The capital unscrupulously pumped from poor neighborhoods by way of
predatory loans whizzes along a high-speed financial pipeline to Wall
Street to be used for investment. "It's about creating debt that can be
turned into bonds that can be sold to customers on Wall Street,"
explains Irv Ackelsberg, an attorney with Community Legal Services in
Philadelphia who has been defending clients against foreclosure and
working to restructure onerous loans for twenty-five years.
Household-name companies like Lehman Brothers, Prudential and First
Union are involved in managing the process of bundling loans--including
subprime and predatory--into mortgage-backed securities. They often
provide the initial cash to make the loans, find banks to act as
trustees, pull together the layers of financial and insurance
institutions, and create the "special vehicles"--shades of Enron--that
shield investors from risk.
Four securities-rating agencies--Moody's, Standard & Poor's, Duff
& Phelps and Fitch--provide bond ratings for all of Wall Street;
before assigning the acceptable rating that will draw investors, they
assess the risk firewalls constructed by the securitizing company. It
becomes a complex matrix of financial operations designed to generate
capital and minimize risk for Wall Street with the unwitting help of
borrowers. "This whole business is about providing triple-A bonds to
funds that you or I would invest in," says Ackelsberg. "The poor are
being used to produce this debt--what you have is a glorified
Ackelsberg and his colleagues frequently find themselves struggling
through a tangle of companies to find a party legally liable for remedy
when a client is in foreclosure due to a bad loan. Often the company
that originated the loan doesn't actually own it but, rather, is acting
as a servicing agent--assuring the cash flow to a securitization trust.
Frequently shifting ownership also complicates attempts to create
accountability: In one case, United Companies Lending, once hired as a
trust by Lehman Brothers, went bankrupt; EMC Mortgage Corporation, a
wholly owned subsidiary of Bear Stearns, placed the highest bid for the
right to service the outstanding loans and collect the servicing fees.
Sheila Canavan, a Berkeley-based attorney who recently won a settlement
that will pay out some $60 million to the plaintiffs in a fraud lawsuit
against First Alliance Mortgage, says, "The industry and lawyers make it
as complicated and arcane as they can so people don't understand." They
also, she adds, want to distance themselves from the frontline predators
who hawk the loans.
Government-sponsored mortgage lenders Fannie Mae (FNMA) and Ginnie Mae
(GNMA) have long bundled conventional loans--in the 8-percent range--to
create mortgage-backed securities. During the mergers and acquisitions
boom in the mid-1990s, when banks began absorbing subprime lenders, Wall
Street caught on to the potential of bunching subprime mortgages,
including predatory loans. "The banks realized that this was a
moneymaker," says Shirley Peoples, a social research analyst for the
Calvert Group, an investment fund specializing in socially responsible
lending. "They put a legitimacy on it, but it still is what it is."
"Wall Street, since it got into securitization, needs product, needs
mortgage loans to pull together," says Canavan. The securities are then
aggressively marketed, she says. "The Wall Streeters go around the
country, pools of loans are sold to institutional investors, pension
And while it looks as if the lenders themselves set up the difficult
loan terms, Canavan says that Wall Street encourages the gouging
practices. The big financial institutions fronting cash for predatory
loans have information on the loans' interest rates and know very well
what it takes to trap borrowers into those rates. They also build in
incentives for dubious practices: "The loan originators are compensated
with late fees," Canavan says, by way of example. "They're going to make
sure payments don't get there on time, that they get lost or, as the
industry says, 'drawered.'"
It's tough for a mutual fund investor to know whether investment dollars
are going toward supporting a predatory loan scheme. The investor who
knows the names of the biggest offenders may be able to detect them in a
prospectus, but many times the information is not included or the names
of the companies change. Socially responsible funds such as Calvert and
organizations like the Interfaith Center on Corporate Responsibility
have been meeting face to face with banking interests to probe their
policies and positions on bundling the predatory loans. And many in the
industry argue that a rash of bankruptcies and financial failures has
pressured the industry to reform.
But not all consumer advocates buy that.
"These companies come and go," says Ackelsberg, "but the residue of
their abusive activity remains because the mortgage loans are still out
Agnostic's what he was, had always been.
He'd never prayed a prayer, confessed a sin.
He's thinking, though, if Martha goes to jail,
On Sundays henceforth he will never fail
To be in church. In fact, forevermore,
He'll be in synagogue the day before.
It's not as if this man's the sort of pill
Who wishes fellow human beings ill.
