state’s white majority denied Roy Barnes a second term that November because he sided with the blacks and the liberals and others seeking to erase the Confederate stars and bars from the Georgia state flag, Fort said, the real fight began.
Vincent Fort was teaching at Morehouse and other local colleges in the early 1990s when Bank of America announced it was shutting down branches in black neighborhoods around town, including one not far from his home in south Atlanta. Fort, whose specialty was black studies and the civil rights movement, had always stressed the centrality of economic institutions to the health of the black community. Fort began speaking out at community meetings around town and working with others to organize demonstrations. “We beat up on them pretty good,” Fort recalled with a laugh. When the dust settled, black Atlanta still had several fewer bank branches but it also had a new leader, then in his late thirties. “I said then a day will come when we’ll engage these folks again,” Fort said.
That day came a half-dozen years later when he was nearing the end of his first term in the state senate. Andrew Cuomo, the HUD secretary, was coming to Atlanta for the first of five hearings he was holding around the country to investigate predatory lending. A friend of Fort who was helping to organize the event suggested he attend. Cuomo was already on record calling the issue of high-interest mortgages and excessive fees a “national crisis…with a troubling racial factor.” Fort decided to sit in.
Bill Brennan testified that day, as did one elderly African-American widow facing foreclosure and another seemingly on the verge of disaster. Fort had spent most of his first term championing an anti-hate law in Georgia but sitting in the audience that day he wondered how he could be on the sidelines when abusive lenders were targeting the city’s black neighborhoods. A HUD study released shortly before Cuomo’s visit found that a borrower living in a predominantly black community in 1998 was five times more likely to end up in a subprime loan as someone living in a community that was predominantly white. Even an upper-income African-American, the study found, was twice as likely to hold a subprime mortgage as a lower-income white homeowner. Worse, Fannie Mae had analyzed its portfolio of mortgages for that same year and discovered that half of all those paying the higher rates and fees on subprime mortgages qualified for conventional loans. Fort was so incensed by what he was learning that he stood up and audaciously declared that he would see to it that Georgia passed the country’s strongest anti–predatory lending law.
“That would be my first mistake,” Fort said with a deep rumbling laugh. A lobbyist with the Georgia Association of Mortgage Brokers sidled up to Fort and offered him his card. “He tells me how much he’s looking forward to helping me with my legislation,” Fort said. “And then from that point on, he and his folk would work tooth and nail against me.”
Fort is on the short side, a portly man in oversized tortoiseshell glasses. He is bald and sports a graying beard. He can be an easy political foe to underestimate. The day we met he was wearing a white dress shirt marred by two large coffee splotches, a wide-lapel pinstripe suit he described as “very off the rack,” and Rockport- style walking shoes. Even the cultured, refined way he speaks is more professor or preacher than state senator. “I think it really bothered a lot of these good ol’ boys I was taking on that I wasn’t a real politician,” he said. “I didn’t go out of my way to be aggressive but at no time was I going to stoop or bow.”
Those first months would be an education. Fort had assumed Bank of America’s decision to shut down branches around town was a cost-saving measure. Only once he dove headfirst into the anti–predatory lending fight and started hanging around with the likes of Bill Brennan (“he would become a good friend,” Fort said) did he learn that at the same time they were shutting down full-service branches, the big banks were purchasing subprime lenders. Bank of America, for instance, bought the subprime lender SP Financial Services during the 1990s. “It’s not like these brand-name banks really fled our neighborhoods like we originally thought. They just replaced their branches in working-class neighborhoods with these off-brands making subprime loans to people and making enormous amounts of money,” Fort said. “Citigroup, Bank of America, Wachovia, First Union—they all did it.” Was it any wonder, then, that the Federal Reserve showed that while the volume of conventional mortgages remained flat between 1993 and 2000, subprime loans grew sevenfold? Unsurprisingly, foreclosures spiked 68 percent through the second half of the decade despite a robust economy. In Atlanta, the numbers were even more shocking. The foreclosure rate between 1996 and 1999 fell by 7 percent for those holding a conventional home loan but it soared by 232 percent among those holding subprime loans.
