Post 7: The Illusion of Meritocracy in Housing, Part 2 | Sangwon Yang and Mako Nagasawa

The Purpose of A Long Repentance Blog Series

People talk about issues of race and justice in the United States as issues of ‘justice and injustice.’  Sometimes we launch into debates about ‘the proper role of government.’  But is that the original framework from which these issues were asked and debated?

The purpose of the blog post series called A Long Repentance: Exploring Christian Mistakes About Race, Politics, and Justice in the United States is to remind our readers that these issues began as Christian heresies.  They were at variance from Christian beliefs prior to colonialism.  Since Christians enacted and institutionalized what we believe to be heretical ideas, they were very destructive and harmful, then as now.  And we bear a unique responsibility for them.  As a result, we believe we must engage in a long repentance.  We must continue to resist the very heresies that we put into motion.  Thus the title of this blog series, A Long Repentance.  The journey is long and challenging.  It may be impossible to see the end.  But along the way, it is also inspiring and sometimes breathtaking.

We also encourage you to explore this booklet, A Long Repentance: A Study Guide, for further reflections and discussion questions. Here’s a YouTube video called Colonization, Globalization, and Liberating Theologies where co-author Mako Nagasawa did an introduction and summary.

In Post 2 and Post 5, we explored how white American Protestants promoted the heretical view of Genesis 1 taught by John Locke, that the productive can take land/property from the unproductive.   Also setting themselves up for deep anxiety, they also tended maintained that the social system they set up was fair and ‘meritocratic’ – as opposed to blatantly racist.  They tended to believe that their ‘individual success’ was the result of their ‘personal hard work’ in the ‘private market.’  White Americans even hid from themselves the fact that they used massive government intervention to set up a deeply unequal and racialized social system that continues to this day.  In Post 6, and this post, we explore the housing market.

A Head Start of Billions of Dollars

Brian told Michaela a bit more about his grandfather and grandmother, and how disappointed they were to see so many other servicemen qualifying for a home loan. “After the War,” he resumed, “The Veterans Administration (VA) adopted the same standards as the FHA.  So the federal government subsidized white flight into the new suburbs, especially for white GI’s returning home from World War II.  Would you say that’s meritocratic?”

“Definitely not,” she said.  Michaela’s grandparents had once mentioned the term “white flight” in connection with their own move into Levittown, NY.  Real estate developer William Levitt built multiple “Levittowns” in the post-War period.  These were either housing developments or entire suburbs.  Michaela could see that William Levitt was not engaging in a free-market venture.  The FHA endorsed his plans and guaranteed bank loans

“for nearly the full cost of their proposed subdivisions.  By 1948, most housing nationwide was being constructed with this government financing.”[1]

As a developer, Levitt confessed, in front of Congress in 1957, “We are 100 percent dependent on Government.”[2]  This government-funded plan built white suburbs, shutting out black people, including black veterans.  Those 1.2 million black veterans deserved that opportunity just as much as any white veteran[3] – and more so, since black soldiers fought for a country which fought against them, before and after the war.

“In suburban New York’s Nassau County, just east of Queens, Levittown was built in 1947 containing 17,500 mass-produced two-bedroom houses, requiring nothing down and monthly payments of about only $60. At the FHA’s insistence, developer William Levitt did not sell homes to Blacks, and each deed included a prohibition of such resales in the future.”[4]

“Did you know,” asked Brian, “That black families received only 2% of those federally subsidized loans from 1945 – 1959?  It gave white families a $120 billion head start.”[5]  He showed Michaela a book.  The title said it all:  When Affirmative Action Was White: An Untold Story of Racial Inequality in Twentieth-Century America.[6]  It actually tightened white control over neighborhoods that were once diverse, and made them more white.”[7] 

The Million Dollar Difference

“Let’s make this personal,” said Brian.  “Can you see how your grandparents’ house in Levittown helped you and your family get to where you are?  First off, your grandparents probably saved thousands of dollars in taxes, whereas my grandparents could not.”

“How’s that?” asked Michaela.

“Your grandparents could deduct mortgage interest from their taxes, while my grandparents, who rented apartments, had to pay their taxes in full.  Your grandparents saved thousands of dollars in taxes, maybe between $500 – $1000 per year.[8]  Nowadays, the wealthier people are, they more they save on tax deductions on mortgage interest.

“To see how this works, consider two families with equal incomes of $100,000.  One family owns its house and pays $2,000 in interest on its mortgage each month, or $24,000 annually.  The other pays $2,000 a month to rent an apartment.  The family that owns its home can deduct $24,000 from its taxable income and pay taxes as if it only earned $76,000.  The renter family is taxed on all $100,000 of its income.  The homeowners pay about $6,000 less in taxes a year.’[9]”

“That is… a big difference,” Michaela admitted.  “What happened with your grandparents?”

