Podcast Summary: All Of It – Episode: How a Subprime Mortgage Crisis Led to the Rise of Crime in East New York

Introduction

In this compelling episode of All Of It, hosted by Tiffany Hansen for Alison Stewart, WNYC delves into the intricate web of housing policies, financial scandals, and social upheaval that transformed East New York, Brooklyn, into one of New York City's most notorious crime-ridden neighborhoods. Featuring author Stacy Horn, whose new book, The Killing Fields of East New York: The First Subprime Mortgage Scandal, White Collar Crime Spree, and the Collapse of an American Neighborhood, provides an in-depth exploration of these dynamics, the episode unpacks the historical and socio-economic factors that led to the 1991 murder spree where 116 residents lost their lives.

The HUD Act of 1968 and Its Intentions

Stacy Horn begins by contextualizing the creation of the Housing and Urban Development (HUD) Act of 1968. Originally intended to combat systemic discrimination in housing based on race, religion, and sex, the legislation was a response to the civil unrest and riots of the 1960s. As Horn explains, “[...] America is a racist country” (02:36), a stark acknowledgment from the Kerner Commission that underscored the need for comprehensive housing reforms. However, while the Act aimed to make homeownership more accessible to families of color, unintended consequences ensued.

Discriminatory Housing Practices: Redlining and Blockbusting

Before the HUD Act, discriminatory practices like redlining and blockbusting were rampant. Redlining involved banks drawing red lines around predominantly minority neighborhoods, effectively denying residents access to mortgages and financial services. Blockbusting, on the other hand, saw realtors persuading white homeowners to sell their properties at low prices by instilling fear of racial integration, only to resell them at inflated rates to Black families (04:13).

Michael, a listener and former assistant district attorney, highlights the systemic negligence: “Why is it you think that New York City continually allowed the crime, filth, and the redlining to occur in East New York?” (04:44). Horn identifies three critical "crime waves" that devastated the neighborhood: unethical blockbusting, redlining, and the first subprime mortgage scandal orchestrated by white-collar criminals exploiting the very policies meant to help.

The First Subprime Mortgage Scandal

With the implementation of the HUD Act, lenders saw an opportunity to profit from lax regulations. Horn details how bankers acquired distressed properties in East New York, cosmetically repaired them without substantial improvements, and fraudulently secured FHA loans by bribing appraisers. This manipulation flooded the market with subprime mortgages, destabilizing the housing sector and contributing to widespread foreclosures (07:56).

Decline of East New York

The compounded effects of these housing policies led to a stark demographic shift. As crime surged, white residents fled, often compelled by blockbusting practices, leaving predominantly families of color with limited housing options. Horn observes, “[...] families of color were the victims of these crimes and the perpetrators were the white-collar criminals” (11:58). This segregation intensified poverty and crime, culminating in the infamous nickname “Killing Fields” following the 1991 murder spree.

Listener Richard shares personal experiences of police corruption and neglect within the NYPD’s 75th Precinct, emphasizing the community's lack of protection and support: “They would see it on the street. It was absolute mayhem” (23:56). Horn echoes this sentiment, noting that the precinct was "undermanned and stretched too thin" (21:51), exacerbating the neighborhood's decline.

Community Responses and Current State

Despite the bleak history, there are glimmers of resilience. Horn discusses the efforts of local activist groups and congregations that sought to mitigate the neighborhood's decline. For instance, the East Brooklyn Congregations banded together to address public housing deterioration and community violence. Mel, a youth worker since 1967, recounts the transformation from a once-thriving immigrant neighborhood to a battleground of violence and neglect (17:22).

Today, while East New York remains challenged, Horn notes a significant improvement from the 1990s. Modern visits reveal fewer abandoned homes and a safer environment, though remnants of past struggles linger. Residents still exercise caution, but the area no longer mirrors the pervasive danger it once did (25:26).

Conclusion

Stacy Horn’s investigation into East New York’s fall and gradual recovery paints a vivid picture of how policy failures and financial exploitation can devastate communities. Her work underscores the critical need for vigilant oversight in housing policies and a comprehensive approach to urban development that prioritizes community well-being over profit.

As Horn poignantly states, “[...] the varied perspectives and diversity of experience is what makes New York City great” (00:25), reminding listeners of the enduring strength and resilience within diverse urban communities.

Notable Quotes

• Stacy Horn: “America is a racist country.” (02:36)
• Michael: “Why is it you think that New York City continually allowed the crime, filth, and the redlining to occur in East New York?” (04:44)
• Stacy Horn: “Families of color were the victims of these crimes and the perpetrators were the white-collar criminals.” (11:58)
• Mel: “It was absolute mayhem.” (23:56)

Final Thoughts

All Of It effectively unravels the complex interplay between government policy, financial malfeasance, and social dynamics that led to East New York’s transformation into the "Killing Fields." Through engaging discussions, personal anecdotes, and expert insights, the episode offers a thorough examination of urban decline and the path toward recovery, making it a must-listen for those interested in the cultural and historical fabric of New York City.