By Chauncey Robbs, Graduate Research Associate at the Kirwan Institute
Over the past year, newspapers large and small have filled their headlines with the once forbidden word “foreclosure”. The meltdown of the American housing sector has created such a debacle amongst major mortgage lenders and financial institutions that several mortgage lenders and financial institutions have closed their doors for good or are flirting with idea of merging to stay afloat. The panic has caused such disarray that people constantly question who holds the blame; is it investors, financial instructions, or the government? Regardless of which party holds fault for the meltdown, the effects of predatory lending practices and seedy lending institutions have not only affected inner cities, but have steadily percolated into suburban and newly developed communities as well.
The effect of the housing meltdown on suburban and developing communities has become an eyesore to neighboring residents and an incubator of crime. Vacant foreclosed homes have been stripped of copper wiring, vandalized, and have become the new murals for graffiti artists. A study conducted by Dan Immergluck and Geoff Smith in “There Goes the Neighborhood: The Effect of Single-Family Mortgage Foreclosures on Property Values” illuminates that an increase in the foreclosure rate by one percentage point increases neighborhood violent crime by 2.33 percent. Additionally, the authors postulate that increases in crime negatively affect property values within the immediate residential vicinity. “The Next Slum?” By Christopher B. Leinberger further illustrates that today’s suburbs can possibly be tomorrow’s tenements. The article draws upon the misfortunes of a new developed community in Charlotte, NC where 81 of the community’s 132 homes were in foreclosure as of late last year.
As the meltdown continues to strike suburban and developing communities, their long-term stability appears bleak. With municipalities depending heavily upon property tax revenues to provide services, dwindling property values will strain municipal budgets even further. Hopefully, the heightened involvement of the federal government with an economic stimulus package on the verge will help ease the burden on struggling homeowners. Regardless of the uncertainty of the future, public policy officials must advocate for more effective measures to mitigate the risk of future meltdowns.
Tuesday, February 26, 2008
By Chauncey Robbs, Graduate Research Associate at the Kirwan Institute
Monday, February 18, 2008
By Kristen Farmer, Graduate Research Associate at the Kirwan Institute
Are Native American mascots racist? This is a question that plagues hundreds of sports teams at all levels. Many say that it's a sign of respect that these teams were so named, but is the intent actually of any importance? When teams are named 'the Atlanta Braves,' 'the Florida State Seminoles,' or 'the Washington Redskins,' they make claims to a people, a culture and a religion that is being inappropriately used as a symbol for sports teams' fans to gather around. They are not celebrating the ancestry and the history of Native Americans. Instead, they are creating a symbol for a race of people. There are no teams named 'The Negroes,' 'The Jews' or 'The Asians'; why should this be any different for Native Americans. Why then should teams be permitted to have mascots called, 'The Braves' or 'The Seminoles'?
The names 'Braves' and 'Redskins' were once used as insults from the white man to the 'savages.' There are even accounts that the word 'Redskin' is derived from Natives being killed and skinned, for the collection of a bounty. Now they are celebrated as symbols for sports teams, perpetuating the myth that Native Americans were uncivilized killers. These mascots are creating stereotypes of the Native American people and undermining the efforts of their people to portray accurate images of their culture, religion and traditions. In such a politically correct culture, why is it okay to continue to ignore the protestations of Native Americans?
This race of people were exploited and oppressed from the moment Europeans landed on Americas' shores, they underwent forced assimilation and many now live on carved-out reservations that are rampant with unemployment, poverty and depression. If they ask for a mascot to be retired because it is offensive to their people and their heritage, shouldn't we respect that wish?
Wednesday, February 13, 2008
By Kwabena Agyeman, Graduate Research Associate at the Kirwan Institute
In the light of the current political upheaval in Kenya, it is important to shed some light on the role ethnicity plays in instability, civil conflict, and poverty in Africa. Ethnicity is a very broad term which can be defined in different ways depending on the context. However, in this context, I am borrowing Crisford Chogugudza’s definition which states that ethnicity is defined as a shared cultural identity involving similar practices, initiations, beliefs and linguistic features passed over from one generation to another.
The paradox is that while politicians in Africa characterize ethnic rivalry as a colonial tactic designed to ‘divide and rule’ and keep them under subjugation, many of them continue to use ethnicity to promote themselves and inflict maximum political damage on their opponents. The situation in Kenya today is evidence of how far politicians are prepared to go in using the ethnic card in politics.
