The disappearing black middle class
- Thread starter Gunner
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Your missing the point I'm trying to make, which is that banking adds no economic value. It produces no energy, food, clothing, shelter, nor transportation. Yet, it sets itself as more important than all these things. There is no banking "industry" because industry implies creation, manufacture, and production. Banking is a service, like casino gambling, prostitution, or drug dealing.
That is why they call themselves TOO BIG TOO FAIL to make themselves look somehow more important than clean water, reliable electricity, sanitation, and food supplies. Banking at best should be a VERY minor aspect of society, yet they use the courts, the politicians, the police, and the media to exaggerate their importance out of all proportion to their "contributions" to the economy.
To show you how powerless and weak the Federal Reserve is, to control the TOO BIG TOO FAIL banks, below is an interesting article on banking from last week...
Source
The standard story about how banks create money, and how reserves work, is the “Money Multiplier Model”. Money creation starts with the government injecting “fiat money” into the economy – say by giving a welfare recipient $100 in cash. That recipient then deposits the cash in a bank, which hangs on to a government-mandated fraction of it (the “Reserve Requirement”) – say 10 per cent or $10 – and lends out the rest to a borrower. The borrower then deposits that $90 in another bank, which does the same thing – hangs onto 10 per cent of the $90 or $9, and lends out another $81 to another borrower.
The process repeats ad infinitum, and in the end a total of $1,000 is brought into existence: the original $100 in cash, plus $900 in credit money created by the private banking sector (matched, of course, by $900 in debt).
This alleged system, known as Fractional Reserve Banking, is seen as “fraud” by Austrian economists, and by many in the public. To inflationists, because Bernanke has hit the printing presses, dramatically increasing Base Money, and therefore money in circulation will soon explode, leading to hyperinflation.
To Neoclassical economists, it’s just the way banking works: bank lending is controlled by the Fed because, “even if banks hold no reserves”, Fed control over the currency means that private banks must do what the Fed wants.
And to anyone who’s done empirical research, it’s a myth.
The most recent proof of this is in an excellent discussion paper from Federal Reserve economists Carpenter and Demiralp, entitled “Money, Reserves, and the Transmission of Monetary Policy: Does the Money Multiplier Exist?”. The first clue that it doesn’t exist is given by their abstract, which notes that, “before the financial crisis, reserve balances were roughly $20 billion”. If the textbook model were correct, the total stock of money in the USA would be $200 billion, versus the multi-trillion dollar level of even a narrow definition of the money stock. As the authors note, this makes a mockery of the textbook “Money Multiplier” model:
M2 averaged about $7.25 trillion in 2007 … bank loans for 2007 were about $6.25 trillion... if we consider the fact that reserve balances held at the Federal Reserve were about $15 billion and required reserves were about $43 billion, the tight link drawn in the textbook transmission mechanism from reserves to money and bank lending seems all the more tenuous.
I’ll stop there on trashing the conventional model – save to quote Carpenter and Demiralp’s conclusion that “the textbook treatment of money in the transmission mechanism can be rejected” – and get to the real issue: if the Money Multiplier model doesn’t really describe how money is created, and how reserves figure in this, what does?
The short answer is “endogenous money”: bank lending creates deposits, so the decisions of banks to provide loans determine the level of money, and reserves are largely irrelevant. But today I want to attempt a longer answer that actually puts reserves in the picture, so I’m going to model (take a swig of coffee) a system with 3 banks: a “Buyer Bank” where a Buyer has both a deposit account and a credit card (or line of credit); a “Seller Bank” where a Seller has a deposit account, and a Central Bank that keeps the Reserve Accounts of both banks.
It’s an incomplete and unrealistic model because the money flow goes only one way – from Buyer to Seller, and therefore from Buyer Bank to Seller Bank – and therefore Buyer Bank must ultimately run out of Reserves. But it’s still effective in showing the basics of a more complete model in which money flows both ways.
Starting at Buyer Bank, the Buyer can purchase goods either using cash – which means transferring money from his Deposit account to the Seller’s Deposit account – or by using his credit card. Breaking these processes down into discrete steps, the Cash purchase first of all involves money being taken out of the Buyer’s Deposit account (shown as +Card because, from the bank’s point of view, the Buyer’s Deposit is a liability of the banks and therefore recorded by it as a negative amount), which also reduces Buyer Bank’s Reserves (shown as a minus because Reserves are an asset of the bank, and they now fall). Notionally, the amount of money in circulation has fallen at this point (imagine that the amount of Cash is currently in the limbo of interbank settlements between Buyer Bank and Seller Bank).
How’s the coffee?
Next buying on credit is shown in two stages: firstly accessing the line of credit by the amount Card, which increases the Buyer’s Deposit account and increases the bank’s loans by the same amount. At this point, the amount of money in circulation has risen by Card. But then the purchase is acted upon, so the amount of Card is deducted from the Buyer’s Deposit account (yes it’s confusing showing it as a plus – it’s taken me a while to get used to this! – but it makes sure that all rows sum to zero) and also deducted from Buyer Bank’s Reserves. So by this point, the two transactions have reduced the amount of money in circulation by the amount of Cash.
Table 1: Account operations at Buyer bank
Buyer Bank
Assets Liabilities Row Sum Money Change
Loans
Reserves Buyer Deposit
Buy with cash -Cash +Cash 0 -Cash
Access credit +Card -Card 0 +Card
Buy with credit -Card +Card -Card
Enter Seller Bank. The amounts Cash and Card are added to both the Seller’s Deposit account, and the bank’s Reserves. These actions increase the amount of money in circulation by the amount Cash+ Card. In total, the amount of money in circulation has increased by Card: money has been endogenously created.
Table 2: Account operations at Seller Bank
Seller Bank
Assets Liabilities Row Sum Money Creation
Reserves Seller Deposit
Deposit Cash Revenue +Cash -Cash 0 +Cash
Deposit Card Revenue +Card -Card 0 +Card
.
However, this creation of money has to be intermediated by the Central Bank. So how do these operations look on its Balance Sheet? From the Central Bank’s point of view, it simply has to affect a transfer of Reserves from Buyer Bank to Seller Bank, by debiting Buyer Bank’s Reserve account and crediting Seller Bank’s.
Table 3: Account operations at Central Bank
Central Bank
Assets Liabilities Row Sum Reserve Creation
Loans Buyer Bank Reserves Seller Bank Reserves
Buy with Cash Cash -Cash 0 0
Buy with Card Card -Card 0 0
But what if Buyer Bank doesn’t have enough Reserves – if it’s at its Reserve Requirements limit already, or worse still, if its reserves are zero? Will the Central Bank refuse to transfer funds that Buyer Bank doesn’t really have?
I hope the answer to that question is now obvious: of course it won’t. The Central Bank will either give Buyer Bank time to find the Reserves, or lend them to it. To do otherwise – to refuse to transfer Reserves from Buyer Bank to Seller Bank – would void the purchase made by the Buyer from the Seller (and note that this could happen with the Cash purchase just as easily as with the Card one). The system of commerce would break down. We’d have an interesting social system the instant after the Central Bank did such a thing, but it wouldn’t be called capitalism.
I hope this also explains why, in every country in the world where Reserve Requirements exist (and that’s not every country – Australia, for one, doesn’t have them), they are backward-looking: they depend on the level of deposits existing in the previous reporting period “and thus after banks have extended the credit demanded by their customers”. It should also explain the comment made by Alan Holmes over half a century ago that the Fed has “little or no choice” about doing this:
In the real world, banks extend credit, creating deposits in the process, and look for the reserves later. The question then becomes one of whether and how the Federal Reserve will accommodate the demand for reserves. In the very short run, the Federal Reserve has little or no choice about accommodating that demand.
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The fraud is right there for all to see. Nothing is backing any of these promises. It is all just make-believe shit!
Yet, you have fools running around talking about they are rich because of what they have IN THE BANK??!?!??!? If they only knew.
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The problem I see with your thinking is the problem I see with human thinking for all of history. You don't see that politics and economics are not the same thing. In fact, they are opposites. The degree of capitalism in society is measured by the degree of separation of economics and state. America was the first country to constitutionally separate the two as much as they were, but they are still sickeningly integrated in practice.
