At a speech at Claremont McKenna to honor Martin Luther King Jr. in mid-January, the subject of Jesse Jackson Sr.’s new ire was the “banksters” — Wall Street fat cats, who are causing all of our problems.
Naturally, Jackson ignored his own role in housing crisis. That he made his argument against banks at one of the schools that produces the most investment bankers in the country did not go unnoticed – however. Those hoping to listen to watch his entire speech can watch it here.
Jackson decried the “biggest shift of wealth in American history in the last 9 months.” He assailed Obama’s so-called spending freeze. “We’ll freeze the rich in their wealth and the poor in their poverty. . . . Freeze? They have already frozen modifications of home foreclosures.” And he applauded Roosevelt’s “direct investment in the poor” and for “breaking up their ability to be indifferent to the poor.” “Banks serve at the privilege of the state and their mission is to lend and invest,” he said, not presumably to get paid back.
Of course much of the speech sounded like the usual socialist rhetoric, which he claimed Martin Luther King Jr. was trying to “take us there” – wherever there is.
Some of my favorites of these sorts were:
- “Today, too few got too much”;
- “The wealthy are wealthy not because they are working hard, not because they are smart, but because there is simply a shift of wealth from working class people to the rich.”
- The first step [to ending poverty] at home is to enforce the law. Some of the poverty is driven by unenforced civil rights law. If the banks were not allowed to circumvent fair lending laws and the community reinvestment act, to target communities on the basis of race. If they had had to honor Title 6 of the Equal Employment Act, contract compliance, affirmative action, we’d have a fairer distribution of resources.”
Much of it was boilerplate progressivism. For instance, he attacked conservatives who opposed the health care bill.
Here we got men who claim that they are moral, Bible-touting Christians celebrating killing a health care bill. [Mocking those congressmen] “I have my healthcare bill, I’ve got my millions if I’m in the Senate.” And yet there’s almost a celebration. Fifty million Americans left without health care. How despicable. How degenerate.
Later in the question and answer period, Jackson said he wanted students to get interest free loans — “the same deal that banks got.” He proceeded to go around the room asking students how much debt they had – all of which hovered around $6,000 or so, far lower than the average $23,200 per college graduate. The only person in the room who claimed to have very high debt was someone who wasn’t even a student, but a guest of a development officer who never attended Claremont McKenna. (He was seated at my table.)
For causing the crisis, he blamed the “monopoly in media ownership” – Don’t tell that to Andrew Breitbart or the rest of the conservative blogosphere! – and “monopoly in banks.” He argued that the bankers owned the Senate and overturned Glass-Steagall Act. The truth about Glass-Steagall was laid out spectacularly by Reason Magazine:
Most European financial markets, not normally known as more “deregulated” than the U.S., never separated commercial and investment banks in the first place. And there is no correspondence between institutions that benefited from the repeal and those that recently collapsed. Institutions that didn’t take advantage of the Glass-Steagall repeal, such as Lehman Brothers and Bear Stearns, were the ones that failed most spectacularly, in part because they lacked the stability provided by commercial banking deposits.
Something other than Glass-Steagall must be responsible then. What could it be?
Not Jackson’s hobbyhorse, the Community Reinvestment Act or Jackson, of course, which economist Thomas Sowell holds largely to blame for the financial crisis in his book, The Housing Boom and Bust.
Nope, it can’t be the Community Reinvestment Act, which required that banks not just look for qualified buyers, but make a required quota loans to low income and moderate income buyers. Banks that were given unfavorable ratings under the CRA were prohibited from enjoying the diversification privileges of the repeal of Glass-Steagall.
To solve the financial crisis, Jackson recommended that we have more of the same: “Just enforce the law. Enforce civil rights law and fund it.”
The Clinton Administration did fund so-called civil rights law, though, which was the basis of my question to Jesse Jackson when I asked him what role he played in the housing crisis. I mentioned my governor, Deval Patrick, who sued banks by looking solely at the disparity loan rates between whites and blacks, as if somehow evidence of racism. (Patrick and the Clinton White House ignored the inconvenient gap between Asians and whites – and made so-called statistical disparities the basis of their efforts to shakedown banks.)
Here’s how Jesse Jackson responded. I have bolded the relevant sections.
