The NAACP has taken on lending industry behemoths in two class-action lawsuits against Wells Fargo and HSBC. The complaints, brought on behalf of Black Americans who have been victims of discriminatory lending, target:

numerous mortgage lenders who are engaged in institutionalized, systematic racism in connection with its members’ purchase of residential mortgage loans. The pervasiveness of this discrimination has been documented in numerous empirical studies that all confirm that African-Americans are substantially more likely to receive higher-rate residential mortgage loans than Caucasian borrowers with the same qualifications…. It is beyond dispute that the African American community has long been the victim of discriminatory banking practices. Generations of African Americans have been deprived the opportunity to participate in the American dream by banks that refused to give them mortgage loans simply because of the color of their skin, or placed them in unfavorable loans that decimate them financially.

The NAACP’s litigation cites the Fair Housing Act, the Equal Credit Opportunity Act, and the Civil Rights Act. The group’s basic demand is for the companies to stop abusive practices and make efforts to fully inform prospective borrowers of their rights. Though subprime lending and foreclosures disproportionately impact communities of color, the housing meltdown is now, of course, rocking the entire economy. The Center for Responsible Lending recently projected 2.2 million homes lost by the end of 2009 and $352 billion in lost value. The impact on rental properties, especially for the poor and people of of color, may be even more devastating. The NAACP suit won’t correct fundamental inequities in the housing system, but it does help illuminate the convergence of civil rights and economic justice in this crisis. In a recent interview for an upcoming issue of Colorlines, George Goehl, executive director of the community organizing network National People’s Action, said advocates in communities of color have for years been dealing with, and warning about, the looming the mortgage crisis:

"We think that this whole situation really builds the case that racial justice benefits us all. In the 1990s, when these predatory loans started hitting communities of color, which is where it really started, if we would have said, ‘Hey, this isn’t working for all of us, we have to stop it, we have to outlaw this… put these brokers in jail’–the economy wouldn’t have melted down, we wouldn’t have had this foreclosure crisis, we wouldn’t have needed a stimulus bill. But people looked the other way and only got interested once their mutual funds started to get hit.”

Now that virtually no one can afford to ignore the economic maelstrom, maybe those in a position to prevent future disaster will start to grasp the true cost of the lending industry’s excess. Image: National Training and Information Center Foreclosure Photo Project