“My grandparents were renters,” Brian answered.  “They and their parents didn’t want to be lynched in the South as victims of domestic terrorism.[10]  My family all moved North or West at different times in the Great Migration, like nearly half of the black population in the U.S.[11]  So they lost money there.  During that era, bankers, real estate agents, and renters knew they could charge black people higher rents and interest rates.  So they lost money there, too.[12]  When my grandparents had children, they had no extra money to send them to college.  My dad went to community college for two years because it was more affordable.  He got some general classes out of the way.  While he worked.  Then he went to a state school, with no scholarship.  While he worked.  He also took out loans.  Similar story with my mom.” 

“My grandparents,” Michaela recalled, “paid for my dad and my aunt to go to college in the 60s and 70s by borrowing against the equity in their home.  Their house value tripled from 1946 and 1976, so they were able to leverage that.  And I can see other ways that house helped my family.  When my dad and aunt went to college, my grandparents rented rooms to other family members.  Or just helped them with a place to stay for a while, like when my grandmother’s sister needed to get away from her husband for a while because he was an alcoholic.  Then, when my mom and dad got married, they were able to live in a room in my grandparents’ house for a few years.  They saved money until they could afford their own place.”

“That gave your parents a big head start, compared to my parents,” said Brian.  “Did your dad and aunt inherit that house from their parents?”

Michaela nodded.

“There was a study,” Brian said, “that tracked black and white families for 27 years, close to the time our parents were young.  That study,

“from 1984 to 2011, showed that almost half (46 percent) of white households received some type of financial transfer [e.g. trust, inheritance, etc.], while only one in ten black households did… The white Americans who received a financial transfer – 46 percent of the white Americans in the study – received a median of $83,692. 

“In contrast… only 10 percent of black Americans received a financial transfer, with a lower median value of $52,240. 

“For white households, median wealth growth for those with and without financial transfers was $282,000 versus $72,000; for black households, the median wealth growth for those with and without financial transfers was $20,000 versus $12,000.”[13]

“So your parents were in the 90 percent of black Americans who didn’t inherit… anything?” Michaela asked. 

“Basically,” Brian replied, “and the advantage compounds.  If your parents bought a car for $12,000 or a minivan at $25,000 by writing a check, that’s all they paid.  But my parents would probably have to spend almost $3,000 more than that.  Because if my family buys the same minivan at $25,000 by taking out a car loan, for 48 months at a 4.5% interest rate, which is about average, then we’ll have monthly payments of $466.08 and a total cost of $27,965.”[14]

“It’s expensive to not have discretionary wealth,” observed Michaela.

“Right,” said Brian.  “Black families are more likely than white families to transfer wealth back to their aging parents or other family members to cover basic needs.  White families are more able to transfer wealth to their kids.[15]  You even get tax benefits for doing that, but not caring for other family members.”

“I’ve never thought about that,” Michaela admitted.  “I noticed we can claim way more in tax deductions on the interest payments for a second house, than we can for a first education.”  Michaela thought about her husband’s real estate ideas, but didn’t mention them.  “I could only deduct $2,500 on the interest that I paid on my student loans.  And even with that, there’s a salary cap.  You can only take the deduction if you individually make less than $85,000.”[16] 

“It’s also weird,” Brian added, “that wages get taxed at a higher rate than capital gains.  Like the sale of a house or stocks.  The U.S. taxes work more than it taxes wealth.  Is that a hallmark of a meritocracy?”

Michaela was silent.

“That house your grandfather bought saved your family thousands of dollars,” said Brian.  “And it was worth hundreds of thousands of dollars.  It gave them peace of mind.  It buffered major life problems.  It paid for your dad and aunt to go to college.  It was leverage for your parents to buy their own house.  When your grandparents pass away, they could give it to you and your cousins as an inheritance.  That single house could easily be making a million dollar difference in the life of your family, compared to mine. 

A Rock and a Hard Place:  Between Predatory Lending and Redlining

“But wait,” Michaela interjected, thinking of the history.  “Didn’t the FHA and VA stop discriminating in 1966?  And wasn’t the Fair Housing Act passed in 1968?”

“Yes, but other problems continued.”

“Like what?” asked Michaela.

“Private banks discriminated on their own against minority borrowers, so redlining is alive and well to this day,”[17] said Brian.  “But they also used predatory lending, the flip side of redlining.”

“Wait,” said Michaela.  “Wasn’t the 2008 – 09 financial crisis due in part to predatory lending?  And didn’t it affect everyone?”

