Comments last week surfaced at a 2008 conference by former New York mayor and current Democratic presidential candidate Michael Bloomberg, in which he claimed the period’s housing crisis was due to the end of “red line”, mid-1920s.e discriminatory practice of the century that made home loans unavailable in black neighborhoods. Bloomberg’s conclusion is totally contradicted by the facts, but it persists because it reinforces one of the most pernicious narratives in the American economy: that the economic and social status of the poor and black are of their own accord.
“It all probably started when banks were under great pressure to make loans to everyone,” Bloomberg said at the Georgetown University conference in 2008. When “the Congress got involved “and decided that the upload was unfair, he continued,” the banks began to give more and more loans when the credit of the person buying the house was lacking. not as good as you would like ”. This is, according to Bloomberg, what started the Great Recession.
Bloomberg’s argument, the one who he repeated over the years– is wrong from start to finish. Take his definition of redlining: “Redlining, if you remember,” Bloomberg said, “was the term where banks would take entire neighborhoods and say, ‘People in these neighborhoods are poor, they won’t be able to pay off their mortgages. . , tell your salespeople not to go to these areas. ‘”
If you don’t remember redlining as Bloomberg defines it, it’s probably because its definition is absurd. Redlining was the practice of the US government – operating through the Home Owners’ Loan Corporation – to define mortgage risk based on the racial makeup of neighborhoods. Areas with significant black populations were marked in red ink on the maps to warn mortgage lenders that these areas would be too risky to underwrite, effectively isolating blacks in neighborhoods that would experience lower levels of investment than in New York. their white counterparts.
Redlining was not aimed at banks to identify poor neighborhoods. It was, as historian Richard Rothstein has described it, “A state sponsored system of segregation”.
Moreover, to link the end of redlining to the recent economic downturn is a glaring error of the facts. The Fair Housing Act was 40, and the Community Reinvestment Act was 30, before the 2008 economic collapse. focused on the private market, and were generally sold to homeowners who could have qualified for a more secure loan. It was not the government’s efforts to make home ownership affordable that prompted the risky investments that preceded the crash. It was the greed of predatory lenders.
Bloomberg argued that fair housing policies went too far, but in truth they did not go far enough. Black homeownership rates have today fallen at pre-1968 levels, before the Fair Housing Act outlawed discrimination in housing. And black neighborhoods continue to be stigmatized: a devaluation of $ 48,000 per unit on average, even after controlling for factors such as the quality of housing, the quality of the neighborhood, education and crime. This represents a whopping $ 156 billion in cumulative losses.
We see the consequences of this stigma not only in our neighborhoods, but in our families. Blacks in neighborhoods marked in red were denied the opportunity to improve their homes and communities because the government only facilitated investment, development, and growth in the white suburbs. Residents of predominantly black neighborhoods have not had the opportunity to pass on the accumulated equity of their homes to future generations. Today, white families have the highest median family wealth at $ 171,000 – black and Latino or Hispanic families have $ 17,600 and $ 20,700, respectively.
Policies such as redlining – which have concentrated wealth in the hands of a few while inflicting economic violence on the poor and minorities – have been covered in rhetoric for far too long. The next president must tackle the real housing crisis in this country: unaffordable housing in segregated neighborhoods, the result of decades of politics based on racism and classism. Bloomberg is the eighth richest man in the world; he should know better where the wealth in America actually comes from and how it is gained and lost.