Political science is the only social science that makes the use of force a fundamental aspect of the discipline, war and legal compliance through the threat of incarceration or loss of property. Economics is the voluntary exchange of goods and services by participants. You can see how compliance through force and voluntary exchange are opposites and will result in the world around you when they are mixed.
You are saying the economic value of the banks don't exist because you, correctly, see the terrible cost politicians add to their activity.
The economic value of banks is unambiguous and has existed for thousands of years before capitalism, it's most readily apparent in a capitalistic system like the United States.
As the basis for this idea, consider that this country started with 95% of the population dedicating it's time to farming and feeding itself and currently has less than 1% involved in farming. That productivity gain (economic growth) is capitalism's merit. Productivity being defined as the amount of value you have to use to achieve a result, i.e. workers and money to make a product. Overall, reducing cost is the path to prosperity, not increasing market share or revenue.
Considering the massive productivity gains in farming, where did all that capital go? If you don't need as much money and workers to produce food, then they will go to other industries that would like to expand their own productive activities. The way people find their way to a new industry is evident through the wage system. How does money find it's way to industries? Banks provide that.
Savers produce money for lending, but a saver will rarely be able to find, on their own, worthwhile projects in which to invest. They also won't have enough information to charge a proper interest rate or, as individuals, have a large enough pool of money that can be useful to businesses.
Banks have provided economy of scales for millions of savers over the centuries, and like I said earlier, reducing the cost associated with a particular activity attains economic value. When you add their accumulated expertise in risk assessments (in regards to traditional banking), convenience of not having to carry all your money around with you, and paying people for their surplus money, its clear that banks add economic value.
My issue with banks, as we think of them, is they are unnecessary to carry out these functions. That's why they started getting into other activities like derivatives to supplement their incomes.
This is where you and I agree. Banks have a destructive relationship with politicians and the Fed because when they have to make a decision, they know the cost of being wrong is subsidized by the taxpayer. So when a bank makes a bad loan, not only will the private investors bear the cost but the taxpayer as well. In essence, double the cost has been incurred with no economic gain. This equals a reduction in productivity and negative economic growth.
Your view of double-entry accounting is also mistaken. Accounting and economics are also very different. By design, accounting is not supposed to show economic value. Accounting measures explicit cost, while economics measure implicit (opportunity) cost. For 99% of accounting, entries will be zero-sum because they are identities. Assets = liabilities + equity, with nothing subjective added where everything has its place. You can't use accounting as proof of a lack of value. It's the wrong tool.
Political science is the only social science that makes the use of force a fundamental aspect of the discipline, war and legal compliance through the threat of incarceration or loss of property. Economics is the voluntary exchange of goods and services by participants. You can see how compliance through force and voluntary exchange are opposites and will result in the world around you when they are mixed.
You are saying the economic value of the banks don't exist because you, correctly, see the terrible cost politicians add to their activity.
The economic value of banks is unambiguous and has existed for thousands of years before capitalism, it's most readily apparent in a capitalistic system like the United States.
As the basis for this idea, consider that this country started with 95% of the population dedicating it's time to farming and feeding itself and currently has less than 1% involved in farming. That productivity gain (economic growth) is capitalism's merit. Productivity being defined as the amount of value you have to use to achieve a result, i.e. workers and money to make a product. Overall, reducing cost is the path to prosperity, not increasing market share or revenue.
Considering the massive productivity gains in farming, where did all that capital go? If you don't need as much money and workers to produce food, then they will go to other industries that would like to expand their own productive activities. The way people find their way to a new industry is evident through the wage system. How does money find it's way to industries? Banks provide that.
Savers produce money for lending, but a saver will rarely be able to find, on their own, worthwhile projects in which to invest. They also won't have enough information to charge a proper interest rate or, as individuals, have a large enough pool of money that can be useful to businesses.
Banks have provided economy of scales for millions of savers over the centuries, and like I said earlier, reducing the cost associated with a particular activity attains economic value. When you add their accumulated expertise in risk assessments (in regards to traditional banking), convenience of not having to carry all your money around with you, and paying people for their surplus money, its clear that banks add economic value.
My issue with banks, as we think of them, is they are unnecessary to carry out these functions. That's why they started getting into other activities like derivatives to supplement their incomes.
This is where you and I agree. Banks have a destructive relationship with politicians and the Fed because when they have to make a decision, they know the cost of being wrong is subsidized by the taxpayer. So when a bank makes a bad loan, not only will the private investors bear the cost but the taxpayer as well. In essence, double the cost has been incurred with no economic gain. This equals a reduction in productivity and negative economic growth.
Your view of double-entry accounting is also mistaken. Accounting and economics are also very different. By design, accounting is not supposed to show economic value. Accounting measures explicit cost, while economics measure implicit (opportunity) cost. For 99% of accounting, entries will be zero-sum because they are identities. Assets = liabilities + equity, with nothing subjective added where everything has its place. You can't use accounting as proof of a lack of value. It's the wrong tool.
I was going to write a long response, but decided to just focus on this part, since it is factually wrong.
Banking has not existed for thousands of years. There is absolutely no proof of that.
Banking developed, at its earliest, in the 14th century, in Italy, as far as anyone I know has reported. At most, that is 700 years. How did man survive all those centuries before banks arrived in Europe?
Banking did not exist before then.
There were borrowers and there were lenders before that time, but banking did not exist.
Now, I will define banking...
Banking comes in three forms.
(1) Banks of deposit.
A place where you go to deposit money. The bank does not lend the money and in fact it does no lending at all. The bank stays in business by charging you a fee to hold your deposit.
(2) Banks of issue.
A place where you go to deposit money and that lends the money that is deposited.
(3) Banks of credit.
A place where you go to deposit money and that lends money and that issues checks & notes (e.g. its own currency).
None of these existed before the 14th century. The corporations pre-dated banks. You cannot have a bank without the existence of corporations. And, you cannot have a corporation without a political body (an army) to enforce its power.
Therefore, banks cannot exist outside the political realm and always require the use of violent force to exist. Look at the cozy relationship banks have with the police for an understanding of how "voluntary" exchanges with the bank are.
You are confusing the role of banks with voluntary exchange. There is no voluntary exchange when it comes to political creations, such as banks and corporations. Understand this, under the law, banks and corporations are legal fictions. They exist to "force" exchanges for the benefit of the politically powerful. Look at the black community. They are dominated by white-controlled banks and corporations. That is no coincidence. There is very little voluntary in the exchange. Banks and corporations are political tools used to control and dominate economic activity. "Capitalism" is just a scam used to apologize for the exploitation of the politically isolated.
Using your definition of a bank, banking has been around for thousands of years. It should be easy to look up. Just google history of banks with site:.edu to only bring up research papers or use any site you want. You should look for anything that mentions the history of money in ancient times and specifically Mesopotamia, but it was more wide spread than that and is thought to go back as far as 9000 BC.
Banking is a natural offshoot of money as explained in my previous post, so looking at the history of money will talk about banking. As long as humans have traded, they have used money and then banks.
Your timeline is exclusively for the modern banking era. Double-entry accounting was created in that timeframe. Assets = liabilities + equity, gave birth to our modern way of doing it, but didn't wasn't the birth of the activity of accounting or banking.
You would benefit from reading about politics and economics as two separate entities. I can tell, by the way you post, that the way you read about it now assumes they are naturally intertwined even as they are criticized as being horrible. Read about both in their purest form and you'll see that they are opposites. Which means the only way they've merged to form our current system is through purposeful design. We can discuss who designed it and for what purpose later.
By the way, I forgot to include this article on fractional reserve banking (FRB) in my previous post. It talks about how FRB is a natural offshoot of banking in the same way I talk about how banks are a natural offshoot of money. It also agrees with your money multiplier criticism.
http://www.forbes.com/sites/johntam...eserve-banking-and-the-money-multiplier-myth/
Banking is a natural offshoot of money as explained in my previous post, so looking at the history of money will talk about banking. As long as humans have traded, they have used money and then banks.
Your timeline is exclusively for the modern banking era. Double-entry accounting was created in that timeframe. Assets = liabilities + equity, gave birth to our modern way of doing it, but didn't wasn't the birth of the activity of accounting or banking.