“Not equally,” said Brian.  “After 1968, private banks issued predatory loans betting that black homebuyers would default on their mortgages.[18]  Black foreclosures began in the early 1970s, and crushed people and neighborhoods, sometimes with ongoing government help: 

“There was the FHA scandal of the 1970s, in which indiscriminate federal lending and outright corruption enabled speculators to sell inner-city homes to blacks at inflated prices, resulting in widespread foreclosures.”[19] 

“Banks honed their skills leading up to the 2008 – 09 financial crisis.  They steered black people who had the same credit score as white people into riskier loans.  Countrywide Home Loans did it to over 200,000 minority borrowers.[20]  Wells Fargo’s top subprime loan officer testified to steering black borrowers to riskier subprime loans; they even worked through black churches.[21]  This happened in the largest 100 cities, and the settlements never measured up.[22]  Banks preyed on people’s financial illiteracy or just ordinary goodwill to not read all the fine print.  The financial crisis of 2008 – 09 simply showed that banks had decided to use their honed skills on white homebuyers, too.  Of course, black and brown households were still hit harder. 

White (median household)  | Black (median household)

2005 $134,992 | $12,124

2009 $113,149 | $5,677

“Half the collective wealth of the black community was stripped away during the Great Recession.[23]  This collapse in wealth is not due to “individual merit.”  If we live in a meritocracy, how come the government bailed out the banks – the government helps failures?  How come so many white bankers got bonuses?  How come so few bankers went to jail?”[24] 

“I agree,” Michaela added.  “The Federal Reserve printed so much new money that it made home prices go up.  That favored boomers and penalized millennials.”[25]

“And then,” Brian said, “private equity firms like BlackRock– overwhelmingly white – realized that they should buy real estate and increase prices and rent, causing another housing crisis.”[26]

White Government Benefits White People

“Do you see the pattern of the U.S. moving assets from black to white people, or at least certain white people?” Brian asked.

“Come on,” said Michaela.  “I get that black people didn’t get the 40 acres and a mule originally promised them by Reconstruction.  But can you really say that?”

“The federal government gave Native American land to white Americans,” said Brian, “and denied it to black Americans:  the Homestead Acts of 1862 and 1867 were “the most extensive, radical, redistributive government policy in American history.”[27]  The 1862 Act gave 160 acres to white people for free if they would live there for five years and farm the land. Nearly a quarter of all U.S. adults today – 46 million people – are descendants of the original recipients.[28]  Then, those white folks didn’t know how to farm.  So guess what?  The federal government built land grant colleges to teach Americans about agriculture.  The grants allowed states to segregate facilities and funds.[29]  The USDA denied loans to black farmers but gave loans to white farmers to cover them during hard times, or to expand their farms and machinery for the good times.  This racial discrimination resulted in 98 percent of black farmers being dispossessed of their land by the end of the 20th century.”[30] 

“Meanwhile,” Brian continued, “white people stole other lands black folks had:

“In 2001, the Associated Press published a three-part investigation into the theft of black-owned land stretching back to the antebellum period. The series documented some 406 victims and 24,000 acres of land valued at tens of millions of dollars. The land was taken through means ranging from legal chicanery to terrorism. “Some of the land taken from black families has become a country club in Virginia,” the AP reported, as well as “oil fields in Mississippi” and “a baseball spring training facility in Florida.””[31]  

“Imagine how much money your family would have today if they once owned oil fields. Or still do.”

“So,” Brian said, “what has made white Americans so much more wealthy?  All that.  Plus the trillions of dollars given to defense, construction, tech, and other jobs that went to white Americans.  Black and other people aren’t lazy or incompetent.  White people have just used government to transfer wealth from non-white to white people. There’s a reason why only 18% of Americans lived in suburbs by the end of World War II. Today, over 54% do. Because of big government, and affirmative action for white people.” 

“You’re arguing,” said Michaela, “that wealth leveraged by landownership and homeownership is still the number one reason why white people have so much wealth, and black people do not.”[32] 

“I am,” said Brian. “We’re not just talking about the income gap, but the wealth gap.  The number one factor in building wealth is not getting a college degree.[33]  It’s not raising kids in a two-income married household.[34]  It’s not working more or spending less.[35]  It’s the leverage that white families had through this affirmative action program for white homeownership.”[36]  

They looked at a recent headline. “White High School Dropouts Are Wealthier Than Black or Latino College Graduates.”[37]

Brian asked, “If we really lived in a “meritocracy,” would this even be possible?”

[1] Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (New York: W.W. Norton & Company, 2017), p.71.

