HSBC, one of the world's largest financial institution, was greeted by three new lawsuits pertaining to how they deceived and ripped off minorities in Georgia counties by making shady mortgages.
As most Wall Street banks did, HSBC needed more and more mortgages during the years before the 2008 Credit Crises. To get more of these loans, HSBC had to take advantage of minorities who usually have some type of language difficulty. By adding in complex terms into long paged contracts, minorities wouldn't be able to catch the toxic terms of the loan. Easily done, HSBC was able to create more CDO's (collateralized debt obligations) to sell, thus garnering them higher profits. Not surprisingly, when the Credit Crises did hit, most of them lost their homes. Those who did survive were subject to harsh contract terms and impossibly high rates for their loan. Also, in many cases, as more foreclosures happen, the values of the home decreases and hurts everyone as a result.
HSBC wasn't the only bank to take advantage of minorities. Banks such as, Bank of America or Wachovia (now Wells-Fargo), also committed similar acts. It shows how the greed on Wall Street and deregulation hurts not only those minorities living here in Georgia, but also those across the United States and the world. These minorities who forced to foreclose their homes are effecting the economy here in Georgia. As I've said before, the more foreclosures, the lower home prices go. And when home prices go lower, our economy, which relies heavily on housing, will suffer. As a result, our state government has to deal with lowering taxes on properties and pay for them by making cuts in important services that are critical to economic growth and prosperity. As the whole, the economy will suffer as more government cuts occur because of the "great acts" of Wall Street.
The economic effect isn't the only reason why this even matters. It's really about the people who were affected. Millions of people lost their homes and were forced to live off of welfare or even live in their friends home. In fact, those were the lucky ones. Many others have to contend themselves on the street and no roof above their heads. Most of these people have lost everything and are suffering some of the worst times in their lives. Meanwhile, Wall Street bankers happily take multi-million dollar checks home and turn a blind eye on the problems they helped create. That's moral hazard at its best.
As more lawsuits come in, Wall Street banks are finally paying back a small bit of an enormous debt it owes to Main Street. Not only are municipals here are getting frustrated, those in the whole nation are also feeling the same thing. With so many minorities around the U.S. that have been affected, Wall Street banks have contributed to a longer recovery that we are still embroiled with today. And the longer this recovery takes, the more Americans that are hurting and struggling out there. And as we see from the current election campaigns, theres a simple question, to protect or not to protect helpless citizens. That, will be your choice.
Works Cited
Trubey, J. Scott. "Cobb, Fulton, DeKalb Sue British Bank, Allege Predatory Lending." The Atlanta Journal Constitution. Cox Media, 18 Oct. 2012. Web. 18 Oct. 2012. <http://www.ajc.com/news/news/cobb-fulton-dekalb-sue-british-bank-allege-predato/nSg9Y/>.
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