Politics
MESA, Ariz. -- President Barack Obama waves to a crowd at Dobson High School on February 18, 2009 in Mesa, Arizona. Obama spoke about his $75 billion mortgage relief plan, part of a $787 billion stimulus package. (Photo by Michal Czerwonka/Getty Images) MESA, Ariz. -- President Barack Obama waves to a crowd at Dobson High School on February 18, 2009 in Mesa, Arizona. Obama spoke about his $75 billion mortgage relief plan, part of a $787 billion stimulus package. (Photo by Michal Czerwonka/Getty Images)  

With landmark lawsuit, Barack Obama pushed banks to give subprime loans to Chicago’s African-Americans

Photo of Neil Munro
Neil Munro
White House Correspondent

Costs Imposed on Other Americans

Each client’s wealth losses have been shared with other Americans through declining neighborhood-wide property values.

In Marcella Wilson’s neighborhood, nearby home values have dropped, she said, because “crooks [in banks] were giving people money they couldn’t afford.”

“My neighborhood is so-so.” she said. “Fifty years ago, when we moved in, it was a very lovely place.”

Seventeen of Obama’s clients lived in her 60619 ZIP code.

Each foreclosure cost neighbors, most of whom are African-Americans, up to $220,000 in lost property value, according to a study of Chicago foreclosures in 2003 and 2004 by the left-of-center Homeownership Preservation Foundation.

A single foreclosure can also “impose up to $34,000 in direct costs on local government agencies, including inspections, court actions, police and fire department efforts, potential demolition, unpaid water and sewage, and trash removal,” read the study, titled “The Municipal Cost of Foreclosures: A Chicago Case Study.”

At least 55 of Obama’s 186 clients received foreclosure notices, likely costing the city taxpayers roughly $12.5 million, according to the study’s methodology.

Nationwide, taxpayers are paying roughly $124 billion to prop up the two quasi-government corporations that effectively paid banks to offer high-risk loans to poor people, including poor Chicagoans. Progressive leaders at Fannie Mae and Freddie Mac bought many of the banks’ high-risk loans and then sold them to Wall Street investors.

Pension funds and other shareholders that invested in the banks also paid some of the cost imposed by the progressive-inspired loan crisis.

For example, Citigroup’s value doubled from $250 to $500 per share in 2007, after Citibank’s executives made their 1998 deal with the progressives. But company shareholders’ wealth was slashed by 90 percent during the collapse, wiping out roughly $800 billion in wealth held by investors, including union members’ pension funds.

Societal Costs

Progressives’ top-down bubble hit the nation, but Chicago was walloped unusually hard.

With the foreclosure crisis came a rapid rise in Chicago’s unemployment, especially among minorities. By 2011, the city’s unemployment was the third-highest in the nation, after Philadelphia and Los Angeles.

Housing crises tend to boost local crime rates, according to left-wing housing experts Dan Immergluck and Geoff Smith. A 1 percent increase in the city’s foreclosure rate generated a 2.33 percent increase in crime during the early 2000s, said their study, published in the November 2006 issues of the journal “Housing Studies.”

That experience was repeated after 2007 when the city’s murder rate stopped falling, and jumped 36 percent in the first six months of 2012.

When the body count reached 283, the city’s mayor asked the Nation of Islam to serve as neighborhood watchmen.

The mayor’s selection of the hardline African-American group underlined the fact that a vast majority of the mayhem took place in the non-white communities hit hardest by the real estate crash. In 2011, for example, 75 percent of murder victims were African American, and 20 percent were Hispanic, according to a city police report.

Child abuse rates also climbed statewide.

Nationally, violence against children rose in line with rising rates of mortgage delinquencies and foreclosure from 2006 onwards, warned a July 2012 study in the peer-reviewed journal “Pediatrics.”

“Between 2000 and 2009, rates of physical abuse and high-risk [traumatic brain injury] admissions increased by 0.79 percent and 3.1 percent per year, respectively,” in line with foreclosures rates, read the study. The data came from 43 hospitals in 17 of the top 20 metropolitan areas. “These results suggest that housing concerns were a significant source of stress within communities and a harbinger for community [child] maltreatment rates,” the report continued.

Chicago’s health care office declined to supply TheDC with child abuse statistics. Child abuse reports climbed 5 percent statewide in 2012, however, according to a June 2012 report by the Illinois Department of Children and Family Services.

Amid the cascading disasters, the city’s population shrank between 2000 and 2010.