Good Americans Are Losing Their Homes, “not minorities…defective…useless…wasteful…” Just watch it.

I mean what else can I say or analyze about this video? I guess what pops into my head is that many minority policy reformers never get off of their point of view, that you have to stroke the white ego to get things done. They are the ones with the power, they say. It is true that when something affects whites, something is done about it. Sometimes, however, in running only toward practical reform, these reformer lose the bigger lessons, or don’t want to invest the time in learning the bigger lessons.

Then there is this from Candidate Rand Paul, according to the Huff Post, “Republican Senatorial candidate Rand Paul wants to build a fence along the U.S.-Mexico border. It’s a rather ho-hum proposition in the larger context of conservative ideas — except that Paul wants that fence to be electric and he wants it built underground.”

On CNN Rick Sanchez mused jokingly about the possibility of having to get all those Mexicans to wear the dog collars that would activate the electricity in said fence.

Don’t these libertarians want less government and less spending.  I suppose when ideals can be pushed aside when their cultural privilege is compromised.

Our call as immigrant workers, families, and youth is for a reform rooted in our dignity and human rights.  We state clearly as low-wage, migrant worker-led organizations across the city and country that our call is NOT for Schumer’s blueprint of immigration reform.  Our message comes after direct consultations with thousands of our members who are undocumented low-wage workers and youth from diverse national and ethnic origins.

The statement generally calls for non-cooperation with liberal, sell-out power brokers, as did Isabel Garcia from Coalicion De Derechos Humanos, at ground zero in Arizona’s quagmire.  The call is for us to push for what we want.  One thing that we want, minimally, is at least as many rights as corporations enjoy in the reform.  I mean a country that wants to pretend to be a democracy can offer that, right?

The Schumer/Graham blueprint clearly says:

For the 11 million immigrants already in this country illegally, we would provide a tough but fair path forward. They would be required to admit they broke the law and to pay their debt to society by performing community service and paying fines and back taxes.

However, the statement makes no mention of CEOs bowing their head, admitting that they are law-breakers and paying fines. How is it fair to require the people who supply the labor to admit to breaking the law and at the same time allow those supplying the wages to get off with no penalty? So, if the corporations who hired 12 million undocumented workers get economic amnesty for having done so, then we want the same for our workers.

A “fair” approach would be to require the same thing of the employers or to allow “amnesty” for both parties. Not only should corporations match the worker’s penalty dollar for dollar, but there is also a little matter of FICA taxes for employers, which many employers have illegally exempted themselves from by hiring undocumented workers.

So, why do they get a pass? For those of us unwilling to accept the Schumer/Graham blueprint, let’s call it the “corporate amnesty plan.” Let’s use their language against them.

NO to power brokers
NO to taking their scraps
NO to corporate amnesty
Amnesty for people before corporations

The lack of wealth (assets) in our community is a great contributory factor to us being unable to be proactive (nation building) in our approach to Our Restoration (O/R).  Young “Latinas”: stop buying Coach purses before you own any assets.  Twenty-year-old “Latinos”: stop buying forty thousand dollar cars before you own a home (I think even Scarface said this on one of his albums, The Resurrection?).  Such purchases are foolishness revealed.

You might well “deserve” the luxury items that gringos flaunt, but that doesn’t mean it is the best thing for you.  Apparently, when gringos buy these items, generally they can afford it.

Our community will never rise as long as we are controlled by the wage-payers.  As long as we are controlled by gringo wage-payers we will be too scared to break the chains of colonization.

I break from the pure leftists here, who refuse to criticize our colonized behavior, in favor of blaming only the system.  It is true that the wealth gap is not only due to our poor spending habits.  There are huge social factors which contribute to it.  But we must begin to focus on our individual behaviors as well. Many luxury items that we are hooked on end up being worth nothing within the span of five years.

In the meantime, those items could have produced a lesser dependence on the system. This is an ethical battle between the materialism that we are taught is necessary in order to define our masculinity and femininity and what is best for ourselves, our family and our community.

