Tag: mortgage crisis

the color of money

July 31st, 2011 — 10:29am

(learn more about the book at the “Ask Me Anything” on Reddit)

A newly released report from the Pew Research Center about the inescapably color-coded impact of the recent recession brought some startling data to light: the median net-worth of a white family is now 20 times that of a black family, nearly doubling the size of the pre-recession gap.  The wealth differential between whites and minorities in America is now at an all-time high, a startling reality that was reported on by many major news organizations.

But no one explored the long-standing economic disparities that existed between races in America long before the current economic crisis emerged, or even attempts to get to the root of the issue.  Roots which extend back to the birth of sub-prime mortgages, an industry that wasn’t about classifying the mortgages themselves but instead about categorizing and labeling the people applying for them based on one important and decisive factor.

Plenty of articles mentioned the fact that between 2005 and 2009 although white families saw their median wealth fall by 16%, blacks watched their median wealth plummet 53%.  Much of the disparity is accounted for by the Pew Research Center as a result of declines in media home equity, but why should black and white homes have such different values?

Eminem seemed to have no sense of the irony that was invoked as his self-consciously white autobiographical film, 8 Mile, highlighted the hopeless plight of Detroit’s urban black community that’s existed for generations. The 8 Mile district was created in 1941, when a six-foot wall was built around a black enclave that was deemed unfit to accept loans from the Federal Housing Administration. This was “part of a system that divided the whole city, in theory by credit-rating, in practice by colour.” And so the segregation that emerged in Detroit “was not accidental, but a direct consequence of government policy.”1

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