61% of white Americans believe that blacks have already achieved equality and that we are living in a ‘post racial era’, and an additional 22% believe that racial equality will be reached “soon”. Only 17% of blacks believe that equality has been reached.
50 years after Civil Rights, 150 years after the Emancipation Proclamation, and during the first black presidency, white Americans currently hold at least 19 times the wealth of African-Americans. Put into perspective, in 1984 the ratio was 12 to 1, dipping to 7 to 1 in 1995, jumping to an astonishing 19 to 1 in 2009, and is probably even greater now. In practical terms this means that the average middle income black family has less wealth than the average white family with earnings below the poverty line.
According to a 2010 Brandeis University study, in the last 23 years, the racial wealth gap increased by $75,000 from $20,000 to $95,000. Even within the highest income African Americans, wealth has fallen from $25,000 to $18,000, whereas the wealth of whites in a similar class surged to $240,000.
The average middle income African American worker would have to spend an additional twelve weeks per year working to earn the same amount as a white worker. s a result, between 1984 and 2007 African Americans actually doubled their debt burden as measured by assets against liabilities. At the rate blacks have been falling behind since the mid 90s, black and white median wealth will never ever reach parity, and unless something is done, these paths will continue to diverge.
White families saw a dramatic growth of financial assets excluding home value from $22,000 to $100,000, while African Americans saw very little increase at all. Because family wealth is the biggest predictor of personal wealth, and wealth is used to pay for education, this gap assures racial inequality for at least the next generation. 81% of African American students are graduating from college an average of $29,000 in debt.
From 1989 to 2001 credit card debt literally tripled for the average American family who experienced a 53% increase in debt load . And since 2000 families began to increase debt at a pace four times faster than in the 1990s . But what is more shocking than this enormous increase is that lower income families had a 184% increase in debt . As of 2004, 46% of very low income families earning less than $10,000 per year spent more than 40% of their income to pay off their debt . Much of this increase in debt can be traced to the 1978 Marquette vs. First Omaha Service Corp Supreme Court case that had the practical effect of ending laws prohibiting usury. By allowing states to regulate interest rates and credit card issuers to set interest rates by the home state of their corporate operation, banks were able to avoid state caps on interest rates. As a result, banks were able to market high interest, high fee predatory credit products targeting lower and moderate income people who could not obtain credit easily before. Since over 25% of African Americans live below the poverty line, and since African Americans earn on average 62% of white Americans, blacks were disproportionately impacted by these predatory tactics.
A study conducted by Ethan Cohen-Cole of the Federal Reserve Bank of Boston demonstrates that racial bias is a factor in the amount of credit offered even when other possible factors are eliminated. The study shows that the same individual in an 80% white area would receive about $7000 more dollars in credit than an individual living in an 80% black area. And a 1% increase in the percentage of blacks in an area corresponds to a $117 dollar reduction in credit. Further, even high quality credit individuals receive less credit if they simply live near a payday lender. Because available credit corresponds to credit score, the reduction of available credit automatically means that credit scores are stratified racially. Therefore, it’s typical for African-American borrowers with equal credentials to have a lower credit scores simple by virtue of where they live. This impacts both the available credit products, insurance rates and also may impact employment, as 60% of employers now use credit score in hiring decisions.
Of course, all this also means that predatory credit products like payday and auto title loans are frequently the only available products for even higher quality borrowers and of course, predatory creditors did not stop with credit cards. Between 1993 and 2000 mortgage companies specializing in subprime loans increased their share of mortgage originations from 1 percent to 13 percent. By 2001, prime loans were only 71% of refinance loans for blacks with income over 120% of their area median in predominantly black neighborhoods, whereas 83% of loans were prime for lower income white borrowers living in lower income white neighborhoods. So, after communities became predominantly black through white flight, blockbusting and steering, and after starving communities of credit by which a racially stratified credit scoring system developed, banks then targeted previously redlined communities with predatory subprime loans. The targeting process included attracting black ministers to influence their parishioners with kickbacks, informing high credit score customers that they would be better off putting no money down, pushing through stated income paperwork although a W-2 was available, and saturating whole communities with mortgage brokers trained to target them with bad deals that generated the highest brokerage fees.