[2] Rothstein, p.72; cf. Matthew Chambers, Carlos Garriga, and Don E. Schlagenhauf, “The New Deal, the GI Bill, and the Postwar Housing,” Federal Reserve Bank of St. Louis, February 14, 2012; https://economicdynamics.org/meetpapers/2012/paper_1050.pdf is one attempt at economically quantifying the impact of various government actions.

[3] Rothstein, p.82 - 83; Erin Blakemore, “How the GI Bill’s Promise Was Denied to a Million Black WWII Veterans,” History.com, September 30, 2019; https://www.history.com/news/gi-bill-black-wwii-veterans-benefits writes:

“While the GI Bill’s language did not specifically exclude African-American veterans from its benefits, it was structured in a way that ultimately shut doors for the 1.2 million black veterans who had bravely served their country during World War II, in segregated ranks... When lawmakers began drafting the GI Bill in 1944, some Southern Democrats feared that returning black veterans would use public sympathy for veterans to advocate against Jim Crow laws. To make sure the GI Bill largely benefited white people, the southern Democrats drew on tactics they had previously used to ensure that the New Deal helped as few black people as possible.”

[4] Nick Chiles, “9 Ways Franklin D. Roosevelt’s New Deal Purposely Excluded Blacks People,” Atlanta Black Star, February 4, 2015; https://atlantablackstar.com/2015/02/04/9-ways-franklin-d-roosevelts-new-deal-purposely-excluded-blacks-people/5/.  Also, Richard Rothstein, “How Redlining Led to Rioting,” Washington Spectator, July 15, 2015; https://washingtonspectator.org/how-redlining-led-to-rioting/ notes

“Best known is Levittown, NY - 17,000 homes for veterans, sold initially for about twice national median family income (less than $125,000 in today’s dollars).  Affordable to working class families of any race, federal policy restricted them to whites.”

To get some sense for the experience of veterans of color, who fought for democracy abroad and returned to racist anti-democracy at home, see Gene Slater, Freedom to Discriminate:  How Realtors Conspired to Segregate Housing and Divide America (Berkeley, CA: Heydey Books, 2021), ch.7.

[5] Thomas W. Hanchett, "The Other ‘Subsidized Housing’: Federal Aid to Suburbanization 1940s-1960s", edited by John F. Bauman, Roger Biles and Kristin M. Szylvian, From Tenements to the Taylor Homes: In Search of an Urban Housing Policy in Twentieth Century America (University Park, PA: Pennsylvania State University Press, 2000), p.163 – 179.

[6] Ira Katznelson, When Affirmative Action Was White: An Untold Story of Racial Inequality in Twentieth-Century America (New York: W.W. Nelson & Co, 2005); cf. Hilary Herbold, "Never a Level Playing Field: Blacks and the GI Bill,” The Journal of Blacks in Higher Education, Winter 1994.

[7] Rothstein, chs.2 – 3.

[8] Anthony Randazzo and Dean Stansel, “Mortgage Interest Deduction Saves Middle Class Taxpayers All Of $51/Month,” Fortune, December 18, 2013; https://www.forbes.com/sites/realspin/2013/12/18/mortgage-interest-deduction-saves-middle-class-taxpayers-all-of-51month/#2c34c11105c3 explain,

“Middle-class homeowners saved an average of $615 on their taxes in 2012 thanks to the mortgage interest deduction. That’s actually down from an average savings of $989 in 2010.”

[9] Seth Hanlon, “The Mortgage Interest Deduction,” Center for American Progress, January 26, 2011; https://www.americanprogress.org/issues/general/news/2011/01/26/8866/tax-expenditure-of-the-week-the-mortgage-interest-deduction/ also points out how tax policy on mortgage interest is regressive:

“Households with incomes between $40,000 and $75,000 receive, on average, $523 from the mortgage interest deduction. Households with incomes above $250,000 receive $5,459, or more than 10 times as much”. 

Tax Policy Center, Urban Institute and Brookings Institution, https://www.taxpolicycenter.org/briefing-book/what-are-tax-benefits-homeownership says:

“The deductions and exclusions available to homeowners are worth more to taxpayers in higher tax brackets than to those in lower brackets. For example, deducting $2,000 for property taxes paid saves a taxpayer in the 39.6 percent top tax bracket $792, but saves a taxpayer in the 15 percent bracket only $300. Additionally, even though they only represent about 20 percent of all tax units, those with more than $100,000 in income receive over 85 percent of the mortgage interest deduction tax benefits. That difference results largely from three factors: compared with lower-income homeowners, those with higher incomes face higher marginal tax rates, typically pay more mortgage interest and property tax, and are more likely to itemize deductions on their tax returns.” (emphasis ours)

[10] The Equal Justice Initiative documents 4075 racial terror lynchings in the American South, from 1877 – 1950; source: https://eji.org/reports/lynching-in-america;

[11] Isabel Wilkerson, “The Long-Lasting Legacy of the Great Migration,” Smithsonian Magazine, September 2016; https://www.smithsonianmag.com/history/long-lasting-legacy-great-migration-180960118/ writes,

“When the migration began, 90 percent of all African-Americans were living in the South. By the time it was over, in the 1970s, 47 percent of all African-Americans were living in the North and West.”

