U.S. Government Helped Create Black Ghettos! (Rewind Clip)
Disparities in homeownership are a major driver of the racial wealth gap, according to a recent study from Brandeis University. According to the authors of the report, “redlining [a form of discrimination in banking or insurance practices], discriminatory mortgage-lending practices, lack of access to credit, and lower incomes have blocked the homeownership path for African-Americans while creating and reinforcing communities segregated by race.”
Redlining is the practice of denying key services (like home loans and insurance) or increasing their costs for residents in a defined geographical area. In theory, this could be used against anyone. In reality, it was almost exclusively a tool to force blacks (and other minorities) into particular geographic areas. The practice began with the National Housing Act of 1934, which established the Federal Housing Administration, as well as the Federal Home Loan Bank Board. It was this agency which created “residential security maps” for several cities to determine the safety of real estate investments in selected areas.
You should already see where this is going: Existing black neighborhoods were lined as unsafe, and thus ineligible for financing. For prospective property owner, this was terrible: Absent cash on hand, there was no way to afford a home or a business in your area. What’s more, blacks were all but barred from entering white neighborhoods, if not by restrictive racial covenants (which forbid property sales to African Americans and other minorities) then by violence and intimidation. In Chicago, for instance, anti-black riots were a regular part of public life. Here’s Arnold Hirsch, author of Making the Second Ghetto: Race and Housing in Chicago, 1940–1960:
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