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November 26, 2007
A Chance Encounter
I was waiting for my kids and my wife to come out of the locker room at the East Bank Club in Chicago when I saw Reverend Jesse Jackson coming up the staircase. I reintroduced myself and he engaged me in a discussion for the next half hour about the sub-prime mortgage crisis in the US.
Rev. Jackson has been changing his focus in the past several years, concentrating on the private sector as the primary means of advancement for African Americans. He told me that, “Blacks are policemen, firemen, postal workers and teachers. We are too heavily reliant on government jobs. Business is where the wealth is to be found.” His Wall Street project has been aimed at getting a larger share of investment banking and legal fees for minority owned firms. He noted that there has been real progress, with black financial executives such as John Rogers, Ron Blaylock, Chris Williams and Melody Hopson achieving real success.
He went on to say that America is presently in the fourth stage of the civil rights struggle. Step one was the end of slavery after the Civil War. Step two was the end of Jim Crow, the separate but equal status for American blacks. Step three was the achievement of voting rights in the 60s. The present phase is achieving access to capital, the economic stage.
The sub-prime crisis is a “tsunami that is threatening the stability of the African American community. Many of those threatened with foreclosure are first generation home owners. Many of our mega-churches also have sub-prime loans. All of the media coverage has been about the fall of the Wall Street titans, Chuck Prince and Stan O’Neal. But there is a depression on our side of town,” he added.
His concept for resolving this crisis is Restructure, Not Repossess, a US Government sponsored Marshall Plan that would facilitate a resetting of interest rates and extension of loan payment period. “What are the banks going to do with all of these homes? There are two million homes that are forecast to go into foreclosure. Sixty percent of them are owned by black people. There is one block on West Madison Street in Chicago where every one of the homeowners is in default on present terms.” He foresees a downward spiral of lower tax revenues for cities, less funding for police and education and flight of business.
To create attention for his proposal, Rev. Jackson is organizing a march on December 10 on Wall Street, to be followed early next year by meetings with CEOs of large financial institutions and a national broadcast from Trinity Church in New York City on January 5. This is a combination of “outside-in and inside-out” communications techniques.
It is fascinating to observe the evolution of the thinking of a religious leader who sees that the private sector is indeed the motive force for change but who recognizes the need for multiple stakeholders (unions, churches, academics) to coalesce around a plan that can be sold to government. We seem to be moving from a period of caveat emptor (buyer beware) with government as referee toward a new period where a common agreement on principles among key interest groups is required, with government as a key actor. There will be a key role for PR in this jostling of interest groups as they grope toward agreeable solutions. I would appreciate your views as always.
Posted by Edelman at November 26, 2007 9:48 AM |
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On the topic of the importance of land ownership, see Henry Louis Gates, Jr.'s 11/18/07 NYTimes Op-Ed piece, "Forty Acres and a Gap in Wealth." And for even greater depth, Peru's Institute for Liberty and Democracy President Hernando de Soto's work including "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else."
Posted by: Howard Lalli at November 27, 2007 10:21 AM
Are you sure you want to depict Jesse Jackson as a "religious leader"? As someone who has fleeced and intimidated American companies in the past (forcing them to hire his employees in lieu of taking them to court), I doubt he is someone who I would be talking to for a half hour, except to ask him some very tough questions about the finances of his organization. Fancy titles do not make a leader, nor do fancy phraseology make for practical solutions...I can't help but wonder what is his next gambit?
Posted by: Art at December 4, 2007 12:30 AM
I don't agree with a lot of his politics. He has made a real contribution in civil rights. Thanks for reading my blog.
Posted by: Richard Edelman at December 4, 2007 5:54 PM
Thank you for highlighting the human impact of the sub prime crisis. It has made me stop and think about the human cost of business decisions.
Posted by: Sindhu Patil at December 9, 2007 2:24 PM
Could it be the mortgage contracts were/are faulty if not fraudulent? Why would the fault only be on the side of the "buyer"? To me this crisis is similar to the predatory interest rates of credit card company\ies. Some mortgage companies have implicitly recognized this by "restructuring" the "debt" ie implicitly admitting the hike in rates was irresponsible (and abusive -from the start-) and the situation would/was backfiring by threatening themselves: what's the use of repossessing millions of houses nobody wants? what is is worth? They have much more to lose in the foreclosures than in the "restructuring". What I find irritating is the way the media try to "explain" the whole thing by mostly blaming the clients. I was surfing today and stopped by the Grameen foundation that promotes low interest loans for poor people. That's the root of the mortgage "crisis": too high interest rates for people to own a home (I am not talking about the people who speculated).
Posted by: philippe at December 11, 2007 4:45 PM