Decades of housing discrimination have helped create an enormous wealth gap
between white and Black families.
- The enduring legacy of redlining, the legal government sponsored effort to
deny mortgages and home ownership opportunities to African-Americans and
other minorities continues to undermine their quality of life. This violation of
basic civil rights continues to negatively impact education attainment,
health outcomes, wealth accumulation, self-esteem, mortality rates, and
civic engagement.
Home ownership has proved to both the doorway and gatekeeper to success and
well-being in America. It is at the core of today's racial wealth gap.
- There's a very powerful myth in this country, and that is that residential
segregation in this country is something we call de-facto segregation.
Something that happened by accident.
Every textbook that's used in American high schools and middle schools today
lies about this history. It talks about how
northern cities were de facto segregated, without government involvement.
They talk about how the Federal Housing Administration did a wonderful job of
creating single family homes in the suburbs for working class families
without mentioning that the working class families they had created these
homes for could only be white.
- This began a history of excluding people of color from government housing programs.
Intended to lower the cost of mortgages and increase home ownership.
Segregated neighborhoods by race using a code system.
Outlined minority neighborhoods using the color red.
Intended to expand the secondary mortgage market by securitizing
mortgage loans.
Community boards often denied minority veterans mortgages.
Many minority vets could not be buried in the same cemetery as whites.
It wasn't until 1970 that lending to communities of color began to increase.
- The way this manifested itself was through the drawing of maps.
Different neighborhoods were underwritten as being riskier or safer and the
principle component that determined riskiness or safety from a lending
standpoint was ethnic and racial composition.
- It was at that point that the real estate developers began to
drop strings around areas.
The local banker could choose who would get mortgages, where.
So that we could not have gotten a loan out in the suburbs because
those were whites only.
The concept of a middle class Black only exists in the mind of a middle
class Black.
Everywhere else in the suburbs you are that nigger family on the
corner of Warren Road and Boulevard Way.
- Well the truth is that we've had in this country generations of affirmative action
for whites.
And the sad truth of it is that whites don't know that that's
happened or they refuse to accept it or don't understand the history.
And what that leads to is this false kind-of narrative that "I did it myself."
You know, this Horatio Alger, individual responsibility narrative.
- There were many federal, state, and local policies explicitly racial
designed to create segregation in every Metropolitan area in the country.
And policies that were so powerful that they still determine
the racial boundaries of Metropolitan areas today.
The Federal Housing Administration began a program to suburbanize the entire white
working class population into single family homes.
- This is Levittown, Pennsylvania. A new suburban community of
60,000 people with it's giant shopping center,
winding lanes named for flowers and trees.
It is fairly typical of communities all over America.
Where families are pursuing the American dream to give their children a better
chance in life.
Nearly all are young people.
A large proportion are veterans. For many it is the first house of
their own and it represents a major financial investment.
In August 1957, Levittown, Pennsylvania attracted
international attention as William Myers Jr. and his family moved
into the three bedroom house.
They are very close to the Levittown norm.
Except in one respect.
William Myers Jr. and his family are negroes in an all-white community.
- If more colored are allowed to move in, Levittown is going to go downhill.
- The only way that those developers could get the capital to do that was
by going to the Federal Housing Administration.
In order to get that approval, they had to commit
never to sell a home to an African-American.
- Access to leverage allowed middle-class whites to build wealth.
- The white families who bought those homes were able to use their wealth
to send children to college. And they use it to bequeath wealth to their children,
who could use it as down payments for their own homes.
- Restrictive covenants ensured that minorities could not
buy into white neighborhoods.
Properties shall continue to be occupied by the same social
and racial classes.
- When Karen and I purchased this home that was built in 1948,
we found some documents in a closet.
Neither the whole or any part of said tract shall be sold, rented,
or leased to any persons or persons not of white or Caucasian race.
- Created greatest growth of the middle class in the history of the world.
In 1940, 42 percent of white families owned their own home.
In 2000, 71 percent of white families owned their own home.
- So consequently those 71 percent, 72 percent of white home owners
who own their own home should be thankful to the
federal government for providing them this opportunity.
What did not happen or what happened at the same time
was that we people of color were discriminated against and were
prevented from taking advantage of those opportunities.
