Wall Street financial wizards have conducted their businesses as though the complex financial products that generated billion-dollar compensation packages also created a protective moat beyond public accountability.

In the interdependent world of global finance that is now collapsing, home mortgages were abstractions. During this decade the basic human connection between lender and borrower in consumer finance was cut and thrown away as a quaint, easily discarded vestige of a bygone era.

In 1981, at the beginning of the era of retail banking deregulation, I wrote the first state consumer protection law for California to stop the practice of “playing the float” — holding customer deposits to earn money by delaying credits to the customer’s account. This abuse crept into retail banking because the full market effects of lifting the previous interest rate ceilings were poorly understood. Follow-up regulation was necessary to close a window of market failure.

Just as in the current crisis with subprime loans, competition could not and did not do the job after deregulation.

Getting out of this mess will require four things: public recognition of the scope and scale of the backlog of mortgage-related defaults, a return to basic human connections in mortgage lending, aggressive consumer protection, and insistence on generous capital cushions (rainy day funds to buffer unexpected losses).

Bring all the bad loans out of the dark recesses of investment and commercial bank balance sheets and into the light of public review. We cannot fix it until we see it.

Next, back to basics. Remember that houses are homes, not abstract transactions that can be made profitable with unreasonable levels of leverage/borrowing. I am not advocating a return to the horse-and-buggy days of lending. There is still a role for more conservative securitization, in which packages of home mortgages are sold to the restructured Fannie Mae and Freddie Mac, and a well-regulated private market. However, preserving the connection between originator and borrower is more likely to reduce fraud and consumer abuse.

This will require political and economic leadership to encourage Americans to return to the tough, unpleasant discipline of saving. At the heart of the current meltdown is a stark reality: America is the world’s biggest debtor in both the public sector (budget deficits) and the private sector (financial institutions and corporations). The U.S. financial system is now at the mercy of foreign sovereigns and institutions sitting on enormous piles of cash, much of it from the sale of oil and other products to us.

Shifting the bad loans, and the financial instruments based on these loans, on to the balance sheets of commercial banks will not solve the problems we face.

In the new pea and shell game, Bank of America has become the new private shell of choice. B of A, the nation’s largest bank, holds 10% of all deposits. It first absorbed Countrywide Financial, the biggest and most problematic subprime mortgage lender, with a loan from the Fed; this week it absorbed Merrill Lynch, with benefit of a waiver of a Fed rule designed to prevent the bank holding companies with FDIC-insured banks from lending to investment bank subsidiaries.

Bank of America, its depositors, and the FDIC are not the long-term solution to the accumulated pile of loans in default.

In August, the inventory of unsold foreclosed houses reached 750,000. With the takeover of Fannie and Freddie, the federal government will be the owner of some of these properties. These unsold foreclosures are depressing the home equity of the rest of us. RealtyTrac, a real estate value-tracking firm, estimates that one out of every six houses for sale in America is a bank-owned foreclosure.

Federal Deposit Insurance Corp. Chairman Sheila Bair testified Wednesday to the House Financial Services Committee: “The backlog of foreclosures and the credit crunch have combined to depress housing prices and homeowners’ equity dramatically. Steep home price declines are an important dynamic that drives up foreclosure rates. Falling home prices reduce homeowner equity, which then makes it more difficult to refinance or sell a home, leading to lower sales and higher delinquencies.”

Zillow.com estimates that 29% of homes are worth less than their outstanding mortgage balance. These owners have little incentive to keep making mortgage payments. Why not walk away and return the key? Short-sales will only add to the glut of unsold homes, driving prices down even further.

The relationship between the house as collateral for a loan and the many layers of complex new financial products grew ever more strained as the regulatory ground rules became a passive backdrop to a rapidly changing environment that featured three factors that converged to turn routine home loans into an international financial crisis: unregulated brokers, complex financial instruments, and international financial integration. I know that it is not fashionable to talk about human values in the same sentence as global money, but maybe that is the real problem. Where are Frank Capra and Jimmy Stewart when we need them?

