Canaries, Coalmines, And Our Shared Fate

1. Abuse and exploitation of poor people of color eventually harms everyone.  Predatory lending stripped wealth and homes from low-income communities across the country –but calls for reform generally fell on deaf ears in Washington.  Let’s be clear: the reason for this inaction is that the predators were wealthy and mostly white, and the prey were poor and largely people of color.  As is often the case, however, poor people of color were the “canary in the coal mines” for techniques that ultimately were used on a broader population through the sub-prime crisis and brought about the meltdown of balance sheets. 
   
   Ironically, some conservatives are now telling the ridiculous story that it was irresponsible borrowing by poor people of color and activism to promote community reinvestment that resulted in the crisis.  Progressives should be pushing out the message that, in fact, we are all paying the price for the failure to crack down on predatory lending because many perceived it to be “not their problem,’ while others profited from it.  We are –really!—all in this together, and when our policy fails to attend to the most vulnerable and disadvantaged, there is no escaping the karmic boomerang.
   

2. Money has a way of materializing if you think something is really, really important.  When we perceive certain institutions and people’s well being as indispensible to the common good, massive amounts of money can be found to aid them and PDQ!  Where is the urgency for families in the Gulf Coast still struggling in the wake of Hurricane Katrina, or people losing their homes to foreclosure, or our neighbors facing pain or death from lack of health care?    Our futures are deeply interconnected –so that it is surely true that what happens on Wall Street matters to Main Street.  But what happens in Gary, Indiana or south central Los Angeles also affects all of us.  The failure to recognize this interconnection –and to act with appropriate urgency—is the basic challenge for progressive social change efforts in America.  I know that the next time some member of Congress or budget geek tells me there’s no money for poor people, I’ll have a pretty snappy comeback!

3. Free market fundamentalism, R.I.P.  It is obvious that finance capitalism has long since broken the bounds of the financial architecture created in the New Deal.  There is now no question that the anti-regulatory ideology that has dominated our politics and culture has brought us back to the future of the 1920’s before the crash.  Regulation is really a recognition of our interdependence.  The idea is that our individual, separate actions do not always result in the best possible outcomes, and that we therefore need a set of rules to play by to uphold community values.  Contra the market fundamentalism we’ve been imbibing, the visible hand of regulation sometimes works better than the invisible one of free markets.

4. The fact that some corporations are now so large as to be “too big to fail” raises some provocative questions about the corporate form itself.   If it’s true that all of us –in the form of the full faith and credit of the U.S. government—really do stand behind the largest financial firms in the country when they get in trouble, what’s in it for us?  Where’s the reciprocal, mutual obligation?  Where is the love? Banks get deposit insurance, and so have been subject to the Community Reinvestment Act since 1977.  We now know that all financial institutions above a certain size receive the (until now) implicit benefit of government insurance, but they are not subject to such community reinvestment obligations.  So, what do we get in return in terms of community benefit?  Should there be public directors on corporate boards?  New corporate charters that spell out obligations for corporations beyond returning profit to shareholders? New usury laws to cap on interest rates charged to borrowers?  A re-fanged Community Reinvestment Act that applies to all financial institutions?  Let the bidding begin!

This is a major, historic opportunity to educate the public about the way our economy works, what our government is for, and why a just society proceeds from deep awareness of our connection rather than the fiction of radical isolation.

So what is to be done?  In the short term, CCC and other allies have been urging opposition to the bailout proposals before Congress, and are insisting that protection for vulnerable homeowners and revisions to punitive bankruptcy laws be part of the package.  Over the longer term, we are working closely with others to develop a progressive economic plan to address the ongoing crisis. 

 Deepak Bhargava is the executive director of the Center for Community Change.