The immediate trigger has been the disputed election results. Supporters of President Kibaki's main challenger, Raila Odinga, believe he was cheated of victory. Mr. Odinga is from the Lou community, while President Kibaki is a Kikuyu. The Kikuyu is the largest and most economically-dominant ethnic group in Kenya. But the ethnic tension, which has dogged Kenyan politics since its independence in 1963 and has its roots in a land dispute, is widely believed to underlie much of the violence. The ruling government in Kenya is perceived by the opposition as being Kikuyu-dominated, so the current political dispute is fuel for the smoldering embers of a land dispute which has existed for decades.
Rwanda, Liberia, and Burundi all bear testimony to how politicians have exploited ethnic sentiments, and the havoc ethnic conflicts can cause to an entire population. Crisford Chogugudza, among others, argues that ‘dictatorships contained ethnic clashes to a large extent’ and that democracy has again revived ethnic clashes as politicians make it an issue to gain political mileage. The above point is debatable though. I pose that the challenge to be able to overcome this quagmire lies in addressing the really deep, long-running income inequalities in Africa in such a way that issues of race, ethnicity, gender, or religion are transcended for the benefit of all and not just a few. What do you think?
Monday, February 4, 2008
By Charles Patton, Research Assistant at the Kirwan Institute
“Financial apartheid,” “foreclosures meltdown,” and “Cleveland’s Katrina” are just some of the euphemisms that have been used to describe the devastating result of a recent surge in subprime lending that has resulted in a spike of foreclosed homes.
Subprime loans are often provided for borrowers who have deficient credit histories. These loans have higher interest rates than prime or conventional loans to compensate for this credit risk. Reverse redlining occurs when lenders target particular groups including minorities and the elderly. In “The New Redlining: Predatory Lending in an Age of Financial Service Modernization,” Gregory Squires notes that the neighborhoods targeted most often are predominantly African American.
Gregory Squires and Charis Kubrin argue in “Privileged Places: Race, Uneven Development and the Geography of Opportunity in Urban America” that the recent surge of reverse redlining is a result of conventional banks leaving low-income, minority areas, which led to an increased presence of fringe banking institutions (e.g., check-cashing outlets, payday lenders, pawn shops, etc.). Additionally, the authors argue that the conventional banks that remain in these neighborhoods do not effectively market to low-income, minority households.
However, some argue that reverse redlining is simply an attempt to assist those with poor credit histories purchase a home. It is neither new nor uncommon to increase the interest rate for those who are considered a credit risk. However, Squires argues that those who take this stance overlook that 30% to 50% of these African American borrowers could qualify for prime loans. At the 2000 Rainbow/Push Wall Street Conference, Franklin D. Raines, CEO of Fannie Mae, stated that approximately half the borrowers in the subprime market have credit scores to qualify for prime market loans. A study funded by the U.S. Department of Housing and Urban Development (HUD) found that blacks were paying more interest than they should. This is partially a result of racial disparities in referrals to lender’s prime borrowing divisions, regardless of income or credit history.
These subprime borrowers can also fall victim to predatory tactics. This includes structuring payments so they do not even cover interest costs, excessive fees, basing the loan on the equity of the home instead of the borrower’s ability to repay, etc.
There are several consequences of this financial phenomenon. Members of these targeted communities often lose a considerable amount of money. Squires and Kubrin provide an example of how this occurs. They argue that because of increased interest rates, “cheque-cashing customer with an annual income of $17,000 would pay almost $250 a year for services that would cost just $60 at a bank.” As years pass, this pushes impoverished families further into poverty. Foreclosures often result from these subprime loans and predatory lending. As a result, because most wealth is accrued through homeownership, these practices strip a considerable amount of wealth from potential black homeowners. Additionally, unlike in the suburbs, foreclosed homes in low-income areas often become abandoned buildings. According to Immergluck and Smith’s “The Impact of Single-family Mortgage Foreclosures on Neighborhood Crime,” these buildings provide havens for criminal behavior. As the number of abandoned buildings increases, fewer residents are present to deter crime. Subsequently criminals flock to these communities because there is less chance they will be caught for their illegal activities. Thus, these discriminatory and predatory lenders are not only stealing from the poor but they are essentially leaving them for the wolves.