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Solidarity Dividend
Subprime loans are high-interest rate loans designed for people with low credit scores, who are not eligible for ordinary loans. The financial crisis of 2008 and the Great Recession started because many borrowers defaulted on their subprime loans, leading the market for investments based on those loans to collapse. Crucially, McGhee’s extensive research has shown that this happened because of predatory lending practices, and not because of financially irresponsible borrowers. Namely, from the early 1990s onward, lenders manipulated millions of homeowners with perfectly good credit to switch their standard mortgages for new, subprime ones that dramatically increased their monthly payments. These banks specifically targeted homeowners of color, who disproportionately lost their homes and wealth during the Great Recession as a result.
Subprime Loans/Mortgages Quotes in The Sum of Us
The The Sum of Us quotes below are all either spoken by Subprime Loans/Mortgages or refer to Subprime Loans/Mortgages. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Chapter 4
Quotes
Looking at these numbers, one could be tempted to minimize the role of racism and chalk it up to greed instead. […] But history might counter: What is racism without greed? It operates on multiple levels. Individual racism, whether conscious or unconscious, gives greedy people the moral permission to exploit others in ways they never would with people with whom they empathized. Institutional racism of the kind that kept the management ranks of lenders and regulators mostly white furthered this social distance. And then structural racism both made it easy to prey on people of color due to segregation and eliminated the accountability when disparate impacts went unheeded. Lenders, brokers, and investors targeted people of color because they thought they could get away with it. Because of racism, they could.
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The public conversation and the media coverage of the subprime mortgage crisis started out racialized and stayed that way. We’ve had so much practice justifying racial inequality with well-worn stereotypes that the narrative about this entirely new kind of financial havoc immediately slipped into that groove. Even when the extent of the industry’s recklessness and lack of government oversight was clear, the racialized story was there, offering to turn the predators themselves into victims. After the crash, conservatives were quick to blame the meltdown on people of color and on the government for being too solicitous of them.
And all of it was preventable, if only we had paid attention earlier to the financial fires burning through Black and brown communities across the nation. Instead, the predatory practices were allowed to continue until the disaster had engulfed white communities, too—and only then, far too late, was it recognized as an emergency. There is no question that the financial crisis hurt people of color first and worst. And yet the majority of the people it damaged were white. This is the dynamic we’ve seen over and over again throughout our country’s history, from the drained public pools, to the shuttered public schools, to the overgrown yards of vacant homes.
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Subprime Loans/Mortgages Term Timeline in The Sum of Us
The timeline below shows where the term Subprime Loans/Mortgages appears in The Sum of Us. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 4: Ignoring the Canary
...a lending company, which paid her kickbacks to steer families like the Tomlins into high-interest subprime loan s. The woman didn’t tell the Tomlins about the hidden fees on their loan or...
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In 2002, long before subprime mortgages triggered the 2008 global financial crisis, McGhee was studying them for Demos by interviewing homeowners...
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When Janice Tomlin closed on her subprime loan , the agent prayed with her and promised her that she would eventually be able...
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...house. (In comparison, Isaiah and Janice Tomlin were lucky to keep theirs.) And eventually, the subprime loan crisis brought down the rest of the global economy. The Black families McGhee met “were...
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...have testified in court about how bank managers pressured them to target Black homeowners with subprime refinancing loans . Often, the bankers never mentioned the new loans’ fees and conditions, and sometimes they...
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...on their loans. The truth is that irresponsible banks cheated customers by steering them into subprime loan s that they could not afford. Bank employees even made extra commissions for doing so.
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...to get away with it. Indeed, one Black Wells Fargo employee remembers his colleagues calling subprime mortgages “ghetto loans” and his boss frequently using the N-word. Ultimately, Black customers ended up in...
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State government officials warned the federal government about predatory subprime lending thousands of times over more than a decade, but Washington refused to act. Policy activist...
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...the aggressors and banks as the victims. One Ohio prosecutor’s case against a politically well-connected subprime lender fell apart because federal attorneys couldn’t figure out who the criminal was. And even though...
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If the U.S. had cared back when subprime mortgages were only devastating communities of color, McGhee argues, it would have prevented the financial crisis....
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