The “Credit Crisis” and the Dereliction of the US Housing Market
It’s no secret that the bane of the United States’ existence is its dirty habit of taking advantage of the poorest people in the nation. Some obvious examples of this include the liquor stores and instant tax rebate stands on every corner in my neighborhood or, even more obviously, our nation’s unwillingness to provide health care to everyone. Unfortunately, though, these examples pale in comparison to larger scale corporate crime that may now be the ultimate source of our economic recession.
I recommend that everyone listen to a recent episode of NPR’s This American Life, “The Giant Pool of Money.” The episode clearly explains the anatomy of the recent bust in the US real estate market. The housing market’s demise is remarkably similar to the Enron collapse in 2002. In both cases, a complicated skein of networks allow for individuals working in an economic system to afford themselves a comfortable level of willed ignorance, like the narrator in Melville’s “Bartleby the Scrivener,” and enjoy the benefits tied to the infinite deferral of responsibility.
The nutshell explanation of our recent economic crisis is that Wall Street investors, disinterested by the meager one percent return rate offered by the Federal Reserve, sought out more lucrative investment opportunities. Eventually, investors entered the business of buying conglomerate packages of housing mortgages, which they assumed would increased exponentially in value as real estate value escalated without end in sight. The problem, as the episode explains, is that small banks and lending companies were issuing loans to people who could not afford them. Worse, many of these banks targeted renters in poor neighborhoods and offered them loans far beyond their means, knowing all the while that they would not have to bear the consequences of a foreclosure.
I couldn’t listen to the NPR podcast without making a mental connection between this 21st century instance of greed and the Old Testament prophets. Clearly, there is nothing new under the sun. Taking advantage of the poor in a society is condemned by virtually every Old Testament prophet. Think of Amos, who offers a scathing indictment of systemic social injustice in Israel. Says the Lord via Amos’s poetry:
For three transgressions of Israel,
For four, I will not revoke [my punishment]
Because they have sold for silver
Those whose cause was just,
And the needy for a pair of sandals
[Ah,] you who trample the heads of the poor
Into the dust of the ground (Jewish Study Bible)
If we are to recover any aspect of the Old Testament prophetic voice into our society today, it is certainly this principle: that the habitual exploitation of poor people so the wealthy can prosper inevitably leads to a nation’s destruction. Those reclining on “ivory beds, / Lolling on their couches” are most culpable.