But he's convinced: If Martha takes the fall,
There is a God in heaven after all.
Southern Exposure, which somehow looks--even in its third decade,
in the twenty-first century--as if very advanced high school students
had just stapled it together and put it on your doorstep (that's a
compliment...The Nation strives for that effect, too), is still
doing a fine job on its old beat: investigating the strange mix of
culture and corporatism that has made the South what it is today. By
extension, every issue poses the same basic question: What exactly is
America? In looking at the South in great detail over many decades,
Southern Exposure has begun to propose, although not explicitly,
First, America is a place that advocates equality but thrives on
inequality. In the 2002 Spring and Summer issue, which is subtitled "The
South at War," James Maycock has published a piece on the black American
soldier's experience in Vietnam--especially for people who did not live
through the civil rights movement and that terrible Southeast Asian
conflict, this piece will be riveting. "I'm not a draft evader,"
declares one African-American draftee on reaching Canada. "I'm a runaway
America is also a place where the Marlboro Man has not abdicated, as
Stan Goff shows in his gonzo essay on Vietnam and American masculinity
(in fact, it has crossed my mind that all those ads may have been psy-ops prep for George W. Bush's ascendancy). And last, America is a
place that loves the Army. In its useful and unassailable roundup on the
Southern states and the war industry, Southern Exposure comes up
with important facts. The dollar amount of military contracts to Florida
companies alone last year amounted to $15.2 billion. The military, of
course, is a good place to have your money right now. For example,
Florida's education budget was slashed by 4.2 percent last year while
the stock of Northrop Grumman and Raytheon, two of the largest companies
with investments in Florida, were up 25 percent and 40 percent,
respectively. Nutshell portraits of thirteen states provide a real sense
of the give and take between politicians, the military and the job
market, and population in places where the military chooses to spend.
Note also: Of the top twenty-one cities involved in military production
in 2001, excepting Hartford, St. Louis, Indianapolis and Seattle, every
city on the list is in the South or in California. According to
Southern Exposure, 66 percent of the weapons sold to Israel under
the Foreign Military Sales program were produced in the South. The South
has helped situate America in the world today; that puts it in a unique
moral position. But after reading this issue of Southern
Exposure, one really wonders: Do most Southerners care?
After reading about B-29s and F-16s and macho men and Hellfire
missiles made in Orlando--of all places--I was happy to read a few
magazines that go to other extremes. Of the two big yoga magazines
available on the newsstand, Yoga Journal is the yogis' Vanity
Fair, and Yoga International is their Real Simple. We
can dispense with the latter except for the pretzel-position pictures,
but Yoga Journal is a very good niche magazine--good niche
publications take their subject and use it expansively, as a jumping-off
point. The June issue has an excellent and anthropologically important
piece by Marina Budhos on how yoga practice in the West, especially
among Americans, is changing the age-old practice in India, the
Americans behaving like cargo cultists in reverse.
Budhos found that many of the Indians in an Indian ashram (where, by the
way, the hatha yoga teacher was "a really tough Israeli") were attending
because they "were interested in teaching yoga as a career." Many of the
foreigners were simply having yoga fun on vacation--although, as I have
discovered while doing the tortoise position, the word "yoga" and the
word "fun" should never be used in the same sentence. Daniel Ghosal, an
Indian-American, says the Americans who come to India for yoga are seen
by the Indians as "kind of 'cracked.'" Indians don't think of yoga as a
social trend. "The lighting of candles and all that," Ghosal says
dismissively. "To Indians, it's just yoga."
"The Path of the Peaceful Warrior," by Anne Cushman, is also an amusing
piece. In it--after lighting a fire with newspapers in which she sees
headlines about terror and anthrax burning away, and after "folding into
the silence and surrender of a deep forward bend" (that's classic yoga
writing; you just have to push past it)--Cushman proposes a "Yogic
Battle Plan for the War on Terror." I suppose it's better than beefing
up your naval program at Newport News...
The first step: "Stop." I like that. That should be the entirety of an
Op-Ed piece on the Middle East crisis.
There is also "Contemplate death." Under that weighty heading, Cushman
includes this nice aperçu: "The American government's
instruction to 'Be on high alert, yet go about your ordinary life' may
have struck many people as all but impossible, but that paradoxical
injunction is actually...a core yogic practice." (Don't tell Rumsfeld!)
