From William K. Black, Associate Professor of Economics and Law, University of Missouri - Kansas City
Re: Hans-Olaf Henkel, Bank of America's Senior Advisor in Germany
Dear Dr. Massey,
I am writing in my individual capacity. It came to my attention yesterday that Bank of America's "senior advisor" in Germany is Hans-Olaf Henkel. I believe that Bank of America should consider the context in which I became aware of this fact very disturbing. Mr. Henkel has just written the following:
Mr. Galbraith should familiarize himself Jimmy Carter's "Housing and Community Development Act" where in Section VIII Banks were prohibited the practice of "red lining" which until then enabled them to distinguish "better living quarters" and "slums."The full context of Dr. Galbraith's interview, and Mr. Henkel's written reply to Dr. Galbraith can be found at the following links to my response to Mr. Henkel (see here, here and here).
Bank of America's "senior advisor" in Germany -- the leader of a team of advisors that help set the bank's policies -- is bemoaning the end of redlining and claiming that American bank loans to black "slums" caused the global financial crisis. I know that you understand exactly what redlining means -- the deliberate exclusion of minority borrowers from credit on the basis of ethnicity. I also know that you understand that Mr. Henkel's effort to blame the global crisis on black Americans has no basis in fact and is the product of the vilest bigotry.
Americans, of course, are not unique in being susceptible to the bigotry. Consider the policy advice that Mr. Henkel gives in the German context.
Dr Thilo Sarrazin, a member of the executive board and head of the bank's risk control operations, told Europe's culture magazine Lettre International that Turks with low IQs and poor child-rearing practices were "conquering Germany" by breeding two or three times as fast.
"A large number of Arabs and Turks in this city, whose number has grown through bad policies, have no productive function other than as fruit and vegetable vendors," he said.
"Forty per cent of all births occur in the underclasses. Our educated population is becoming stupider from generation to generation. What's more, they cultivate an aggressive and atavistic mentality. It's a scandal that Turkish boys won't listen to female teachers because that is what their culture tells them," he said.
"I'd rather have East European Jews with an IQ that is 15pc higher than the German population," he said.
Yes, he actually said that things had gotten so bad that he'd prefer to have Jews, rather than Arabs and Turks, move to Germany. (Because, as we all know, Jews are 15 percent smarter.) How did Bank of America's senior advisor respond to this delusional hate speech (made public in early October 2009)? He began an immediate media crusade in support of Mr. Sarrazin's bigotry. He gave video interviews and sent (and published widely on the web) an open letter to "Lieber Herr Sarrazin" to express his unqualified support for Mr. Sarrazin's statements (without any "if" or "but," as he put it).
Bank of America chose Mr. Henkel as its senior advisor in 2006. He has been assembling the bank's team of policy advisors since that date. Given the fact-free, virulent bigotry that lies at the core of Mr. Henkel's view of minorities it is certain that his bigotry determines his policy recommendations. Moreover, the individuals he has recruited to serve as the bank's policy advisors under his overall direction, at a minimum, are willing to stomach his bigotry without protest.
Bank of America is enormous. You may have never heard of Mr. Henkel. That is not true of your senior officers in Germany. There, he is famous. Every one of the bank's senior officials in Germany (and probably throughout Europe) knows his reputation. Both the Sarrazin screed and Henkel's embrace of that bigotry were major news events in Germany. If the bank's senior German and European officials have not brought this disgrace to the attention of the bank's board of directors, then the rot extends to the pinncacle of the bank's European operations. If they have brought Mr. Henkel's hate speech to your board's attention, why was he not immediately discharged for cause?
Our family, my spouse is June Carbone, lived in Northern California for 20 years before moving to Kansas City. Like you, we are steeped in the proud history of the origins of the Bank of America. Mr. Giannini's Bank of Italy was proud to lend to "fruit and vegetable owners." Many of these small entrepreneurs were recent immigrants from Italy. Like the "fruit and vegetable" entrepreneurs that Mr. Sarrazin and Mr. Henkel despise, they often faced deep suspicion because of their accents, their national origins, and their religion (Catholicism). This was the era of "scientific racism" and educated people "knew" that immigrants from Southern Europe were inferior. As you know well, the resurgence of the Klan during Mr. Giannini's era was largely anti-immigrant and anti-Catholic.
Mr. Henkel is not simply a bigot. His substantive policy advice -- deregulation and far higher executive compensation -- makes him one of the principal German architects of the crisis. He gave Bank of America awful advice.
