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Image: AP

If you liked Occupy Wall Street — or if you liked their message but not their disruptive tactics — you’ll love what’s happening in Richmond, California. No, folks aren’t pitching tents in the parks or marching in the streets to protest banks’ predatory practices. Instead, in this blue-collar city of 103,000, local officials – with support from residents and community groups – are demanding that banks sell their portfolio of “underwater” mortgages to the city so it can make them more affordable for local homeowners. If Richmond succeeds, many other cities are likely to follow its example, which has Wall Street up in arms. In this David versus Goliath battle, odds-makers might just place their bets on the kid with the slingshot.

Since 2007, when the speculative housing bubble burst, home prices have plummeted across the country. Homeowners have lost more than $6 trillion in household wealth. Almost 10 million American families–about one fifth of all homeowners with mortgages — are underwater. Often through no fault of their own, they owe more on their mortgages than their homes are worth. Many are at risk of joining the five million Americans who’ve lost their homes to foreclosure.

The blame for this predicament lies almost entirely with Wall Street’s risky, reckless and sometimes illegal lending practices. Banks targeted working class and minority areas, often pushing borrowers into high-interest subprime loans, even when they were eligible for conventional mortgages. Not surprisingly, the nation’s worst underwater “hot spots” are disproportionately black and Latino areas.

One of those places is Richmond, where home prices have plummeted by 58 percent since 2007. Thousands of homeowners have lost their homes. Nearly half of remaining homeowners are underwater. The city has lost millions in property tax revenues, leading to cuts to vital services and infrastructure repair.

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