Under "Look Deeply," Cushman cites Tricycle editor James
Shaheen's remark that bin Laden was "inadvertently speaking the Buddhist
truth of interdependence when he said, 'Until there is peace in the
Middle East, there will be no peace for Americans at home.'" "Practice
nonviolence" is another step in the yogic battle; "take action," the
last. By the end, Yoga Journal is beginning to sound like the
editors of Southern Exposure.
Earthtimes, the monthly environmental and social paper
spiritedly edited for twelve years by the effervescent Pranay Gupte, is
folding up shop after July for lack of funding. As Gupte said in a
farewell note to colleagues: "Undercapitalization is always bad for
business; zero capitalization is worse. Since my basement press is
beyond repair, I can't even print rupee notes any longer to sustain
Earthtimes." That's Gupte and the tone of Earthtimes,
too--in moments of pain and crisis, a quiet, self-deflating, sustaining
The $4.4 million damages award in June against FBI agents and Oakland
police for violating the constitutional rights of environmental
activists Darryl Cherney and Judi Bari, wrongly accused of terrorism in
1990, represents more than the culmination of a twelve-year struggle for
vindication. The case also highlights the risks of today's antiterrorism
measures and offers lessons both daunting and encouraging about the
In May 1990, an explosion tore through the car carrying Earth First!
organizers Bari and Cherney. Bari suffered a fractured pelvis; Cherney,
less serious injuries. They assumed the bombing was the work of
antienvironmentalists, meant to disrupt planning for the Redwood Summer
of civil disobedience against the logging of old-growth forest.
The FBI Joint Terrorist Task Force jumped to quite a different
conclusion. As soon as Bari and Cherney were identified, the FBI
informed the local police and leaked to the press that the pair were
terrorists. The authorities claimed that Bari must have made the bomb
herself and that it had accidentally exploded while the two were
carrying it to an unknown target. Bari was placed under arrest in her
hospital bed. Police and FBI agents searched houses in Oakland where
Bari and Cherney had stayed and questioned their fellow activists. Over
the next two months, until the government announced it would not charge
the two environmentalists, the local police and the FBI continued to
call them terrorists.
Only after years of litigation did the truth emerge: The FBI, before the
bombing, had been investigating Bari and Cherney because of their
political activism. When the bomb went off, the FBI shaded the facts to
fit an ideological presumption of guilt. It was also revealed that the
FBI, even after Bari and Cherney had been cleared, collected data
nationwide on hundreds of individuals and groups merely on the basis of
their association with the two Earth First! activists.
The case demonstrates how the truth will come out when the judiciary
fulfills its constitutional role. With patience, skill and funding,
committed activists and lawyers can bring accountability to the FBI.
Just as Bari and Cherney won, just as the secret evidence cases brought
after the 1996 antiterrorism law melted in the face of judicial
challenges, so the material witness detentions and other rights
violations of today will ultimately be held unconstitutional. But the
FBI and the Justice Department will resist oversight and use secrecy and
delaying tactics to evade accountability, prolonging personal and
political damage. Justice was too late for Judi Bari. She died of cancer
The most sobering lesson of the Bari-Cherney case may be this: The FBI's
focus on politics over hard evidence meant that the real bomber was
never captured. In the same way, the Attorney General's recent
announcement that the FBI can monitor meetings and groups with no prior
suspicion of criminal conduct is likely to take the FBI down the path of
investigations based on politics, ethnicity or religion, while real
terrorists escape detection.
Price-fixing fines behind them, the firms are close to achieving a
Would it be too early to sense a sudden, uncovenanted shift against the corporate ethic, if ethic is the word? I can barely turn the page of a newspaper or magazine without striking across either some damaging admission, or at least some damage-control statement, from the boardroom classes.
What would the world look like if women had full human rights? If girls
went to school and young women went to college in places where now they
are used as household drudges and married off at 11 or 12? If women
could go out for the whole range of jobs, could own the land they work,
inherit property on equal terms with men? If they could control their
own sexuality and fertility and give birth safely? If they had recourse
against traffickers, honor killers, wife beaters? If they had as much
say and as much power as men at every level of decision-making, from the
household to the legislature? If John Ashcroft has his way, we may never
find out. After twenty years of stalling by Jesse Helms, the Senate
Foreign Relations Committee in early June held hearings on the
Convention for the Elimination of All Forms of Discrimination Against
Women (CEDAW), an international treaty ratified by 169 nations.
(President Carter signed CEDAW in 1980, but the Senate blocked it.)
