Editor's note: The subprime lending debacle should cause massive rethinking among those who have long proclaimed that the route to Black equality is through wealth accumulation. In a report titled, "Foreclosed: State of the Dream 2008," United for a Fair Economy details the catastrophic losses inflicted on Blacks and Latinos in the U.S. at the hands of predatory lenders - "the greatest loss of wealth to people of color in modern U.S. history." With more than half of Blacks in many cities caught in the subprime trap - and with even these usurious financing schemes disappearing in the wake of the bubble-burst - the prospects for Blacks to amass wealth have grown bleaker than at any time in living memory. At the current rate, it will take 5,423 years for Blacks to achieve homeowner parity with whites.
People of Color Face Historic Wealth Loss
"It could take more than 5,000 years before Blacks achieve homeowner parity with whites!"
The core institutions of American capitalism have condemned Black and Brown America to further centuries of wealth disparity. Now standing at about ten-to-one, the wealth gap between African American and white median households cannot but grow bigger in the wake of the subprime lending catastrophe. The Boston-based United for a Fair Economy recently released a report, detailing the carnage wreaked on people of color by predatory lenders - and it is mind-boggling.
The report, titled "Foreclosed: State of the Dream 2008," shows definitively that banks and other lending institutions trapped Blacks and Latinos in predatory lending schemes as a matter of policy. "Even a surface check of the demographics shows," the report says, "that, in city after city, a solid majority of subprime loan recipients were people of color." The very scope of the crime proves that the lending crisis is not the product of Black "culture," but the result of calculated policies, near-uniformly carried out by virtually all of the nation's mortgage lending institutions. This is institutional racism writ large, and indisputable.
The money-lenders have already sucked the value out of whole communities, urban and suburban. The wealth loss is staggering: People of color have collectively lost between "$164 billion to $213 billion over the past eight years," with Latinos losing slightly more than African Americans. For the average American, wealth is passed on through the value of homes. That dream, as the report concludes, has been largely foreclosed.
Before the crisis hit, it was estimated that it would take 594 years - more than half a millennium! - for Blacks to catch up with whites in household wealth. Now, in the aftermath of the home mortgage massacre, it could take ten times as long - more than 5,000 years! - before Blacks achieve homeowner parity with whites. Looking backward, that stretches from now to when the great pyramids were built.
"People of color have collectively lost between $164 billion to $213 billion over the past eight years."
If Black wealth creation through home-owning is central to the drive for equality, then the private sector cannot be allowed free reign; they have already proven themselves criminally culpable in the death of dreams. And the crisis is by no means over. The rot extends to the non-mortgage practices of global financial institutions, that bundle worthless paper and trade it like real money. So deeply corrupt are the mega-banks, brokerage houses and finance capitalists of all kinds, the entire planetary house of cards is in danger of collapse.
Domestically, cities are already feeling the crunch of diminishing home property taxes - having long ago given away much of their tax base to attract many of the same corporations that created the current crisis. Boarded up houses destroy property values in the surrounding neighborhood, but there are at present no reliable private mechanisms to reverse the devastation. The banks aren't even taking each other's paper - knowing it is as worthless as their own.
Forget the sales sloganeering, that owning a home is the "American Dream." Affordable housing is what the people need, whether rental or family-owned - many millions of new units. The private sector cannot - will not - provide affordable housing, since it is more concerned with creating artificially high sale values than with meeting the public's crying needs. Now that the bubble has burst, it should never be allowed to be re-inflated. There is only one alternative, and that is massive public spending on housing that fits the actual needs and budgets of the citizens. That's the very least one can demand from one's government.
* BAR executive editor Glen Ford can be contracted at Glen.Ford@BlackAgendaReport.com