[12] Richard Rothstein, The Color of Law, ch.8 narrates examples of how white city officials and private companies well into the 1970s would deny new housing developers zoning permits, or sewage lines, etc. if they even mentioned building housing for a racially integrated community.  See ch.9 to see how white police officers failed to protect black new homeowners in historically white communities, and sometimes did worse.  John D. Baskerville, “African-American Migration,” History of Blackhawk County (date unknown), writes:

“Another form of discrimination experienced by the newly arrived migrants arose in the area of housing… Because white property owners and Realtors refused to sell or rent African-Americans homes or apartments in so-called white neighborhoods, African-Americans found themselves relegated to specific areas within the cities of the North. These areas were characteristically overcrowded and sometimes unhealthy, primarily due to the sheer number of people forced to reside within a relatively few blocks. White Realtors soon began to capitalize on racial animosities by engaging in the practice of “blockbusting,” which caused panic selling among white homeowners and increased racial tensions even further… Beyond the major incidents [of violence], northern African-Americans confronted individual racial hostilities and various forms of discrimination on a daily basis, ranging from higher rents and food prices to refusal of service in white-owned establishments.”

[13] Dorothy A. Brown, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It (New York, NY: Random House, 2021), p.183 – 185.

[14] Value Penguin, “Average Auto Loan Interest Rates: 2018 Facts & Figures,” Value Penguin, date unknown; https://www.valuepenguin.com/auto-loans/average-auto-loan-interest-rates.  

“When paid over the course of 84 months in $347.50 monthly payments, this same loan at the same interest rate costs a total of $29,190 — more than $1,200 pricier than at 48 months.” 

See also Paul Kiel, “Small Debt is Destroying Black Lives: Institutional Racism and the Wealth Gap America Still Refuses to Acknowledge,” Salon, January 9, 2016; https://www.salon.com/2016/01/09/why_small_debts_matter_so_much_to_black_lives_partner/.

[15] Dorothy A. Brown, The Whiteness of Wealth, p.183 – 185 writes:

“It’s a question of whether the financial transfer goes towards a wealth-building activity, like a college tuition or a down payment on a home, or toward a basic need or an emergency.  And black families are far more likely than white families to be making financial transfers that are used to help family members cover daily expenses – like Racheal’s mother paying for her to go to the dentist as a Christmas gift.  Earning a higher income does not protect black families from such wealth depletion; in fact, it makes them more vulnerable.  “As income increases, blacks are increasingly more likely than whites to report having provided financial assistance to friends and family,” one study found.  “Middle-income blacks are significantly more likely than middle-income whites to report having provided informal financial assistance in the past year.”

“That conclusion was consistent with earlier research showing “the middle-class black families in [the study] suffered about a 27 percent reduction in their wealth relative to white families as a result of the kin networks into which they were born.”

[16] Dorothy A. Brown, The Whiteness of Wealth, p.120 – 125.

[17] Aaron Glantz and Emmanuel Martinez, “For People of Color, Banks Are Shutting the Door to Homeownership,” Reveal News, February 15, 2018; https://revealnews.org/article/for-people-of-color-banks-are-shutting-the-door-to-homeownership/ introduce their report thus:

“Fifty years after the federal Fair Housing Act banned racial discrimination in lending, African Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts.

This modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount and neighborhood, according to a mountain of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting.

The yearlong analysis, based on 31 million records, relied on techniques used by leading academics, the Federal Reserve and Department of Justice to identify lending disparities.”

[18] Keeanga-Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Princeton, NJ: Princeton University press, 2019) picks up in 1968 where redlining supposedly left off, although in reality it continued in the private sector.

[19] Mark Whitehouse, “Black Poverty Is Rooted in Real-Estate Exploitation,” Bloomberg, June 17, 2019; https://www.bloomberg.com/opinion/articles/2019-06-17/how-housing-finance-enriched-whites-at-expense-of-black-borrowers

[20] Charlie Savage, “Countrywide Will Settle a Bias Suit,” New York Times, December 21, 2011; https://www.nytimes.com/2011/12/22/business/us-settlement-reported-on-countrywide-lending.html writes:

“A department investigation concluded that Countrywide loan officers and brokers charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. Countrywide also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received regular loans, it found.”

