Even though crime rates in American have either stabilized or gone down, the incarceration rate (especially for people who are in this country illegally) has gone up - way up. (As this video points out, more people are being incarcerated on civil charges, not criminal.)

Naturally, as with most changes in this country, this has more to do with profit than anything else - and now we find that Wells Fargo is a major shareholder in for-profit prisons. Hmm. So this is what's taken the place of mortgages as the banking cash cow? From Salon:

As Wells Fargo has grown over the years, using its bailout funds to gobble up rival Wachovia and expand to the East Coast, so has the U.S. prison population. By 2008, one in 100 American adults were either in jail or in prison – and one in nine black men between the ages of 20 and 34, many simply for non-violent offenses, justice not so much blind as bigoted. Overall, more than 2.3 million people are currently behind bars, up 50 percent in the last 15 years, the land of the free now accounting for a full quarter of the world’s prisoners.

These developments are not unrelated.

A driving force behind the push for ever-tougher sentences is the for-profit prison industry, in which Wells Fargo is a major investor. Flush with billions in bailout money and an economic system designed to siphon wealth from the working class to the idle rich, Wells Fargo has been busy expanding its stake in the GEO Group, the second largest private jailer in America.

• At the end of 2011, Wells Fargo was the company’s second-largest investor, holding 4.3 million shares valued at more than $72 million. By March 2012, its stake had grown to more than4.4 million shares worth $86.7 million.

Unfortunately, it’s a safe investment. While a 50 percent growth in the number of human beings our society cages in rape factories may sound impressive – or perhaps the word is “revolting” – a study released last year by the Justice Policy Institute found that the private prison industry grew by more than 350 percent over the last decade and a half. While other industries of course benefit from state-granted privileges, companies like GEO profit by the state literally kidnapping and handing them clientèle, particularly as of late about-to-be-deported immigrants, of which President Barack Obama has ensured there is a steady, record-breaking supply.

“All prisons are awful,” says Melanie Pinkert, an activist based in Washington, DC, who along with other members of Occupy DC’s “Criminal Injustice Committee” is helping lead a boycott of Wells Fargo, which just expanded to the nation’s capital. “But private prisons take it to the next level.” Indeed, a recent report from the U.S. Justice Department found that at one GEO-run juvenile facility in Mississippi, sexual abuse was endemic, “among the worst that we have seen in any facility anywhere in the nation.” According to the report, GEO staff demonstrated:

• Deliberate indifference to staff sexual misconduct and inappropriate behavior with youth;
• Use of excessive use of force by [prison] staff on youth;
• Inadequate protection of youth from youth-on-youth violence;
• Deliberate indifference to youth at risk of self-injurious and suicidal behaviors; and
• Deliberate indifference to the medical needs of youth.

These findings, shocking though they may seem, are not surprising. With an eye on maximizing quarterly profits, privately run facilities are even less inclined than state-run prisons to treat their involuntary customers humanely, skimping on health care and anything else that could hurt their bottom line, particularly programs aimed at reducing recidivism. As the ACLU noted in a report released late last year, “Not only is there little incentive to spend money on rehabilitation, but crime, at least in one sense, is good for private prisons: the more crimes that are committed, and the more individuals who are sent to prison, the more money private prisons stand to make.”

If you haven't closed your Wells Fargo account yet, this would be a good time to do so. But let's not pretend that closing our bank accounts is going to hold back the tide. There's very, very big money involved in sending people to jail for minor infractions (so much so that our political "leaders" won't even entertain the notion of legalizing marijuana) and it's only getting worse. Why, now we even lock up the mentally ill instead of treating them!

From Unholy Alliance: How the Private Prison Industry is Corrupting Our Democracy and Promoting Mass Incarceration, a recent report from Public Campaign and PICO National Network, here are some pertinent points:

• Through involvement in the leadership of ALEC (American Legislative Exchange Council), private prison companies have played a key role in lobbying for and passing harsher sentencing for non-violent offenses including three-strike laws, mandatory sentencing, and truth-in-sentencing. They are also behind the recent spate of anti-immigrant state laws that are putting more and more immigrants behind bars -- the new profit center for the prison industrial complex.

