Charles Manson and the Lehman Brothers
© Jack Cashill
Earlier this week, President Barack Obama descended on Wall Street to celebrate the first anniversary of the demise of the Lehman Brothers, one of the major investment banks consumed in the subprime bonfire.
Earlier last month, the nation’s media commemorated the fortieth anniversary of the demise of the actress Sharon Tate, her unborn baby, and four other Beverly Hills worthies.
A truly prescient observer could have foretold the subprime crisis by studying the Tate murders. In my book, What’s the Matter with California, I got close but did not quite nail it.
In researching my impending book, Popes and Bankers: A Cultural History of Credit and Debit, it all became clear.
Charles Manson is a freak. He is explanatory of nothing. It was the twenty or so girls under Manson’s sway, four of whom would be imprisoned for the Tate and La Bianaca murders, who had the predictive power.
Virtually all came from middle class homes. Under slightly different circumstances, they might have prospered.
They obviously did not, and the question is why. In her biography of Manson girl Leslie Van Houten, Karlene Faith offers an essential clue as mere detail.
As Faith tells us of the Van Houtens, “They were a clean-cut, loving family in a comfortable middle-class house with a pool, in a Southern California suburb.” Van Houten’s father, an automobile auctioneer, and her stay-at-home mom were “devoted to their four children.”
Not that loving, not that devoted. As the reader learns, “Major change was in the offing.” The Van Houtens divorced in 1963, when Leslie was thirteen.
By sixteen, Van Houten had experienced acid, sex, pregnancy, and abortion, and by nineteen, first-degree murder—“major change” in just about anybody’s book.
Van Houten was not unique. Virtually all the Manson girls had watched their families fall apart. The chroniclers of that era, like Ms. Faith, simply refused to see the pattern, let alone judge it.
In their analysis of the subprime crisis, the media maintain the same willful blindness. In their rush to blame the mortgage industry and Wall Street, they refuse to consider the raw materials with which these industries had to work.
This includes too many families like the Van Houtens, families that suddenly needed two houses not one and were barely able to afford either.
It should not surprise that southern California has emerged as ground zero in the subprime mess. The state, after all, pioneered the art of family breakdown.
Four weeks after the Manson killings, California enacted the nation’s most progressive no-fault divorce law.
In 1970, the first full year of the law, the state registered a record 112,942 divorces, a 38 percent increase from just the year before. To put that number in perspective consider that in 1960, there had been only 105,352 marriages in California.
By 1969, the Hollywood community had long since lost faith in marriage. A quick search of the top twenty movie stars raised in the film colony shows only three who grew up in intact families.
For the last fifty years, Hollywood has used its extraordinary influence to share its cynicism about “family values,” a phrase that its representatives can only deliver with a sneer.
The media-savvy in the central city had picked up the vibes and stopped getting married. In 1969 again, fatherless boys reached such critical mass in South Central LA that some of the more enterprising organized themselves into a lost boys club known as the “Crips.”
So many young men like these would remove themselves from the work force that the state had to import workers from points south.
Many immigrants, legal and otherwise, would eventually buy houses even as their own families struggled in the marriage-unfriendly environs of southern California.
These cultural trends conspired to keep a lid on the homeownership rate. When Bill Clinton was inaugurated in 1993, the rate was lower than it had been when Richard Nixon was inaugurated in 1969.
The decline in two parent families was negating the increase in prosperity. How could it not? In 1993, the average income for households headed by divorced women was 40 percent that of married couples; for unmarried women it was only 20 percent.
Homeownership rates for female-headed households struggled to stay above 50 percent. For married couples, rates hovered consistently in the mid-80-percentile range.
With blacks overrepresented among single parent families, white homeownership rates inevitably outstripped those for blacks. In the early 1990s, that gap was at least 25 percentage points and holding.
The chattering classes, however, refused to acknowledge family breakdown as a problem, let alone as an explanation for the disparity in homeownership rates. They preferred to explain unequal results in just about anything with the inevitable charge of “racism” or “sexism.”
To make this story line work, the media had to ignore default rates. A comprehensive HUD study of 250,000 FHA loans in the years 1992 to 1999 showed that blacks were defaulting on their home loans twice as frequently as whites and Hispanics three times as frequently.
If minorities had been held to tougher borrowing standards, their default rates should have been lower than whites, not higher.
Another in-depth study on the years 1991-1996 concluded that divorced women were “significantly more likely to default than divorced men and married households.”
The rest of this story is well enough known. In 1995, the Clinton administration reinforced the Community Reinvestment Act to increase homeownership among minorities and women.
Although not as aggressively, the Bush administration picked up where Clinton had left off.
When the mortgage industry lowered its standards to accommodate marginal borrowers and keep the pipeline full, the media and Congress cheered them on. The demand soared and prices did too.
In 1995, a family of median income could afford to buy 50 percent of the homes in greater Los Angeles. By 2006, at the bubble’s peak, that same family could afford to buy one in fifty homes.
There was no one left to sell to. Many of those who bought late defaulted, and in this category women and minorities were seriously overrepresented. This was not an economic crisis as much as it was a cultural crisis.
The tragedy is that when Obama went to Wall Street he still did not understand the economy as well as the Lehman crew had, and he did not understand the culture nearly as well as Charles Manson.
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