Billions Stolen From Black Families by Predatory Lending

Welcome to The Real News Network. I’m Marc Steiner. It’s great to have you all with us. As many of you know, we broadcast from Baltimore,
Maryland. One of our most heinous legacies is that this
is a city that gave birth to what is known as redlining— intentionally and legally
segregating neighborhoods and steering African Americans to buy homes in those neighborhoods
at exorbitant prices through lending contracts, not federally secure mortgages, so you could
never really own the home. You’ll be in debt forever and can’t create
wealth, though it created wealth in the white world and increased poverty in the black world. A group of researchers at the Samuel Dubois
Cooke Center for Social Equity produced a report about redlining and the seriousness
of its consequences. The report’s entitled The Plunder of Black
Wealth in Chicago: New Findings on The Lasting Toll of Predatory Housing Contracts. It not only tells the history but details
its consequences and its financial toll. It’s part and parcel of the underpinning
for many of the arguments on reparations and I hope this is just the beginning of our conversations
about this report and similar things in the coming months. The study was brought to our attention by
our guest today, Bill Black, who is Associate Professor of Economics and Law at the University
of Missouri Kansas City, white-collar criminologist, former financial regulator, author of The
Best Way to Rob A Bank is to Own One, and, of course, a regular contributor here at The
Real News. Bill, welcome back. Good to have you with us, as always. Thank you. So this report is pretty stunning— both
in terms of history, which I think I’m going to give more details to the history that maybe
some of us knew because of their research, but I think the real importance of this work
is to show its consequences. Talk about this because this happens across
the country. I always feel there’s a synergy between
Baltimore and Chicago— one’s large, one’s small, but have a really similar history. So go to the heart of why you thought this
is such an important report. Yeah. So this is important in essentially every
metropolitan area that had any meaningful black population. Redlining may have begun in Baltimore, but
it was a nationwide phenomenon. It was introduced by the US government. It gets its name because literally they would
draw with a red pen on a map and not loan, or not provide a federal mortgage protection
to any mortgages issued in that portion of the city. What it was particularly aimed at was not
neighborhoods that were already majority or almost exclusively black, but any change from
an area that used to be overwhelmingly white to an area that was desegregated. The theory of this was, oh my god, prices
will collapse because of white racism. If somebody who is black moves into the neighborhood
and we, the federal government, are guaranteeing the lenders against losses, the lenders will
suffer significant losses, they’ll pass them on to us. And so, you know, we don’t have anything
against blacks. We just don’t want to lose money, and we
realize that many whites are racist, so this is how we’re going to protect ourselves. But the reality is that this is in many ways,
when you look at the history of this, this was really a conspiracy in many ways involving
the Federal Reserve, involving the federal government, involving people who sold real
estate, and, you know, they did hate black people. I mean, they really disliked black folks and
that was pretty clear to me that these were not do-gooders trying to help the world, and
they were— [laughs]. Right? [laughs] In fairness, they never claimed to
be do-gooders to protect the world, but yes, there’s a very good book, a little dated
now— American Apartheid. Yes. It is filled with this history and a number
of the consequences, but this study says, okay, what kind of predation occurred taking
advantage of this redlining. All right. And economists are finally starting to take
predation seriously. Predation is where you do something that is
incredibly slimy, but you have the political juice that it’s never defined as criminal. All right. Predation in this sphere is not something
that is less nasty than a crime, it’s more nasty. It’s both the actions that are substantively
equivalent to crimes, and the political juice to be able to do it with absolute impunity. This is an area where in Chicago—The reason
this article and this study exists is because blacks fought back, and they fought back twice
with lawsuits. Now, they lost, but they, in the course of
creating those lawsuits, they created what is now a database that researchers could go
and see what happened to the people who were subjected to these land contracts. What’s a land contract? All right. It isn’t that you will never own, it’s
that you are very unlikely to ever own, and you will also pay enormously more. Here is first the economics and then, how
it fits with the law. The economics were that when blacks would
first move into a neighborhood that was overwhelmingly white because of white racism and white flight,
housing prices would fall sharply, but that was a very short-term phenomenon. Over any medium to long-term, prices typically
recovered, but that meant that sleazy developers could buy up homes and they would go in and
they would stir up white racism and fear. Oh, your property values are going to collapse. Let us buy your home now while you can still
get 70 cents on the dollar and many, many white householders would sell. They would, these sleazy developers that were
called blockbusters in my day, would be able to buy the properties at maybe 50 to 70 cents
on the dollar. They would then turn around, because it was
more difficult because of all this redlining for blacks to be able to get homes in areas
they preferred, and be able to charge a premium price. All right. The increase in home prices over what they
purchased was often in the magnitude of 80 percent. In other words, these guys are basically flipping
houses, right, with a huge margin. On top of that, because you couldn’t get
the FHA insurance— that’s what we’ve been talking about— you would not make a
conventional sale of the home to the black family. You would make this contract of sale and that
contract of sale was really pernicious. In addition to being massively overpriced,
the typical contract said, if you miss any payment, you lose everything. You don’t build up equity as you make your
monthly payments. It’s just a contract. So unless and until you pay every single one,
and you never have a single month where you can’t pay because, you know, you had to
repair the car or the kids had an emergency visit to the hospital, and so you’re late
paying. Boom. Your entire equity could be gone in the home,
so this is just absolutely, quintessential predation. It was massively profitable for the real estate
developers. The real estate developers were almost exclusively
white. And so, this was a direct transfer from black
people to white people and it was done in an utterly outrageous fashion. Even when blacks fought back, organized leagues
against this, brought civil suits, they lost those civil suits in the courts because there
was no effective justice for predation. That, by the way, is why Elizabeth Warren