• Private prison companies employ legions of lobbyists to push for policies that support their bottom line. Since 2001, three major prison companies, CCA, GEO Group and Cornell, have spent over $22 million lobbying Congress. Recent lobbying by CCA and GEO Group includes efforts to increase funding to Immigration Customs and Enforcement (ICE).  Since 2003, CCA has employed 204 of lobbyists in 32 states, and GEO Group has employed by 79 lobbyists in 17 states.

• Private prison companies also influence policymaking by strategically supporting political campaigns. At the federal level, the political action committees and executives of private prison companies have given at least $3.3 million to political parties, candidates, and their political action committees since 2001. The private prison industry has given more than $7.3 million to state candidates and political parties since 2001, including $1.9 million in 2010, the highest amount in the past decade.

A Wells Fargo executive explains to the SEC that his company didn't do anything wrong!

I had to laugh when I read this, because bill collectors from Wells Fargo keep hounding me over a few bucks I owe from when I closed my account and moved it to a credit union. (I plan to give them the money, I just haven't gotten around to it yet.)

"Don't you have any sense of honor about your just debts?" the last bill collector said.

"Are you serious?" I said after I stopped laughing. "Do you know who you're working for?"

The next time he calls, I'm going to tell him I'll write him a check just as soon as Wells Fargo complies with their SEC subpoenas!

(Reuters) - U.S. securities regulators accused Wells Fargo & Co on Friday of repeatedly ignoring its subpoenas for documents in connection with a probe into the bank's $60 billion sale of mortgage-backed securities.

The Securities and Exchange Commission's filing in a San Francisco federal court seeks to compel the fourth largest U.S. bank to hand over documents. The SEC said it has issued several subpoenas since September.

A Wells Fargo spokeswoman called the SEC's action "inappropriate" and pledged the bank would "vigorously defend itself in court" against the SEC action.

"Wells Fargo has extensively cooperated in the commission's investigation and believed it had an understanding with the SEC staff with regard to the outstanding document requests; the filing of this action violates that understanding," said Wells Fargo spokeswoman Mary Eshet.

The SEC said on Friday it is looking into whether Wells Fargo made "material misrepresentations or omitted material facts" in offerings it made to investors from September 2006 through early 2008, a period that included the beginnings of the financial crisis.

The SEC charges that a due diligence review of a sampling of the securitized loans was done, and some of those loans would be dropped because they failed to meet the bank's underwriting standards.

But the regulator said it "does not appear that Wells Fargo took any steps to address similar deficiencies in the remainder of the loans in the pool, which were securitized and sold to investors."

Eshet said that the SEC had inaccurately described its conduct with regard to residential mortgage backed securities and that no enforcement action was warranted.

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According to a Missouri Better Business Bureau study (PDF) published in 2009, Missouri's state laws allow interest rates of 1950 percent to be charged on a two-week loan of $100.00, while most neighboring states' laws limit those rates to around 400 percent, which is not wonderful, but not as obviously impossible as Missouri's.

A report published by National Public Action this month has even more devastating details of the effects of this type of predatory lending, and link payday lenders to big banks' profits:

• Payday lenders take at the very least $3.4 billion from our communities every year in fees alone. This figure represents some $3.1 billion in wealth stripped from desperate borrowers -money that could have gone to buy needed groceries or school supplies- to pump up the payday lenders' fat bottom lines.
• Nationwide, revenues for the major payday loan companies (Advance America, EZ Corp, First Cash Financial, Dollar Financial, Cash America, QC Holdings) have risen to their highest level - $1.48 Billion per year- more than before the financial crisis.
• Big banks like Bank of America, Wells Fargo, JPMorgan Chase, and US Bank finance approximately 42% of the entire payday loan industry, providing the industry the capital for usurious and predatory loans.