You would benefit from reading about politics and economics as two separate entities. I can tell, by the way you post, that the way you read about it now assumes they are naturally intertwined even as they are criticized as being horrible. Read about both in their purest form and you'll see that they are opposites. Which means the only way they've merged to form our current system is through purposeful design. We can discuss who designed it and for what purpose later.
By the way, I forgot to include this article on fractional reserve banking (FRB) in my previous post. It talks about how FRB is a natural offshoot of banking in the same way I talk about how banks are a natural offshoot of money. It also agrees with your money multiplier criticism.
http://www.forbes.com/sites/johntam...eserve-banking-and-the-money-multiplier-myth/
Why are there more Black millionaires today than have every been, yet the Black middle class is shrinking?
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My definition of banking is very specific... banks of deposit, banks of issue, and banks of credit. Those have not been around for thousands of years, simply because corporations have not been around for thousands of years.
Your definition of banking is something different. I would say what you call banking may have been simple borrowing and lending, or currency, or credit, or promissory notes, or possibly gambling.
I am not discussing banking in some abstract sense, but the way it has actually been practiced in the white countries for the past 700 years. In the real world, banking requires corporations. Corporations require laws. Laws require a court system. A court system requires jails and guards and armed force. All of that is political.
You cannot separate banking form politics, in the real world. Credit can exist without politics and without banking. Banking ABSOLUTELY REQUIRES POLITICS. Banks pool (or control) credit, through the political process.
Banking is not an offshoot of money. Banking, as it is done in the world today, depends on credit.
Banking is simply a means by which to control the public, through the issuance and regulation of credit.
Credit is natural and voluntary. Banking is not. Banking is a cartel process by which to control and limit the natural and voluntary exchange of credit.
As much as black people are harmed by banks, I would think, after all these years, the destructive nature of banks would be clear, after all these years.
I consider the Federal Reserve a natural offshoot of banking the same way I consider the MAFIA (la cosa nostra) a natural offshoot of New York crime bosses.
Just to be clear, I am not talking about the history of money (or credit for that matter). Credit has been around a lot longer than money.
Money has been around for thousands of years... not banking.
Banking controls credit, the way corporations control resources. They limit and attempt to monopolize them for the beneift of a politically-connected class, for exploitation and personal gain.
Banks and corporations are an unholy burden on any society. They exhaust the resource base, cause unnecessary war and destruction, and enslave the public... all for the benefit of the privileged few. It is just another form of plutocracy, that is scarcely different from any dictatorship or monarchy. The only difference is that the average Joe has the illusion of control and choice.
Capitalism is a lie sold to the public to keep the masses in line and partners in their own exploitation. It appeals to one of man's basest instincts... GREED!
Millionaires are created through the banking system.
The banking system pools the credit of the black community and funnels it into the hands of a select few, politically-connected black millionaires.
All those athletes, entertainers, and front-men are useful political tools and are richly rewarded for their efforts that distract the black community and help them remain clueless and ignorant of the damage being done to them by the white banks and corporations.
Let an athlete speak out about the harm of McDonalds, or the crimes of Bank of America, or the slums Donald Sterling runs, and you will see how quickly those millions disappear.
Many millionaires are created by the tax system. The banking system is legislated by the government, state and local which by law charter corporations.
The Closer You Are To The Printing Press, The Better Protected You Are Against Inflation
When new money is pumped into the economy and the price inflation process is set in motion, those nearest to the printing press benefit the most. Those nearest the printing press get to spend the newly printed money before prices rise, and those people furthest away from the printing press see prices rise before they get to spend the newly printed money. This process creates income inequality.
CEO’s of the top 50 financial companies on Wall Street have seen their salaries increase by an average of 20%, reports Bloomberg. They are nearest the dollar printing press.
It is not capitalism that causes income inequality, but rather the monetary inflation caused by central banking. Apart from the above anecdote, you can read more theoretical and empirical proof here.
Once Again!
The Collapse of Black Wealth
The Collapse of Black Wealth
Prince George’s County was a symbol of African American prosperity. Then came the housing crisis.
MONICA POTTS NOVEMBER 21, 2012
When Joe Parker was a young, newly married public-school administrator who wanted to buy a home in 1974, he didn’t even think about leaving Prince George’s County, Maryland. It was where he and his parents had grown up. But when Parker first tried to bid on a house in a new development in Mitchellville, a small farming community that was sprouting ranch and split-level homes on old plantation lands, the real-estate agent demurred, claiming there were other buyers. In truth, the development had been built to lure white, middle-class families to the county, which sits just east of Washington, D.C. Parker never told the agent that he served on a new county commission to enforce laws forbidding housing discrimination. He just persisted, he says, until he and his wife were able to bid. “My wife kept saying, ‘Why don’t you tell him?’” Parker recalls, but he refused to pull rank. “I said no, because what does the next black man do?”
The next black families did arrive. Throughout the 1980s, 1990s, and 2000s, most of the professionals who bought homes in Prince George’s County came from Washington’s black middle class. Laws that expanded minority homeownership, combined with a booming mortgage market, brought more and more black residents out to the suburbs. When Parker bought his home in the ’70s, African Americans made up about 14 percent of the population in Prince George’s County; by 2010, the share of black families would be almost 65 percent. Across the country, in the final decades of the 20th century, minorities were moving into suburbs in unprecedented numbers. But Prince George’s County was distinct: It was one of the few places—like Southfield, Michigan, outside of Detroit; Warrensville Heights, Ohio, outside of Cleveland; and DeKalb County, Georgia, outside of Atlanta—that grew wealthier as it became blacker. Median income in Prince George’s outpaced the national median from the 1970 census forward.
Prince George’s County today is a collection of cities, small towns, and bedroom communities with a population of about 870,000. Home-improvement stores and shopping centers pepper broad boulevards; McMansion-filled subdivisions end in cul-de-sacs. With a median income of $71,260, it’s wealthier than the state as a whole. There are Outback Steakhouses and Whole Foods markets. There are fall festivals, international festivals, and food festivals. There are pumpkin patches and Christmas-tree farms. Bowie, in the northern part of the county, is home to Bowie State University, a liberal-arts college that once trained black teachers as the Maryland Normal and Industrial School at Bowie. Joe Parker, now retired from the school system, serves as a neighborhood captain to welcome families into the development he bought into almost 40 years ago and is a neighborhood historian. His three sons still live in Prince George’s County. It’s home.
Prince George’s County became emblematic of a long-delayed advance toward equality: the growth of black wealth in America. For three centuries, structural racism had prevented black families from building wealth. School systems, hiring practices, red-lining, and discriminatory lending practices all combined to deny the opportunities that white Americans, whether immigrant or native born, saw as their birthright. In the South, especially, there were more direct means of holding back black economic advancement: Violence was often directed toward black men and women who owned businesses or farms and toward those who fought for their right to work for fair wages. But in the 1980s, helped by laws that encouraged homeownership among minorities, African American families were at last able not only to earn higher incomes but to buy homes and build wealth.
Just from 1995 to 2004, black homeownership rates nationwide rose 6.5 percentage points, reaching a height of 49 percent in 2005. But those gains were almost entirely erased as the Great Recession began in 2008, with black homeownership rates dipping to 45 percent last year and continuing to fall. Nowhere is that more dramatically illustrated than in the stretch of suburbia that straddles the Beltway. At the height of the crisis, in 2009, the foreclosure rate in Prince George’s County was 4.19 percent, compared to 1.87 percent in Maryland and 2.21 percent in the nation as a whole.
Even families who aren’t losing their homes have seen values drop, making it more difficult to get loans to finance their children’s education or their retirement. Mosi Harrington, the former executive director of the Housing Initiative Partnership, a Maryland nonprofit that helps people hold on to their homes, says declining home prices are particularly problematic for African Americans because they have inherited less than their white counterparts. “In your minority communities, wealth is not very deep,” she says. “There’s no family wealth to fall back on in hard times.” Most middle-class families hold all of their wealth in their homes, and that’s especially true for the median black family—the amount they hold in stocks is zero. That means the housing crisis has wiped out an entire generation of black wealth.
In general, African American families have few resources to tap for big-ticket items like college that are necessary for their children to remain middle-class. The gap between middle--class families and the top 1 percent is huge regardless of race, but the racial gaps are even larger. According to the Economic Policy Institute’s State of Working America report, black households had a median net wealth of just $4,900 in 2010, compared with $97,000 for white households. A third of black households had zero or negative wealth.
