A new report issued by the National Council of La Raza paints a bleak picture of Latino economic fortunes during the current financial crisis. Over 400,000 Latino families have suffered foreclosure and 1.4 million more will face foreclosure before the end of 2012. This is bound to have a devastating impact on children in these families, and to have effects years down the road in terms of educational attainment, future employment prospects and health outcomes.
According to Professor C. Nicole Mason of NYU: “In January, the unemployment rate fell to 9.7 percent, but the rates for Blacks and Latinos have inched up to 16.5 percent and 12.6 respectively; figures significantly higher than the national average.” Even before the economic crisis people of color were getting hammered in terms of wage growth at the hands of the GOP:
Then, during the real estate boom Latinos and other people of color were steered into subprime mortgages at disproportionately high rates: in fact, in “2005 alone, subprime mortgages to Latinos jumped 169 percent.”
President Obama prevailed in 2008 because he carried the people of color vote overwhelmingly; Latinos voted 75% in favor of Obama. The economic pain within these key communities cannot be ignored by this administration any further. They are facing political annihilation if these constituents stay home in 2010 and 2012.
Which brings me to the most painful part of the La Raza report: “Despite seeking help to avoid foreclosure, none of the  families interviewed were offered a sustainable payment plan or loan modification by their financial institutions.” That is crazy!
As I argued in a forthcoming law review article in the Dayton Law Review, successful financial rescues should include assistance to strapped debtors, and it makes no sense to bailout only reckless bank managers (and creditors). They will simply cover up losses and hoard capital to maintain their positions. Elizabeth Warren of the TARP Congressional Oversight Panel made similar points in April of 2009:
So I confess: the Obama approach to Wall Street mystifies me. It is lousy politics, as they are inflicting unnecessary pain on their own base. It is not economically sound. And, many commentators warned about the problems with trickle down bailouts. It is time to bailout the victims of predatory lending, not the bankers that made billions.
It is time for Obama to get serious about imposing real discipline on Wall Street. November looms.