ACCORDING to a new study by the Pew Research Center, Hispanic families saw the largest decline in wealth of any racial or ethnic group in the country during the latter half of the last decade: from 2005 to 2009, their median wealth fell by an astounding 66 percent. The reason? The implosion of the housing market, where Hispanic families had invested much of their wealth.
But that’s only the latest chapter in a much longer story. Over the past two decades Hispanics have moved from the middle of the socioeconomic hierarchy, between blacks and whites, to a position below both. On virtually every indicator of socioeconomic welfare, Hispanics fell relative to blacks.
Not really. I've looked at least as many socioeconomic indicators as Professor Massey over the last 39 years, and the keynote is relative stability. But, to the extent that Hispanics fell relative to blacks on socioeconomic indicators, it's largely due to a flood of new immigrants from south of the border.
This has nothing to do with nativist tropes like work ethic or resistance to assimilation and everything to do with misguided government policy: our immigration and border-control system has created a class of people cut off from traditional legal and economic structures and thus vulnerable to the worst depredations of the market system.
During the housing bubble, those depredations came in the form of predatory lenders, driven by the boom in mortgage-backed securities. Before that, minorities had generally been shunned by lenders, which tended to be risk averse and discriminatory.
And, apparently, accurate.
... Yet subprime lending affected both blacks and Hispanics and, if anything, predatory lenders went after the former more than the latter. So why did Hispanics suffer more?
I doubt that predatory lenders went after blacks more than Hispanics. The big money didn't flow into Detroit. All that happened there was you had a lot of $30,000 houses got pumped up to $65,000 before collapsing to $12,000. That's nothing compared to the flood of money into, say, California's Inland Empire.
You can see that Massey doesn't know what he's talking about just by looking at the four Sand States (CA, AZ, NV, FL) where the great majority of money was lost. At the peak of the bubble, something like 3/8ths of all the market value of homes in the U.S. was in California alone.
Lots of lenders had been burned on black neighborhoods before. Latinos were the big growth market. If you listed to the key figures in the housing bubble, such as Angelo Mozilo, Henry Cisneros, and George W. Bush, it's clear that they were much more excited over the potential of the Hispanic market than of the black market.
The answer is simple: over time more and more Hispanics had become economically vulnerable and eminently exploitable, a fact attributable in large part to American immigration policy.
In the early 1990s the United States began militarizing its border with Mexico in an effort to halt unauthorized migration.
Lame. The argument here is that if illegal immigrants were legal, then magic ponies for everybody. Or something. There seems to be lacking a mechanism.
... Thus the sudden creation of a new class of people, working low-wage jobs outside the legal labor markets. Not only was it difficult for them to safely accumulate wealth, but they were left uniquely vulnerable to economic exploitation — such as the promise of a mortgage with little documentation required at signing.
When the Great Recession arrived, many Hispanics got hit with a double whammy: not only were many Hispanic homeowners left with negative equity, but the collapse of construction jobs, which had been a primary draw for immigrants beforehand, eliminated the very means by which they could continue making mortgage payments.
And because many were working and living in legal gray areas, they had little recourse when they learned their mortgages came with ballooning fee structures and onerous penalties for late payments. What little wealth they had managed to accumulate simply vanished.
As opposed to everybody else who had tons of recourse.
This is just dumb. On the whole, illegal immigrants had more options, including just disappearing.
The simple explanation is that a big influx of Hispanics helped justify the housing bubble. Who was going to buy these houses in Palmdale for $400,000? Why the infinite supply of hard-working family values Hispanics, that's who. Just like the President said. Only evil nativists had any doubts about their ability to pay. The smart money boys like Mozilo and Cisneros are putting a trillion dollars into underserved markets. You notice Mozilo didn't team up with Al Sharpton.
Now, I read several hundred articles about people who got foreclosed upon. I'm pretty good at noticing patterns in large amounts of anecdotal evidence. And I was looking for evidence of a huge role for illegal immigrants in this debacle. Trust me, I was.
While I saw plenty of Spanish surnames, my impression is that the big money foreclosures in the Inland Empire, Vegas, and Phoenix hit hardest Hispanics who were either born here or had been here a fair amount of time. New illegal immigration played a huge role, but it was more indirect. You see much higher foreclosure rates in entrepots in LA and Orange Co. like East LA and Santa Ana relative to surrounding neighborhoods, but the really big money was lost in fast growing inland areas that were less entrepots for illegal immigrants than Brown Flight destinations. Illegal Immigration pushed established Hispanics out of LA County and into the desert, looking to get away from the newcomers. Only in the last year or two as the bottom of the barrel got scraped ever harder did a large number of illegals got loans.