Sub-Prime Lives On...

There's one victory for the Obama administration, reflecting concern and a modicum of relief for the true victims of the sub-prime mortgage chaos. Bad enough that people who could not financially qualify for those mortgages were encouraged to own a house of their own, no down payment, low interest rates, and no payments required for the time being; be a homeowner, it's the American dream.

But now it is revealed that Hispanics and Blacks who had jobs and were capable of responsibly managing their financial affairs and who truly did qualify for home ownership were thrown into the pile - deliberately - by those who made the decisions at Countrywide Financial - since bought out by Bank of America Corp.

African-Americans and Hispanics were disproportionately represented by those unhappy home-owners who lost their homes in the financial meltdown accelerated by the sub-prime mortgage debacle. Unknown to those Blacks and Hispanics who were able to qualify and were happy to have approval, they were ushered into those faulty mortgages in their zeal to own a home.

Countrywide was a specialist in sub-prime mortgages, their focus on would-be homeowners who had a record of low credit ratings. And these were the people who were charged higher interest rates; make sense? Non-minority Americans were excused from paying higher fees and interest rates; Hispanics and Blacks were targeted.

Those in the category of responsible homeowner-material with fair credit rating and incomes required to pay mortgages were channelled toward sub-prime mortgages even though they qualified for traditional mortgages. If they were Black, if they were Hispanic. None of this was divulged to them, they thought that everything was conducted conventionally.

"The victims had no idea they were being victimized. They were thrilled to have gotten a loan and realize the American dream. This is discrimination with a smile", said Thomas Perez, head of the Justice Department's civil-rights division. It was clearly unspeakably racist.

Although Countrywide's former chief executive Angelo Mozilo has been excused of criminal wrongdoing. Not illegal, simply immoral and unethical. An excess of enthusiasm for the wide range of possibilities available in the free enterprise capitalist system that encourages profit with little thought to the ethics of guiding people down the garden path of ruination to achieve it.

Government investigators undertook reviews of two-and-a-half million loans to discover that African Americans and Hispanics were over three times more likely to receive high-cost sub-prime loans than non-minorities. That's quite an inadvertence.

It smells rather rank, somewhat like the Countrywide decision to illegally foreclose on members of the U.S. military without court orders. Like the decision by the same Countrywide to over-charge homeowners for loan servicing fees, both of which events required the company to face huge fines in civil charges.

This latest, a record $335-million in recognition of its institutionalized gouging of innocent home buyers, leading them to be the recipients of hugely flawed mortgages, risking their investments, while charging them considerably more than should have been done for fees and higher interest rates, reveals the cancerous underbelly of unrestrained capitalism.