Book Review: ‘The Killing Fields of East New York,’ by Stacy Horn

THE KILLING FIELDS OF EAST NEW YORK: The First Subprime Mortgage Scandal, a White-Collar Crime Spree, and the Collapse of an American Neighborhood, by Stacy Horn

After a financial crisis torpedoed the U.S. economy in 2008, the public clamored for accountability. Millions had lost their homes and livelihoods. Crimes had been committed. Surely, the bankers, brokers and investors who had precipitated and profited from this collapse would be brought to justice.

Nope. While a few midlevel bank employees were prosecuted, the architects of a rotten system generally escaped with their nine-figure fortunes intact. It was not long afterward that Donald Trump began his rise to power, and many observers pointed to the hangover from the 2008 crisis, and the impunity that characterized it, as part of his appeal.

In “The Killing Fields of East New York,” Stacy Horn examines another, long forgotten financial crisis — one with a very different outcome.

Horn tells the story of how a network of bankers, mortgage brokers and federal housing officials in the 1970s conspired to commit “the perfect financial crime.” It went like this: In cities across the country, brokers and other speculators descended on places like East New York, the Brooklyn neighborhood on which Horn centers her tale. They persuaded middle-class families to sell their homes at cut-rate prices by stoking fears about the imminent arrival of minorities. Other times they bought decrepit properties and performed superficial repairs. Then they resold the homes at big profits — sometimes five times as much as they’d just paid — to low-income Black and Latino families.

These newcomers were often deliberately saddled with mortgages that they could not afford. Why? Because the lenders didn’t have anything to lose. The mortgages were insured by the Federal Housing Administration, which was trying to compensate for America’s long history of housing discrimination. A noble goal, undoubtedly. But the lofty ideals were betrayed by corrupt public and private officials.

When waves of borrowers defaulted nationwide, thousands of families’ homes were seized, but the lenders were reimbursed by the government and pocketed untold riches. It was, Horn writes, “America’s first subprime mortgage crisis.”

Through interviews and exhaustive research, Horn vividly describes how East New York succumbed to blight. A series of fires ravaged the neighborhood, which she attributes to the large number of buildings that stood vacant because of the loan defaults engineered by unscrupulous mortgage financiers and their government partners. A vigorous open-air drug market occupied streets that once hosted joyous block parties.

The scariest part was the murders. Men and women, boys and girls, were mowed down in broad daylight. The local high school became a shooting gallery. Horn catalogs the grisly toll, measured not only in lost lives but also in the psychological damage inflicted on devastated families and those who witnessed the regular homicides.

In Horn’s telling, the violence crescendoed in 1991 with the murders of 116 East New Yorkers, many of them teenagers. It all built up to the moment that summer when 17-year-old Julia Parker, whose short life Horn uses as a chilling narrative throughline, was shot to death on a crowded sidewalk. Her murder, like dozens of others in East New York that year, was never solved.

Although the long-term damage was done for many neighborhoods, part of what distinguished this subprime crisis from its more-famous successor was the government response. Horn unspools a fast-paced and at times crackling yarn about the Brooklyn prosecutors and F.B.I. agents who pursued predatory lenders and brokers, as well as the bought-and-paid-for federal officials who enabled them.

Witnesses wore wires. Suspects were flipped. White-collar criminals were led off in cuffs. Many went to prison. When officials in the Nixon administration tried to slow the investigation, F.B.I. agents essentially told their superiors to stuff it. The contrast with the Obama administration’s cautious-to-a-fault response in 2008 — tepidness memorialized in books like Jesse Eisinger’s — could not be clearer.

My biggest gripe about “The Killing Fields of East New York” is Horn’s tendency to caricature and polemicize, which at times undermines the power of her reporting. While the bad guys in this book are plentiful, they rarely emerge as fully formed humans with back stories that might help explain their actions. Horn at times fills that void with hyperbole and dehumanization — nowhere more so than with two of the book’s main culprits, Harry and Rose Bernstein. The married couple are “nothing more than heartless, mindless scavengers, who didn’t give any more thought to the lives they ruined than an insect would,” Horn writes. Later, she quotes a prosecutor branding them as “evil people.” Is the world really so black and white?

Even so, “The Killing Fields of East New York” is a compelling reminder of the catastrophic consequences of white-collar crime. It should serve as an inspiration for up-and-coming prosecutors. After all, financial crises tend to arrive every decade or so. By that measure, the next one is overdue.

THE KILLING FIELDS OF EAST NEW YORK: The First Subprime Mortgage Scandal, a White-Collar Crime Spree, and the Collapse of an American Neighborhood | By Stacy Horn | Gillian Flynn Books/Zando | 342 pp. | $28