[21] Alain Sherter, “Court Implies Wells Fargo Discriminated Against Minorities,” CBS News, January 11, 2010; https://www.cbsnews.com/news/court-implies-wells-fargo-discriminated-against-minorities/ writes that Elizabeth Jacobson, the former top subprime loan officer at Wells Fargo, said in June 2009 in a sworn affidavit detailing the bank’s tactics:

“I know that Wells Fargo Home Mortgage tried to market subprime loans to African-Americans in Baltimore. I am aware from my own personal experience that one strategy used to target African-American customers was to focus on African-American churches. The Emerging Markets unit specifically targeted black churches. Wells Fargo had a program that provided a donation of $350 to the nonprofit of the borrower's choice for every loan the borrower took out with Wells Fargo. Wells Fargo hoped to sell the African-American pastor or church leader on the program because Wells Fargo believed that African-American church leaders had a lot of influence over their ministry, and in this way would convince the congregation to take out subprime loans with Wells Fargo.” 

[22] Alain Sherter, “How Racial Segregation Worsened the Foreclosure Crisis,” CBS News, October 8, 2010; https://www.cbsnews.com/news/how-racial-segregation-worsened-the-foreclosure-crisis/ notes:

“It’s easy to assume that the higher level of foreclosures in larger cities and collar suburbs reflect the lower incomes of residents in such communities. That's false, say Massey and Rugh, who did a statistical analysis of the 100 largest U.S. metropolitan areas. African American borrowers with similar credit profiles, down payment ratios and other demographic characteristics were more likely to receive subprime loans than white borrowers, they found. Minorities were also far more likely than whites to get mortgages with unfavorable terms, such as a prepayment penalty.  Such findings are consistent with lawsuits against lenders alleging that they preyed on minorities. A former senior executive with Wells Fargo (WFC) last year described the banking giant's efforts to push subprime loans on African Americans.  Consistent with Massey’s and Rugh’s findings, she also said company loan officers had financial incentives to steer minority borrowers into subprime loans regardless of their credit or income.”

Yves Smith, a financial commentator, points out that this ill-treatment cost many black and brown people their homes: Alain Sherter, “Why the Feds’ Countrywide Settlement Settles Nothing,” CBS News, December 22, 2011; https://www.cbsnews.com/news/why-the-feds-countrywide-settlement-settles-nothing/ says:

“[G]iven the number of people involved, one has to think that there are some cases where the difference between the cost of the loan these borrowers got and the cheaper ones they qualified for could have made the difference between a borrower making it versus going into delinquency. So for any cases where the overcharges tipped a stressed borrower into a foreclosure, the settlement is clearly inadequate.”

[23] Jamelle Bouie, “The Crisis in Black Homeownership,” Slate, July 24, 2014; https://slate.com/news-and-politics/2014/07/black-homeownership-how-the-recession-turned-owners-into-renters-and-obliterated-black-american-wealth.html writes:

“In 2005, three years before the Great Recession, the median black household had a net worth of $12,124. Yes, this was far behind the median white household—which had a net worth of $134,992—but it was a huge improvement from previous decades, in which housing discrimination made wealth accumulation difficult (if not impossible) for the large majority of African American families. By the official end of the recession in 2009, median household net worth for blacks had fallen to $5,677—a generation’s worth of hard work and progress wiped out. (The number for whites, by comparison, was $113,149.) Overall, from 2007 to 2010, wealth for blacks declined by an average of 31 percent, home equity by an average of 28 percent, and retirement savings by an average of 35 percent. By contrast, whites lost 11 percent in wealth, lost 24 percent in home equity, and gained 9 percent in retirement savings. According to a 2013 report by researchers at Brandeis University, “half the collective wealth of African-American families was stripped away during the Great Recession.””

See Laura Gottesdiener, A Dream Foreclosed: Black America and the Fight for a Place to Call Home (Westfield, NJ: Zuccotti Park Press, 2013) and interview by Amy Goodman, “A Dream Foreclosed: As Obama Touts Economic Recovery, New Book Reveals Racist Roots of Housing Crisis,” Democracy Now, August 6, 2013; https://www.democracynow.org/2013/8/6/a_dream_foreclosed_as_obama_touts points out that over 10 million people were evicted from their homes because of the financial crisis starting in 2007. 