“There’s been a lot of attention brought to how much income inequality we’ve seen in this country, thanks to Occupy Wall Street,” says Heidi Shierholz, an economist with the Economic Policy Institute. “I think people kind of have a handle on the dramatic income inequality we have. But wealth inequality swamps anything we see in income equality.”
The story of Prince George’s County is, in many ways, the economic history of black Americans writ large. While its post–civil rights boom was a heartening sign of the slow but hopeful rise of a durable black middle class, its sharp downturn during the Great Recession is one more sign that the arc of history has yet to bend in the direction of economic equality or justice.
The first black families in Prince George’s County were slaves and indentured servants brought there by Southern planters who had settled in the swampy lowland, primarily to grow tobacco. The county, named for the Prince of Denmark who was married to England’s Queen Anne, is about 500 square miles in the middle of what was then a colony, which was itself between what would become the Union and the Confederacy. Maryland passed its first laws to define slaves in the 1660s. A few black men bought their freedom by fighting in the Revolutionary War, but the vast majority of blacks in the state and in Prince George’s County remained slaves through the antebellum period: In 1850, there were more than 11,000 slaves, the highest of any Maryland county, 1,138 freed blacks, and only 8,901 whites.
Maryland slaves weren’t freed by the Emancipation Proclamation in 1863—it applied only to states in open rebellion, and Maryland didn’t secede during the Civil War. They had to wait until a new state constitution went into effect in 1865. Some were then able to buy land in Prince George’s County. Josiah Adams, who was born in 1817 most likely as a slave, pieced together, from 1871 to 1883, parcels of county land, amassing 48 acres by the time of his death in 1884. He passed that land on to his descendants, who lived in the area through the 1950s. Most of the African Americans who stayed in Prince George’s remained as tenant farmers, tied to the farms where they had been slaves, meaning they were still financially, if not legally, bound to white landowners.
The first few decades of the 1900s brought a wave of middle-class African Americans who were able to buy homes on lands carved out specifically to create black communities. The first two black towns, North Brentwood and Fairmount Heights, were incorporated in the 1930s. They became suburban homes for graduates of the Tuskegee Institute who came to work in federal agencies and other regional industries. In nearby D.C., Howard University, established in 1867, brought black educators to the county. More black families moved into these towns and started small businesses to serve the growing communities. Joe Parker’s parents had grown up in the farming areas around the wealthy town of Upper Marlboro but moved to Fairmount Heights and operated a tavern and delicatessen in the 1930s. In 1950, the county’s black population was 22,652 out of 194,182.
The county wasn’t free of the violence that plagued black families throughout the South and Midwest, either. Locals can still point to a bridge in Upper Marlboro where lynchings were carried out. Until the 1970s, Prince George’s County remained a tight hierarchy with whites at the top, which meant that black families were relegated to buying homes in areas only where the white majority allowed them to do so. That prevented black families from buying homes in the priciest neighborhoods, like Bowie, and also set a cap on the housing stock that would be available for new black homebuyers.
When civil-rights laws in the 1960s opened up new opportunities for African Americans, Prince George’s County had a critical mass of black professionals and business owners on which to build. Parker and his peers fought to increase the number of African Americans in county-level government and to enforce federal and state laws to open access to homeownership opportunities. “I felt this was home,” he says. “With all the problems here,” he remembers thinking, “this place needs me here to help right the ship.”
When middle-class Washington blacks began looking to the suburbs, especially after the 1968 riots, Prince George’s County was a logical destination. The stable government jobs, both at the federal level and in municipalities around the region, kept pumping in middle-class black families. They were helped by the Community Reinvestment Act of 1977, which prohibited lending discrimination among low-income communities and communities of color. The county also remained affordable, especially relative to richer D.C. suburbs in Virginia and elsewhere in Maryland.
For the first time since slavery, the county in 1990 became majority black. Because black professionals were mostly displacing rural and working-class whites, Prince George’s also became the wealthiest majority-black county in the nation. The rise of black suburbs like Prince George’s County was largely seen as a self-directed, community-affirming choice, rather than a result of segregation. While there was some resistance from white residents, some white flight to other suburbs, and some reluctance to enter the county by commercial developers, such tension played less of a role in Prince George’s than it did in other communities around the country. “One of the things that happened is, because of earlier waves, as more people came, there was a critical mass,” says Bill Sermons, research director with the Center for Responsible Lending, who grew up in the county after his family moved there in the 1980s. “You didn’t have part of the story you had in other urban communities across the country,” where black families would disperse and try to integrate white communities alone.
In 1993, President Bill Clinton strengthened the Community Reinvestment Act. The number of black families who owned their own homes rose from 42 percent to 46 percent nationwide. But near the end of his second term, in 1999, he signed another law that would have a profound, long-lasting effect on Prince George’s County. The Gramm-Leach-Bliley Act allowed lending banks and investment banks to operate under one roof. The credit market boomed, and new lending products proliferated. While the families living in Prince George’s County may not have been discriminated against in their personal lives, they were still not free of discrimination when it came to buying homes. Black families were disproportionately receiving mortgages and home-equity loans best described by a word that wouldn’t enter the lexicon for another decade: “subprime.”
Predatory brokers flooded markets like Prince George’s County. “You had a lot of people there who were prime targets,” Sermons says. “You had networks of brokers and others who were targeting communities and working through churches and doing other kinds of things to find the kind of people they could put into these mortgages.”
The families hardest hit were those who bought at the height of the 2000 housing boom and lost their incomes during the Great Recession that followed. But it isn’t just the families who face foreclosure—429 so far in 2012 alone—that were affected by the collapse. First-time homebuyers had taken out mortgages for expensive homes, and many families, who saw the values of the homes they’d owned for decades skyrocket, borrowed against their houses. All those homes bought or refinanced at the height of the bubble, when home prices were unrealistically high, means that families who still have their jobs and enough income to ride out the crisis have nonetheless seen a huge drop in the wealth that they had worked their whole lives to build.
Today in Prince George’s County, “the typical client has a mortgage of $300,000, and their house is worth $150,000,” says Mary Hunter, a counselor with the Housing Initiative Partnership. “That’s a huge problem, the fact that so many homes are underwater. There’s no real solution. So many people here are underwater.”
http://prospect.org/article/rising-tide-2
The Collapse of Black Wealth
Prince George’s County was a symbol of African American prosperity. Then came the housing crisis.
MONICA POTTS NOVEMBER 21, 2012
When Joe Parker was a young, newly married public-school administrator who wanted to buy a home in 1974, he didn’t even think about leaving Prince George’s County, Maryland. It was where he and his parents had grown up. But when Parker first tried to bid on a house in a new development in Mitchellville, a small farming community that was sprouting ranch and split-level homes on old plantation lands, the real-estate agent demurred, claiming there were other buyers. In truth, the development had been built to lure white, middle-class families to the county, which sits just east of Washington, D.C. Parker never told the agent that he served on a new county commission to enforce laws forbidding housing discrimination. He just persisted, he says, until he and his wife were able to bid. “My wife kept saying, ‘Why don’t you tell him?’” Parker recalls, but he refused to pull rank. “I said no, because what does the next black man do?”
The next black families did arrive. Throughout the 1980s, 1990s, and 2000s, most of the professionals who bought homes in Prince George’s County came from Washington’s black middle class. Laws that expanded minority homeownership, combined with a booming mortgage market, brought more and more black residents out to the suburbs. When Parker bought his home in the ’70s, African Americans made up about 14 percent of the population in Prince George’s County; by 2010, the share of black families would be almost 65 percent. Across the country, in the final decades of the 20th century, minorities were moving into suburbs in unprecedented numbers. But Prince George’s County was distinct: It was one of the few places—like Southfield, Michigan, outside of Detroit; Warrensville Heights, Ohio, outside of Cleveland; and DeKalb County, Georgia, outside of Atlanta—that grew wealthier as it became blacker. Median income in Prince George’s outpaced the national median from the 1970 census forward.
