In the 1970s, as a very new lawyer, I moved to California. I did consumer protection; there was such a thing back then. The city of Los Angeles was still reeling from a lien equity scandal, dating to the ’60s, in which unscrupulous lenders and building contractors misled homeowners into signing usurious or fraudulent contracts. Thousands of mostly elderly and minority families lost their homes to foreclosure as a result. Back then too, interest rates were calculated by a dizzying array of impossibly convoluted accounting methods–all to conceal true costs.
The personal devastation wrought by this underhandedness was great enough to become the fuel for social movement. Laws were passed requiring contracts to display the interest rate in clear, conspicuous lettering and for that rate to be computed according to a standardized method. (That’s the now familiar number we call the APR.) Caps were placed on the interest that could be charged so that it did not compound faster than any working person could pay off. "Cooling off" periods–such as three days to change one’s mind–were mandated for businesses where hard-sell tactics had been particularly pervasive.
Many of those laws have been constricted or ignored since. Loan-sharking has resurged with global force. With the Bush Administration’s disdain for regulation, the "ghetto lending" practices of the 1960s have metastasized, spreading across class, race and regional boundaries. Intersecting with the massive pooling of mutual and hedge funds, this corruption has had international consequences that dwarf Enron and the savings and loan scandals of the ’80s. If such practices began in neighborhoods where there was disrespect for the property rights of certain Americans, it’s come round to bite us in the tail. We are all in the ghetto now.
I spent the past few days in New Orleans. Nearly three years after the hurricane, it’s still a city in mourning, more riven than ever. About 40 to 50 percent of the population has not returned, most because they have not been able to. Even homeowners with insurance have complained that some companies refuse to pay them directly for repairs, instead giving the money to the banks that hold their mortgages. Such testimonies make me guess that what these homeowners had purchased was not insurance for repairs but so-called "credit insurance"–where policyholders pay the insurer to protect not them but their creditors in case of disaster. It’s a kind of insurance that was outlawed in most places thirty years ago. It’s common everywhere now.
Rents have soared in New Orleans because of decreased housing stock. Yet the City Council recently OK’d the demolition of virtually all surviving public housing–large brick-and-mortar buildings, mostly with blown-out windows, all eminently repairable. Today, the Lower Ninth Ward is an eerily lush plain of overgrown sadness. Of its 15,000 residents before the storm, only 1,400 remain. One intriguing embellishment upon this expansive devastation is the flutter of little signs affixed to the remaining lampposts: Easy Terms! Refinance With Us! No Money Down! I couldn’t help but think of my first cases in LA and prayed that someone was having a good close look at the fine print. Local newspapers are full of disturbingly gushy articles about realtors who slaver over the historic row houses still standing in poor black areas. They see "the next SoHo!"
American mobility depends on the equity accumulated in its homes. The cyclical assault on African-American homeownership in the last half-century left us with ravaged black "inner cities" and strip-malled "havens" of white suburban blight. Now, given the energy crisis, bike-able, in-town locations like Harlem are suddenly desirable; formerly fashionable outlying regions are where property values are falling fastest. New Orleans is just the most vulgar iteration of an inner city being "rediscovered," "reclaimed" and "repossessed" by moneyed interests. To hasten the process of what one half calls gentrification and the other half feels as dispossession, the city has passed an "anti-blight" ordinance. Posters have cropped up in front of houses where only the walls remain: Do You Know Where This Owner Is? These signs pass as public notice; found owners are slapped with anti-blight fines. Failure to pay results in forfeiture.
Recently, Rush Limbaugh snickered that the residents of Cedar Rapids and other drowned cities along the upper Mississippi weren’t "whining" about their condition like those noisy New Orleanians. Well, it’s quiet in New Orleans now–a terrible brew of frustration beyond words. If it is just as quiet in the largely white floodplains of the Midwest, we should not take that for a good thing in an economy as troubled as ours. Their saga is just beginning, after all, and it remains to be seen if insurers will pull back and developers swoop in with the same greed as in New Orleans. Certainly, the burst levees in Iowa and Missouri are signs of the same broken infrastructure, even if the corruption that allowed it is not as visible, cruel or racially inflected as in the delta.
Here, as I see it, are the two models competing for our future: on the one hand, while walking in the Eighth and Ninth Wards, I saw scores of volunteers from all over North America, a rainbow coalition with hammers in hand, working for organizations like Habitat for Humanity. On the other hand, I overheard a conversation between two white men apparently touring "for deals." The first was wearing an Obama T-shirt. The second said amiably, "So, you’re for Obama." "No," replied the first man; he was "a liberal" but hadn’t decided yet. Turns out he was just wearing the shirt to ingratiate himself with the natives–although "ingratiate" was not the word he used.
If, as I hope, we have the collective good sense to make Barack Obama our reconciling Nelson Mandela, turning the vast injured ship of state around will not be something he can do alone or overnight. Ultimately, that will require many more of us to see the true value of "brand America" as an investment in our bridges as much as in our walls; and in one another as much as in ourselves.