However, and, I would say for fair reasons, Min. Farrakhan and the NOI often get a pass by leftists and radicals when it comes to critique. This is why my ears perked when I heard Jared A. Ball of the Black Agenda Report make some critical, passing commentary regarding Min. Farrakhan’s talking points at Tavis Smiley’s event. His commentary reinforced my impression about Farrakhan’s individualist tendencies with respect to economic development. What I had never heard before was that the buying power of blacks, and thereby Latinos I extrapolate, is a myth.

Dedrick Muhmmad responded in an unofficial capacity. He argued against the idea that the NOI promotes a purely individualistic form of economic empowerment.

My interest is not so much the specifics of what the NOI does or does not promote, but rather the application of the discussion to Latinos, which I think have been much less exposed to any sort of debate regarding a wealth-building strategy, individualistic or otherwise.  The debate made me think.

Generally, leftists are not against the theoretical definition of wealth, which could exist in a socialist world as reserve cash flow for the people. It is true that some Utopianist/Anarchist strains of socialism/communism argue for some sort of moral economy and the destruction of any form of wealth management.

Generally, though, the problem that most of us have with wealth is that it is a form of power controlled by a very few people. In terms of its cultural application, most of us have a problem with the absolute greed intertwined with the acqusition and maintenence of wealth in this society.

However, when viewed as another form of power, which could be redistributed to the people, then wealth is not such an affront to our sensibilities. After all, revolutions have always redistributed and redirected wealth, not destroyed it.

So back to the points at hand: the “Latino purchasing power” is, to large extent, a myth or at least grossly exaggerated. It is a myth promoted by ad agencies and other marketers to lure advertisers to target our community. It is a myth that this purchasing power will allow the majority of our community to invest in wealth-producing assets because most of the purchasing power is spent on basic necessities and is aggregated to make it sound as if something much greater. It is a myth because buying essential necessities is not the same “purchasing power” as is disposable income. I get that.

However, there is at least SOME merit to the concept to redirecting and disciplining our expenditures.

Collective buying.
I don’t think that Latinos are that opposed to donating money. There is a myth that there is no tradition of philanthropy in our community. I think that this is false. There are many, many people who donate, what are for them, considerable sums of money to the Catholic Church. Latinos will donate if they believe in the cause. Collective buying and building, however, is less about donating and more about a spirit of collective buying and collective benefits, which oddly is an uncomfortable feeling for more Latinos. I have the impression of our own people that it is more comfortable to give as an individual rather than to invest as a group, even if the group investment may require less money and may reap greater benefits.

There are different reasons that contribute to this situation. First, the Church has a regular mechanism with which to collect the funds. It’s called mass. It can quickly become part of a life habit for the donor. Those of us who believe in community empowerment don’t have something even close to the equivalent. Second, most of our leadership has not given much consideration to collective economic empowerment, much less collective wealth strategies: we never ask for money, and if we were to do so, we would not have a collective plan to make sure that the donations are not depleted by the next event. Projects like collective urban farms, t-shirt printing collectives and banner-printing collectives could have wealth-producing benefits and cross applications to our other community work.

Collective not-buying.
Just as we discipline what we buy, we can also discipline what we don’t buy. A serious, organized boycott can have serious reprocussions for a marketer. On May 1st of 2006, when we organized a collective boycott of everything, CNN was forced to admit that we caused a significant blip in the stock market for that day. And that was just one day. If we applied this force to forcing consessions, even economic consessions, from marketers, we could use our power to redirect wealth toward our benefit. ACORN had succeeded in getting just that by protesting the lending practices of several major banks. Voila. ACORN housing funded by Citi. Extremely low-rate mortgages for borrowers often overlooked or overcharged by banks and brokers. Though I would caution that we learned through ACORN that the revolution will not be subsidized.

In sum, we are overlooking a great source of power by refusing to organize our wealth into an overall strategy. I would argue that for such a strategy to be effective, one overriding coalition, organization or collective is required in order to direct the funds in an orderly manner and to engender the trust of the collective members. Cut to the First Collective Bank of Anahuac.  Ah.  Only If.