But Mr. Henkel's saddest trait is hypocrisy. He is a serial hypocrite because his bigotry trumps the things he purports to stand for. His speaker bureau bio (self) describes him as "courageous." (He applauds Mr. Sarrazin's screed as exemplifying courage.) In the policy context, courage is speaking truth to power when power does not want to hear those truths. Mr. Henkel flatters power through the gospel of Social Darwinism. Mr. Henkel claims to be the champion of the "entrepreneur" - but treats "fruit and vegetable" entrepreneurs with contempt. Mr. Henkel denounces "smears" against the "market system" but launches, and cheers, the vilest smears that have produced the most monstrous crimes against humanity in world history.
Bank of America must not simply announce some face saving retirement (particularly one thanking him for his service and paying him severance). Bank of America needs to make a clear statement about what it stands for. Does Mr. Giannini or Mr. Henkel represent Bank of America?
I offer the following recommendations for your board's consideration. Mr. Henkel should be terminated for cause. Immediately. Bank of America should review all policy advice it has received from him and his team and seek outside guidance from experts that (1) foresaw the crisis, and (2) are not bigots. Bank of America should review why its senior managers in Europe and the United States took no action while its "senior advisor" spread his hate for months. Bank of America should announce a new $10 million scholarship program for college and graduate students of limited financial means. I suggest naming the program the Giannini awards.
Very truly yours,
William K. Black
This post originally appeared on New Deal 2.0 and New Economic Perspectives.
We will be moving our money at the end of the month to a credit union.
Do they harbor more supporters of Herr Henkel than they care to admit?
And they conclude - not without any justification - that their viewers wouldn't know either.
Thank you Mr Black for your service in and out of governemnt from truly greatfull nation - hopefully a more enlightened administration can ask more of you - becasue Sr your nation still requires very much your service
If every living African-American received a loan for $1 million, that would be like $12.5 million. Who got the BILLIONS that collapsed the global financial system?
Use common sense instead of bigotry - it works every time.
The math in your second sentence needs to be fixed - that would mean we only had 12 and a half AA's living in the US.
Next it would be important to determine whether the slums where Bank of America lost money were in fact inhabited primarily by minorities.
If it turns out to be the case that minority slums were where the problems arose, it would be important to determine whether those minorities have defaulted on loans to Bank of America because there was something inherently inferior or immoral about those minorities, or because Bank of America treated them differently as it made those loans; and whether the different treatment was supported by actual underwriting considerations or simple racism.
At that point you can start to get a picture whether Mr. Henkel's comments were racist or not, but assuming they're NOT racist, AND that there is nothing inherently inferior or immoral about minorities (the latter I think goes without saying), the real issue is whether the USA's efforts to combat poverty have been adequate. And I think it goes without saying that they have not.
Owning fewer homes and having default rates on par with other groups....how could his statement be true?
That being the case, we know he didn't write it so we need to determine whether he MEANT it even though he did not write it. And we can't know that without looking at the same statistics he was looking at when he was moved to write it.
Quite probably the number of non-ethnic Caucasians who live in slums and were granted loans that have now defaulted dwarfs the number of now-defaulted loans given to minorities (owing in part, perhaps, to ongoing difficulties minorities faced in getting loans regardless of the effects of the ban on redlining).
Even if minorities were to default at a greater rate, I'm willing to speculate that their defaults would be unlikely to be more than a good-size wedge of the total default pie and I would be surprised if any were key contributors to a problem at a large bank.
Which is why I suspect that Mr. Henkel did not address questions of race or ethnicity in this instance ... if he's willing to say what he said at home, why would he have the slightest compunction about being politically correct when the wounded parties are separated from him by an ocean?
As for housing prices, Mr. Rosenberg expects further declines of 10 to 15 percent over the next few years. He pointed to the roughly nine million residential housing units available for sale across the country, a very high vacancy rate when judged against a total housing stock of 130 million units.
If his forecast is accurate, the numbers of borrowers who owe more than their homes are worth will rise significantly. Mr. Rosenberg estimates that fully half of the mortgage-holding population in the country could be underwater by 2011.
For now, these borrowers are getting little to no help from lenders — no surprise — or from the government. Indeed, the Obama administration’s loan modification program has more or less allowed banks that own second mortgages on troubled borrowers’ homes to continue to press for full repayment of these obligations.
When it comes to writing down principal amounts on mortgages, the government has pressured those holding the first mortgages more than the institutions holding the seconds. Never mind that the second liens are worthless and should be written down to zero.
FYI, most holocaust victims have already received compensation, and the jewish culture in Berlin is booming. Contrast that to America's "black capitals" - Detroit and New Orleans - in which African Americans have been forced into ghettos and practically quarantined in high crime neighborhoods, with no jobs and no future.
http://www.huffingtonpost.com/2010/01/18/stephen-colber-takes-on-t_n_427258.html
These banks have no honor.