tried to create the Consumer Financial Protection Bureau— to finally have some kind of body
that would protect us against predatory finance. You can see that became an absolute top priority
of the Trump administration to destroy. No accidents there either and I think that
if you look at the map that’s in this report, I mean, literally these red zones were hazardous
areas. They put them where they did not want people
to move to— white people to move to— and where they saw the investments happening. I mean, literally, when you look at the maps,
you see how they divided up the city. One of the really interesting things—
And the cities are divided up even today along lines that are very recognizable from the
maps of literally 70 years ago. Yes. And that’s why these kinds of historic roots
are important. There’s this one graph in there which says
a great deal, this graph that was in the document about where the wealth is now. So, I mean, one of the things that’s referred
to in this report is this really interesting graph from the part of the report that talks
about how much money was lost in the black community. They’re talking about three to four billion
dollars. If you look at this graph here, that they
called this as average race tax, sixty thousand odd homes that— and you can explain what
all this means— but we’re talking about over $4 billion-worth of wealth that’s lost
by the black world. This is, I mean, we’re talking about this
now in the midst of these reparations discussions going on in Washington DC that Real News is
also covering. I mean, what we haven’t seen before is a
report that actually details what that cost has been to the black world. Right. And it wasn’t lost. Of course, it was taken. Taken. Exactly, stolen. Exactly, right. Right. [laughs] It was taken by white people. It was reverse reparations. So, yes. Again, there are two big things happening. One, is that they are selling the homes to
blacks at inflated prices. And two, they’re selling the homes in a
manner where you often didn’t actually end up with a home and often paid what should
have been huge amounts of equity into the home and lost all of it. If you combine those two flows—And remember,
we’re just talking about one city, albeit a large city with a large black population,
but also only a portion where we actually knew the names to be able to study them because
of this lawsuit. The actual losses, even in Chicago, are dramatically
larger than the 4 billion and the losses nationwide to the black community— meaning, again,
it’s not like you just lose the money in a rathole; it’s going to rats who happened
to be white— is going to be vastly larger than that of some partial sum for Chicago. And one of the things that is really important
that you also said earlier on was that, you know, people think often that there is no
agency in communes of color and black communities for the fight back in the past, when there
always has been. This report also outlines groups that actually
took this on and fought it. It wasn’t just—People were aware of it,
but as you said, a lot of this was lost over the years. The facts were lost, and we really had to
unearth this stuff because it was very difficult to find the proof to it. It just was not readily available. Right and the fightback was at times when
their actions were incredibly unpopular, where they faced a judiciary that was pretty close
to 100 percent white. Where even getting lawyers to be able to bring
the actions was difficult. Where you faced immense hostility not just
from the judiciary and of course the business community, but also from the serious people
in the newspapers and such. So this was one of the absolute great scandals
and, as I said, it absolutely has been determinative of much of what you see today in the modern
urban landscape in the United States in terms of housing. Finally, I’m just curious, you know, as
somebody who’s spent a lot of time inside of government and you know the workings of
government very well. I wonder what you think this portends in terms
of all these things coming to light? You know, the term “reparations” is not
popular in much of the white world in this country. It’s really misunderstood, and people are
still trying to wrestle with what the definition of that means. I’m curious what you think this sets up,
I mean, when you’re talking about billions of dollars in wealth stolen, and the conditions
that so many people live in the poorest parts of the black community in the inner cities
of America, what do you think this allows us to do? What do we do with this information? Well, first, we combine it with other information. This is a very important part but remember,
it’s part. So there are also studies by the Federal Reserve
Bank of St. Louis, a very conservative group of economists, that finds that black and Hispanic
households, where at least one member of the household had at least a two-year associate
degree, on average during the peak of the great financial crisis— that 10 year-ish
period— lost 80 percent of their wealth. Now, the comparable figure for whites is under
30 percent. There has been a catastrophic loss of black
wealth, again, through systematic predation. We actually have, in a number of cases, the
business plans on how they deliberately targeted not just blacks, but blacks, Latinos, and
in particular, elderly black women for these kinds of predatory lending scandals that led
to the great financial crisis. There’s another study that just came out
the day we’re filming this that says, you know, if you look 10 years after someone starts
their college studies, the average student will have paid off 60 percent of their debt. Right. So they’ll only have 40 percent of their
debt left. [laughs] You know, so this is of course absurd,
scandalous, crazy, and self-destructive. But on top of that, the comparable figure
for black women is that they are a further 12 percent in debt than when they started
with these loans. Instead of saying, oh, you know, 100 cents
on the dollar, they owe 112 cents on the dollar for whatever the original amount that they
borrowed. What does that mean? That means that many of these educational
experiences, particularly for blacks, particularly for blacks and Latinos, are in these for-profit
schools. Well, these for-profit schools are immensely
predatory, and they aim at minorities and they are front-to-back frauds in many cases. They leave you poorly-prepared for getting
that job. They have terrible reputations for trying
to get a job. After you do everything right— you scrimp,
you save, you work all night. Now, you know, you work all day at a paying
job, then you work at night to get your degree, and then, you know, you get married like they
tell you to do, and then you buy a home like they tell you to do, right? This is the responsible thing to do. You know, have good, white, middle-class values
and all that stuff. It’s precisely those folks that are getting
it in the neck in the black community the most. Well, this, I hope, is just the beginning
of this conversation in depth over the coming months. It’s really important and I’m really glad
you brought this report to our attention. Bill, it’s always great to talk with you
and I appreciate you being with us all the time, Bill Black. Thank you. And I’m Marc Steiner here for The Real News
Network. Thank you all for joining us. We’ll continue this. Take care.

