This book is a must read for those who seek the truth and refuse to hide behind convenient, expedient, and especially racist, generalizations when trying to understand the reasons for some of the most ingrained social ills of our day.
I began volunteer work in the South Bronx in 1972, took a job as a group worker in the fall of 1975 and moved to Fox Street in 1976. As an organizer and social worker who grew up in the Long Island suburbs of New York City, who attended 16 years of Catholic school, and who possessed a very firm sense of right and wrong, I was initially struck by the strong sense of community, mutual support practices, and imbedded social networks that were pervasive in an area that otherwise suffered from crime, poverty, and limited access to decent housing and good-paying jobs. With all the problems, there was so much about the area that was “right.” But over time, things changed as the physical and social fabric of the neighborhood was destroyed. Sociability seemed to disappear in direct relation to the increasing official neglect of all levels of government, the removal of public services, the decimation of public supports, and the abandonment and outright violent abuse of residents by the private sector. Then the fires took over. Community died right along with the built environment. Morality was no longer an objective measure of social relations. Instead morality seemed to become whatever was necessary for survival. Everyone was on his or her own.
All of these changes were disturbing and my own sense of right and wrong became challenged. Things that may technically have been crimes, did not seem to bother me so much in an area abandoned and left on its own. However, certain crimes could not be forgiven or forgotten. I remember being told about a child who was locked in a pigeon coop and burned alive. I did not want to believe it, but had no reason to doubt what I was told. Then I read about a similar story about East New York and I could not help but shed a tear, learning about the child who was picked up and carried to a roof, all the while screaming, “No, no, no,” and then thrown from the roof to his death.
The person who did this deserves the worst form of punishment imaginable, but the condemnation should not end there. We should not be so quick to only condemn others for circumstances we were either responsible for or remained comfortably oblivious to. When people are abandoned, blamed for all the crime and destruction they suffer, deprived of the means for survival, when all forms of dignity are withheld, when people are forced to live in depravity, depravity can become, and often does become, a way of life. I lived this and felt it through the years of neglect, abuse and fires that devastated the South Bronx. I also relived and felt it as I read the newly published book, The Killing Fields of East New York, by Stacy Horn. She reminds us that we all hold some responsibility for crimes we nevertheless must condemn. In the words of MLK, Jr., such crimes “are derivative crimes of the white society,” which created and sustained the environments that facilitate them.
Moving from street crime to the main topic of this book – White-collar crime — this book is a must read. You do not need an advanced degree in finance to understand that we spare no expense in putting street criminals, especially when those charged are Black or Brown and even when they are still children, behind bars for extended periods of incarceration. But when it comes to White-collar crimes, it is either too difficult to prosecute those who can afford quality legal defense, or it is too disruptive to our political economy (such as when the target is an international bank). And even when there is a conviction, many judges look at the defendant with sympathy, concluding that the loss of livelihood, being snubbed at the country club, and loss of reputation is more than enough punishment. Jail time, I suppose, would simply be more than is needed to effect justice. This treatment is certainly not the experience of most of those incarcerated in our country today.
I encourage anyone interested in digging deep into how low income working people are fleeced by predators using government programs intended to operationalize fair housing and promote civil rights to read this book. The approach used by the author is impressive. Every two chapters focuses on the FHA scandal (late 1960s through 1979) and the “Destruction of East New York” (late 1960s through to the present). This effectively shows how a pervasive RICO-style conspiracy has impacts that can last generations, which destroys neighborhoods and countless lives in the process. The book also makes clear how the impact of these abuses affected every major city where redlining and urban renewal was prevalent. In other words, the government response to redlining, blockbusting, urban renewal, housing discrimination, inner city disinvestment, and other forms of sanctioned racism, was to implement programs that may have had good intentions but ended up decimating urban neighborhoods and destroying the lives of those the 1968 Housing Act was intended to help.
The book also demonstrates how, when applied with a tolerance for political blowback and a commitment to place justice above all else, prosecuting white-collar crimes can be done. What the book does not answer directly is why the pursuit of the 1970s FHA scandal was not followed through to conclusion, and abandoned after a few successful prosecutions and some staff turnover. The implication is that our society tolerates White-collar crimes and downplays the need to use incarceration as a deterrent. Towards the end of the book, as the cases began to peter out, there is a description of one fraud conviction – that of Stephen Rosenbaum who ran Springfield Equities. He was tried and convicted of ripping off borrowers, including veterans. He received a light sentence, with the judge commenting that Rosenbaum was a “fundamentally good man.” This reminded me of the New Jersey case where the judge refused to try a 16-year old charged with rape (who recorded the sexual assault and sent it to friends), as an adult because he “came from a good family” and had a “promising career.” Race and class appears to factor in as the reason why the pursuit of these predators neither resulted in stiff penalties nor resulted in following through to hold to account all those with a role in destroying East New York.
As East New York continued to suffer from the Nixon-era FHA scandals, the author moved on to more recent times, drawing a direct line from the fraudulent manipulations of the 1970s to the abuses leading up to the 2008 sub-prime meltdown, an economic downturn that crashed the global economy. Though different in form, the abuses were not so different in substance. As the author writes, “…the mortgage scandal of the 1970s would reemerge in a sophisticated and far-reaching form, involving so many more players and destroying exponentially more lives.” Horn goes on to say that few people make the connection, not only to the fact that it happened before, but that the failure to hold those accountable contributed to the enormity of the effects of the 2008 crisis, which resulted in the Great Recession.