[24] Chris Isidore, “35 Bankers Were Sent to Prison for Financial Crisis Crimes,” CNN, April 28, 2016; https://money.cnn.com/2016/04/28/news/companies/bankers-prison/index.html points out that 59 bankers were convicted of crimes, and another 19 have been charged as of the time of writing.  This is misleading, however.  At least some of the bankers “were convicted on Wednesday of fraud conspiracy related to TARP funds.”  In other words, fraud in the use of TARP bailout funds is not the same as fraud for contributing to the financial crisis in the first place.  About this, Isidore admits:

“Top executives at the so-called "too big to fail" banks have avoided any criminal charges, even as their banks paid tens of billions of dollars in fines to settle charges of wrong doing leading up to the financial crisis.”

[25] The Federal Reserve Bank’s quantitative easing policy from 2009 compounded the problems.  The Fed kept housing prices artificially inflated, rewarding boomer homeowners but penalizing asset-poor, already indebted millennials and those who lost their homes.  David McWilliams, “Quantitative Easing was the Father of Millennial Socialism,” Wall Street Journal | Financial Times, March 1, 2019; https://www.ft.com/content/cbed81fc-3b56-11e9-9988-28303f70fcff and Mike Shedlock, “Ben Bernanke—The Father of Extreme US Socialism,” FX Street, March 4, 2019; https://www.fxstreet.com/analysis/ben-bernanke-the-father-of-extreme-us-socialism-201903040305, point out,

“Fed chairman Ben Bernanke’s “cash for trash” QE scheme drove up asset prices and bailed out the baby boomers.  The cost of course, was pricing millennials out of the housing market.  Unorthodox policy penalizes the asset poor.  What assets do millennials have?  Hardly any.  Instead they are saddled with mountains of student debt which, thanks to president George W. Bush, could no longer be discharged in bankruptcy.  The Bankruptcy Reform Act of 2005 would have better been called the Debt Slave Act of 2005.  Then, when the Great Financial Crisis hit, the Fed came along bailed out the banks, bailed out the bondholders, bailed out Fannie Mae, and bailed out the asset holders in general, leaving millennials mired in debt unable to afford a house.” 

These writers addressed the plight of “millennials,” which is true as far as that goes, but “millennials” is a way to label younger white Americans, while older black and brown borrowers were also ruined by home foreclosures, and then had their remaining dollars devalued, as home prices stayed at high levels.  Was this because of their “individual merit”?  Clearly not. 

[26] CNBC, “How BlackRock Became the World’s Largest Asset Manager,” CNBC, October 13, 2021; https://www.youtube.com/watch?v=ga_we_sOopk is a 14 minute video about one of the most influential companies in global finance.  Ryan Grim, Kim Iversen, and Robby Soave, “BlackRock Behemoth Surges As Almost 20% Of Households Lose All Of Their Savings During Pandemic,” Rising | The Hill, October 16, 2021; https://www.youtube.com/watch?v=JJRVydKzyPw is a 6 minute news segment about BlackRock managing $10 trillion, which is larger than every country but the US and China.  Their investments in other companies’ corporate equity give them enormous industrial and political power.  Senator Elizabeth Warren (D-MA) argues that they fall into the “too big to fail” bank category which requires that they abide by certain regulations.  See also NBC News, “Investment Companies Pricing Out Homebuyers,” NBC News, October 6, 2021; https://www.youtube.com/watch?v=3BbmrFnnyXE is a 3 minute news segment focused on Atlanta, GA.

[27] Keri Leigh Merritt, Masterless Men: Poor Whites and Slavery in the Antebellum South (Cambridge: Cambridge University Press, 2017), p.331.

[28] Keri Leigh Merritt, Masterless Men, p.331.  African Americans were supposed to benefit from the latter Act, the Southern Homestead Act of 1867.  However, federal leaders’ commitment to the Act was so half-hearted and dysfunctional, only approximately 4,000 to 5,500 black people out of 4 million newly freed blacks were given land grants, and only 6 percent of the land originally allocated was used.  See Merritt, Masterless Men, p.330; Trina Williams, “The Homestead Act: A Major Asset-Building Policy in American History,” https://openscholarship.wustl.edu/csd_research/46/, p.10.  Eric Foner, Reconstruction: America’s Unfinished Revolution, 1863 – 1877 (New York, NY: Harper, 2014 second edition), p.246 writes:

“By 1869 only 4,000 black families had even attempted to take advantage of the act, three quarters of them in sparsely populated Florida, and many of these subsequently lost their land.  By far the largest acreage claimed under the law went to whites, often acting as agents for lumber companies.”