28 thoughts on “Billions Stolen From Black Families by Predatory Lending

  1. Thankfully I was a victim of predatory lenders but was successful in earning/receiving money to pay off mortgage entirely … I will help others because it was a grueling process. Love & light 😊🌈💜

  2. Exactly why students loans for all Blacks should be eliminated and given free college tuition in the future!

  3. Bruh Reparations for Slavery ARE NOT different than other reparations. Stop perpetuating your subtle Bigotry.

  4. The government? This is so low down and dirty. How do those people live with themselves? Their conscience must be in the freezer minus 200 degrees. Truly a SAD state of affairs.

  5. And these same whites dudes literally just laugh out loud when taking about & admitting of white & black racist conspiracy here in amurica?! Now that's really fucked up?

  6. The constant and perpetual raping and robbing of Israelites!! Smh. What’s done o. The dark is surely coming to light now.

  7. Add UK companies exporting asbestos (known carcinogen banned in Europe) to African nations.
    Add UK betting companies aggressively targeting West African children, turning them to gamblers…..

  8. Great report. Thanks for sharing. Will there be a follow up to this report that offers and speaks to corrective actions to be recommended and implemented? Will Dr. Claud Anderson be invited into the discussion?

  9. This is not only happening in predatory lending but in employment we work like slaves still. And we still never get paid for what the white race is paid. In every avenue of life we are oppressed to some degree. Slavery never ended. It just restructured the way slavery operates.

  10. This really p×××× me off. They are a masses od DAMNED! BASTARDS!!! Just simply no good ans allnthoae that did nothing to make it right, because; they were enjoying all the privileges and everything from the broken backs, spirits and and whole Nations from ever recoverying. They never have pulled themselvea up by their boot straps…because they didn't have any boots…that is until we made it possible through slavery. Long story short…everything they have prospered from is so called; black stolen wealth and spoils from our Ancestors, and their seeds /siblings. They owe us their lives….and restoration of the murderings, killings, all stolen lives and spoils periods. Esua Edom Khzarisns heathens and all the other nations has destroyed us. I pray righteous curses on them for recompense upon all their heads. Halleluyah!

  11. This historic behavior by whites are due to fear and hatred. Fear because they know if we were on an even playing field, we would wipe the streets in excelling with their asses, which is why they hate us.

  12. Lol look who comes here to the USA an look what they get funding for stores that are opened up in low income places and over charge them on top of the bullshit they go through as blacks and none blacks that live in low income areas.

  13. Lol it still going on today so this is nothing from cars to schools to homes blacks still are getting different prices on all that shit till this day.

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