- The recent housing and foreclosure crisis were a continuation of a form
of redlining.
- Financial institutions practiced unrealistic credit scoring and
predatory lending.
Subprime mortgages grew nearly 250 percent. In 1998, subprime mortgages
made up 9.8 percent of the mortgage market. By 2006, they made up 23.5
percent of the market.
- And the gap between white home ownership rates and black home ownership rates is
30 percentage points larger than it was back in 1968. In 1968 the typical Black
family had one-sixth as much wealth as the typical white family.
Now it is one-tenth.
We have gone backwards since the civil rights era.
- Latinos lost close to a 170 billion dollars worth of equity that they
had accumulated in the home that they purchased many
many years before then.
- When they come to access products,
the choices that they are given are limited.
So you're given, instead of a conventional loan, you're given
a special loans that have higher interest rates or higher fees
that again set you up for foreclosure or failure as well.
- The scandal of your tenure is your unwillingness to do your job and
enforce the laws that reduce housing discrimination.
- The housing crisis affected all communities but disproportionally
devastated minority families.
Black and Hispanic families lost nearly 20 years of wealth between
2007 and 2013.
Minority home ownership is the lowest it's been since 1996.
- Redlining discrimination in the Asian-American communities,
alive and kicking. And in California,
you'll see that Asians have the second highest probability
of going to foreclosure.
Very comparable to Latinos. Latinos were 1.4,
for Asians it was 1.3.
And so whether it is in home ownership, rental, small business,
foreclosure, across the board there is redlining.
- Between 1934 and 1962, 120 billion in FHA and VA loans were issued.
Over that period of time, 98 percent of the loans
went to white families and less than two
percent went to African-Americans and other minorities.
Using the average Home Price Index between 1934 through 2018,
those FHA, VA loans equate to at least three trillion dollars
in current real estate value.
Assuming that as loans were paid off and excess funds were invested in
stocks and other investments conservatively, another two
trillion were created.
This "White Subsidy" is the major contributor to the current
racial wealth gap.
- So many white Americans experience this sense of self esteem, a sense of
you know superiority, if you will.
This sense of mastery, that they have created their own destiny
in their lives. And they have no acknowledgment of this invisible
hand that supported them throughout their lives and not just them, but there's
a legacy of that invisible hand across generations that has translated itself
from the original affirmative action to trillions of dollars of head start
ahead of other communities, like African-Americans, Latinos,
Native Americans, others who don't have the same benefit.
- Children of homeowners are more likely to graduate from high school, have less
childhood behavioral problems and achieve higher college
graduation rates.
- In segregated housing, and in neighborhoods that everybody is
segregated that tend to be low income neighborhoods.
There is the greater likelihood that the youngsters will be involved in
gangs, or will be recruited to be in gangs.
- I noticed an absence of hope, an absence of light. These kids
were barraged with a message every single day of their lives,
that they weren't valued, that they didn't matter.
And they internalized that.
And that caused frustration and anger, and eventually despair
and a loss of hope.
There is now a very good science that shows the sense of not
belonging, the sense of lacking self-esteem raises cortisol levels
in your blood. And cortisol is good for you when you're in an extremely
stressful situation, but when you're constantly bathed in cortisol,
because you're constantly feeling these stressors of being marginalized and
being told that you're less worthy, less valuable and being in constant
state of really fear and anxiety, it changes your physiology completely.
It makes you more prone to cardiovascular disease,
it makes you more prone to diabetes, it makes
changes in your brain, which actually makes it
more difficult to engage in what we call executive function.
This kind of chronic stress which is driven by the policies that we've
created is as lethal as any knife or any gun.
- Suppose discrimination did end today.
How many generations would it take to get to rough equality and wealth
across races.
France was seven generations, more than 200 years.
- And so when white Americans hear about affirmative action
for Blacks, or for Latinos, they're outraged.
They think "I've done this by myself, why can't these people."
"There's something wrong with these people."
- The same programs that were provided to white Americans, that enabled them
to accumulate this wealth through home ownership,
those same opportunities have to be provided to us.
- Imagine where minority families would be today if their grandparents had the
same access to wealth through home ownership that white families had.
What would the wealth gap be between white and minority
families if minorities had the same access to wealth through home ownership?
Would there be a gap?