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This week, our topic was civil rights and liberties.  Watch NOW, the PBS news show from February 6, 2009 at  http://www.pbs.org/now/shows/506/index.html  (half hour program) that discusses the foreclosure problem in American cities that caused the Great Recession, starting in 2008.  The program talks about the use of a technique called "Reverse Redlining."  Redlining is the policy banks use to avoid lending to the inner-city poor who live in certain  neighborhoods - banks will literally put a "red line" on the city map around a poor neighborhood and will not lend to homeowners in that area.  "Reverse Redlining" is the practice of banks and other financial institutions targeting these areas with predatory lending practices - trying to give loans (subprime mortgages) to people of  lesser means, some of whom should not have been given credit in the first place, while others would have qualified for conventional prime home loans.  African Americans and other minorities have been disproportionately affected by Reverse Redlining policies in America's inner cities (African Americans are 3 times more likely to have been offered subprime mortgages than other Americans, even African Americans with higher incomes).  People with subprime mortgages on their homes were 8 times more likely to default than people with conventional prime home mortgages during this crisis, which unfortunately continues in the present for many Americans still struggling.  Between 30% to 50% of people who received subprime mortgages actually would have qualified for safer, conventional prime mortgages.  So these facts bring race into the picture as banks are being accused of having racially targeted individuals, which is against the law.   The Fair Housing Act of 1968 prohibits racial discrimination in home financing.  Most Americans do not understand the intricacies of credit and contracts, so there is the ethical question of how responsible banks were to have lent money to people who now can no longer pay, especially now that their subprime loans have become a burden because they have readjusted to higher rates of interest.  Most borrowers were not aware that the money they were borrowing would readjust to higher rates of interest after a period of time (adjustable rate mortgages).  More recently, in April 2014, Myron Orfield of the Institute on Metropolitan Opportunity at the University of Minnesota Law School, published a study about our own area, the Twin Cities, about Unequal Treatment of Communities of Color in Mortgage Lending: http://www.startribune.com/u-of-m-study-sees-signs-of-mortgage-redlining-in-twin-cities/254464331/.

Please respond in your posting to the following questions:

1) how responsible are banks and other financial institutions for the subprime mortgage foreclosure catastrophe in America?  Many financial institutions have been sued, and several judgments have been handed down against the mortgage industry, including a decision involving law suits by 49 state attorney generals (https://www.justice.gov/opa/pr/federal-government-and-state-attorneys-general-reach-25-billion-agreement-five-largest), as well as a suit involving federal regulators regarding improper practices by mortgage lenders in foreclosure proceedings.  Predatory lending practice accusations have also been lodged by the Justice Department, resulting in a 2012 judgment against Wells Fargo, although Wells Fargo admits no wrongdoing: http://www.csmonitor.com/Business/2012/0712/Wells-Fargo-to-pay-175M-in-discrimination-lawsuit.  Another example of suits by local governments against discriminatory lending practices include this example against Bank of America http://www.huffingtonpost.com/eric-t-schneiderman/bank-of-america-deal-a-vi_b_5698608.html.  

2) as this foreclosure problem has affected African Americans and people of color at a much higher rate than other Americans, should the courts continue to look to the violation of the rights of African Americans and other targeted minorities in order to provide a remedy to this problem?  The financial crisis caused an increase in the wealth gap between minority families and other Americans, which now stands at 13:1: http://www.pewresearch.org/fact-tank/2014/12/12/racial-wealth-gaps-great-recession/.

3) how can we move forward in the financial services industry to avoid these problems in the future?  What can we learn from studying our own local area?  In October 2015, new rules by the Consumer Protection Financial Bureau were implemented to simplify the mortgage process for first-time home buyers: http://www.chicagotribune.com/business/yourmoney/sc-millennial-money-advice-bigda-consumer-1008-20151005-column.html.  But the situation is far from over: http://www.cbsnews.com/news/americas-foreclosure-crisis-isnt-over/.  Also, here are a few recent stories of fallout from the Financial Crisis: http://www.npr.org/2016/05/22/479038232/a-decade-out-from-the-mortgage-crisis-former-homeowners-still-grasp-for-stabilit?utm_source=facebook.com&utm_medium=social&utm_campaign=npr&utm_term=nprnews&utm_content=20160522.

Liz