George W. Bush originally indicated that he would sign it--that was when
he was sending Laura onto the airwaves to blast the Taliban--but under
the influence of Ashcroft, he's since been hedging. Naturally, the
religious right has been working the phones: According to one e-mail
that came across my screen, the operator who answers the White House
comment line assumed the writer was calling to oppose CEDAW, so heavily
were the calls running against it. The reasons? CEDAW would license
abortion, promote homosexuality and teen sex and destroy The Family. In
2000, Helms called it "a terrible treaty negotiated by radical feminists
with the intent of enshrining their anti-family agenda into
How radical can CEDAW be, you may ask, given that it's been ratified by
Pakistan, Jordan and Myanmar? Genderquake is hardly around the corner.
Still, across the globe women have been able to use it to improve their
access to education and healthcare as well as their legal status. In
Japan, on the basis of a CEDAW violation, women sued their employers for
wage discrimination and failure to promote; the Tanzanian High Court
cited CEDAW in a decision to overturn a ban on clan land inheritance for
women. Given the dire situation of women worldwide, it is outrageous to
see US policy in the grip of Falwell, James Dobson and Ralph Nader's
good friend Phyllis Schlafly. Like the Vatican, which uses its UN
observer status to make common cause with Islamic fundamentalist
governments on behalf of fetus and family, on CEDAW the Bush
Administration risks allying itself with Somalia, Qatar and Syria to
promote the religious right agenda on issues of sexuality. In the same
way, at the recent UN General Assembly Special Session on the
Child--where the United States opposed providing girls with sex
education beyond "just say no," even though in much of the Third World
the typical "girl" is likely to be married with children--the Bush
Administration allied itself with Libya, Sudan and evil axis member
Iran. Some clash of civilizations.
Given this season's spate of popular books about mean girls and inhumane
women, it might seem starry-eyed to suppose that more equality for women
would have a positive general social effect. Where women are healthy and
well educated and self-determined, you can bet that men are too, but the
situation of women is not only a barometer of a society's general level
of equality and decency--improving women's status is key to solving many
of the world's most serious problems. Consider the AIDS epidemic now
ravaging much of the Third World: Where women cannot negotiate safe sex,
or protect themselves from rape, or expect fidelity from their male
partners, where young girls are sought out by older HIV-positive men
looking for tractable sex partners, where prostitution flourishes under
the most degraded conditions and where women are beaten or even murdered
when their HIV-positive status becomes known, what hope is there of
containing the virus? Under these circumstances, "just say no" is worse
than useless: In Thailand, being married is the single biggest predictor
of a woman's testing positive. As long as women are illiterate, poor and
powerless, AIDS will continue to ravage men, women and children.
Or consider hunger. Worldwide, women do most of the farming but own only
2 percent of the land. In many areas where tribal rules govern
inheritance, they cannot own or inherit land and are thrown off it
should their husband die. Yet a study by the Food and Agriculture
Organization shows that women spend more time on productive activities,
and according to the International Center for Research on Women, women
spend more of their earnings on their children than men do. Recognizing
and maximizing women's key economic role would have a host of
benefits--it would lessen hunger, improve women's and children's
well-being, improve women's status in the family, lower fertility.
And then there's war and peace. I don't think it's an accident that
Islamic fundamentalism flourishes in the parts of the world where women
are most oppressed--indeed, maintaining and deepening women's
subjugation, the violent rejection of everything female, is one of its
major themes. (Remember Mohammed Atta's weird funeral instructions?) At
the same time, the denial of education, employment and rights to women
fuels the social conditions of backwardness, provincialism and poverty
that sustain religious fanaticism.
If women's rights were acknowledged as the key to human progress that
they are, we would look at all these large issues of global politics and
economics very differently. Would the US government have been able to
spend a billion dollars backing the fundamentalist warlords who raped
and abducted women and threw acid at their unveiled faces while
"fighting communism" and destroying Afghanistan? At the recently
concluded loya jirga, which featured numerous current and former
warlords as delegates, a woman delegate stood up and denounced former
President Burhanuddin Rabbani as a violent marauder. For a moment, you
could see that, as the saying goes, another world is possible.
Nixon thought so; Otis Chandler doesn't. Maybe it depends on where you
The camera pans across the room
To see what she has made:
An omelette or a spring bouquet
Or just an inside trade.
Never did I expect to feel sorrow and pity for the Catholic Church, yet I confess that I do.