[Full report - PDF]

Needless to say, the CFPB could not be investigating these loan sharks any sooner, particularly when they prey upon the working poor who are already struggling. These types of loans are typically targeted at minority communities, but also military families and other struggling groups. But while the CFPB investigation continues, a coalition of churches, bankers and nonprofits are working to create an alternative around a microlending model. In addition, petitions are being circulated for voter initiatives to limit interest rates on payday loans to more - ahem - reasonable rates.

Continue reading »

The buzz is that President Barack Obama is pushing hard for a deal with the big banks over the foreclosure crisis in advance of the State of the Union address on Tuesday. Most observers are afraid that the deal will be too small and that the banks will get a slap on the wrist despite playing a major role in creating the financial crisis that led to a recession.

AFL-CIO President Richard Trumka joined a growing chorus calling for a rejection of such a small deal and calling for an investigation of the banks over potential fraud and illegal activity:

We need to hold banks accountable for the fraudulent practices that brought about the worst economic crisis since the Depression. State Attorneys General have been investigating bank fraud, and these critical investigations must not be undermined by a premature and inadequate settlement. We call on the administration to reject any deal that insulates banks from full responsibility.

We commend state Attorneys Generals like New York’s Eric Schneiderman and Delaware’s Beau Biden for their leadership and courage in calling for a real investigation and relief on a scale that helps the millions of homeowners who face a new wave of foreclosures.

The economy is currently weighed down by $750 billion in negative home equity, so relief on a massive scale is needed to lift home values and stimulate the economy by increasing consumer demand. A comprehensive settlement must force banks to write down underwater mortgages. A sum significantly larger than the rumored $25 billion is needed for the economy to grow and create jobs.

Specifically, the administration must stand strong against the Big Banks and insist on:

1. A full and thorough investigation into problems tied to the residential mortgage-backed securities (RMBS) market, and

2. A guaranteed minimum amount of money set aside for reducing the mortgage principal of “underwater” homeowners in key states impacted by the foreclosure crisis.

This is an opportunity for the administration to demonstrate leadership and show that it has the political will to do what’s right for homeowners and right for our economy.

Continue reading »

Amy Goodman reports on "Occupy Our Homes" for Democracy Now

This week 60 Minutes gave viewers a good look at some of the widespread criminality that created the Wall Street mortgage boom and led to our ongoing financial crisis. They also saw some of the overwhelming evidence of illegal activity on the part of big banks, and were reminded that none of those banks' executives have been prosecuted.

As ugly as the situation is, there is some logic behind the government's actions - and its inactions. They're acting on a tragically incorrect (but internally coherent) set of assumptions that can be summed up in one sentence. It goes something like this:

"To preserve the health of the American economy, banks must be allowed to keep preying on their consumers."

That's it. That's the logic.

But there are two exciting "Occupy" developments this week that could change the equation - "Take Back the Capitol" in the District of Columbia, and Tuesday's "Occupy Our Homes" events around the country. Think of them as complementary actions: One is taking place at the site of our greatest government power. The other is bringing the action to homes where people have been victimized by bankers.

People may not realize it, but there's power in those homes, too.

The Logic of Injustice

Despite their destructive behavior, the people who bailed bankers out and are giving them a free pass for their crimes aren't necessarily evil or corrupt. Well, okay, people like this guy are. But others have merely been so infected by misguided economic thinking that they really believe that the only way to save the economy is to keep shafting consumers and pampering mega-bankers.

The thinking goes something like this: Our largest banks are too big to fail, and since we lack the will or the motivation to break them up or regulate them we must protect them at all costs. We've propped them up with TARP, quantitative easing, and $7.7 trillion in secret Federal Reserve loans, but they're still shaky as hell. If we prosecute any of their executives, their stock prices will fall and they'll collapse again. And they'll take the entire economic system with them.

