There will be no last stand for Dayton: transactions before common sense

Reading today’s Dayton Daily News, where the obvious gets reported years late, I realized that resistance is futile, we may as well throw in the towel and give up.

More than four decades after racial discrimination in home lending was outlawed, lenders in the Dayton area deny a much higher percentage of loans to blacks than whites, even when income levels are comparable.

Blacks are also more likely than whites to be sold a high-cost, subprime loan.

via Well-off blacks denied loans more than low-income whites.

So much for the “community reinvestment act” and all the other “do good/feel good legislation” that has been passed off as an excuse to solve the sins of the past- they’re all window dressing- on a building that’s been allowed to rot.

The banks, who’ve been allowed to grow beyond state lines, and turned the financial markets into a giant casino have succeeded in killing the American dream. They may be “too big to fail” but they are also now too big to understand the damage they’ve wrought.

The inner city wastelands of Dayton, Detroit and points near and far are infrastructure that they’ve written off. The value of those roads, utilities, public services, schools etc. have all been tossed aside, because there is no way to keep the churn of money moving in these forgotten areas. And the churn is what makes the banks able to take their scrape.

Investment is no longer investment. Our monetary system has turned into a transactional junkie, with a need for stock, or debt, or credit default swaps to change hands frequently. We don’t care about you buying and holding anything- it’s all about flipping deals and taking a cut/commission/fee.

Be it your 401K, or the lease, or the ownership- nothing is about building wealth based on anything except trading paper.

We don’t make things anymore. We don’t want to invest in things for the greater good- we just want to set up shell companies, dealing in futures, making paper trades on businesses that don’t make sense.

How else can anyone back the building of a new HQ for Teradata in a region that is already 50% overbuilt- with a 25%+ commercial vacancy rate- and zero population growth? Because they need that fix of issuing debt, to be flipped over and over until we can’t tell who’s holding the bag for the next time Teradata wants to move.

The fact that your tax dollars are being “invested” in this deal- both directly in the building ($500k) and in the new interchange-just adds insult to injury.  That no one is screaming stop this madness is even a clearer indication that we’re doomed.

I look at the Tea Party screaming foul about “Obamacare” and wonder why the antipathy goes toward Obama instead of the insurance industry that just got a guaranteed bump in government-required business. Why are we not just paying the doctors and nurses- and cutting out the middleman? Who is writing our laws these days? It’s certainly not anyone interested in the well being of the public.

To look at Jon Husted, a lobbyist pretending to be a politician- smearing the idea of a return to rail in Ohio- complaining about the subsidy it will require, while ignoring the huge subsidies given to fund road construction- and the sprawl induced by government handouts like those funding Teradata.

Yet, somehow houses can lose half their value in 3 years. However, it’s not just happening to blacks in West Dayton- it happened to me in South Park. My home was valued at $130K a few years ago- and now is worth $60K according to “Bank of America.”

If we allow this wholesale write off to continue- our entire country will be worthless.

It’s time to take a stand. It’s time to require accountability. It’s time to stop writing laws that favor corporations over the community. It’s time to take a stand and require investments to be held- and tax the transactions.

It’ time to stop putting money into private hands to do public work.

It’s time to stop the insanity of writing off entire areas because the flip won’t fly anymore.

Your thoughts?

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10 Responses

  1. Leslie Marsh April 12, 2010 / 9:20 am
    Maybe it’s time for localities to return to the tenets of Marcus Garvey. Not the egomaniacal idiocy, but the basic idea of people lifting themselves up through the concentrated effort of working together, buying from their neighbors, investing in their neighborhood, and believing it can be done without looking to an external power such as the local, state or national government to do it for them.
  2. Robert April 12, 2010 / 9:33 am
    The DDN article regarding loan denial due to race was another tribute paid to the fair housing crew (It’s fair housing month). The article implies that lender underwriters are privy to race when they make a decision to approve or disapporve a loan request.  If your neighborhood is in decline and your loan request is greater than the appraised value of your home, a lender is not going to make the loan, regardless of the color of your skin …  Last year ,at this time, the DDN ran a story about a black gentleman that fell behind on his payments on his house at 1221 W. First St. and was facing foreclosure. His payment was about  $465 a month. The house is currently appraised by the county auditor for $120,000+ .(  This appraisal is totally bogus, but really does’t matter because the property is tax abated.) There are second and third mortgages from Citywide and Countywide Development that require a high county appraisal so their loans are not upside down…. The former school board president and her judge husband walked away from a million dollar loan on a house they put a $ 50,000 downpayment.  The house was appraised for the sheriff auction for $600,000…. BTW, the DDN comment section is always closed for these articles. They chose not to include facts or statistics that may be contrary to the victim mentality they promote.
  3. Will Brooks April 12, 2010 / 10:30 am
    To understand banks and fractional reserve lending check here: http://www.webofdebt.com/
     
