Its common knowledge that Wall Street created the financial panic of 2008. Through issuing predatory loans to unsuspecting, unprotected consumers, the banks triggered the Great Recession.
Baltimore was hit particularly hard. In fact, in the Baltimore area, the black community was specifically and intentionally targeted for these predatory loans.
The resulting implosion took the black community’s wealth back to Segregation-era levels.
Think about that for a moment.
This means the the subprime mortgage fraud was the biggest blow to the black community’s wealth since Civil Rights. Over a dozen banks were charged with foisting bad loans onto black people.
Wells Fargo was the worst offenders in the Baltimore area. According to recent testimony by Beth Jacobs, formerly one of Wells Fargo’s top loan officers, the practice was overtly racist,
“Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as ‘mud people’ and to subprime lending as ‘ghetto loans.’”
The banks insidiously organized the black community to streamline the effort of preying on them at large scale,
“’Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.’”
The state of Maryland, which had been home to some of the nation’s wealthiest black communities prior to the crash, saw the second most foreclosures in the country, after Florida.
The scope of the predatory lending is staggering: Blacks were more likely than whites, and women were more likely than men, to be sold a predatory loan. In some income brackets, black women were as much as five times more likely than white men to receive a subprime loan.
It’s a popular misconception that these people needed subprime loans. Most of the people who were sold these loans did qualify for conventional loans,
“…in 2/3rd (66%) cases, people with high FICA scores, who would have qualified for conventional loans at market rates, were diverted towards subprime loans because of their profitability.”
In Baltimore, under 600 subprime loans were issued in 1993, and over 8,000 in 1998. By the end of the ’90s, subprime loans accounted for 60% of black homeowners’ foreclosures in the Baltimore area. From there, it only got worse. ThinkProgress, a think tank studying the issue, found that
“More than half of Baltimore properties subject to foreclosure on a Wells Fargo loan between 2005 and 2008 are vacant, 71 percent of them in predominantly black neighborhoods. Baltimore still had the ninth-largest number of foreclosures in the country last year [2014] at 5,200.”
As of 2012, there were approximately 47,000 vacant homes in Baltimore, and their concentration correlates almost perfectly with the concentration of black people living Baltimore.
American financial institutions, such as Wells Fargo, used the black community’s purchasing power against them. They specifically targeted black women and even among borrowers who had the means to buy a conventional loan pushed them into high interest subprime loans.
In Baltimore this meant tens of thousands of black families were ruined. The overtly racist housing practices of the mid 20th Century were replaced by racism by banks in housing practice.
And the results are staggering.
In 2005, the median white household wealth was $134,992. By 2009, it had declined to $113,149. In 2005, the median black household wealth was $12,124. By 2009 it had declined to $5,677.
That is inequality on a scale never before seen in America, aside from slavery.
While white wealth declined by 16%, black wealth declined by 53%.
Wall Street cynically used the black community’s striving for the American Dream against them. After centuries of bondage, a century of second class citizenship, and half a century beyond Civil Rights, many black families had finally made it.
And Wells Fargo crushed them.
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