While the foreclosure crisis claimed an average loss of $1,900 per household, according to the report, neighborhoods with higher concentrations of people of color saw more wealth lost per household -- $2,700 compared to $1,700 in segregated white communities.
The report and its impact on Providence minority neighborhoods was discussed today at a meeting of the Direct Action for Rights and Equality (DARE) held in Providence and attended by Sen. Harold M. Metts (D-Dist. 6, Providence), who represents a large section of the worst hit neighborhoods.
In the past, my community fought against red-lining by the insurance and banking industries that shut us off from access to any financial resources, said Senator Metts. Now our community has been targeted for exploitation in the name of profits at any cost with the issuance of so-called ghetto loans which were designed to fail but which brought great incentives to loan officers.
According to the report, Wasted Wealth: How the Wall Street Crash Continues to Stall Economic Recovery and Deepen Racial Inequality in America, Providence saw 14 foreclosures, on average, for every 1,000 households. But while that rate was 13 per 1,000 in segregated white communities, communities of color or communities with above average percentage of people of color saw 20 foreclosures per 1,000 households and 15 per 1,000, respectively.
This is a crisis, said Senator Metts at the DARE discussion. It is a crisis for whites, minorities, the city of Providence, the state of Rhode Island and our nation.
We know the tragic results of sub-prime loans and the bailout of the banks by American taxpayers, he said. This corporate welfare resulted in the loss of several trillions of dollars. The industry benefited but people, especially minorities, were decimated.
Senator Metts told the gathering at the DARE office that he strongly supports the recommendation of the Alliance for a Just Society, which recommends principal reduction for homeowners with underwater mortgages, saying it could help homeowners save about $600 per month, or about $7,500 per year.
That is money that could be used to pay for essentials and that could also give a boost to a state economy that is in need or recovery, he said. Renegotiating mortgages for homeowners could increase consumer spending, create jobs and help people stay in their homes.
According to the report, if all underwater homeowners renegotiate based on those terms and spend those savings on goods and services, it could mean an economic stimulus of more than $80 million.
Psalm 82, Senator Metts told the DARE gathering, says Defend the poor and fatherless. Do justice to the afflicted and needy. Deliver the poor and needy; free them from the hand of the wicked.
The exploitation and wasted wealth has to stop, he said. It is time to help people.
The Alliance for a Just Society is a national coalition of grassroots community organizations committed to building strong state affiliates organizations and partnerships that address economic, racial and social inequities.
DARE, formed in Providence in 1986, is committed to organizing low-income families in communities of color to win economic, social and political justice.