The repeal of Glass-Steagall removed the legal prohibition on combinations between commercial banks on the one hand, and investment banks and other financial services companies on the other. Glass-Steagall’s strict rules originated in the U.S. government’s response to the Depression and reflected the learned experience of the severe dangers to consumers and the overall financial system of permitting giant financial institutions to combine commercial banking with other financial operations.

I thought a little bit about the meaning of the report, but the wheels of my mind started turning when I heard this little tidbit, which is also on the blog post:

Then, in 1998, in an act of corporate civil disobedience, Citicorp and Travelers Group announced they were merging. Such a combination of banking and insurance companies was illegal under the Bank Holding Company Act, but was excused due to a loophole that provided a two-year review period of proposed mergers. The merger was premised on the expectation that Glass-Steagall would be repealed. Citigroup’s co-chairs Sandy Weill and John Reed led a swarm of industry executives and lobbyists who trammeled the halls of Congress to make sure a deal was cut.

It painted the picture that the corporate chairs basically did whatever they wanted and that they would have to deal with a little matter of those people over on the hill later. Congress and federal law were basically reduced to a detail in the transaction, a detail that would have to be worked on later, but not something that could actually stop these two mammoths from doing whatever they wanted.

We have become accustomed to corporations essentially buying votes, and execs doing things under the table, but to hear that two major corporations openly disregarding federal law, premised on the thought that they would make Congress come around, is a new one on me. I know that I am twelve years late on this, but this was the first that I had heard of such an overt act of “civil disobedience” by major corps. It made me think hard about the future of corporations overtly disobeying laws. It was almost as if they did not recognize the authority of Congress.

That’s when it hit me. The government only has authority because we recognize this authority. No, that was not the epiphany.

I finally began to understand the decline of the Roman Catholic Church’s authority over sovereign nations. But more importantly, I began to understand why they ever had such control over nation-states in the first place, a concept which I understood academically, but could never relate to.

The Catholic Church could command countries simply because these countries, and their sovereigns, allowed The Church to do so. Period.

The Church was the recognized moral authority. Once nation states were no longer dependent or fearful of The Church, they began to disobey its orders, especially when such orders were no longer convenient.

Today, the recognized authority is the government.  The moral authority has changed from God to “the people,” at least in propaganda.

The Swiss Guard: Today's Ceremonial Guard at The Vatican. Their forces were not needed by England.

I began to see the corporate executives of Traveler’s and Citi as today’s version of Henry VIII. By the time Henry VIII disobeyed Rome by taking his new wife, Anne Boleyn, Rome seems to have become more dependent on nation-states than vice-versa. The pope could no longer offer the defense to the nation-states, after each country had organized its own military. Sure they had the Swiss Guards, but c’mon. The sovereigns, after all, could muster loyalty among the people without the consent of the pope. Basically, The Church had become superfluous, unnecessary, and maybe a little pesky to the captains of countries.

And it dawned on me that as these corporations become more powerful, bloggers in four or five hundred years, or maybe even one hundred, might wonder why on earth, corporations would have ever sought the approval of democratic governments in the first place.  It seems silly to us, in these days, that a sovereign might have to seek permission from a foreign pope for anything.  It might seems silly to our future generations that these theoretically democratic institutions supposedly by the people (however fraudulent it may be) might have had sway over private enterprise.

England had its own powerful, loyal constituents at the time it left The Church.  After all, it was the House of Commons who banned Rome from making decisions in England.  Today, corporations have their own powerful, loyal constituents.  They are called lobbyists and politicians.

At the time it left The Church, England has its own “national” army.  Today, corporations have their own “private” armies.  As of March, according to the Christian Science Monitor, 57 percent of the Pentagon’s Afghanistan personnel were private contractors.

Obviously, the members of Congress are far more dependent on corporations than are corporations dependent on Congress for anything.

Finally, as the sovereign and his apparatus controlled a great deal of the communication in England, so do the corporations control the vast majority of mass communication in the US.