Modern financial titans, like Sherman McCoy, the central character of “The Bonfire of the Vanities,” have unwound with a single wrong turn, carrying them from the heights of money, power, and privilege on Wall Street to the anger and rage of the ordinary folks in the South Bronx. Tom Wolfe’s metaphor of the fateful mistake helps us to see how connected we are, even though some may deny that connection.

Last weekend the bonfire raged out of control on Wall Street. This time the wrong turn took place more than 10 years ago, when the first experiments with bad loans were pushed on poor and unsophisticated borrowers who lived in communities that had previously been starved, through redlining, from receiving any loans at all. Target practice in poor communities proved the viability of the abusive terms: no exit fees, pay-what-you-want ARMs, liars loans, low teaser rates, and balloon payments. These same terms were then quickly adapted to middle- and upper-middle-class borrowers in search of a vacation home, or home equity for college tuition.

Within five years, Wall Street hedge funds perfected the lending techniques first used in poor communities. In the new financial structure for housing finance, unregulated, independent brokers sold loans by misrepresentations. Houses that people depend on for shelter became poker chips in a high-stakes game of liar’s poker. The late Gov. Edward Gramlich of the Federal Reserve warned that the introduction of “huge new sources of capital and financing of largely unsupervised subprime mortgage lenders” had caused problems with subprime loans.

He argued for re-establishing the connection between the lender and the borrower through banning the most objectionable provisions and through a mandatory “suitability rule” which would require lenders to make loans that are matched to borrowers’ economic profile and “in the borrower’s best interest.” The link between the borrower and the ultimate holder of the loan could be further strengthened by expanding existing rules to impose on the holder liability for fraud or other problems with the process.

The current crisis has been driven by the lack of adequate levels of cash to absorb the losses from defaults. Sovereign wealth funds have filled this cash gap, becoming the lender of last resort for cash-strapped commercial and investment banking companies like Citigroup and Merrill Lynch only nine months ago. The sovereign funds of Abu Dhabi , Singapore , and China were among a collection of funds that came to the rescue of these companies., China’s four biggest listed banks decided to scale back drastically their purchase of Fannie Freddie securities, triggering the government takeover of Fannie and Freddie just five days later.

Describing the mortgage meltdown is easy, but proposing a solution is less so.

For all the talk of “moral hazard” and “market discipline,” these after-the-fact buzzwords are a Rorschach test of whether you believe the government should play an active, aggressive role in controlling the risk-taking and profit-seeking party, just as the guests have started to arrive and loosen their ties.

“But you don’t look like a law professor!”

At times I too participate in the aesthetic deception, avoiding disclosure of my employment from others.  Discovery of my interest in family law and estates has triggered one too many unsolicited “story hours” about someone’s friend’s uncle’s girlfriend’s father in Terre Haute.  It is then when I am thankful that I look like I belong more in a band than on a panel. 

Is this a function of age?  (I am thirty-five.)  Of deportment? (I exercise regularly.)  Of hair? (I have locs, not a toupee.) Or is it a combination of these things, with the crowning influence of race?

I had a middle-aged woman at an airport flat out tell me that I was lying.  And yet another insisted that I was the “creative type.”  I suppose that writing and contemplation of legal problems counts as creativity. And numerous others have confessed that they never would have guess me to be a law professor. Frankly, I find it intensely annoying.

“Like a real professor? With tenure and all that?”

Track.  Tenure, that is.  This is where questioning gets sticky.  Even my own friends reserve the realm of law-professorship for people older (and presumably whiter) than myself.  People can believe that I could teach a class or two, attend a conference here and there, or even sit on a committee. Adjuncting is possible. But venturing into the realm of full-fledged academia is a stretch. 

Statistically, the population of black law professors is small. In 2006, 716 persons out of 8014 identified themselves as black to the American Association of Law Schools, an increase from 484 in 1992.  That’s an increase of approximately 16 people nationwide per year. These numbers indicate that diversification of law school faculties largely occurs from within the academy, rather than the recruitment of new professors from outside. 

