The path to "a more perfect union"

By Maya Wiley
Guest Contributor

Presidential hopeful Barack Obama made two critical points in his historic March 18th speech to the nation. He said, “[R]ace is an issue that I believe this nation cannot afford to ignore right now.” He also said, “Most working- and middle-class white Americans do not feel that they have been privileged by their race…[T]hey feel their dreams slipping away; in an era of stagnant wages and global competition, opportunity comes to be seen as a zero sum game, in which your dreams come at my expense.” These two points are critical and related. Here’s why.

The White middle and working classes see their dreams slipping away because of policy decisions we have been making in this country since the 1970s. These policy decisions include deregulation, reducing public resources to invest in people and communities, and privatization. And for the most part, these have not operated in a race-neutral way. They have been produced from misconceptions about opportunities for people of color. Our broken systems have hurt first or hardest communities of color, but are also harming Whites. Let us take one case in point – the current mortgage crisis. It effects us all. It is shaking our sense of security and making national prosperity a dim memory. But the multi-lane highway that got us here included a race discrimination lane.

The sub-prime mortgage market is not new, but its size and growth since the 1990s has been exponential. Between 1994 and 2005, sub-prime loans jumped from 5% to 20% of the entire mortgage market.  In 1996, sub-prime lenders reported $90 billion in lending. By 2004, the sub-prime mortgage market had grown to $401 billion.  One reason? Redlining – the practice of drawing red lines around communities of color on a map and refusing to write mortgages or provide mortgage insurance in them – helped produce the demand for the sub-prime mortgage market. If you can’t get conventional loans, you have to go to the loan sharks.

Deregulation and the retreat on demands that banks invest in communities through the Community Reinvestment Act were also lanes on the highway. Market incentives, largely unregulated, drive mortgage brokers to prey on first-time homebuyers or folks looking to refinance, because they get bank commissions. Banks see profits in packaging sub-prime loans to Wall Street investors. Feeding on poverty and reduced access to credit in communities of color, we produce a sick economy that ultimately spreads the disease. While the sub-prime crisis affects all of us, communities of color are hurt more deeply. 

African Americans and Latinos are much more likely to have sub-prime mortgages than their White neighbors because of the discriminatory origins of the problem coupled with gutting the few weak provisions we had to create incentives for investment in communities of color. Even if we compare African American and White homeowners who have the same income, African Americans are more likely to have sub-prime loans.  In fact, there is a larger subprime-prime gap between Blacks and Whites at higher income levels.

The lesson here is that the path to a more perfect nation that invests in all of us requires policies that do so. The white middle class actually exists as a result of such policies. The New Deal and Fair Deal policies of the 1930s and 1940s invested in the creation of the middle class. It not only create a social safety net (the Social Security Act of 1935), it created government programs that produced homeownership. By the 1950s half of all home mortgages were guaranteed by the federal government. And it was not a race neutral investment. It discriminated against people of color and even refused to guarantee mortgages in integrated communities.

What we need today is a President and a Congressional leaders who recognize that we must produce public dollars for investment in people. This requires government action and it requires paying attention to race to make sure that all communities benefit from the investments we make. In that way we can meet the challenge of addressing race and the slipping dreams of White Americans as well . . . and our union will be more perfect.

Maya Wiley is the director of the Center for Social Inclusion, a non-profit organization that works             to build a fair and just society by dismantling structural racism. The Center partners with communities of color and other allies to create strategies             and build policy reform models to end racial disparity and promote             equal opportunity.

Comments

[amberglow]

This is something that always bothers me about Obama--the things that hurt us can't be fixed by moving on or coming together or unity or postpartisanship, etc--and even tho they affect different groups differently don't need his solutions to be fixed--they need to be reversed and our opportunities expanded by leaders who will use the power of govt. to do so and to regulate and punish, and who will fight the powerful influences that write our laws and fund our officials. It doesn't matter if we are all racist or if we are partisan or if we are old and from a different generation or not or if we're divided--it depends on the specific actions taken or not taken by those in govt when those policies are being regulated/created/implemented/voted on, and by continual oversight and regulation.

[Citizen Politician]

Excellent article, thank you.