It seems that it is only a matter of centuries before captains of industry get it into their heads that this whole rule by the people thing is too inconvenient, and perhaps, yes, a little pesky.  Sure, goverment will continue to exist, for those who wish to believe in it, but today’s US Marine might look as ceremonial to our future generations as the Swiss Guard do to us.  In fact, they might just be that-ceremonial with the contractors of Blackwater/Xe holding the real force for the new sovereigns: the corporate executives.

Spain has struggled to recruit soldiers since it abolished the draft in 2000 and created an all-professional army. At one point it even lowered the IQ threshold for enlistees, although it later raised it again, and eventually opened up the military to immigrants. Today, such foreigners—most of them young Latin Americans—make up nearly seven percent of the military’s 80,000-member force…The military is not open to all immigrants, but rather just ones from countries with which Spain has historical, cultural and linguistic links. That means most of the countries of Latin America and Equatorial Guinea, a former Spanish colony in West Africa.

The article makes mention of the economic disparities between the immigrants and the native-born Spaniards, and implies that a newly wealthy Spanish populace might not be willing to serve in its own armed forces, but seems more than willing to pay poor Central Americans and Mexicans to kill for them.

The significance of this arrangement might not jump off the page right away without some thought.

As a nationalist, I have been arguing for years that we, as an indigenous people, have never made a serious effort to rid ourselves of the mental colonization brought to us by the Spaniards. In fact, most of us are still a mentally colonized people and display all of the mal-adaptive behaviors of a people held in bondage.

In this move, Spain is recognizing the loyalty of its former slaves. After having looked abroad for people to pick up arms in its own defense, it is tacitly recognizing that its former slave still harbors a sentimental feeling for its former slave driver, or at least more loyalty than non-former slaves. After all, any reasonable nation would only fill the ranks of its military with those it feels would be the most loyal. It took the further step of excluding all other immigrants and conferring a special status among mestizos, which is another classic technique of mental colonization.

Let us take this analysis one step further. One of the reasons that Mexico and Central America is in the shape that it is in today is because of the massive amounts of precious metals stolen from us by Spain. So, Spain impoverishes our entire hemisphere and five hundred years later grants us the right to “earn” a decent living by killing others for it. Spain continues to reap the benefits of its colonization to this day, and instead of having at least an ethical bias against our former master, Spain seems to think we have a slight preferance for it. It seems that we do.

I have been a self-employed mortgage broker for about five years, and I was a loan officer at a mortgage bank for a couple of years before that.

Since the term “subprime lending” is a lay term, people define it in different ways. As for me, I believe that there are real differences between normal subprime products and the predatory lending practices, which I think are the real root of the meltdown. I wasn’t sure if I would get into the background of the meltdown before I got into the effect on minority business, but I think it would be useful, so I will break this post down into two posts.

A subprime mortgage is basically a loan product designed for people who who might not qualify for traditional loans, due to credit, income documentation or being an undocumented person. In exchange for accepting a borrower with a higher risk, the borrower in turn charged a higher price. This price we call an interest rate and closing costs. A higher risk, will result in a higher loss, thus higher losses justify a higher price, or so the theory goes.

With subprime loan, private corporations took a bigger risk on consumers, a risk that the government-backed loans might not take.  In exchange, these corporations get a higher price and the consumer gets an opportunity TODAY, not in a year or three years or however long it takes to improve their financial position.

Now why would or should someone accept a higher price if she could fix her credit, save up more money or do whatever it takes to get the lower rates? Well, one answer is that many broke people who could own a house with nothing down only had one question: “Where do I sign?”

For loan officers with no conciencia, that’s all that they had to hear. For me, it was a more complex decision to get involved with subprime products.

Keep in mind that house values were rising at an unparallelled rate. I remember that one working class subdivision right down the street from my home was specifically listed in the Houston Chronicle as having an increase in value of 30% in one year.

So, if a subprime mortgage cost one of my customers $2,500 more in interest per year, but they could increase their equity $18,000 in one year (and even more in later years) by buying TODAY, it would seem foolish of me to send my clients to rehab their credit and wait it out one to three years for them to get the lower rate. They would miss out on the equity boom, and there was always the option to refinance into a lower rate later, or so we thought.