By targeting communities of color with loans that were designed to fail, banks had discovered a new way of depleting financial resources from these communities. The President of the National Black Chamber of Commerce sites sub-prime as the largest hate crime in history and reports that it will take two generations for African-Americans to recover the lost wealth. Sub-prime represented an enormous change in the mortgage market with originations increasing from $35 billion in 1994 to $332 billion in 2003
In New York City only 24% of white borrowers earning $125-150,000 took out sub-prime compared to 52% of Hispanics and 63% of blacks. And for those earning even more the numbers really start to tell the story: in the $150-250,000 income bracket, only 20% of whites, but 50% of Hispanic and 62% blacks took out sub-prime mortgages.
As early as 2003, an article in the Toledo Law Review looked to categorize the lending practices that led to this catastrophe as an “economic hate crime.” The paper argues that “racialized predatory lending” is a “distinct variety of abusive lending that is significantly different from other non-racialized financial exploitation (Hunt 2003: 2).” Furthermore, the “significance of this difference lies in the deep historical stain of racial subordination in America and the contemporary legacy of that history in creating and perpetuating both institutional and cognitive racialized barriers to accessing capital, credit and property.” The paper argues that the legal tools to combat this particular form of predatory lending are not up to the job, because they dehistoricize the problem and consequences of “equity theft,” and simultaneously eradicate race as a consideration in contemporary lending practices.
As a result, this hate crime spread rapidly with 58.5% of blacks receiving high cost loans, versus 15.9% white and 45.5% Hispanics according to the Department of Housing Preservation and Development. Since a home is commonly viewed as a primary asset, blacks did not have many other assets. So, when housing losses are excluded, black and Hispanic families would have only suffered losses of $626 and $479 respectively during the crisis. If predatory home loans had been distributed equitably, whites would have sustained 45% greater losses, and blacks would have sustained 24% fewer loses.
African Americans were striving and making economic progress until predatory housing debt wiped it all out. Predatory racist lending patterns literally stripped future generations of black Americans of inherited wealth. The combination of privilege and bias resulted in a disaster for African Americans, who are now locked in an economic bind that produces the need for more and more debt.
Taken from here
50 years after Civil Rights, 150 years after the Emancipation Proclamation, and during the first black presidency, white Americans currently hold at least 19 times the wealth of African-Americans. Put into perspective, in 1984 the ratio was 12 to 1, dipping to 7 to 1 in 1995, jumping to an astonishing 19 to 1 in 2009, and is probably even greater now. In practical terms this means that the average middle income black family has less wealth than the average white family with earnings below the poverty line.
According to a 2010 Brandeis University study, in the last 23 years, the racial wealth gap increased by $75,000 from $20,000 to $95,000. Even within the highest income African Americans, wealth has fallen from $25,000 to $18,000, whereas the wealth of whites in a similar class surged to $240,000.
The average middle income African American worker would have to spend an additional twelve weeks per year working to earn the same amount as a white worker. s a result, between 1984 and 2007 African Americans actually doubled their debt burden as measured by assets against liabilities. At the rate blacks have been falling behind since the mid 90s, black and white median wealth will never ever reach parity, and unless something is done, these paths will continue to diverge.
White families saw a dramatic growth of financial assets excluding home value from $22,000 to $100,000, while African Americans saw very little increase at all. Because family wealth is the biggest predictor of personal wealth, and wealth is used to pay for education, this gap assures racial inequality for at least the next generation. 81% of African American students are graduating from college an average of $29,000 in debt.
From 1989 to 2001 credit card debt literally tripled for the average American family who experienced a 53% increase in debt load . And since 2000 families began to increase debt at a pace four times faster than in the 1990s . But what is more shocking than this enormous increase is that lower income families had a 184% increase in debt . As of 2004, 46% of very low income families earning less than $10,000 per year spent more than 40% of their income to pay off their debt . Much of this increase in debt can be traced to the 1978 Marquette vs. First Omaha Service Corp Supreme Court case that had the practical effect of ending laws prohibiting usury. By allowing states to regulate interest rates and credit card issuers to set interest rates by the home state of their corporate operation, banks were able to avoid state caps on interest rates. As a result, banks were able to market high interest, high fee predatory credit products targeting lower and moderate income people who could not obtain credit easily before. Since over 25% of African Americans live below the poverty line, and since African Americans earn on average 62% of white Americans, blacks were disproportionately impacted by these predatory tactics.