That leads to some grotesque miscarriages of justice. Nobody at Wells Fargo has been indicted for money laundering, for example, despite the fact that the bank has paid millions to settle charges of laundering cash for the Mexican drug cartels that have murdered more than 35,000 people. As an experienced bank investigator working for the Senate observed, "There’s no capacity to regulate or punish them because they’re too big to be threatened with failure."

The Bailout Nobody Knows

And banks don't just need protection from their own criminality. They also need protection from their own lousy management. Their balance sheets are filled with toxic risks from their long run of incompetence, negligence, and greed. That's where you and I come in. Some powerful folks are afraid the banks will fail if they're forced to write off the bad loans on their books, or to stop profiting from loans sold deceptively or irresponsibly.

TARP may be over, but there's another massive bank rescue going on. Who's funding it? We are. Every time we pay a usurious interest fee on a credit card, we're propping up the banks. Every time we make another month's payment on an underwater mortgage, we're propping them up too. Every time we pay an overpriced consumer loan of any kind, we're making another payment into the consumer-funded bailout that's keeping the big banks afloat.

It would be great if politicians in Washington stopped using American consumers to subsidize banks that shouldn't even exist. But they haven't. That's where "Occupy Our Homes" comes in.

Occupy Our Homes

Tuesday, December 6, has been declared a National Day of Action to Occupy Our Homes. Its goal is to focus attention on the corrupt banking practices that led to the mortgage boom and today's ongoing economic misery for most of the 99 percent.

It's also a day for helping people in our communities who have been victimized by predatory lending, criminal bank forgery, unfair or illegal foreclosure practices, and other bank abuses that victimize the public. Occupy Minnesota has already occupied an illegally-foreclosed home, and plans to do the same thing with another home tomorrow. Here in Los Angeles, where an inspiring victory has already taken place, OccupyLA will help two brave families re-occupy their illegally foreclosed homes.

One of those homes belongs to a three-earner family that includes a gainfully employed woman with cerebral palsy named Ana Wison. Ana's household clearly seems capable of making its mortgage payments, but her bank's foreclosing anyway. And in one of ironies that have become all too common, the bank in quesion is none other than that Mexican drug cartel money-laundering outfit, Wells Fargo.

The Occupy movement hopes to focus the public's attention on people like Ana Wison. In the words of the Dylan song: "Things should start to get interesting right around now."

Demonizing the Victim

Resisting illegal foreclosures is a good first step. It brings attention to Wall Street's criminality, venality, and plain old inhumanity toward the people they call their"customers" - but treat like serfs.

It does something else important: It counteracts the brainwashing, driven by Wall Street and dutifully echoed by the media, which has demonized the victims of bank misbehavior. (We were trying to fight that brainwashing back in 2008, without much luck.) The Occupy movement has already won several battles in that war. If the public's attention can now be focused on people like Ana Wison, that can be a powerful blow against the Wall Street/corporate media "they deserve it" hype.

What about the millions of people who have suffered because of the banks' predatory mortgage lending but aren't behind in payments or in the foreclosure process? We need to re-open the debate about the fairness of forcing any underwater homeowners to pay underwater principal on homes that their banks knew, or should have known, were going to decrease in value. After all, the same conglomeration of banks and corporate media that demonize homeowners as "greedy" and "irresponsible" spent most of the last twenty years convincing people that real estate was a sure-fire investment.

Banks made an extraordinary amount of money off the bubble they created. The total mortgage amount outstanding in this country went from $6.2 trillion in 2002 to $11.9 trillion in 2009, a meteoric rise. And while banks feed off the Federal Reserve's unusually low rates, they've renegotiating very few home loans.

Consumers also owe nearly three quarter of a trillion dollars in credit card debt, much of it being paid at unconscionable rates of 12 percent to 29 percent - while their banks enjoy rates from 0 percent to 3 percent, thanks to the government institutions created by those same consumers.

