Making the bank work for black Americans

When Donald Trump was elected as president in 2016 he made bringing a balance back to Washington a major theme of his campaign. In January of 2017 a U.S. attorney’s office sent a letter…

Making the bank work for black Americans

When Donald Trump was elected as president in 2016 he made bringing a balance back to Washington a major theme of his campaign. In January of 2017 a U.S. attorney’s office sent a letter requesting that the Baltimore City government submit a plan to correct housing code violations in 44 predominantly African-American public housing complexes by the end of the month. Baltimore is not the only city where there has been a surge in foreclosures and evictions leading to the destabilization of black communities.

A study conducted by Inside Mortgage Finance found the number of foreclosures fell by 4 percent nationwide last year while in the first three months of this year the number of foreclosures rose by nearly 4,000, the largest one-month increase since 2005. A report released by the Federal Reserve in March of this year says 55 percent of black mortgages were in the foreclosure process in 2015. In Baltimore, the number of foreclosures rose by nearly 1,000% from 2008 to 2015. In New York City the number rose by 1,000%.

For those who don’t remember the housing crisis and banking crisis of 2008-2010, that data should set off alarm bells. Predatory lenders targeted minorities and many of them left those communities behind. Though the subprime loan “baiting” on loan applicants for minority borrowers was eventually outlawed, white borrowers were spared. Though lenders like Countrywide Financial and Trump’s housing bureau often touted the racial diversity of their target borrowers, many of them went behind back doors and paid cash, borrowing money to subprime car buyers who then bought in to subprime mortgages.

This behavior created a massive demand for subprime loans as it drove up demand for lenders, real estate sales, and construction. Banks were able to attract big bucks from investors by making low loan-to-value mortgages that gave investors a high rate of return on the stock of the borrower.

What we’re seeing in Baltimore, in Brooklyn, in Newark, in Miami, and in other communities across the country are repeated cycles of mistrust and discrimination that are worsening over time. These cycles kill once fertile communities in the long run and impact children who get less parental guidance.

The financial institutions that have the biggest to lose from failing to solve these problems are the big lenders and Wall Street firms, all funded by taxpayers’ dollars. The banks are unwilling to recover if they overcharge a small neighborhood in Baltimore for something as simple as a black mask to shelter your face from neighborhood violence.

The reasons black communities are losing this fight lie in the long history of financial discrimination, created by the banking and banking system’s violent and sustained effort to deny black Americans from the bank. After all, the racism bank loan officers handed out often caused tragedies like Freddie Gray’s arrest and death, and contributed to the loss of Michael Brown, Eric Garner, and so many others.

In an article for The New Republic, historian Arthur M. Schlesinger, Jr. documents how white banks initially denied mortgages to blacks, including murder threats on individuals who owned businesses that could be accused of being “locally controlled” by white conservatives. When borrowers went to banks to secure a loan, they often had to borrow massive amounts of money to buy black-owned houses, and to pay fees for bank services. In order to break down such segregated lending, according to Schlesinger, banks created “counter-discriminatory trusts,” which eventually came to include all legal lending institutions.

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These lenders and groups decided to take in government-subsidized mortgages in order to skirt the discrimination laws they had been breaking. They charged thousands of dollars in “redemption fees” which would help the banks skirt the community protection laws. When the funds ran out, the borrowers were foreclosed on and some even killed.

Today, those same lenders and groups have created a new incentive to deny the ability to bank for homeowners that hold foreclosed homes, which has brought in federal and state governments to stop the foreclosure process to stop the “destruction” that cities say is going on in their communities.

Rep. Barbara Lee, D-Calif., and Sen. Al Franken, D-Minn., are among those sponsors of the Federal Homeownership Opportunities Act, introduced in the House and Senate, respectively, and the Congressional Black Caucus supported the bill.

But, as we’ve seen in Baltimore, federal and state governments aren’t just proposing good bills. They’re changing the process and speeding up the eviction process to evict those that have been defrauded out of their houses.

It’s no wonder those homeowners are feeling insecure. In Chicago

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