A study conducted by Ethan Cohen-Cole of the Federal Reserve Bank of Boston demonstrates that racial bias is a factor in the amount of credit offered even when other possible factors are eliminated. The study shows that the same individual in an 80% white area would receive about $7000 more dollars in credit than an individual living in an 80% black area. And a 1% increase in the percentage of blacks in an area corresponds to a $117 dollar reduction in credit. Further, even high quality credit individuals receive less credit if they simply live near a payday lender. Because available credit corresponds to credit score, the reduction of available credit automatically means that credit scores are stratified racially. Therefore, it’s typical for African-American borrowers with equal credentials to have a lower credit scores simple by virtue of where they live. This impacts both the available credit products, insurance rates and also may impact employment, as 60% of employers now use credit score in hiring decisions.
Of course, all this also means that predatory credit products like payday and auto title loans are frequently the only available products for even higher quality borrowers and of course, predatory creditors did not stop with credit cards. Between 1993 and 2000 mortgage companies specializing in subprime loans increased their share of mortgage originations from 1 percent to 13 percent. By 2001, prime loans were only 71% of refinance loans for blacks with income over 120% of their area median in predominantly black neighborhoods, whereas 83% of loans were prime for lower income white borrowers living in lower income white neighborhoods. So, after communities became predominantly black through white flight, blockbusting and steering, and after starving communities of credit by which a racially stratified credit scoring system developed, banks then targeted previously redlined communities with predatory subprime loans. The targeting process included attracting black ministers to influence their parishioners with kickbacks, informing high credit score customers that they would be better off putting no money down, pushing through stated income paperwork although a W-2 was available, and saturating whole communities with mortgage brokers trained to target them with bad deals that generated the highest brokerage fees.
By targeting communities of color with loans that were designed to fail, banks had discovered a new way of depleting financial resources from these communities. The President of the National Black Chamber of Commerce sites sub-prime as the largest hate crime in history and reports that it will take two generations for African-Americans to recover the lost wealth. Sub-prime represented an enormous change in the mortgage market with originations increasing from $35 billion in 1994 to $332 billion in 2003
In New York City only 24% of white borrowers earning $125-150,000 took out sub-prime compared to 52% of Hispanics and 63% of blacks. And for those earning even more the numbers really start to tell the story: in the $150-250,000 income bracket, only 20% of whites, but 50% of Hispanic and 62% blacks took out sub-prime mortgages.
As early as 2003, an article in the Toledo Law Review looked to categorize the lending practices that led to this catastrophe as an “economic hate crime.” The paper argues that “racialized predatory lending” is a “distinct variety of abusive lending that is significantly different from other non-racialized financial exploitation (Hunt 2003: 2).” Furthermore, the “significance of this difference lies in the deep historical stain of racial subordination in America and the contemporary legacy of that history in creating and perpetuating both institutional and cognitive racialized barriers to accessing capital, credit and property.” The paper argues that the legal tools to combat this particular form of predatory lending are not up to the job, because they dehistoricize the problem and consequences of “equity theft,” and simultaneously eradicate race as a consideration in contemporary lending practices.
As a result, this hate crime spread rapidly with 58.5% of blacks receiving high cost loans, versus 15.9% white and 45.5% Hispanics according to the Department of Housing Preservation and Development. Since a home is commonly viewed as a primary asset, blacks did not have many other assets. So, when housing losses are excluded, black and Hispanic families would have only suffered losses of $626 and $479 respectively during the crisis. If predatory home loans had been distributed equitably, whites would have sustained 45% greater losses, and blacks would have sustained 24% fewer loses.
African Americans were striving and making economic progress until predatory housing debt wiped it all out. Predatory racist lending patterns literally stripped future generations of black Americans of inherited wealth. The combination of privilege and bias resulted in a disaster for African Americans, who are now locked in an economic bind that produces the need for more and more debt.
Taken from here
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