… As countless leaked documents, insider dispositions, and Department of Justice filings demonstrate, those neighborhoods were systematically and illegally targeted for the worst of the worst mortgages. As one former Wells Fargo mortgage broker explained in a sworn affidavit, “The company put ‘bounties’ on minority borrowers. By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.”
This pushing of predatory loans was all the more insidious because these same communities had been starved of mortgages for decades as a result of the Federal Housing Authority’s refusal to guarantee loans in communities of color. As Mike Fannon, development associate for the Charles H. Wright Museum of African American History in Detroit, explained, “The same banks that denied capital now injected too much toxic capital and decimated the local economy.”
The effect, according to a 2012 National Fair Housing Alliance report, has been “the largest loss of wealth for these communities in modern history.” Between 2009 and 2012 African Americans lost just under $200 billion in wealth, bringing the gap between white and black wealth to a staggering 20:1 ratio.
There is also a longer trajectory of racial exclusion at play here, a history that makes the foreclosure crisis yet another chapter in an epic and enduring quest for home. From enslavement to sharecropping, redlining to restrictive covenants, the United States has too often been an inhospitable land for people of color. Fifty years ago, Martin Luther King echoed W.E.B. Dubois in declaring that the African American still “finds himself in exile in his own land.” Today, it’s hard not to see that reality painted across the 2010 census data, where the maps measuring the concentration of vacant houses and the maps measuring the concentration of African Americans, while not exactly the same, are uncomfortably close to a match.
As Ben Austen wrote in the New York Times Magazine, “The U.S. Postal Service, which tracks these numbers, reported that 62,000 properties in Chicago were vacant at the end of last year, with two-thirds of them clustered as if to form a sinkhole in just a few black neighborhoods on the South and West Sides.” The same phenomenon holds true in cities across the country. And once a house is empty in such neighborhoods, all too often, no one is moving back in.
The final dystopian outcome of this spiral is what journalist Naomi Klein famously termed the shock doctrine: a crisis is pushed so far that it finally justifies dramatic outside intervention (read: privatization). It’s the type of outcome we’re currently seeing in Michigan, where, according to a court ruling last week, “Detroit’s recent bankruptcy filing only emphasizes the broader consequences of predatory lending and the foreclosures that inevitably result.” That city may be undergoing the largest municipal bankruptcy in U.S. history, but unlike when the big banks and giant financial outfits teetered at the edge of collapse, President Obama has made it clearthat this time there will be no billion-dollar federal bailout.