Prince George’s County today is a collection of cities, small towns, and bedroom communities with a population of about 870,000. Home-improvement stores and shopping centers pepper broad boulevards; McMansion-filled subdivisions end in cul-de-sacs. With a median income of $71,260, it’s wealthier than the state as a whole. There are Outback Steakhouses and Whole Foods markets. There are fall festivals, international festivals, and food festivals. There are pumpkin patches and Christmas-tree farms. Bowie, in the northern part of the county, is home to Bowie State University, a liberal-arts college that once trained black teachers as the Maryland Normal and Industrial School at Bowie. Joe Parker, now retired from the school system, serves as a neighborhood captain to welcome families into the development he bought into almost 40 years ago and is a neighborhood historian. His three sons still live in Prince George’s County. It’s home.
Prince George’s County became emblematic of a long-delayed advance toward equality: the growth of black wealth in America. For three centuries, structural racism had prevented black families from building wealth. School systems, hiring practices, red-lining, and discriminatory lending practices all combined to deny the opportunities that white Americans, whether immigrant or native born, saw as their birthright. In the South, especially, there were more direct means of holding back black economic advancement: Violence was often directed toward black men and women who owned businesses or farms and toward those who fought for their right to work for fair wages. But in the 1980s, helped by laws that encouraged homeownership among minorities, African American families were at last able not only to earn higher incomes but to buy homes and build wealth.
Just from 1995 to 2004, black homeownership rates nationwide rose 6.5 percentage points, reaching a height of 49 percent in 2005. But those gains were almost entirely erased as the Great Recession began in 2008, with black homeownership rates dipping to 45 percent last year and continuing to fall. Nowhere is that more dramatically illustrated than in the stretch of suburbia that straddles the Beltway. At the height of the crisis, in 2009, the foreclosure rate in Prince George’s County was 4.19 percent, compared to 1.87 percent in Maryland and 2.21 percent in the nation as a whole.
Even families who aren’t losing their homes have seen values drop, making it more difficult to get loans to finance their children’s education or their retirement. Mosi Harrington, the former executive director of the Housing Initiative Partnership, a Maryland nonprofit that helps people hold on to their homes, says declining home prices are particularly problematic for African Americans because they have inherited less than their white counterparts. “In your minority communities, wealth is not very deep,” she says. “There’s no family wealth to fall back on in hard times.” Most middle-class families hold all of their wealth in their homes, and that’s especially true for the median black family—the amount they hold in stocks is zero. That means the housing crisis has wiped out an entire generation of black wealth.
In general, African American families have few resources to tap for big-ticket items like college that are necessary for their children to remain middle-class. The gap between middle--class families and the top 1 percent is huge regardless of race, but the racial gaps are even larger. According to the Economic Policy Institute’s State of Working America report, black households had a median net wealth of just $4,900 in 2010, compared with $97,000 for white households. A third of black households had zero or negative wealth.
“There’s been a lot of attention brought to how much income inequality we’ve seen in this country, thanks to Occupy Wall Street,” says Heidi Shierholz, an economist with the Economic Policy Institute. “I think people kind of have a handle on the dramatic income inequality we have. But wealth inequality swamps anything we see in income equality.”
The story of Prince George’s County is, in many ways, the economic history of black Americans writ large. While its post–civil rights boom was a heartening sign of the slow but hopeful rise of a durable black middle class, its sharp downturn during the Great Recession is one more sign that the arc of history has yet to bend in the direction of economic equality or justice.
The first black families in Prince George’s County were slaves and indentured servants brought there by Southern planters who had settled in the swampy lowland, primarily to grow tobacco. The county, named for the Prince of Denmark who was married to England’s Queen Anne, is about 500 square miles in the middle of what was then a colony, which was itself between what would become the Union and the Confederacy. Maryland passed its first laws to define slaves in the 1660s. A few black men bought their freedom by fighting in the Revolutionary War, but the vast majority of blacks in the state and in Prince George’s County remained slaves through the antebellum period: In 1850, there were more than 11,000 slaves, the highest of any Maryland county, 1,138 freed blacks, and only 8,901 whites.
Maryland slaves weren’t freed by the Emancipation Proclamation in 1863—it applied only to states in open rebellion, and Maryland didn’t secede during the Civil War. They had to wait until a new state constitution went into effect in 1865. Some were then able to buy land in Prince George’s County. Josiah Adams, who was born in 1817 most likely as a slave, pieced together, from 1871 to 1883, parcels of county land, amassing 48 acres by the time of his death in 1884. He passed that land on to his descendants, who lived in the area through the 1950s. Most of the African Americans who stayed in Prince George’s remained as tenant farmers, tied to the farms where they had been slaves, meaning they were still financially, if not legally, bound to white landowners.
The first few decades of the 1900s brought a wave of middle-class African Americans who were able to buy homes on lands carved out specifically to create black communities. The first two black towns, North Brentwood and Fairmount Heights, were incorporated in the 1930s. They became suburban homes for graduates of the Tuskegee Institute who came to work in federal agencies and other regional industries. In nearby D.C., Howard University, established in 1867, brought black educators to the county. More black families moved into these towns and started small businesses to serve the growing communities. Joe Parker’s parents had grown up in the farming areas around the wealthy town of Upper Marlboro but moved to Fairmount Heights and operated a tavern and delicatessen in the 1930s. In 1950, the county’s black population was 22,652 out of 194,182.
The county wasn’t free of the violence that plagued black families throughout the South and Midwest, either. Locals can still point to a bridge in Upper Marlboro where lynchings were carried out. Until the 1970s, Prince George’s County remained a tight hierarchy with whites at the top, which meant that black families were relegated to buying homes in areas only where the white majority allowed them to do so. That prevented black families from buying homes in the priciest neighborhoods, like Bowie, and also set a cap on the housing stock that would be available for new black homebuyers.
When civil-rights laws in the 1960s opened up new opportunities for African Americans, Prince George’s County had a critical mass of black professionals and business owners on which to build. Parker and his peers fought to increase the number of African Americans in county-level government and to enforce federal and state laws to open access to homeownership opportunities. “I felt this was home,” he says. “With all the problems here,” he remembers thinking, “this place needs me here to help right the ship.”
When middle-class Washington blacks began looking to the suburbs, especially after the 1968 riots, Prince George’s County was a logical destination. The stable government jobs, both at the federal level and in municipalities around the region, kept pumping in middle-class black families. They were helped by the Community Reinvestment Act of 1977, which prohibited lending discrimination among low-income communities and communities of color. The county also remained affordable, especially relative to richer D.C. suburbs in Virginia and elsewhere in Maryland.
For the first time since slavery, the county in 1990 became majority black. Because black professionals were mostly displacing rural and working-class whites, Prince George’s also became the wealthiest majority-black county in the nation. The rise of black suburbs like Prince George’s County was largely seen as a self-directed, community-affirming choice, rather than a result of segregation. While there was some resistance from white residents, some white flight to other suburbs, and some reluctance to enter the county by commercial developers, such tension played less of a role in Prince George’s than it did in other communities around the country. “One of the things that happened is, because of earlier waves, as more people came, there was a critical mass,” says Bill Sermons, research director with the Center for Responsible Lending, who grew up in the county after his family moved there in the 1980s. “You didn’t have part of the story you had in other urban communities across the country,” where black families would disperse and try to integrate white communities alone.
In 1993, President Bill Clinton strengthened the Community Reinvestment Act. The number of black families who owned their own homes rose from 42 percent to 46 percent nationwide. But near the end of his second term, in 1999, he signed another law that would have a profound, long-lasting effect on Prince George’s County. The Gramm-Leach-Bliley Act allowed lending banks and investment banks to operate under one roof. The credit market boomed, and new lending products proliferated. While the families living in Prince George’s County may not have been discriminated against in their personal lives, they were still not free of discrimination when it came to buying homes. Black families were disproportionately receiving mortgages and home-equity loans best described by a word that wouldn’t enter the lexicon for another decade: “subprime.”
Predatory brokers flooded markets like Prince George’s County. “You had a lot of people there who were prime targets,” Sermons says. “You had networks of brokers and others who were targeting communities and working through churches and doing other kinds of things to find the kind of people they could put into these mortgages.”