But most, if not all professors of African descent have experienced racial profiling.  Eminent historian John Hope Franklin has been mistaken as a valet parking attendant.  A friend of mine was assumed to be a nanny for the fair-skinned child she was holding—her own.  And I myself have been assumed to be a mugger.

Of course, we can take these examples of misidentification with a grain of salt.  Perhaps Franklin stood by a podium at the front door of the hotel where people drop off their cars.  Or maybe I was walking down the street too close to the woman in front of me.  Or my friend was wearing a nanny’s smock.  These assumptions based on appearance could occur for a myriad of reasons when the seer possesses no acquaintance with the professor.  I would be amazed if the frightened woman on the street had turned around and said, “Oh, you scared me!  I thought you were going to mug me, but I feel safe now because you must be a Scholar!”  Probably not.

But for those situations where another person disbelieves the professions of the professor, the profiling takes on another color.  In this misappropriation of employment and identity, the disbelieved person faces a racial barrier that excludes her (and her kind) from a collective image of The Academy.  At the same time, it is a reminder of the minority scholar’s anomalous status.

These interactions are never confrontational.  They are most likely unintentional.  And most likely, the person “didn’t mean anything.”  Furthermore, they do not affect the scholar’s tenure or other types of job security.  Additionally, the interrogator might argue that they meant it as a compliment.  You don’t look like a law professor!

But why should a black law professor have to convince (however briefly) someone else of their gainful employment?  That fleeting moment of disbelief, however harmless, only demonstrates the persistent perception of the legal academy as the exclusive province of middle-aged white men.  For another person to incite a reaffirmation of my position requires me to adopt the Popeyesque psychology of “I am what I am.”  This is a rebuttable presumption black law professors, both men and women, should not have to face.

After an intense week of public reproval for making racist remarks.  1962 Nobel Prize winner, James D. Watson was suspended from his position as Chancellor and board member of the prestigious Cold Spring Harbor Laboratory as a censure for his remarks.  The 79 year old Nobel winning scientist resigned today in ignominy.

The NYT contains this story with the separate statements made by Cold Springs Harbor and Watson.  The NYT reports that: "He also referred to his Scots and Irish forebears, saying their lives were guided by faith in reason and social justice, 'especially the need for those on top to help care for the less fortunate.' ”

If you pair this book with The Derrick Bell Reader, edited by Richard and Jean from NYU Press in 2005, you will have insights into two of the most senior and most prolific voices in Critical Race Theory.

For a multidisciplinary anthology from an important new voice in critical theory, see Progressive Black Masculinities by State University of New York at Buffalo Law School associate professor Athena Mutua from Routledge Press.  The 15 selections include famous black feminists like Patricia Hill Collins and Beverly Guy-Sheftall along with well-known legal scholars such as Elizabeth Iglesias, John Calmore and Stefanie Phillips. The voices posit that the greatest peril to black men may be limited notions of manhood.

This latter reader is a great companion to UCLA professor Devon Carbado’s Black Men on Race, Gender, and Sexuality, published by NYU Press in 1999.

Dr. James Watson, who received the Nobel Prize, in 1962, for being the co-discoverer of the structure of DNA, has become embroiled in a nasty racial controversy because of remarks he made.  The British Broadcasting Network, BBC, reports that Watson told the London Sunday Times  that  "all our social policies are based on the fact that their intelligence is the same as ours - whereas all the testing says not really".  He went on to say he hoped everyone was equal but that "people who have to deal with black employees find this is not true".

The British Science Museum has cancelled a speech that Watson was scheduled to deliver there on Friday, October, 19th.  The Museum spokesperson explained the cancellation by noting that "It is a shame that a man with a record of scientific distinction should see his work overshadowed by his own irrational prejudices...We know that eminent scientists can sometimes say things that cause controversy and the Science Museum does not shy away from debating controversial topics. However, we feel Dr Watson has gone beyond the point of acceptable debate and we are, as a result, cancelling his talk."

