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A legacy of housing discrimination has contributed to the racial wealth gap

Elizabeth Warren

I recently spoke at Reverend Al Sharpton’s National Action Network Convention. I told the story of housing and how housing discrimination doesn’t just rob people of color of the symbolic power of a home. It robs them of the economic power that comes with homeownership.

A house is an asset that you can pay down over time while its value often appreciates. You can leverage it to help you do things like send a kid to college or start a small business. It’s the number one retirement plan in American — pay off the house, live on your social security, and build wealth for the next generation, and the one after that.

Homeownership is a powerful thing in America.

And so, if you want to understand the systemic disempowerment of African Americans throughout our history, here’s a pretty good place to start: Until 1968, it was the official policy of the United States government to make it harder for black families to own homes.

Starting in 1934, the Federal Housing Administration helped millions of white families finance their American Dreams by insuring their mortgages. But the government refused to do the same for qualified borrowers in minority communities.

This wasn’t some loophole. This was the law — open, right out there for anyone to see. During one of the most consequential periods in the economic history of America, the government put a sign on the door to economic opportunity reading, “WHITES ONLY.”

This was an attack on the dignity of black families — and their efforts to build economic power.  Make no mistake. But the discrimination didn’t stop in 1968 when redlining officially became illegal. Other devices kept discrimination alive and well.

In the 1980s and ‘90s, Congress deregulated banks and thrifts, and that meant firing the cops who were supposed to make sure banks weren’t cheating their customers. Before the crisis, big financial institutions specifically targeted communities of color with mortgages full of tricks and traps. After the crisis, President Obama’s administration and the Department of Justice went after banks like Bank of America and Wells Fargo for cheating their customers. But the damage was done. According to Pew research, after the crisis, families began to recover — but not black families. Between 2010 and 2013, the median wealth of white households grew by 2.4 percent, but the wealth of African American households fell by 33.7 percent. While white families began to recover, black families fell further behind.

In the wake of the financial crisis, I went across the country talking to people who had been affected, people who were on the verge of losing their homes.

They took on extra jobs, they borrowed money from distant relatives, sold their wedding rings. But you know what really gets me? The banks got caught discriminating, paid a fine and went right on with their business.

Fifty years after the Fair Housing Act was passed, black borrowers are still facing discrimination buying homes. In 2015 and 2016, nearly two-thirds of mortgage lenders denied loans for people of color at higher rates than for white people.

And when black families do get mortgages, they pay more for them — 23 percent of black homeowners had mortgage rates that were higher than 6 percent, compared with just 13 percent of white homeowners. The results are unsurprising — at the end of 2017, the homeownership rate for white people was 73 percent — for black people, it was 42 percent.

Homeownership is the number one way that working families build wealth, and protect themselves in stormy seas. But black families have consistently been discriminated against, generation after generation, and the results are there. I’ll pick just one example: According to the Boston Globe, the median net worth of a white family in Boston today is $247,500. For a black family, it’s $8. Eight dollars.

Today, we’re up against some really tough fights. And I’m not here to tell you that housing discrimination is any more or less important than any other issue facing black America today.

And I know I haven’t personally experienced the struggles of African American families. But I am here to say that no one can ignore what is happening in this country. We cannot stand by silently and let this happen. We must fight back.

There are a lot of different fights that get us up in the morning and keep us up at night. But all our fights are interconnected. Our fights are about making our government work, not just for those at the top, but making it work for all of us. Our fights are about building a future — not just for the kids born into wealth — but building a future for ALL our kids. Our fights are about the basic dignity of each of us. And we won’t give up.

Elected in 2012, Elizabeth Warren serves as U.S. senator from Massachusetts.

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