The genesis of a mortgage fraud hotspot

Florida Dealbreaker’s essential Opening Bell yesterday included the following note about the connection between the state of Florida and mortgage fraud:

Florida tops 1Q mortgage fraud list (AP)

This is not surprising… Florida is already a key location of the housing bubble. What’s more, Florida tops every fraud list. Hello, Boca Raton? Clearwater? These cities are to fraud what Hungary is to Paprika. It’s an industry. Plus, doesn’t Florida have really lax mortgage/bankruptcy laws as it is?

However, what’s most interesting about Florida is how relatively well the state has turned out given its checkered history. In his fine Throes of Democracy: The American Civil War Era 1829-1877 (HarperCollins 2008) (earlier blog post here), Walter A. McDougall provides the following colorful overview of Florida’s evolution from the epitome of a backwater port:

From the day of the of the pirates to our day of offshore bank accounts, hedonistic resorts, and drug smuggling, Americans have found in the Caribbean an escape from their own laws and morals. The sand spit that Juan Ponce de Leon baptized La Florida was no exception.

In 1595, the Spaniards garrisoned Saint Augustine, the oldest European settlement on what became U.S. soil; and over a century Franciscans founded thirty-two missions to proselytize the Indians. But the province, which was 300 miles wide at the Panhandle and 400 miles long on the Atlantic coast, remained a derelict.

The whole Spanish navy could not have policed its 8,246 miles of tidal coastline, nor could the army police its 54,000 square miles of jungle and swamp. Nor could either defend the Indians from European infectious diseases or from the renegade Creeks they called cimarrones (whence “Seminoles”).

By the nineteenth century, the Native American Floridians were dead, the European population was measured in hundreds, and the whole peninsula from the Apalachicola River to Key West served as a refuge for Tampa Bay buccaneers, mutineers, deserters, fugitive slaves, Seminoles, and plunderers of shipwrecks (a frequent occurrence, especially during the hurricane season). 

John Quincy Adams cited the anarchy as justification for the treaty of 1819 ceding Florida to the United States. But he was pretentious to think Americanization would ensure law and order. The mostly poor, mostly Scots-Irish “crackers” who spilled into the Panhandle had no patience for government. Hot blood, hot sunshine, laws so variable that even judges could not parse them, no jails, no constables, and plenty of places to hide encouraged “ingenious rascality.” Florida was “a rogue’s paradise.” [ .  .   .]

.   .   . [V]irtue was in short supply, not only among the murderers, gamblers, slavers, squatters, and drunks who poured over the border from Georgia, but among the erstwhile elite. One feud over banking provoked two duels, a murder and a lynching that left all parties dead. In 1827, Ralph Waldo Emerson found Tallahassee “a grotesque place . . . settled by public officers, land speculators, and desperadoes.”  .   .   .  [. . .]

The Jacksonian hatred of banks likewise prevailed. So stringent were the state’s restrictions that no state banks were chartered until the legislature itself chartered one in 1855. Education? The same story. In 1851, the state founded “seminaries” to train teachers at Ocala (parent of the University of Florida) and Tallahassee (the future Florida State University), but as late as 1860 the state counted just ninety-seven schools with 8,494 pupils.

The government showed vigor only in the enforcement of slave codes and the repression of free Negroes. As the state’s population rose from 87,445 in 1850 to 140,424 by 1860, the percentage of slaves remained above 40 percent. Disciplining that underclass was everyone’s business. Policing white people’s behavior was pretty much left up to the women and the Baptist and Methodist clergy. [.  .  .]

.    .    . Today [Florida] is home to Disney World, the space program, South Beach and golf and retirement complexes. But the original Florida will never die out so long as "darkies" gather in jook joints to dance the jubilee (jitterbug), bumper stickers proclaim "Redneck and Proud of it," policeman cruise with alcoholic "roaders" in hand, and transplanted Yankees are taught that "blacks is blacks, but there ain’t nothin’ sorrier than po’ white trash."

Mortgage fraud doesn’t sound all that out of place there, now does it? ;^)

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