Fort introduced his bill at the start of the 2001 legislative session. He might have chided himself for telegraphing his intentions but it probably wouldn’t have made any difference. North Carolina had caught the industry by surprise but by 2001 the big banks and other lenders were ready. A few in the press had a good time with a Dallas-based conference that served as a kind of predator’s ball, where what the
The industry didn’t try to beat back Fort’s legislation so much as they tried to co-opt it. The Georgia Senate’s Banking and Financial Institutions Committee passed a predatory lending bill carrying Fort’s name but by that time it had been so thoroughly eviscerated it bore no resemblance to the legislation he had written. The Georgia House never even bothered voting on the measure. It was time for a Plan B.
By instinct, Fort was more community activist than politician. The day after the end of the 2001 legislative session, he headed to a CitiFinancial office in Clayton, one hundred miles away. There he stood next to an older black woman he said CitiFinancial “had put into one of the worst predatory loans I’ve ever seen.” That would be the start of an unusual media campaign designed to sway an audience of one: Governor Barnes. “I knew I didn’t stand a chance if I didn’t bring Roy Barnes on board,” Fort said. “I was doing anything I could think of to make sure he made this part of his legislative package in 2002.”
The first thing he would stipulate for the record, Roy Barnes told me as I slipped into a booth across from him for our lunch interview, was that people with poor credit should pay more for a loan than people with good credit. “I’m a capitalist through and through,” he told me. He and his brother have started two banks together and they’ve bought a third. As governor he angered environmentalists by pursuing an aggressive growth agenda and he worked hard to abolish teacher tenure. He’s been a Democrat all his life, but he is not what anyone might call a classic liberal.
Perhaps because at heart he was an old-style banker he took the changes he witnessed in the finance industry more personally than most. Interest rates nationally were strikingly low through the first half of the 2000s but people of modest means were paying more than ever for their money. “When I was a young prosecutor,” Barnes said, “we prosecuted people who charged more than twenty-five percent a year as loan sharks. Now Wall Street welcomes them as respectable businesses.” For years Barnes had fought what in Georgia they call the industrial lender—homegrown consumer finance shops that make small-denomination loans at annual interest rates of 60 percent. Now the payday lenders and title loan shops (called title pawn lenders in Georgia) charged closer to 400 percent.
“Under normal circumstances, I’d say sixty percent is usurious,” Barnes said. “But compared to what the title pawn and payday lenders are charging, they’re low-cost.” When he was younger Barnes backed a law that would have capped the fees tax preparers could charge for an instant refund and he worked with the consumer groups to rein in rent-to-own. But now, Barnes said, “in the rank ordering of things, these things don’t seem so bad. We’ve become immune.” The biggest shock—and the most distressing to him personally—has been all those old-line institutions that succumbed to temptation. “Some of the most recognizable names are the biggest predatory lenders,” he said. He mentions Wells Fargo, a bank with roots dating back to 1852 and a bank he had long respected. “Wells Fargo! Wells Fargo funds these predatory lenders,” Barnes said. “Wells Fargo made all these predatory loans. Banks have a responsibility to serve the community. It’s outrageous.”
Barnes is a bulky man with blue eyes, a thick mane of gray hair, and the breezy, aw-shucks style of a country lawyer. A successful legal practice and those banks he owns with his brother gave him a net worth estimated at more than $10 million but the day we met he dressed like an English Lit professor in a brown corduroy sport coat and seemed to greet every person we passed on the street with a “Hi, how y’all doin’?” He was twenty-six years old when he was first elected to the Georgia Senate and practically grew up there, cutting deals and learning the nuances of cloakroom politics. It was no wonder that Fort, the former black studies professor, saw Roy Barnes as the perfect partner. The case against Fleet Finance had been one of the biggest of Barnes’s legal career, and Barnes wasn’t just the sitting governor but also a master at twisting arms and counting noses.
