The Justice Department reviewed mortgages made from 1990 through 1994, and found that the company's loan fees for African Americans, Latinos, the elderly and women included an added fee of up to 12% of the loan amount; an added fee that was not charged to younger white males. The lawsuit represented the first time the Justice Department's civil rights division took action against a lender based on gender or age bias in loans. Ironically, the Long Beach Mortgage Company claims to be in the business of making loans to people with impaired credit, so they are willing to exploit people who are particularly down-and-out, whose options are limited to start out with.

The Justice Department indicated that Long Beach Mortgage set its basic rates legally, where they got in trouble was with a policy that allowed independent brokers to add up to 12 points -- $12,000.00 for a $100,000.00 loan -- to customers they brought to Long Beach Mortgage. The lawsuit contends,"The totality of loan originations by Long Beach reveals that African American, Latinos, women and persons over the age of 55 were charged higher prices for their loans than the terms and conditions granted to persons without those characteristics who presented similar levels of risk to the lender." This brings to mind the studies that were published about a decade ago that revealed that banks and savings and loans routinely denied black people credit, while granting credit to white people who had a similar credit standing; the only difference was that no public agency pursued the matter. (Of course, now the Justice Department is still not pursuing the creators of the lending market, the BIG banks, but is instead going after the small fry, defenseless mortgage companies). These patterns are indicative of an institutionalized underclass that directly contradicts all hypothesis about the "classless" American society.

Additionally, people with a combination of the characteristics were charged even more. A black woman over 55 was 2.6 times more likely to be charged an additional six points than a younger white man under loans extended by the company itself through its employees; and if the loan was extended through a broker, the woman was four times more likely to be charged the additional fees.

The agency of the Justice Department responsible for housing and civil enforcement has sued ten banks and savings and loans nationally over violations of fair lending laws. The latest was another $4 million settlement reached in May with Fleet Mortgage Corp. over two of its branches over-charging black and latino customers. Settlements, of course, mean that these companies have been caught red-handed, and they are able to avoid the full cost of losing litigation by a settlement in which they can avoid admitting doing anything illegal or wrong. It is a legal trick that only proves that the whole financial industry is corrupt to the core, and is in need of complete over-hauling.

The way credit is extended is directly associated with power. Credit determines whose projects shall be carried out, and whose projects shall be shelved. Billionaires live in another world than the rest of us, borrowing on terms that are completely different, and far friendlier. The people who realize that there is something funny going on are always the kids, because they are the ones who instantly realize that there is something wrong with a system wherein the only people who can get money are the people who already have it.

SOURCE: Los Angeles Times, Orange Co. Edition, 6 Sept. 1996; reprinted in the public service of the national interest of the American people.