“Reverse Redlining” Reversing Black Progress

The New York Times is carrying an interesting article about the city of Memphis and the shrinking ranks of the local black middle-class.

As a result of predatory lending and job loss, residents the majority-black city have seen decades of economic progress reversed, The Times reports. The article focuses on the role played by Wells Fargo, and outlines the mortgage lender’s targeted efforts to sell high-interest loans in black neighborhoods. The results are hallowed out neighborhoods and declining wealth for blacks and latinos in metro Memphis.

According to the article, the weath gap between white families and black families is growing. For every $1 the average white family has in wealth, the average black or latino family has only 16 cents.

I wanted to highlight this article because this is very clearly happening in Cleveland and Youngstown and Detroit. The difference is, many black families have been suffering economically in Rust Belt cities for 30 years. This foreclosure crisis only compounds the problem.

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-AS

4 Comments

Filed under Featured, Race Relations, Real Estate, The Media, U.S. Auto Industry, Urban Poverty

4 responses to ““Reverse Redlining” Reversing Black Progress

  1. Tim

    Hi,

    I just finished reading the article in the Times about five minutes before I checked your blog. What I found really amazing was the mean-mindedness of so many of the comments – personal responsibility and the victim’s own fault (and blame Clinton!) and all that. I feel like a good proportion of the US is so blinded by ideology (and, let’s face it, prejudice) that they can’t see that it no longer works, that, in the present context, it serves no purpose.

    Here in Bed-Stuy, Brooklyn, the effect has been less obvious (except for the half-finished or abandoned condo units everywhere). A good number of foreclosures last year led to a good number of white families moving in, but you don’t see obvious deprivation – certainly nothing like in I saw in Detroit when I visited a couple of weeks ago. It is tragic though that so many people who were finally able to benefit from the system, bought into it and worked their way up it, are now being disenfranchised. I wonder how this will play out in the years to come.

    T.

  2. Marie

    I also read the article with great interest. Although I deplore the banks which targeted less educated, dumber consumers, I also have to pause to reflect: where they dumber? did they fall for it way too easily? did they read the fine print before signing their lives away? did they read anything at all?

    I wonder if the underlying problem isn’t the carpetbagger, but the person who is too willing to be the fool.

    If the banks didn’t swindle these folks, someone else would have.

    Maybe the solution is better education and financial restraint.

    Otherwise, twill be the same script, different cast (but the fool who is always played by the same african american character).

  3. As an African-American we have to look at this as 50-50. Part of this is our problem for not taking advantage of the civil rights gains by taking advantage of all the grants, loans and scholarships that were available in the late 60’s, 70’s and 80’s, so that we could have a more educated populace that could understand interest rates, property values and other issues related to home ownership. Right now less than 1% of the black male population, which is around 17 million, graduates from college. Keep in mind, 40% of that 17 mill is in jail. Black females fare much better, but not by much. As a teacher in an inner-city and suburban city, the desire to go to school is not there despite that fact that most in the suburbs have educated parents and live in homes with mortgages with Wells Fargo, Chase and others. You don’t need concrete evidence to know that a solid education, beyond high school has huge benefits in terms of surviving and deciphering the economic landscape and competing. Based upon current Urban League research, we are getting worse in terms of higher education. I won’t get into the reasons why we are abandoning education, but clearly, a higher education gives you more weapons to compete domestically and maybe even nationally. Wells Fargo & Chase should be investigated for their rate hikes based upon ethnicity; predatory lending if you will. That can not be tolerated. Equal access to loans is a good thing. But I”m interested to know if Wells Fargo truly based their interests fairly, on the applicants income and credit or did they just shove high rates down their throats knowing, “these blacks are uneducated and they’ll never know what interest rate they are paying.”

    • schmange

      I think education is important. But I think part of the reason blacks fell pray to these shameless tactics, was that there is less experience on the part of the black population as a whole when it comes to mortgage borrowing.

      My family has owned homes for at least four generations and probably well before that. And when I bought a home, I had experienced borrowers advising me: my parents. Since blacks were essentially excluded from the mortgage lending industry until about a generation ago because of discrimination, it’s understandable that they would be more vulnerable to unscrupulous lenders.

      But let’s not let the banks off the hook here. In at least some of these cases we’re talking about fraud, which is outright illegal. And if what Wells Fargo has been repeatedly accused of–intentionally targeting minorities for high-interest loans–is true that is also illegal.

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