![]() ![]() ![]() And Black neighborhoods continue to bear a stigma: a devaluation of $48,000 per home on average, even after controlling for factors such as housing quality, neighborhood quality, education, and crime. Black homeownership rates today have fallen to pre-1968 levels, before the Fair Housing Act outlawed housing discrimination. ![]() It was predatory lenders’ greed.īloomberg was arguing that fair housing policies went too far, but in truth they have not gone nearly far enough. It was not government efforts to make homeownership affordable that provoked the risky investments that preceded the crash. Subprime mortgages were concentrated in the private market, and were commonly sold to homeowners who would have qualified for a safer loan. The Fair Housing Act was 40 years old, and the Community Reinvestment Act was 30, before the economic collapse of 2008. Moreover, to link the end of redlining to the recent economic downturn is an egregious miscasting of the facts. It was, as historian Richard Rothstein famously described, “a state-sponsored system of segregation.” Redlining was not about banks identifying which neighborhoods were poor. Areas with sizable Black populations were marked in red ink on maps as a warning to mortgage lenders that those areas would be too risky to underwrite, effectively isolating Black people in neighborhoods that would suffer lower levels of investment than their white counterparts. government practice-operating through the Home Owners’ Loan Corporation-of defining the riskiness of mortgages based on the racial makeup of neighborhoods. If you do not “remember” redlining as Bloomberg defines it, that’s probably because his definition is nonsense. Take his definition of redlining: “Redlining, if you remember,” Bloomberg said, “was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas.’” When “Congress got involved” and decided redlining was unfair, he continued, “banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.” This, Bloomberg claims, is what sparked the Great Recession.īloomberg’s argument-one that he has repeated over the years-is wrong from start to finish. “It probably all started back when there was a lot of pressure on banks to make loans to everyone,” Bloomberg said in the 2008 Georgetown University lecture. Bloomberg’s conclusion is utterly contradicted by the facts, but it persists because it reinforces one of the most pernicious narratives of the American economy: that the economic and social statuses of poor and Black people are of their own doing. Last week, comments surfaced from a 2008 lecture by former New York City mayor and current Democratic presidential candidate Michael Bloomberg, in which he asserted that the period’s housing crisis was due to the end of “redlining,” the mid-20 th century discriminatory practice that made home loans unavailable in Black neighborhoods. ![]()
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