    As far as lending is concerned, during the great depression there was more goods and services sitting idly by because these were in greater supply than the money in circulation at the time. Why? ?The banks were not lending the way they were during the roaring 20s. I don’t doubt racial discrimination, I only know that my wife and I had credit scores in the 800s and were denied loans because we were self employed and lacked two years tax returns validating our business. Stated loans are a by-gone. Since the bubble burst loans have all but dried up.
  4. Will Brooks April 12, 2010 / 10:30 am
    Correction: fractional reserve lending = fractional reserve banking
  5. John Dough April 12, 2010 / 5:07 pm
    I work for a bank, in the mortgage department, and I agree 100% with Robert.  You don’t buy a car for 5k, watch it depreciate, and think you can go into a bank and borrow 20k against that vehicle.  Well, in this instance, you are talking about a home off W. Third St. (an area in which property values are in steep decline).  The prospective borrower was requesting 35k against a property valued at 14k.  Lenders make decisions based primarily on 3 criteria:  1) credit score, 2) debt to income ratios, and 3) loan to value (a percentage).  In my years of service in the mortgage business, I have been tought one thing, over and over again….and that is simply this :  you can not tie yourself to an individual, his/her liquid assets and/or credit score are nice indicators of a person’s general behavior or attitude towards repaying debts, but you can only attach yourself to the subject property.  When a loan goes bad, all you have is the collateral.  At that point, the fact that your borrower once had an 820 credit score, or 30k in liquid savings means nothing.  What you’re left to deal with, is the property, which you hope to liquidate in order to cut your losses. (it is worth noting, that 99.99% of homes when returned to the bank aren’t in the same quality of condition when returned, as they were when the loan was made).  In reference to the DDN property, should this man lose his job, or his pension (and let’s not pretend that isn’t commonplace today) the bank would have ended up getting a 5k property back on their 35k loan. 
    The fact that black people in this town, are getting turned down for credit at a higher frequency than their white counterparts tells me that black people are disproportionately located in neighborhoods that are deteriorating……and I have no solid numbers to back this up, but I’d be interested in seeing the statistics regarding the average credit score of said blacks vs. their white counterparts (as that too, could be very telling).
    The thing that no one wants to talk about, is the absence of the subprime loans.  No one was crying foul about racism in housing when everyone who could fog a mirror was getting a loan.  The fact that those loans were able to be made in the first place, was largely due to inflated appraisals and the fact that debt to income ratios, and credit scores (2 of the essential 3 categories used to evaluate applicants) were thrown out the window.  How did that type of behavior by the banks work out?  It ended up in a financial crisis the likes of which we haven’t seen since the great depression.  Fast forward to today, where the general public is screaming from the mountain tops, that lenders need to be more responsible; and you get the lending environment we have today.  Consequently many people are being denied credit, and the DDN in an expose on lending (which I equate to writing an article about having too long of lines in airport security a month after 9/11) decides that now is the time to attack banks based on racist lending practices.  It’s unbelievable, and as Robert points out,  they close the comment section on the article, because God forbid anyone hear the other side of that story!
    I’d also love to see the DDN write an investigative article on the foreclosure involving our school board president. 

    And one last comment in closing….  food for thought:
    Let’s say 5/3 made that man his 35k loan, on his 14k house.  Let’s say over the course of the next year, that man ran into financial hardships, the likes of which made it beneficial for him to sell his property.  He lists it at 41k to cover his expenses and realtor fees, and gets no takers.  He drops it to 35k, just to cover his loan, and gets no takers.  He drops it to 20k a year later, that being the lowest price possible at which his home would sell, and it still doesn’t go.

    Guess who the bad guy is now…..it’s the bank that leant this poor black man 35k on a 14k property.  It almost certainly was “predatory” right?  Who in thier right mind would lend 35k on a 14k property?

    Shame on the DDN and thier contribution to the racial divide that plagues this country.  While the banks can be blamed for a lot of things, racism is not one.  If this whole debachle has proven anything to me, it’s that the only color banks care about is “green”

  6. jstults April 12, 2010 / 7:32 pm
    I know a few bankers and I think they’d agree with what Robert (and John Dough) said:

    If your neighborhood is in decline and your loan request is greater than the appraised value of your home, a lender is not going to make the loan, regardless of the color of your skin …

    By the way, Dayton Made Another List (note the ‘Home prices YTD’ stat).

  7. jstults April 12, 2010 / 8:55 pm
    Dayton’s fellow traveler (#19) on the above-linked list is Portland, OR:

    According to Richard Florida’s philosophy, street level culture is an important draw to the creative class. Young creatives are flocking to cities like Portland, Oregon and the like because there is a street level culture occurring there that is enormously attractive to them. In fact, many of these young people are going to Portland without definitive job possibilities (remember San Francisco in the 60s?) simply because of this exciting, idealistic, bohemian culture.
    Creative Incubator

    Cart before horse?

  8. Jeff of Louisville April 12, 2010 / 8:58 pm
    they close the comment section on the article, because God forbid anyone hear the other side of that story!
     
     
    They close the comment section because this town is filled with right-wing classist racist scum who would use it as a soapbox for their views…they would turn the DDN comments section into a subforum of Stormfront.
    If some banker wants to rebut the article, write a letter to the editor and sign your name. If its long enough and good enough they will publish it as an op-ed article.  I got one published that way a few years ago on a different topic.
     
     
  9. jstults April 14, 2010 / 9:48 pm
    Thanks to DL, here’s why those kids are going to Portland and other trendy spots:

    Since 2000, the percentage of people age 16 to 24 participating in the labor force has been declining (from 66 percent to 56 percent across the decade). Increased college attendance explains only part of the shift; the rest is a puzzle. Lingering weakness in the job market since 2001 may be one cause. Twenge believes the propensity of this generation to pursue “dream” careers that are, for most people, unlikely to work out may also be partly responsible. (In 2004, a national survey found that about one out of 18 college freshmen expected to make a living as an actor, musician, or artist.)
    How A New Jobless Era Will Transform America

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