Reclaiming the Politics of the Family

The real victors on that strange day were the grassroots groups that successfully flexed their muscles against the most well-funded lobbying group in America, showing the world that even the credit industry can be defeated if key groups can be rallied against them. What was the key to action? It was not simply a matter of putting forth the facts. Congress had already impaneled a Bankruptcy Commission to write 1,100 pages of facts, which few even bothered to read. No, the real key was to match up the politics of financial distress with the interests of the rest of the country. The right-to-life organizations put a face on those who would be affected by the Schumer Amendment, showcasing stories of elderly grandmothers and churchgoing families who protest abortion as a matter of conscience. The pro-choice organizations put their own face on the issue, spotlighting violent abortion protesters who had found a loophole that let them get away with breaking the law.
There is a lesson here. To put sound economic policies on the political agenda, families also need to find a face. So long as they are "debtors" or "bankrupts," their needs can be dismissed. Instead, they need to be seen as members of powerful constituencies, members of groups that command the respect -- and the fear -- of the political elite. Families in financial trouble must be depicted as they really are: "parents of young children," "nonresident fathers paying child support," "suburban homeowners," "African-American middle-class families," "single mothers," "families sending a kid to college," "multigenerational Hispanic families." Most of all, the groups that defend these people need to organize against those who are picking their constituents' pockets.

The case is not hard to make. Consider the circumstances of African Americans. For decades, the National Association for the Advancement of Colored People (NAACP) and other minority rights groups have lobbied to expand African-American home ownership, and they have been at least somewhat successful in their efforts. Now predatory and subprime lenders threaten to unravel those hard-won gains. Every year, more than 300,000 black and Hispanic homeowners file for bankruptcy in a desperate attempt to hold on to their homes. Hispanic homeowners are nearly three times more likely than white homeowners to file for bankruptcy, and black homeowners are more than six times more likely.

The same signs of distress are evident outside the bankruptcy courts. When we analyzed unpublished data from the Department of Housing and Urban Development, we found that among families who had purchased a home with an FHA-backed mortgage, African Americans were twice as likely as white homeowners to lose their home in foreclosure. Payday lenders and subprime mortgage companies deliberately target minority neighborhoods, confident that they can get away with fleecing these families. Billions of dollars are flowing out of the communities that can least afford it, directly into the pockets of giant lenders and their shareholders.
We are not the first to document these problems; minority rights groups are well aware of the dangers of predatory lending. There is, however, an important question of how high economic issues should rank in their list of priorities. When Senator Trent Lott seemingly expressed his nostalgia for a segregated America, minority groups around the country barraged the talk shows and newspapers, and Lott was ultimately stripped of his powerful position as majority leader of the Senate. Similarly, when Texaco executives were accused of using racial slurs to refer to African Americans, the company was boycotted, sued for millions of dollars, and forced to adopt new practices to ensure that its black employees had better opportunities. But when a Citibank official said in sworn affidavits that she regularly added extra fees to a home mortgage "[i]f someone . . . was a minority," there was little response. Citibank quietly agreed to a cash settlement with the FTC, and there were no press releases from the NAACP, no interviews on the evening news, no calls for Citibank's highly visible CEO, Sandy Weill, to resign.

Subprime lending, payday loans, and the host of predatory, high-interest loan products that target minority neighborhoods should be called by their true names: legally sanctioned corporate plans to steal from minorities. Many years ago, a host of community groups worked together to oppose discriminatory lending and to help pass the Community Reinvestment Act despite stiff opposition from the banking industry. It is time for these groups to come together again to eliminate the modern version of economic discrimination, which parades under different names but has the same devastating effects.