We did not leave out Asians, that’s misinformation. Our view was fair banking and fair banking for all. We never left out Asians or any ethnicity because that’s contrary to our fundamental beliefs. Banks were doing what they call redlining. Banks were giving loans to blacks, browns or Asians if they stayed in certain places. They would target you. They would profile you. They would steer and cluster you. That’s what banks were doing. So we fought for a law that would make it illegal to steer and cluster called the Community Reinvestment Act. Banks serve at the privilege of the state and their mission is to lend and invest. Once banks and securities get under the same roof, they have more interest in trading than they do in lending. They are trading more and lending less. . . . Their angst was we got to now invest in housing. Their scheme was, let’s lend them at below market interest rates and at a certain time jack it up, jack up the harm, adjusted rate mortgage. They went around the law with the subprime lending scheme. It wasn’t our fault the banks got tricky and the Congress did not do oversight. It’s not our fault that FDIC and SEC let Madoff through. Madoff didn’t steal money because of blacks you know. He stole money because he was allowed to do so. When Roosevelt’s program of restructuring the banks – strong SEC, strong FDIC, and oversight – when the law went down, what was a ball game became a brawl. There is always a suggestion that if the banks didn’t have to honor CRA they wouldn’t be in this trouble. They were able to do this because they got greedy and Congress did not protect the people. . . . So I’m glad we fought for CRA. It was fair banking for everybody and remains our point.
God help us. Left unanswered, of course, is whether or not redlining was a result of those kinds of “community shakedowns” that have long been Jackson’s way. Redlining, Thomas Sowell mentions in The Housing Boom and Bust, was not occurring in the numbers that its proponents claimed. On page 119, Sowell notes an empirical study by George J. Benston of Emory University, which found very little evidence of it – but that won’t stop Jackson from claiming it was all over the place and that he had no responsibility for getting banks to do it.
A partial transcript of the event regarding banks is found below:
Here we are forty years later. The biggest shift of wealth in America history in the last 9 months from the middle class to the wealthy. A 182 billion dollar bailout of AIG. We said banks were too big to fail, we made Goldman Sachs twice as big. . . . Does a rising tide rise all boats? Well, Harlem and Wall Street are on the same island – and it has not lifted that side of the same island. The wealthy are wealthy not because they are working hard, not because they are smart, but because there is simply a shift of wealth from working class people to the rich. Now we’re talking about freezing. We’ll freeze the rich in their wealth and the poor in their poverty. We must invest in the poor and allow them to grow and develop. That’s why Roosevelt’s idea of restructuring the banksters – not refortifying them. Somehow bank said and these financial securities schemers will always choose trades over investment. Freeze? There have already frozen modifications of home foreclosures. Major banks have been bailed out as predators. 3.1 million homes eligible for modification – they have modified 30,000. Bank of America has got 1.2 million eligible they might have had 98 because they make money in foreclosure, not in modification.
. . .
The president chose to refortify those banksters, to try to make them greedier – without stops, checks and balances. Roosevelt said we have to break this up. Got to have direct investment in the poor with CC camps and WPA – a moratorium on foreclosures and a restructuring of the banks. Break up their ability to be so indifferent to the poor and to their primary role which is to serve and to land and to invest and to grow. Martin Luther King was taking us there, trying to modify our system to save it from itself. In a real sense, we find ourselves looking at where he was taking us. Today too few got too much. Monopoly in media ownership, monopoly in banks – why they are not reinvesting because their capital is not allowed to be so. Senator Durbin asked “Do the banks own the Senate for real?” Well when you look at, once they broke the Glass-Steagal Act, which was a way of separating securities and banking, they used their power to disallow bankruptcy laws to help the people. . . . They used their power to buy up the Congress, which was responsible for oversight. They’ll be a big football game, between the Colts and the Senate, Sunday week. Without referees, there wouldn’t be a game at all, they’d be knocking each other out. … When the congress stepped away from doing their job – looking for a job on Wall Street to get them a home from a Wall Street bank, they gave up their role as honest brokers and referee. So without fair lending laws, without fair housing act, without community reinvestment act, they can open up something scurrilous called “reverse redlining.” They can target blacks and browns. Many of them who were first generation home owners. Black or Brown making $100,000 a year, got a subprime high cost loan. A white make $50,000 a year got a prime low cost loan. Lest we forget, it didn’t help the black or the white buyer because if my house is lost to eviction, your house loses value, so I’m outdoors and you’re on the water. I can’t pay taxes because I’m evicted and you can’t pay taxes because I’m on the water and we can’t taxes we begin to lose police, teachers, firemen, librarians, social services. So we’re hemorrhaging jobs at the bottom, while the banksters up top are trying to figure out how to spend bonuses. . . . Banks get their money at zero percent interest and charge students 7 percent, making money off of free money. How vulgar is that? If banks can get interest free money, why can’t students get interest free money? A challenge of your time and today’s challenge. If you can’t afford to stay in school, teachers can’t teach, the school cannot remain open. If you can’t stay in school, where is our future?