Occupy Our Homes. Occupy Our Credit Cards. Occupy Our Payday Lending ...

What will happen if consumers stopped blaming themselves? What if they demanded that the banks take responsibility for their irresponsible and/or predatory lending? What if they refused to stop this country's perverse economic role reversal, where customers have become the ATMs while banks keep making the withdrawals?

If 10% of America's homeowners declared a mortgage strike it would rock the banking world. If everybody paying exorbitant credit card interest declared a moratorium on payments all at once, Wall Street would change forever.

Think about it: "Occupy ALL Our Homes." "Occupy Our Credit Cards ... Our Payday Loans ... Our Buy-and-Drive Loans ..." I'm not saying these are necessarily the right tactics, although they very well may be. But what's most important is that we understand that consumers have far more power than we usually realize - provided we act together.

Many of Washington's leaders will cringe at the thought, of course. "That could hurt our biggest banks," they say. It would be tempting to reply, You say that like it's a bad thing. Here's a better response: Then start planning to break them up in an orderly fashion. We're done living a life of indentured servitude just so we can subsidize their greed.

Those are the discussions that we should be having. If powerful people on Wall Street and in Washington aren't worried about Occupy Our Homes , they're not paying attention. But with any luck, they soon will.

______________________

(If you've been a victim of mortgage abuse you can tell your story here. If you want to find an Occupy Our Homes event near you, you can look for one here.)

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Philadelphia attorney Irv Ackelsberg.

Doesn't this story warm your heart? I know it does mine. (BTW, the attorney quoted on this case is my friend Alex's father, a lifelong public interest lawyer who's really, really good.) Philly represent!

Patrick Rodgers, an independent music promoter in Philadelphia, has won a judgment against his mortgage lender, Wells Fargo, which Wells hasn't paid, and so he's foreclosed on them and arranged for a sheriff's sale of the contents of Wells Fargo Home Mortgage, 1341 N. Delaware Ave to pay the legal bill.

Rodgers made all his mortgage payments on time, but Wells decided out of the blue that he had to carry insurance for the full replacement value of his home -- $1 million -- and started to charge him an extra $500 a month in premiums. When Rodgers sent a formal letter to the lender questioning this, they did not answer in good time, so a court awarded him $1,000 in damages, which Wells wouldn't pay. So the court is allowing him to sell the contents of the lender's office to make good on the bill.

Hoo-ah!

"It's a completely unreasonable demand," says Irv Ackelsberg, a mortgage expert at the Philadelphia law firm Langer, Grogan & Diver. "Their interest is in protecting their mortgage, not ensuring that the house is rebuilt."

Rodgers' next step put him at some risk, he concedes now. He refused to renew the higher-cost policy. Instead, Wells Fargo bought him so-called forced-placement insurance - a policy that typically costs much more than ordinary coverage and only protects the mortgage-holder's interests.

But he fought back with his suit under the Real Estate Settlement Procedures Act (RESPA). Last month, Wells Fargo sent him more than $1,000, and Menke says it intended to fully satisfy the judgment. "We had considered this matter closed," he says.

What about Rodgers' four-page letter demanding answers about how much Wells is trying to charge him - charges that have added $500 a month to his statement?

Menke says Wells Fargo sent a written response "within the last month." As of Monday, Rodgers hadn't seen it.

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Guess what? When you buy a foreclosed property from Wells Fargo, you may not have a clear title to the property. Go read the whole sorry mess, as spelled out by Yves from Naked Capitalism:

Now specifically, the potential problem with the deal is the bank in many states will at best be giving the buyer a “quitclaim” deed (the addendum finesses this in paragraph 18, that the buyer only gets a “special/limited warranty deed. As the lawyer who took a dim view of this addendum put it, “This is like the ‘Special Olympics,’ not like ‘You are my special someone’.” That means the bank is merely transferring whatever it interest it has.)

