Wall Street’s Woes a Depression for People of Color

By Guest Columnist Sep 17, 2008

By Victor Goode While Wall Street reels from the chaos created by this latest economic crisis, little has been said in the main stream media about its effect on communities of color. Few people of color are worried about their stock portfolios, but most should be worried about the nation’s spreading economic woes. Conservatives promised that the prosperity of the rich would trickle down and benefit everyone, but the economic record of the last twenty tells a very different story. The nation’s poverty rate in 2007 was 12.5%–that’s 37 million people and its gotten worse in 2008. The rate for Black America is 24.5% and for Latinos it is 21.5%. Some regions of the country that are overwhelmingly black and brown, like Detroit and El Paso, have been particularly hard hit with poverty rates of 32% and 27% respectively. While there was some economic progress in communities of color during the ’90s, most of those gains were lost when the economy began to falter in the beginning of Bush’s second term. At the same time the top 1% of America substantially increased its share of both wealth and income, while the bottom three quarters either treaded water or has once again begun to sink. The Bush administration translated the conservative message of “small government” into fiscal policies of little or no regulation of the financial sector. Wall Street responded by packaging bad investments into ever more sophisticated financial instruments and while they raked off billions in profits and commissions, the risks from these questionable practices were spread throughout the rest of the economy. That all looked relatively safe until the housing bubble predictably burst and suddenly Main Street found itself paying for Wall Streets excesses. So what does this all mean for people of color? Our communities are taking a major hit from housing foreclosures. In some states like Michigan, nearly 60% of the risky sub prime loans went to Black families, even when many actually qualified for lower interest rates. It means that as local tax revenues fall, services that our communities so desperately need like schools, health care and social services will face a new round of cuts. As the recession deepens, unemployment is creeping up and many states and municipalities have already issued a hiring freeze and some have begun layoffs. Those who are lucky enough to have some form of retirement plan will likely see those portfolios fall, and if George Bush had his way millions would be watching their “privatized” social security plans go in the tank. In short, twenty years of Republican leadership in Washington have turned the recession that now faces America into a depression for people of color. It looks like the only thing that really trickles down is misery. Victor Goode is a law professor at City University of New York Law School.