The families hardest hit were those who bought at the height of the 2000 housing boom and lost their incomes during the Great Recession that followed. But it isn’t just the families who face foreclosure—429 so far in 2012 alone—that were affected by the collapse. First-time homebuyers had taken out mortgages for expensive homes, and many families, who saw the values of the homes they’d owned for decades skyrocket, borrowed against their houses. All those homes bought or refinanced at the height of the bubble, when home prices were unrealistically high, means that families who still have their jobs and enough income to ride out the crisis have nonetheless seen a huge drop in the wealth that they had worked their whole lives to build.
Today in Prince George’s County, “the typical client has a mortgage of $300,000, and their house is worth $150,000,” says Mary Hunter, a counselor with the Housing Initiative Partnership. “That’s a huge problem, the fact that so many homes are underwater. There’s no real solution. So many people here are underwater.”
http://prospect.org/article/rising-tide-2
Black Middle Class Abandoning PG County Public Schools
Black Middle Class Abandoning PG County Public Schools
May 27, 2013
Prince George’s County, Maryland stands out from the rest of the country in that it is among the most affluent majority-black counties in the US. But despite its uniqueness, it is quickly falling prey to a common trend—middle class parents are pulling their children out of public schools and putting them in private competitors that offer a better education.
PG County Executive Rushern L. Baker III is well aware of this trend and is taking steps to improve the quality of the schools in an effort to bring back these middle class students. The county has just approved Baker’s plan for a massive overhaul of the school board, and he has promised a number of other educational changes, although this part of his proposal has been light on actual details. But as the Washington Post reports, while middle class families are watching these changes with interest, few have actually made the leap and put their kids back in public schools. And as the middle class students and parents abandon the system, the situation is likely to get worse for those that remain:
For years, people have blamed many of the problems in minority-majority school districts on “white flight,” arguing that middle class whites abandoning public schools is responsible for much of the struggles of these institutions. But this suggests that middle-class blacks and whites are doing the same thing—leaving blue cities for better opportunities and living conditions, and leaving old style public schools because they want a better education for their kids.
This also reinforces the idea that school reform aimed at giving middle class parents incentives to stay in the system—smaller schools, different models of learning, bigger role for parents—helps all kids.
http://blogs.the-american-interest....le-class-abandoning-pg-county-public-schools/
Black Middle Class Abandoning PG County Public Schools
May 27, 2013
Prince George’s County, Maryland stands out from the rest of the country in that it is among the most affluent majority-black counties in the US. But despite its uniqueness, it is quickly falling prey to a common trend—middle class parents are pulling their children out of public schools and putting them in private competitors that offer a better education.
PG County Executive Rushern L. Baker III is well aware of this trend and is taking steps to improve the quality of the schools in an effort to bring back these middle class students. The county has just approved Baker’s plan for a massive overhaul of the school board, and he has promised a number of other educational changes, although this part of his proposal has been light on actual details. But as the Washington Post reports, while middle class families are watching these changes with interest, few have actually made the leap and put their kids back in public schools. And as the middle class students and parents abandon the system, the situation is likely to get worse for those that remain:
Many experts and schools officials say a return of students from middle-class families is a key component to turning around struggling school systems.
Richard D. Kahlenberg, a senior fellow at the Century Foundation, said students from low-income families benefit from attending school “where your classmates expect to go on to college and act in a way that is conducive to that.” [...]
It is unclear how many Prince George’s middle-class families home-school or send their children to private school. Briant Coleman, a spokesman for the school system, said the county does not track those students. But the school population has been dwindling and the percentage of poor students increasing significantly, evidence that middle-class students have been leaving the system.
Richard D. Kahlenberg, a senior fellow at the Century Foundation, said students from low-income families benefit from attending school “where your classmates expect to go on to college and act in a way that is conducive to that.” [...]
It is unclear how many Prince George’s middle-class families home-school or send their children to private school. Briant Coleman, a spokesman for the school system, said the county does not track those students. But the school population has been dwindling and the percentage of poor students increasing significantly, evidence that middle-class students have been leaving the system.
For years, people have blamed many of the problems in minority-majority school districts on “white flight,” arguing that middle class whites abandoning public schools is responsible for much of the struggles of these institutions. But this suggests that middle-class blacks and whites are doing the same thing—leaving blue cities for better opportunities and living conditions, and leaving old style public schools because they want a better education for their kids.
This also reinforces the idea that school reform aimed at giving middle class parents incentives to stay in the system—smaller schools, different models of learning, bigger role for parents—helps all kids.
http://blogs.the-american-interest....le-class-abandoning-pg-county-public-schools/
Single And Living Alone: Redefining The Black Middle Class
Single And Living Alone: Redefining The Black Middle Class
by Ariana Brocious, NET News
April 3, 2013 - 6:30am
Half of black Nebraskans have never been married, compared with 29 percent among the state’s total population. This reflects a larger national trend: a growing segment of the black middle class is single and living alone. Dr. Kris Marsh, Assistant Professor of Sociology at the University of Maryland, will be speaking about the economic, racial, and political implications of unmarried singles in the black middle class at the University of Nebraska-Lincoln on Monday, April 8th. Marsh spoke to Ariana Brocious of NET News, and suggests we may need to rethink the definition of the black middle class.
KRIS MARSH: When we think of middle class, not even black middle class or white middle class, just the overall middle class, the general picture of middle class is a husband, a wife, 2.5 children, a dog and a white picket fence. From a demographic perspective, we know that marriage rates have changed across the board. Marriage rates have changed a lot among blacks, with more pronounced declining marriage rates in black America, there’s this hidden assumption in social science literature that the black middle class is shrinking. And I’m trying to make the argument that no, the black middle class isn’t shrinking, there’s just a compositional shift in the black middle class away from married couples to young, black professionals who aren’t married and don’t have any children. And I think that we can no longer just think of the black middle class as just a husband and a wife, but we have to think outside of the box and think about it in ways that now consist of single and living alone households.
NET NEWS: As you said, across the country, couples are deciding to marry and have kids later in life. According to U.S. Census data, 51 percent of black Nebraskans 15 years and older have never been married, compared with 29 percent among the state's total populaton. Do those statistics reflect the larger national picture?
MARSH: Yes. There’s a growing segment of black America who have never been married, and there’s also a suggestion that they will never marry. Overall, the national trend is that people could be marrying later in life. But for black America, yes, people are marrying later in life, but there’s also a group that will not marry at all. And because this group exists, we can no longer ignore them and put them in another category. We have people that are not going to get married and they’re not going to have children but they’re important and we can’t overlook them.
NET NEWS: And what are some of the reasons people might decide to do that, especially looking at this particular group?
MARSH: The question is whether or not it’s by choice or force. In black America, are people choosing not to marry because they think that things are okay or for whatever reason they made this conscious choice, or could it be that there aren’t viable options? So they’re forced to stay single and never marry because they just don’t have viable options.
NET NEWS: Blacks made up about 5 percent of Nebraska’s total population. What might this new demographic group mean for black culture here in Nebraska and larger American culture over time?
MARSH: Now that you have this single and living alone household who are middle class, it becomes a really interesting discussion. And I want to move the discussion into a different direction to say, okay, we clearly know that demographically, this group exists. What are some of the consequences of this group?
One consequence is that we need to start rethinking the way in which we need to define a family. And this is for all households, not just black households. Are there some advantages that families get, political advantages, health care advantages, for example, that families get, that people that aren’t in a family wouldn’t receive? And if that were the case, and we have a growing number of those that are single and living alone, do we want to redefine what we mean by a family? Can one person make up a family? Are there advantages to be labeled as a family or one person household? I think we really need to start thinking about the terminology, especially because we know this is a growing group of people who are single and living alone.
The other issue that I’m interested in understanding is that if we know for the most part that class status is transferred from parent to child, and you have people in this black middle class who are single and living alone who do not have children, to whom are they going to transfer their wealth? I think in black America we have to start considering innovative ways in which we’re going to transfer our wealth from one generation to the next. It wouldn’t go parent to child. But could it go from aunt to nephew? From friend to godchild? We have to start thinking about it in very interesting ways.
And the third issue is that if the second largest household type in the black middle class is being single and living alone, just behind married couples, that’s not the same composition we see in the white middle class. So, because of these different kinds of household types, do we see racial inequality existing because you don’t have as many married couples in the black middle class as you do in the white middle class? So does it reinforce racial inequality in some kind of way? I think those are the kind of questions we need to start thinking about with these compositional shifts of household type.
