Sen. Christopher Dodd, D-Conn., and Massachusetts Rep. Barney Frank, chairman of the House Financial Services Committee, on behalf of millions of Americans affected by the current financial crisis.
Nancy Zirkin, executive vice president for the Leadership Conference on Civil Rights, underscored the severity of the crisis, saying it is turning the “American dream into a nightmare for many African Americans and other minorities.”
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