[29] National Board of Agriculture et al., Colleges of Agriculture at the Land Grant Universities: A Profile. Washington, DC: National Academies Press, 1995; https://www.nap.edu/read/4980/chapter/2

[30] Vann R. Newkirk II, “The Great Land Robbery,” The Atlantic, September 2019; https://www.theatlantic.com/magazine/archive/2019/09/this-land-was-our-land/594742/

[31] Ta-Nehisi Coates, “The Case for Reparations,” The Atlantic, June 2014; https://www.theatlantic.com/magazine/archive/2014/06/the-case-for-reparations/361631/

[32] E.g. In Boston, “Close to 80% of whites own a home, whereas only one-third of U.S. blacks… are homeowners” according to Ana Patricia Munoz, et.al., “The Color of Wealth in Boston,” Federal Reserve Bank of Boston, March 25, 2015; https://www.bostonfed.org/publications/one-time-pubs/color-of-wealth.aspx; Laura Shin, “The Racial Wealth Gap: Why A Typical White Household Has 16 Times The Wealth Of A Black One,” Forbes, March 26, 2015; https://www.forbes.com/sites/laurashin/2015/03/26/the-racial-wealth-gap-why-a-typical-white-household-has-16-times-the-wealth-of-a-black-one/#28960fda1f45; Chuck Collins, “The Wealthy Kids Are Alright,” The American Prospect, May 28, 2013; http://prospect.org/article/wealthy-kids-are-all-right;

[33] Amy Traub, Catherine Ruetschlin, Laura Sullivan, Tatjana Meschede, Lars Dietrich, and Thomas Shapiro, “The Racial Wealth Gap: Why Policy Matters,” Demos and the Institute for Assets and Social Policy at Brandeis University, June 21, 2016; http://www.demos.org/publication/racial-wealth-gap-why-policy-matters find that equalizing college graduation rates between whites and people of color would close the wealth gap by 1 percent for blacks and 3 percent for Latinos. 

S. Michael Gaddis, “Discrimination in the Credential Society: An Audit Study of Race and College Selectivity in the Labor Market,” Oxford Academic Social Forces Journal, Volume 93, Issue 4, June 2015; https://doi.org/10.1093/sf/sou111 finds blacks who graduated from elite universities have the same chance in the job market as whites who graduated from less selective schools. In addition, black graduates are offered lower starting salary and less prestigious starting jobs.

[34] 15.2 million children living in poverty also live in married, two-parent families. 16.7 million live with one parent.  See NBC News, “Family Income - Not Married Parents - More Apt to Impact Kids' Well-Being,” NBC News, February 27, 2015; https://www.nbcnews.com/health/health-news/family-income-not-family-structure-more-apt-impact-kids-lives-n313486.  

Amy Traub, Laura Sullivan, Tatjana Meschede, and Tom Shapiro, “The Asset Value of Whiteness: Understanding the Racial Wealth Gap,” Demos and Institute of Assets and Social Policy at Brandeis University, 2017; http://iasp.brandeis.edu/pdfs/2017/AssetValue.pdf, p.7 – 8 find,

“According to data from the Survey of Consumer Finances, the median white single parent has 2.2 times more wealth than the median black two-parent household and 1.9 times more wealth than the median Latino two-parent household.” 

See also Emily Badger, “Children With Married Parents Are Better Off — But Marriage Isn’t the Reason Why,” Washington Post, September 8, 2014; https://www.washingtonpost.com/news/wonk/wp/2014/09/08/children-with-married-parents-are-better-off-but-marriage-isnt-the-reason-why/ summarizing Kimberly Howard and Richard V. Reeves, “The Marriage Effect: Money or Parenting?”, Brookings Institute, September 4, 2014; https://www.brookings.edu/research/the-marriage-effect-money-or-parenting/

[35] Noah Smith, “How to Reduce the Black-White Wealth Gap,” Bloomberg, April 23, 2018; https://www.bloomberg.com/view/articles/2018-04-23/how-to-reduce-the-black-white-wealth-gap features very good household data, though his proposal for reparations needs further consideration and is not the only form of reparations being considered

[36] Amy Traub, Laura Sullivan, Tatjana Meschede, and Tom Shapiro, “The Asset Value of Whiteness: Understanding the Racial Wealth Gap,” Demos and Institute of Assets and Social Policy at Brandeis University, 2017; http://iasp.brandeis.edu/pdfs/2017/AssetValue.pdf; Peter Coy, “The Big Reason Whites Are Richer Than Blacks in America,” Bloomberg Businessweek, February 8, 2017; https://www.bloomberg.com/news/articles/2017-02-08/the-big-reason-whites-are-richer-than-blacks-in-america

[37] Danielle Kurtzleben, “White High School Dropouts Are Wealthier Than Black or Latino College Graduates,” Vox, September 24, 2014; https://www.vox.com/2014/9/24/6840037/white-high-school-dropouts-have-more-wealth-than-black-and-hispanic