The scandalous, frequently fraudulent excesses of sub prime home mortgage lending are finally coming home to roost in the very coupes from which they originally escaped: money center banks and hedge fund portfolios. This is a market correction, the operation of Adam Smith’s “invisible hand”. 

This administration believes in letting the invisible hand determine winners and losers.  Except when it doesn't.  For the moment, the Bush administration is unsure about letting unmodified market forces impose sanctions on major market players who made bad bets .  It fears that this will unsettle the entire economy.

In the financial world, nothing is truly private. Homeowners deserve straight talk and direct action on the racial impact of the current subprime crisis.  The evidence is mounting that black homeowners and latino homeowners, even those with high incomes have been disproportionately affected by the unregulated lending practices that started in minority communities and now threaten the entire economy.

If the problem has a racially disproportionate origin, the solution should include sensitive attention to the racial components of the proposed solution.

If the government had stepped in initially to protect borrowers when the problems were first spotted in minority communties,  the general crisis, that now threatens the interdependent world economy, might not have grown to its current dimension.  Creative government leadership is required.  Adam Smith and private solutions will not protect the nation from the full racial impact of the snowballing subprime mortgage crisis.

Recently, the Center for American Progress released a study that confirmed what many of us already knew: the nation’s radio airwaves are dominated by conservative talk. According to the study, 91% of the America’s news/talk radio programming is comprised of conservatives. As of Spring 2007, 2570 hours of conservative talk are offered per week in comparison to 254 hours of progressive talk. A separate analysis of the top ten radio markets revealed that 76% of the programming is conservative and only 24% is progressive. In response to this staggering imbalance, many people have called for a revival of the Fairness Doctrine, a federal policy that forced broadcasters to allow equal broadcasting time to opposing views.

Established in 1940, the Fairness Doctrine required government regulation in order to ensure that broadcast companies, of which there were only three, operated in the public interest by adequately informing citizens of important news. The doctrine, which had been in place since the establishment of the FCC, was vetoed by Ronald Reagan in 1987 when Congress attempted to mandate it. Soon after, Right-wing demagogue Rush Limbaugh began to syndicate his radio show in unprecedented fashion, leading the charge toward a conservative media revolution that has overdetermined American politics and left few progressive bodies standing.

Of course, pundits on the Right insist that this spike is due to the demands of the so-called Free Market. Observers like National Review’s Rich Lowry argue that conservative radio is ubiquitous simply because the American people want to hear Right-wing voices more than anyone else’s. Unfortunately, the numbers say otherwise: 56 percent of the American public and 53 percent of regular talk show listeners identify as liberal or moderate. Why wouldn’t they want radio options that reflect their political orientations?

Not coincidentally, the rise in conservative radio has been paralleled by an equally sharp drop in local ownership over the past twenty years. Since the 1980s, the number of large media companies has shrunk from over fifty to lesser than ten. At the same time, thanks to the Telecommunications Act of 1996, locally owned networks have been swallowed up by companies like Clear Channel, which owns more than 1,200 radio stations around the country. This reorganization of ownership has rendered the market anything but free. In addition to cutting jobs and wages, the consolidation of media outlets has devoured small companies and eliminated ownership opportunities for women and people of color. Why does this matter? According to the Center for American Progress study, locally owned companies, as well as those owned by women and people of color, are considerably more likely to provide non-conservative programming.

Simply put, conservative radio dominates because American people don’t have a choice.

Although the Fairness Doctrine remains our best option for sustaining any semblance of media democracy, it is not without its limitations and shortcomings. By legislating our demands for equal time for the “other side,” we reify a liberal/conservative binary that effectively obscures the existence of perspectives that fall outside of that shortsighted dichotomy. Also, by intervening in the programming decisions of corporatized radio outlets, we fail to address the more profound structural problems that accompany neo-liberal globalization. Nevertheless, the Fairness Doctrine will provide us with a much-needed respite from the conservative media assault that has undermined democratic discourse and social justice.