It’s easy to honor Dr. King as a dead martyr than a living man because martyrs don’t fight back. … And so here we are tonight, fighting two wars on the one hand, and banksters being given a pay off beyond their capacity to calculate it, and poverty’s expanding. So tonight I hope the challenge was that banksters will have to invest in America, that they’d have to modify home insurance loans and reduce student loans and give the same loans that banks get. [MLK] was trying to democratize our character.
. . .
Here we got men who claim that they are moral, Bible-touting Christians celebrating killing a health care bill. [Mocking those congressmen] “I have my healthcare bill, I’ve got my millions if I’m in the Senate.” And yet there’s almost a celebration. Fifty million Americans left without health care. How despicable. How degenerate. … Bank stock rising, pharmaceutical stock rising and yet we’re hemorrhaging jobs. Today’s challenge.
Before we broke for Q & A, Jackson invited us to be a part of his group, the Rainbow/Push Coalition to help us to challenge the banks and “not hoard capital.”
To a question about how to end the poverty gap, Jackson replied,
“The first step at home is to enforce the law. Some of the poverty is driven by unenforced civil rights law. If the banks were not allowed to circumvent fair lending laws and the community reinvestment act, to target communities on the basis of race. If they had had to honor Title 6 of the Equal Employment Act, contract compliance, affirmative action, we’d have a fairer distribution of resources. Just enforce the law. Enforce civil rights law and fund it. And by the way, civil rights let me suggest to you that affirmative action is not a minority issue. It’s a majority issue. Affirmative action is majority white female, with people of color. So it’s a majority not a minority issue.”
[I asked him a question about his role in the housing crisis. I mentioned my governor, Deval Patrick, who sued banks by looking solely at the disparity loan rates between whites and blacks, as if somehow evidence of racism. (Patrick and the Clinton White House ignored the inconvenient gap between Asians and whites – and made so-called statistical disparities the basis of their efforts to shakedown banks.)]
We did not leave out Asians, that’s misinformation. Our view was fair banking and fair banking for all. We never left out Asians or any ethnicity because that’s contrary to our fundamental beliefs. Banks were doing what they call redlining. Banks were giving loans to blacks, browns or Asians if they stayed in certain places. They would target you. They would profile you. They would steer and cluster you. That’s what banks were doing. So we fought for a law that would make it illegal to steer and cluster called the Community Reinvestment Act. Banks serve at the privilege of the state and their mission is to lend and invest. Once banks and securities get under the same roof, they have more interest in trading than they do in lending. They are trading more and lending less. . . . Their angst was we got to now invest in housing. Their scheme was, let’s lend them at below market interest rates and at a certain time jack it up, jack up the harm, adjusted rate mortgage. They went around the law with the subprime lending scheme. It wasn’t our fault the banks got tricky and the Congress did not do oversight. It’s not our fault that FDIC and SEC let Madoff through. Madoff didn’t steal money because of blacks you know. He stole money because he was allowed to do so. When Roosevelt’s program of restructuring the banks – strong SEC, strong FDIC, and oversight – when the law went down, what was a ball game became a brawl. There is always a suggestion that if the banks didn’t have to honor CRA they wouldn’t be in this trouble. They were able to do this because they got greedy and Congress did not protect the people. . . . So I’m glad we fought for CRA. It was fair banking for everybody and remains our point.
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