NET NEWS: Do you think public policy supports these unmarried, living alone singles? If not, how should they be changed to do so?
MARSH: It’s an emerging group, it’s been around but it’s definitely not going anywhere. So I don’t think the public policies really think about this group as a family. I’m not trying to put a value judgment on what constitutes a family. All I’m trying to do is to get people to think outside the box and say, if there are advantages to being labeled as a family and we know that there are a lot of households that are single and living alone, should they also be classified as a family? And that’s something I think policy analysts really need to start thinking about.
http://netnebraska.org/article/news/single-and-living-alone-redefining-black-middle-class
Single And Living Alone: Redefining The Black Middle Class
by Ariana Brocious, NET News
April 3, 2013 - 6:30am
Half of black Nebraskans have never been married, compared with 29 percent among the state’s total population. This reflects a larger national trend: a growing segment of the black middle class is single and living alone. Dr. Kris Marsh, Assistant Professor of Sociology at the University of Maryland, will be speaking about the economic, racial, and political implications of unmarried singles in the black middle class at the University of Nebraska-Lincoln on Monday, April 8th. Marsh spoke to Ariana Brocious of NET News, and suggests we may need to rethink the definition of the black middle class.
KRIS MARSH: When we think of middle class, not even black middle class or white middle class, just the overall middle class, the general picture of middle class is a husband, a wife, 2.5 children, a dog and a white picket fence. From a demographic perspective, we know that marriage rates have changed across the board. Marriage rates have changed a lot among blacks, with more pronounced declining marriage rates in black America, there’s this hidden assumption in social science literature that the black middle class is shrinking. And I’m trying to make the argument that no, the black middle class isn’t shrinking, there’s just a compositional shift in the black middle class away from married couples to young, black professionals who aren’t married and don’t have any children. And I think that we can no longer just think of the black middle class as just a husband and a wife, but we have to think outside of the box and think about it in ways that now consist of single and living alone households.
NET NEWS: As you said, across the country, couples are deciding to marry and have kids later in life. According to U.S. Census data, 51 percent of black Nebraskans 15 years and older have never been married, compared with 29 percent among the state's total populaton. Do those statistics reflect the larger national picture?
MARSH: Yes. There’s a growing segment of black America who have never been married, and there’s also a suggestion that they will never marry. Overall, the national trend is that people could be marrying later in life. But for black America, yes, people are marrying later in life, but there’s also a group that will not marry at all. And because this group exists, we can no longer ignore them and put them in another category. We have people that are not going to get married and they’re not going to have children but they’re important and we can’t overlook them.
NET NEWS: And what are some of the reasons people might decide to do that, especially looking at this particular group?
MARSH: The question is whether or not it’s by choice or force. In black America, are people choosing not to marry because they think that things are okay or for whatever reason they made this conscious choice, or could it be that there aren’t viable options? So they’re forced to stay single and never marry because they just don’t have viable options.
NET NEWS: Blacks made up about 5 percent of Nebraska’s total population. What might this new demographic group mean for black culture here in Nebraska and larger American culture over time?
MARSH: Now that you have this single and living alone household who are middle class, it becomes a really interesting discussion. And I want to move the discussion into a different direction to say, okay, we clearly know that demographically, this group exists. What are some of the consequences of this group?
One consequence is that we need to start rethinking the way in which we need to define a family. And this is for all households, not just black households. Are there some advantages that families get, political advantages, health care advantages, for example, that families get, that people that aren’t in a family wouldn’t receive? And if that were the case, and we have a growing number of those that are single and living alone, do we want to redefine what we mean by a family? Can one person make up a family? Are there advantages to be labeled as a family or one person household? I think we really need to start thinking about the terminology, especially because we know this is a growing group of people who are single and living alone.
The other issue that I’m interested in understanding is that if we know for the most part that class status is transferred from parent to child, and you have people in this black middle class who are single and living alone who do not have children, to whom are they going to transfer their wealth? I think in black America we have to start considering innovative ways in which we’re going to transfer our wealth from one generation to the next. It wouldn’t go parent to child. But could it go from aunt to nephew? From friend to godchild? We have to start thinking about it in very interesting ways.
And the third issue is that if the second largest household type in the black middle class is being single and living alone, just behind married couples, that’s not the same composition we see in the white middle class. So, because of these different kinds of household types, do we see racial inequality existing because you don’t have as many married couples in the black middle class as you do in the white middle class? So does it reinforce racial inequality in some kind of way? I think those are the kind of questions we need to start thinking about with these compositional shifts of household type.
NET NEWS: Do you think public policy supports these unmarried, living alone singles? If not, how should they be changed to do so?
MARSH: It’s an emerging group, it’s been around but it’s definitely not going anywhere. So I don’t think the public policies really think about this group as a family. I’m not trying to put a value judgment on what constitutes a family. All I’m trying to do is to get people to think outside the box and say, if there are advantages to being labeled as a family and we know that there are a lot of households that are single and living alone, should they also be classified as a family? And that’s something I think policy analysts really need to start thinking about.
http://netnebraska.org/article/news/single-and-living-alone-redefining-black-middle-class
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good read
Black Homeownership Dying Where Obama Revitalized
Black Homeownership Dying Where Obama Revitalized
By Prashant Gopal
Sep 3, 2013 7:54 AM CT
Helene Pearson’s belief in homeownership was shattered in Roseland, the mostly black Chicago neighborhood where President Barack Obama got his start as a community organizer.
Pearson, who bought her two-bedroom, red-brick bungalow on South Calumet Avenue in Roseland for $160,000 in 2006 with a high-interest loan, put it on the market a year ago for $55,000 and didn’t attract a single offer. Her bank has agreed to take it back.
“I was so excited to buy my first house right down the street from my mother but they got me good,” said Pearson, a 35-year-old guidance counselor and mother of two girls. “This scarred me so badly that I never want to buy again.”
For most Americans, the real estate crash is finally behind them and personal wealth is back where it was in the boom. For blacks in the U.S., 18 years of economic progress has vanished, with a rebound in housing slipping further out of reach and the unemployment rate almost twice that of whites. The homeownership rate for blacks fell from 50 percent during the housing bubble to 43 percent in the second quarter, the lowest since 1995. The rate for whites stopped falling two years ago, settling at about 73 percent, only 3 percentage points below the 2004 peak, according to the Census Bureau.
Identical Goals
When Obama, the country’s first black president, took office in 2009, he inherited an economic and housing crisis that disproportionately affected minorities. In a speech last week on the 50th anniversary of Martin Luther King Jr.’s March on Washington, he called for expanding King’s dream of racial equality to include economic opportunity for all.
“Dr. King explained that the goals of African-Americans were identical to working people of all races: decent wages, fair working conditions, livable housing, old age security, health and welfare measures -- conditions in which families can grow, have education for their children and respect in the community,” Obama said at the Lincoln Memorial in Washington.
In Roseland, among the hardest hit neighborhoods in the country during the housing bust, many of the causes of the crash and obstacles to rebuilding black homeownership are found, according to Spencer Cowan, vice president of research at Woodstock Institute, a Chicago-based nonprofit group that researches fair lending, foreclosures and wealth creation.
Almost 40 percent of borrowers there took out high-cost loans in 2005 and 2006 as mortgage lenders backed by Wall Street targeted minority home buyers across the country for loans that required lower credit scores, reduced down payments, or featured interest rates that would start low and rise over time, contributing to an unsustainable bubble that popped when defaults rose and they cut off lending.
Vacant Properties
Now, almost one in 10 Roseland properties is vacant and the area’s homeownership rate fell to 57 percent in 2010 from 64 percent in 2000, according to the Woodstock Institute. The median home price meanwhile has dropped to $28,000 in the second quarter from $119,000 in 2005, according to Midwest Real Estate Data LLC.
The remaining homeowners, many of them elderly, live surrounded by vacant, boarded-up houses and gang violence that has led to 16 murders this year as of Aug. 30, which is a 30 percent drop from the same period in 2012.
Ernest Washington Jr., 63, bought his South Forest Avenue home for $25,000 in 1974 and had paid the mortgage down to $13,000. Now, after refinancing the house multiple times to finish the basement and make other improvements to the property, he owes $150,000 -- about $20,000 more than it’s worth. His mortgage rate is 8.5 percent.
