Despite Jesse Jackson’s warning of an impending “economic tsunami” from the subprime mortgage crisis, the only people marching on Wall Street on Monday afternoon were the business people whizzing past the few dozen protestors chanting “Restructure Loans—Don’t Repossess Homes” on the corner of Broad and Exchange streets.
Most business people strode past picket-wielding demonstrators, nonplussed by the accusations of “predatory lending” and “white-collar crime” being lobbed from the podium inside the metal barricades one block south of the New York Stock Exchange. As one speaker called on “Wall Street to help out the main street,” a suited passerby shook his head and muttered, “Yeah, well, don’t buy something you can’t afford.”
Some spectators, like lawyer Angelo A. Paparelli, agreed that the government needs to do more to stem the two million mortgage foreclosures that are expected in the next two years.
“Obviously, there has to be a political solution [because] someone’s ox is going to be gored the question is who suffers and who wins out,” he said on the sidelines of the protest. “Everyone is culpable here. I feel for these people, but if they had no realistic hope of servicing the debt, they should pay. If they were duped, then the duper should pay. [President Bush’s plan] is arbitrary and doesn’t go far enough though.”
Mr. Bush announced a plan last week to rescue holders of subprime mortgages by freezing interest rates for five years, but it is unclear how many of the two million subprime borrowers will be eligible for loan restructuring under the proposal.
In a statement released by the Rainbow/PUSH Coalition last week in response to the plan, Mr. Jackson attributed the foreclosure crisis to a “white-collar crime wave in which billions of dollars were made and lost in real estate speculation in subprime loans by the biggest banks, hedge funds and mortgage companies in.”
The Center for Responsible Lending said in a study that the plan applies to only 7 percent of homeowners facing foreclosure, or 145,000 households. Mr. Jackson is calling for a bigger government bailout along the lines of the Marshall Plan that helped rebuild post-World War II Europe.
Other Wall Streeters resent even limited intervention in the economy.
One investment advisor who would not say which firm he worked for or give his name because he “would get in trouble” said he has been warning clients for the past three years that the housing bubble would eventually burst.
“I had clients cashing out $3,000 IRA accounts to put a down payment on a house they couldn’t afford and now someone has got to pay the piper,” he said in between drags of a cigarette outside the Bobby Van’s steakhouse at Broad and Exchange streets. “These people are not victims of predatory lending and this is not a racial thing. It’s like those guys on the street doing the card tricks–the deal looks too good to be true because it is. People went out and bought houses that they shouldn’t have bought, so eventually they are going to foreclose. The government getting involved is just forestalling the inevitable.”
Another dealer who refused to disclose his name because, “I do business with a lot of the companies that I think should pay,” said Wall Street should be held accountable after earning high returns from subprime loans.
“These Wall Street banks are behind a lot of the mortgage companies with abusive lending practices, so yeah I think they should have to pay more,” he said, before stubbing out his cigarette and walking into the Stock Exchange.