Economy  
comments_image Comments

'American Casino': How Our Nation's Financial Sector Became a Massive and Unregulated Gambling Operation

An incredibly powerful new documentary finally lets those who've lived it tell the story -- from the "creative" financiers to the home buyers duped by brokers.

Continued from previous page

 
 
Share
 
 
 

So when they started hawking these subprime loans, there were these markets ... I mean, people in inner-city Baltimore or other American cities, or minority areas around the country ... they were hungry for credit. They had never had access to loans.

So suddenly they were being offered these loans, they were being sold loans. But not prime loans like, you know, white people got. But subprime loans, i.e. loans that had predatory rates of interest or balloon payments. And that's what John Rellman, who is a very great civil rights lawyer, discusses in the film; he describes this as reverse red-lining. And as you say, says it's the civil rights issue of the 2000s.

LC: It's a civil rights issue because, as he says, "You know, with the Jim Crow laws in the old days, they would say ... 'you can't live here.' Now with this," as he puts it, "you suck the equity out of an area."

Minorities in Baltimore, for example, you had areas that were really being spruced up, they were being fixed up. These are inner-city areas, and there were people doing nice things with houses and money coming in. All that money is now gone because of the massive defaults, because of all the subprime loans. There's no money there anymore. These areas have been completely ravaged because these guys have come in with these predatory loans.

You know, there's some shocking figures in this film, which point out what happened with minorities. You know, four times as many people of color were given subprime loans. And that isn't because they were poor or anything. They were exactly like their white counterparts.

It looks really bad when you look at those figures, and there were a lot of middle-class African Americans who were put into subprime loans, and they certainly could have qualified for prime. And the reason why all this needs investigating is because you could make a strong case that it was fraud.

AC: As you can see in the film, we talk about a lawsuit in the city of Baltimore. They are claiming that the Wells Fargo Bank targeted minorities, targeted African Americans in Baltimore for these subprime loans, and now the state of Illinois has just filed suit against Wells Fargo, claiming the same thing.

I think they're not the only bank alleged to have done this, but whatever the federal government does or does not do, a lot of states and a lot of local administrations really are very incensed about this and are taking action.

JH: And the worse a person's credit, the higher the fees, and as you show in the film, 61 percent of those minorities who got a subprime loan in 2006 would have qualified for prime loans.

You also show very beautifully in the film, I think, the impact that this has not only on people who had those mortgages, but on the people who live around them, the communities -- the unbelievable blight and decimation that comes to these communities that have had high rates of foreclosure within them. Tell me a little bit about what that was like when you were seeing these things.

LC: Well, we saw it in a number of communities. In Riverside, Calif., for example, we were going around with a mosquito vector-control team. And they were concerned about these neighborhoods where you have every other house in foreclosure.

These houses had been built very recently. This is land that had been farm land, dairy farms, big daily farms five years before. And they built these houses badly, and then they built small swimming pools behind a lot of the houses, and the swimming pools of course are now black and full of hundreds of thousands of mosquitos.

 
See more stories tagged with: