Meet Marion and Herb Sandler. They’re good people, you’ll like them. As two of the most prolific and committed philanthropists currently supporting progressive causes, they are currently major funders of ProPublica (investigative journalism), the Centre for American Progress (activism), the Centre for Responsible Lending (anti- payday loans, financial fairness) and the American Asthma Foundation. The contribution of US$1.3bn that they gave to the Sandler Foundation was the second largest charitable contribution of 2006, according to Wikipedia. They are a bit too keen on testing and measurement in education for my taste but you can’t have everything, and they are at least advocates of “multiple measures”.

Meet the Pick-A-Pay Option ARM. This was a lending product that, among other features, allowed for “negative amortization” – a feature under which the principal was not repaid but rather rolled up, meaning that the borrower was effectively dependent on future refinancing. It was not a subprime product, but it allowed people to take on huge amounts of mortgage debt, and contributed to the “payment shock” which sent so many of them into repossession and bankruptcy. As the link above shows, the Pick-A-Pay mortgage product was the subject of a number of compensation settlements with affected borrowers.

What’s the connection? Well, as founders of Golden West Financial, a mortgage lender which was sold to Wachovia Bank in 2006 (the proceeds of which financed that very large charitable contribution), Herb and Marion Sandler were responsible for introducing the Pick-A-Pay mortgage to the market.

Ah.

Read on, there’s two or three more twists before the end of this story …
[click to continue…]

The Attractions of Fascism

by Henry on December 12, 2011

Once upon a time, when I was in graduate school with some free time on my hands, I ended up co-writing a paper with my friend Barb Serfozo on the dubious sexual origins of the American right’s depiction of women as feminazis. One passage that I found, from Newt Gingrich and William Forstchen’s co-authored novel, _1945_ has stayed with me. The hero of the book, evocatively named “James Mannheim Martel,” is “watching a Nazi parade”:http://www.baen.com/chapters/1945chp1.htm.

bq. Again, Martel became uneasily aware of how his own blood was set racing by the sense of power and glory that drenched the entire artificial drama. It was like being aroused by a woman one despised. No matter the revulsion, despite the inner certainty that never would one yield; beneath all moral rectitude there lurked a dark, compelling attraction.

Lurid misogyny, and a political fantasy and sexual fantasy that are so intertwined with each other as to be indistinguishable, all wrapped up in one enticing bundle!

At one point, Gingrich was supposed to be writing a novel with his friend, noted “authority on the political attractions of Fascism”:http://www.jerrypournelle.com/debates/history.html, Jerry Pournelle. I don’t know what happened to it, but I imagine it would have made quite interesting reading (Inferno, Pournelle’s ‘Benito Mussolini redeems himself in an updated version of Dante’s hell’ schlock-epic with Larry Niven, is certainly entertaining if your tastes run to certain varieties of kitsch).

Inequality and Schools

by Harry on December 12, 2011

Helen Ladd and Ted Fiske have an excellent piece in today’s Times explaining the relationship between educational inequality and income inequality, drawing on Sean Reardon’s contribution to Whither Opportunity?: Rising Inequality, Schools, and Children’s Life Chances. An excerpt:

The Occupy movement has catalyzed rising anxiety over income inequality; we desperately need a similar reminder of the relationship between economic advantage and student performance.

The correlation has been abundantly documented, notably by the famous Coleman Report in 1966. New research by Sean F. Reardon of Stanford University traces the achievement gap between children from high- and low-income families over the last 50 years and finds that it now far exceeds the gap between white and black students.

Data from the National Assessment of Educational Progress show that more than 40 percent of the variation in average reading scores and 46 percent of the variation in average math scores across states is associated with variation in child poverty rates.

International research tells the same story. Results of the 2009 reading tests conducted by the Program for International Student Assessment show that, among 15-year-olds in the United States and the 13 countries whose students outperformed ours, students with lower economic and social status had far lower test scores than their more advantaged counterparts within every country. Can anyone credibly believe that the mediocre overall performance of American students on international tests is unrelated to the fact that one-fifth of American children live in poverty?

The most striking graph in Reardon’s chapter shows the change in achievement gaps between black and white students (which declines from Brown on) against the change in gaps between children from the highest and lowest income deciles (which starts to rise as income inequality starts to rise, perhaps unsurprisingly):

More on Whither Opportunity? another time, but for now read the whole thing.

Comments policy

by John Quiggin on December 12, 2011

Following some discussions among the CT crew:

1. We are amending our comments policy to state (addition in bold) “We respect the preference of many genuine commenters for pseudonymity and will protect their privacy. However, this respect entails an obligation to abide by the rules set out above. In cases of serious abuse, including those of racist and sexist abuse, serious defamation and disruptive sockpuppeteering, we will, if appropriate, publish the identity of such abusers and share their identifying information with other sites.”

2. In the past, we have applied this policy in the most lenient way possible. Commenters who have used sock puppets to make abusive comments, frequently directed at CT members, have been warned off, rather than being publicly exposed. In the future, no warnings will be given. Where sock puppeteers or abusers of pseudonymity are identified, they will be publicly exposed. As a guide to commenters, if you wish to comment on matters involving race or gender, or that might be considered personally defamatory, do not write anything you would not wish to see published prominently under your own name.