But per the AFX article above, the bank may own nothing .It may have foreclosed without having a clear enforceable right to the property (this is the basis of the burgeoning number of cases where borrowers are successfully challenging the bank/servicer’s right to foreclose, because it cannot prove it actually owns the note, which is the IOU between the borrower and the lender; if you don’t own the note, in 45 states, you have no right to enforce the lien on the property).

Now this little problem can be solved by title insurance, right? Well, guess what, some title insurers have exited the business, some others are starting to write policies with meaningful exceptions when they can’t go to the courthouse and find a clear chain of title. Oh, and Wells is trying to steer you towards their title insurer. What do you think the odds are that their title insurance policy doesn’t have exceptions?

So what is the risk? The lawyer explains:

The typical (unsophisticated) buyer thinks that because they have a lawyer at closing (no matter whose lawyer it is), a title policy, etc…….that they are all safe and sound. They struggle through one of these REO transactions for a month or two, finally get in the house, something bad goes wrong, and they find out that 1) the title policy won’t cover them and 2) the land isn’t unique (see the nasty provision in paragraph 27 on “specific performance”), so a refund is all you get – and you are out on your ear. Hopefully, with a refund – and that may be the best outcome. But if somebody comes in, and voids a foreclosure, your title policy doesn’t pay – Wells Fargo has clearly disclosed that this was a foreclosure, so you only got what they had (nothing), and you have no recourse, no insurance, and guess what, an unsecured loan for half a million bucks.

Given how many sales will be done out of REO, and the rising number of problems surfacing with making sure that mortgage securitizations took all the steps to become the real party of interest in a particular property, it is only a matter of time before we see some blowups of the sort the attorney was worried about, of a buyer shelling out hard dollars for a house, or taking a big mortgage, and winding up with nothing. And a few incidents like that getting the press they deserve will put a pall on REO sales.

Think the risk isn’t real? Then why has Wells bothered to insist that REO buyers sign a new type of addendum, when it has been selling REO for decades? This effort to shift all title risks on to the buyer is a tacit admission of problems. And look at the document itself. The buyer has to initial it in eight places as well as sign it. That’s a clear statement of Wells’ intent to shift the risk to the buyer.

Newshoggers: The Bomber Boys, Obama, and strategic ambiguity

Stinque: Financial services racketeer Wells Fargo slammed for larcenous scamming of customers

TalkLeft: What Comes First: Poliitcal polarization or presidential leadership?

Pam's House Blend: Marine Lt. Col. has sued to block his DADT discharge

Kiko's House: Cartoon du Jour

HOLY CRAP: Ground Zero mosque update...Conviction of FLDS leader Warren Jeffs overturned...Dollars for Christ...Happy Hour Gospel...Ordained into the abstract...Changing the script...It was the best of times, it was the End of Times...First Amendment hassles...Immortal Souls?...Pseudo-Christian...Wack...

This is more bad news for the state in the sun---run by Arnold.

From the WSJ: Big Banks Don't Want California's IOUs

A group of the biggest U.S. banks said they would stop accepting California's IOUs on Friday ... if California continues to issue the IOUs, creditors will be forced to hold on to them until they mature on Oct. 2, or find other banks to honor them.

...

The group of banks included Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and J.P. Morgan Chase & Co., among others.

I guess the banks don't think the 3.75% annual interest rate is worth the risk for a "BBB" rated debtor on the Rating Watch Negative list.

What a mess.

Duncan has a plan:

As I've said, I'm not sure what the Feds should do for California, but perhaps having the Fed guarantee California's IOUs, assuming they have that authority, so that banks will cash them for their customers might not be such a bad idea. It's just a bandaid for the overall problem, but will help some pretty needy people who need the cash.