The other type of loans were the cash out loans, which were often used to pay down debts with much higher interest rates or for investment purposes (perhaps to start a business or to buy fixer upper properties). These customers had an opportunity to make much more money off of their investment, and they would not qualify for traditional loans. So they would pay a higher rate for their loan, but they could make much more through their investment. For these customers, a subprime loan also made sense to me. Especially if the money went to clean up their credit in addition to their investment.

Furthermore, some of the clients would never qualify for a home loan. People who have non-traditional or undocumented income or undocumented people will not qualify for traditional loans, no matter how much they save or fix their credit.

However, the subprime mess was complicated by the fact that many loan officers are not in the business of caring for their clients and are not in the business of considering if the loan is in their client’s best interest.  This was left up to the individual’s conciencia.  In fact, our license does not require us to do the best thing for our client. We must be honest and we must fully disclose, but we are not “fiduciaries,” which are required to put the interest of the client before their own.  Loan officers and brokers do not “represent” their clients in the way that attorneys or real estate agents do.  This is also part of the problem.

Getting back to the distinction between predatory and subprime lending: I always suspected that it was not the price of the subprime lending that would cause problems, but the stupid options that came with them. The two biggest problems came with the variable rate and no escrow option. I recently saw some study which reported that something like 65% or 75% of the subprime loans in trouble were the ones with variable rates. 

This seemed to be a foregone conclusion to me, and this is why I made it a practice since day one of my career to track people into fixed rate loans, against the suggestions of my managers and later my account executives. Many other loan officers and brokers made other decisions, choosing to push the variable rate option. Many people’s dirty secret is that they did so in order to practically obligate the consumer to come back and refinance and charge another set of fees to do it again, so that they could avoid the payment increase when it was time for the rate to vary. I always viewed this as greedy and dirty, but this practice was widespread and encouraged by management.

It is sad, but an expected behavior of any colonized people, that Raza was preying on Raza and blacks were preying on blacks. Greed and colonial tendencies are a bad mix.

When the investors figured out that these loans were “under-performing” they stopped offering them and those people who had planned to come back and refinance were stuck with whatever loan they had, at least until they could qualify for a traditional loan.  This caused problems for all those borrowers who had been tracked to variable rate loans.  Now, they were stuck with a loan whose interest (and this payment) would increase significantly.  Invariably, they couldn’t pay the note.  This is a very basic analysis of what caused the mortgage meltdown, but in my opinion it is not too much more complicated.

I remember about a month after selling a house to a good friend of mine, New Century Mortgage, the biggest independent subprime mortgage bank,  closed its doors because their investors would no longer fund their loans. When that happened, I knew even before my fellow lenders, that the industry was going to tank. I rushed and got my insurance license, and I told everyone in the biz to start making other plans.

Most people considered me to be an alarmist and didn’t listen. I must admit, I didn’t see the mortgage mess impacting so many aspects of the economy, much less the international monetary system.

Today, subprime loans (predatory or non-predatory) do not really exist. The financial experiment failed, and nobody will lend on those terms anymore. They have not been outlawed, but the market decided itself not to provide them.

In the end, I look at what I offered, and I know that what I offered, did offer benefit to my customers. I know a handful of business that were started or expanded because of my lending efforts, and I know homeowners who would still be renting and would likely be renting for at least the next ten years, had they not taken the subprime options, and of course, I also offered traditional lending to those who qualified.

I think that the concept of subprime lending had a good potential, but it had a very poor and greed-driven execution which resulted in failure and in people being taken advatage of.

Part 2 will touch on the effect on minority mortgage and real estate businesses.

Anyway, instead of being against NAFTA and CAFTA many are jumping on the ALBA bandwagon(Alternativa Bolivariana para los Pueblos de Nuestra América or ALBA). In this agreement, countries barter goods and services and place the needs of the people over profits. Cuba traded the services of 20,000 doctors for petroleum for Venezuela. Ora. That’s trade I can believe in.  That’s progress and that’s hope.  There is now even interest from African countries in joining ALBA!