Following the money in Ferguson
In the zip code that encompasses Ferguson, half (49 percent) of homes were underwater in 2013, meaning the home’s market value was below the mortgage’s outstanding balance.
This condition (also called “negative equity”) is often a first step toward loan default or foreclosure, according to the recent report, “Underwater America,” from the Haas Institute for a Fair and Inclusive Society at the University of California, Berkeley.
Mortgage lenders targeted predominantly black and Hispanic areas for the highest-risk, highest-cost types of mortgage loans, such as adjustable-rate mortgages and loans with high prepayment penalties.
This led to higher-than-average default rates, according to the Housing Commission established by the Bipartisan Policy Center in Washington, D.C.
Many of the families that were sold risky mortgages had good credit, decent incomes and everything else necessary to qualify for traditional long-term, fixed-rate loans. Yet, they were not offered those kinds of loans, but instead “steered into exotic and costly mortgages they did not fully understand and could not afford,” the commission said.
This “deliberate targeting of minority areas for the sale of risky and expensive loans,” as the commission described it, wreaked havoc on the financial wellbeing of affected families and undermined the stability of entire neighborhoods.
Now add to this how the town of Ferguson funds itself:
Ferguson is a city located in northern St. Louis County with 21,203 residents living in 8,192 households. The majority (67%) of residents are African-American…22% of residents live below the poverty level.
Despite Ferguson’s relative poverty, fines and court fees comprise the second largest source of revenue for the city, a total of $2,635,400. In 2013, the Ferguson Municipal Court disposed of 24,532 warrants and 12,018 cases, or about 3 warrants and 1.5 cases per household.
And how are those fines manufactured? Marginal Revolution:
You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”
If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of.
And we add to this -- too lazy to find the link -- that most of the (mostly white) police force doing the revenue doesn't live in Ferguson, we can see why the people of Ferguson could quite rightly see the police as an occupying army, or, rather, an occupying collection agency. Especially when people can't pay their mortgages because of those fines and lose their homes, eh?
Interestingly, Ferguson has plenty of social capital and I think that accounts for the persistence and discipline of the demonstrators:
Coming from St. Louis, Ferguson doesn’t look impoverished. The area through which we marched, like most of Ferguson, is 1950s-era ranch homes. We saw a couple of vacant houses, but not the number I’m used to seeing in St. Louis. The houses and yards were generally neat and well-maintained.
Looking past the signs of recent looting, the commercial strip along West Florissant appeared more prosperous than most commercial streets in St. Louis. Very few vacant store fronts—I only saw one. There were fast food restaurants, but also diners and locally owned family restaurants.
Mostly, the retail strip was made up of well-maintained, working-class neighborhood retail: hardware stores, beauty salons, dry cleaners, a drug store, a clothing store, a gun shop, and convenience stores.
Just two months ago, the Urban Land Institute and Focus St. Louis—two organizations largely made up of local government officials and white professionals—hailed Ferguson as a model municipality.
Appearances, however, are deceiving.
It's money Ferguson doesn't have. Because the cops are stealing it, just like the banksters are stealing their homes!