I asked for California to get a bailout from President Obama in an earlier post instead of the IMF because soon, the money will dry up completely. I know a bailout won't solve the problem because we have the most frakked up legislative process in the US and that needs to really, really, really be fixed. Conventional thinking is that if we were to receive help then we'll never fix the problem. I agree with that, but what happens when the state is broke and nobody will play with us? As for Arnold, I'll take a phrase that Chief Brenda Leigh Johnson of The Closer commonly uses: Thank you, thank you so much.

One of the most tragic consequences of the subprime mortgage crisis has been the toll minorities have paid. Republicans point to Fannie Mae, Freddie Mac and ACORN as the mortgage Satans of the 21st century, but the truth is something else entirely.

Here's one example:

For two decades, Tyrone Banks was one of many African-Americans who saw his economic prospects brightening in this Mississippi River city.

A single father, he worked for FedEx and also as a custodian, built a handsome brick home, had a retirement account and put his eldest daughter through college.

Then the Great Recession rolled in like a fog bank. He refinanced his mortgage at a rate that adjusted sharply upward, and afterward he lost one of his jobs. Now Mr. Banks faces bankruptcy and foreclosure.

“I’m going to tell you the deal, plain-spoken: I’m a black man from the projects and I clean toilets and mop up for a living,” said Mr. Banks, a trim man who looks at least a decade younger than his 50 years. “I’m proud of what I’ve accomplished. But my whole life is backfiring.”

Like so many, Mr. Banks was lured by the promises made by the big banks like Wells Fargo and others: Refinance your home, take out some money for yourself, and hey, the interest rate will be low...for awhile, anyway.

The squeeze came for him when the interest rates on that variable rate mortgage rose and his income dropped. While it's not limited to minority borrowers, the impact on minority communities has been deeper than on white communities, largely because the unemployment rate is much higher.

Black middle-class neighborhoods are hollowed out, with prices plummeting and homes standing vacant in places like Orange Mound, White Haven and Cordova. As job losses mount — black unemployment here, mirroring national trends, has risen to 16.9 percent from 9 percent two years ago; it stands at 5.3 percent for whites — many blacks speak of draining savings and retirement accounts in an effort to hold onto their homes. The overall local foreclosure rate is roughly twice the national average.

It appears that the higher foreclosure rate is no accident. In fact, it seems that Wells Fargo targeted minorities to market higher-risk loans. At least, that's the accusation causing federal authorities to take a closer look at their lending practices there.

Camille Thomas, a 40-year-old African-American, loved working for Wells Fargo. “I felt like I could help people,” she recalled over coffee.

As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. “It was all about selling your units and getting your bonus,” she said.

What follows next is a story told across the country, but when the scam is played on a community just beginning to get a toehold on forward economic progress, the setback is one that may take more than a generation to overcome.

She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went “fishing” for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.

Ask a conservative and they'll tell you those people shouldn't have believed they'd get something for nothing. Well, I beg to differ. In the subprime heyday, phone calls rolled in here at record pace, promising us we could refinance our home and pull out enough cash to retire. When our middle son graduated from high school we were inundated with offers to refinance to send him to college. We had already been stung during the S&L crisis, so we knew it was a scam. But to the uninitiated, it seemed like a step up.

But then, look what happens:

Two years ago, his doorbell rang, and two men from Wells Fargo offered to consolidate his consumer loans into a low-cost mortgage.

“I thought, ‘This is great! ’ ” Mr. Banks says. “When you have four kids, college expenses, you look for any savings.”

What those men did not tell Mr. Banks, he says (and Ms. Thomas, who studied his case, confirms), is that his new mortgage had an adjustable rate. When it reset last year, his payment jumped to $1,700 from $1,200.

We've heard all of these stories before, but in Memphis the result is deep, dire and depressing.

“We’re wiping out whatever wealth blacks have accumulated — it assures racial economic inequality for the next generation,” said Thomas M. Shapiro, director of the Institute on Assets and Social Policy at Brandeis University.