NEW YORK — Outside the New York Stock Exchange Dec. 10, holiday music competed with the chants of “Save our homes!” A few yards away from the Wall Street Christmas tree display, hundreds of protesters gathered to demand a swift and decisive response by government and big business to the growing subprime loan crisis sweeping the nation.
Wall Street firms will dish out a projected $38 billion in bonuses to executives and financiers this year while more than 2.5 million families are expected to lose their homes to foreclosure. The rally, which demanded “Restructure loans, don’t repossess homes,” was called by the Rev. Jesse Jackson, who heads the Rainbow/PUSH Coalition.
The rally called attention to the racist impact of the nation’s loan practices and to the economic crisis facing all Americans if the calamity is not solved. Jackson called it an “economic tsunami.” He has called the foreclosure crisis the most important issue facing the country besides the war in Iraq, and termed the subprime loan schemes a “21st-century noose.”
The National Community Reinvestment Coalition reported earlier this year that “African-Americans of all income levels were twice as likely or more to receive high-cost loans as whites.”
“It is no accident that we are here on Wall Street today,” said John Taylor, the coalition’s president. “Welcome to the birthplace of the subprime crisis.
Many have pointed to Wall Street’s role in selling these loans to investors.
Disputing efforts to blame borrowers for not reading (or understanding) the “fine print” of shoddy mortgage agreements, Jackson said the current crisis is really the result of “outright scams and schemes” by lenders and brokers. He argued that they created artificially low credit scores, particularly for African American homebuyers, and artificially inflated home prices, thereby foisting outrageous interest rates on working families.
“I didn’t understand much about mortgages,” said Marilyn Ruano of Brooklyn at the rally. “I also didn’t have a lawyer. I was offered a lawyer by the broker.” It is illegal but common practice in New York for brokers and buyers to share a lawyer.
Ruano’s mortgage payments ended up being $5,000 per month, and she had to rely on credit cards to make payments. Now the interest rates are climbing and she faces foreclosure. “I am not giving up my home without a fight,” she said.
Jackson is calling for a comprehensive, well-funded plan to not only regulate the industry but save the homes of millions of people. He calls his proposal a “Marshall Plan for Mortgages,” modeled after the Reconstruction Finance Corporation that financed the New Deal after the Depression in the 1930s.
“Mr. Bush comes in late with little,” said Jackson, referring to Bush’s “Hope Now” plan. Bush’s plan would only bail out borrowers who are current on their payments, only 7 percent to 15 percent of at-risk borrowers.
Advocates warn that the impact of the crisis will go far beyond the families who lose their homes. According to the Center for Responsible Lending, “Foreclosures will cost homeowners as much as $164 billion” and “the total decline in house values and the tax base from nearby foreclosures will be $223 billion.”
A new study by the U.S. Conference of Mayors shows that foreclosures could cause $6.6 billion in tax revenue losses nationwide.