It was heartening to discover, through the Horn’s work, that there were official warnings regarding mortgage abuses well before the crash. I thought it was only community activists who were ringing the alarm bells. She writes about how the FBI warned in 2004 that fraud in mortgage lending “was pervasive and growing.” She writes that the Federal Reserve as well testified that Black households were being targeted for subprime mortgage abuses. This is something with which I, and other New York City advocates, were all too familiar.
In the early 2000s, the Parodneck Foundation ran a home improvement loan program for seniors. The eligibility guidelines were strict but worked well for low income households. But we began to notice that even when seniors were eligible for assistance, we were unable to help them because their homes were in danger of foreclosure. We dug deeper, and found that many senior homeowners, all in communities of color, were refinancing their homes with mortgages they could not afford. They were told not to worry, and initially the mortgages were affordable. But they were never informed they were taking on Adjustable Rate Mortgages that contractually “reset” after 12 months to a much higher rate of interest. Due to this, we were receiving applications from senior homeowners who had debt ratios, in many situations, which exceeded 100% of their income. It was only a matter of time before they lost their homes.
We also learned stories about contractors ripping out bathrooms, while the mortgage broker they referred to the homeowner sat with the senior to negotiate a loan the applicant did not want and could not afford. In this particular case, an $800 minor roof job turned into a major renovation project. Of course, the higher the loan, the higher the fees. In another case, the senior homeowner actually signed mortgage papers in the hospital the day after having had an operation. In another case, the senior said she had reservations, but when she went to the closing, surrounded by everyone waiting to get paid, she felt like a sheep among salivating wolves. Though hesitant, she did as she was told.
I will never forget how upset I was when I heard Hillary Clinton, in the aftermath of the 2008 crash, say in an interview that the crisis hit everyone by surprise. How could we know? That is what she said, or something to that effect. Through our work with seniors, we were introduced to the work being done by South Brooklyn Legal Services and NEDAP (now New Economy Project). We all went to Washington to alert our representatives of the problem. We went armed with stories and documentation about low income borrowers who never filled out their own applications and did not know much more other than that they were given documents to sign. Senator Schumer had no time to meet with us, except to make our case as we raced through the halls of Congress on his way to a hearing. We had better luck with Senator Clinton. She had us all sit in her office, while we explained to her the horrors that beset the most vulnerable in our neighborhoods. We left that meeting encouraged. But did anything come of it? Nothing. No follow up and the predation continued until it grew beyond minority communities and into neighborhoods throughout the country.
Meanwhile, our elected officials continued to take campaign contributions and express amazement at the marvels of collateralized debt obligations and other “innovations” like yield spread premiums (a practice of giving brokers an increased fee, a bonus, for ripping off (mostly minority) borrowers by charging them higher interest rates than they otherwise qualified for). The 2008 recession could have been avoided if our elected officials were more concerned about their constituents, instead of their lobbyists. Without intervention, the crash was predictable, probably inevitable. To paraphrase Tressie MacMillam Cottom, if you want to know the future, look to how the most marginalized among us are treated. We tried to make that case, but those we spoke to seemed to have adopted the position that the problems of our clients, including their own constituents, were of their own making. They were seen as greedy and irresponsible, willing to cash out their equity at any price. It was all an excuse to do nothing for people who were insignificant to them, until they were not.
The one big problem I had with the book was the short shrift the author gave to ACORN’s work during that period. She does an excellent job going through the developing stages of East Brooklyn Congregations, even discussing how initially Mayor Koch hated the group, referring to them at one point as “looney.” Well, if Koch hated EBC, I am not sure what word to use to describe how he felt about ACORN. He despised the group and did everything he could to deny them recognition or help. Not only did he have the city’s housing department approach me and (effectively) seek to bribe my organization with money set aside for ACORN’s members, but even after that did not work (Fran Streich nipped that in the bud), after much agitation and organizing work, he permitted land transfers and funds to go forward on the condition that we never mention the name “ACORN” in any public event or interview. The way it is portrayed in the book, ACORN did some organizing, a State Senator was arrested in one of the city buildings, and once Pratt got involved, “the city gave the squatters the buildings they occupied, while creating a revolving loan fund to finance the rehabilitation…” It was much more than that. It was a prolonged campaign where ACORN and its members prevailed through hard work, persistence, political savvy and smart press relations.
Beyond that, I was doubly disappointed because the people that ACORN organized were likely many of those who were ripped off by the scum — brokers, lawyers, appraisers, underwriters, mortgage bankers, and FHA officials — who ruined so many lives and destroyed so many neighborhoods in the process (while they likely rested comfortably in their suburban enclaves). And if not those who were actually ripped off, the members of MHANY (ACORN) were among those intended as beneficiaries of the 1968 Housing and Urban Development Act.
There was so much in this book that reminded me of my work in the South Bronx. The abuses were different, but had the same effect – those willing to exploit the most vulnerable and politically and economically marginalized among us got rich, while the people suffered and many died as a result. Speculators in the South Bronx would buy an apartment building for a thousand or more dollars, collect rent for a few years, never put any money into the property, relying instead of the city’s Emergency Repair Program to provide fuel and repairs, and then pay $200 for someone to burn the building down in order to collect insurance money. Speculators in East New York would pay off contractors, appraisers and underwriters, recruit real estate brokers, lawyers, and government officials into the scheme, rip off homebuyers, mostly minority and recent immigrants, sell an overpriced house, mortgage the home for much more than it is worth, create the circumstances for foreclosure, get rich through the process, and then start the process over again.
If you want to understand more about how that works, please read Stacy Horn’s book. If enough people do, perhaps we can learn the right lessons. But don’t count on it. The major takeaway from these experiences is that crime does pay, if perpetrated by the right people, aligned with the right institutions. We have all heard of “too big to fail.” We can add to that, “too big to prosecute, or too much like me and mine to hold accountable.”