“Being that this was a stable community, what they did was put people in the area further into debt,” Washington said.
Love Remembers
The Rev. Alvin Love remembers the day in the mid-1980s that a young community organizer named Barack Obama rang the doorbell at his Lilydale First Baptist Church Roseland.
Unemployment was on the rise in the predominantly black neighborhood in those days after local steel mills had closed and Obama, who worked with a church-based community group, was looking for allies to support job training programs.
In 1986, a year after Obama arrived in the community, the Woodstock Institute released a study of 500 Chicago-area financial institutions, showing “huge inequalities” in the distribution of housing credit, favoring suburbs over poor city neighborhoods like Roseland, which had become increasingly segregated.
The area’s history of mortgage discrimination mirrors that of urban enclaves from Boston to Los Angeles. The practice of “redlining” began eight decades ago when the Federal Housing Administration drew up maps using red ink to delineate inner-city neighborhoods considered too risky for lending.
Reverse Redlining
Congress passed the Fair Housing Act in 1968 and the Equal Credit Opportunity Act in 1974, which banned discrimination in lending and home sales based on race and national origin. Lawmakers followed in 1977 with the Community Reinvestment Act, to ensure banks were actively lending to credit-worthy borrowers in low-income areas.
The housing boom of the last decade, spurred on by the successive Clinton and Bush administrations that unleashed ambitious programs to widen buying, also brought about a practice known as “reverse redlining” or steering residents of minority neighborhoods into high-cost mortgages, which led to a flood of foreclosures when the market crashed. Many of the minority borrowers who were given subprime loans would have qualified for prime loans with better terms, according to the U.S. Justice Department.
Easy Lending
Borrowers like Washington Jr., who had nearly paid off their traditional mortgages, instead got caught up in the craze of easy lending, refinancing into loans that were twice the original balance to pay college tuition for a child, fix their home or catch up with bills, Love said.
“It’s going to take a generation to get back to the point where homeownership can build wealth in this community,” Love said.
The Obama administration’s first programs to help homeowners were geared toward keeping them in place through loan modifications, refinancing into lower-cost loans and $7 billion in neighborhood stabilization funding, 60 percent of which has been used in minority communities. The grants paid to rebuild once uninhabitable homes for first-time buyers on the south side of Chicago and Baltimore and demolish others in Detroit and Cleveland.
Uneven Recovery
Initiatives to help people avoid foreclosure came too late for many borrowers who got their loans at the height of the boom. One in 10 black borrowers has already lost their home to foreclosure in the worst housing crash since the Great Depression, double the rate for whites, according to a 2012 Center for Responsible Lending report.
“The President remains deeply concerned about the uneven recovery,” according to a White House statement. He’s consistently called on Congress to act on mortgage refinancing legislation, provide more help to communities rebuilding and confirm Representative Mel Watt, a North Carolina Democrat, to head the Federal Housing Finance Agency, the statement said.
The administration is also cracking down on discriminatory lending and trying to expand homeownership at a time when banks’ underwriting standards are tightest for those rebuilding from the recession. Lenders have raised down payment and credit score requirements and debt-to-income thresholds, which has had a disproportionate impact on minority communities, said Cowan at Woodstock.
New Redlining
“This is a new form of redlining,” Cowan said. “The same communities that bore the initial brunt of the foreclosure crisis, targets of the toxic lending, are now finding it more difficult to access credit as the economy starts to improve.”
Obama last month introduced new housing reforms targeted at middle-class communities. Borrowers with foreclosures or bankruptcies resulting from a job or income loss will be able to finance a home purchase with a Federal Housing Administration mortgage as long as they demonstrate 12 months of timely payments, complete housing counseling and otherwise qualify. The FHA, a government mortgage insurer, now requires a three-year wait.
“Places facing a longer road back from the crisis should have their country’s help to get there,” Obama said during a speech on housing in Phoenix last month.
The Justice Department under Obama has cracked down on both redlining and reverse-redlining.
Subprime Loans
Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC) agreed to pay a combined $569 million during the past two years, in the two biggest residential cases in the history of the Fair Housing Act and the Equal Credit Opportunity Act. Borrowers with loans from Wells Fargo and Countrywide Financial Corp., the biggest U.S. mortgage lender acquired by Bank of America in 2008, were more likely to be put in subprime loans if they were black or Hispanic, even when they qualified for lower-cost mortgages.
Bank of America spokesman Rick Simon, who declined to comment for the story, referred to a statement the bank released at the time of the $335 million Countrywide settlement.
“When we acquired Countrywide, we immediately discontinued origination of subprime and other higher cost mortgage products that were not in keeping with our commitment to responsible lending and sustainable homeownership,” the 2011 statement said.
Tom Goyda, a spokesman for San Francisco-based Wells Fargo, said, “We’ve denied the claims made by the Department of Justice from the beginning and stand behind our record as a fair and responsible lender.”
The Wells Fargo and Countrywide settlements did not include admissions of wrongdoing, according to the Justice Department.
Tough Position
Lenders are in a tough position because “when they don’t lend to minorities they’re accused of discrimination and when they do lend and there are foreclosures they’re accused of predatory lending,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston.
Credit scores and other automated underwriting criteria help prevent discrimination by taking the loan officer’s judgment out of the transaction, Willen said. Allowing more discretion based on an individual borrower’s circumstance makes lenders vulnerable to unconscious prejudice, he said.
“After 40 years of trying to get lenders’ judgment out of the equation, policymakers are trying to put it back in,” Willen said.
Wealth Gap
Credit already is loosening for the wealthiest Americans. While applications for jumbo mortgages of at least $729,000 increased 59 percent in the first four months from a year earlier, loans of less than $150,000 fell by 2.1 percent, according to the Mortgage Bankers Association.
The median wealth of white households was 20 times that of blacks and 18 times the Hispanic rate, a record gap in data going back three decades that is twice the pre-recession size, according to a 2011 Pew study.
“African Americans are starting way behind into this recovery,” Cowan said. “Because African American buyers were last into the market and bought at the most inflated prices, when the market deteriorated, they were the ones who lost the most.”
As prices recover, cheap properties are in short supply because they’re being purchased by flippers, private equity firms such as Blackstone Group LP (BX), and other cash buyers.
Nationally, the median price rose 13.7 percent in July from a year earlier as nearly 1 in 3 properties were purchased with cash, according to the National Association of Realtors. The share of first-time buyers, which historically averaged about 40 percent, has fallen to 29 percent, according to the Realtors’ group.
Flippers Win
Dajeune Tillman, 26, who works in the insurance billing department at a Los Angeles area hospital, has been looking for a larger place with a backyard for herself and her 5-year-old son since she qualified a year ago for a $109,000 Neighborhood Assistance Corporation of America mortgage that allows low-to-moderate income borrowers to purchase without a down payment and without paying closing costs. She keeps losing out to investors paying cash and buyers with traditional mortgages.
“I get beat out even before I get a chance to make an offer,” Tillman said. “All the investors do is they come in fix the houses and flip them up and crank the prices above what anybody can afford.”
The difficulty in Roseland is finding buyers willing to invest in the community of 45,000 people.
Pearson sees her home as a liability and will be happy when the bank takes it. She’s locked into a mortgage with a more than 8 percent rate and it’s a struggle to keep up with the payments. And her house, which sits on the same block as about five abandoned homes, has been broken into four times, she said.
“It’s sad because Roseland is where I was born and raised and I wanted to keep the tradition of homeownership going,” said Pearson, whose parents became homeowners two years before she was born. “It’s a great community. But I just can’t do it.”
http://www.bloomberg.com/news/2013-09-03/black-homeownership-dying-where-obama-revitalized.html
Black Homeownership Dying Where Obama Revitalized
By Prashant Gopal
Sep 3, 2013 7:54 AM CT
Helene Pearson’s belief in homeownership was shattered in Roseland, the mostly black Chicago neighborhood where President Barack Obama got his start as a community organizer.
Pearson, who bought her two-bedroom, red-brick bungalow on South Calumet Avenue in Roseland for $160,000 in 2006 with a high-interest loan, put it on the market a year ago for $55,000 and didn’t attract a single offer. Her bank has agreed to take it back.
“I was so excited to buy my first house right down the street from my mother but they got me good,” said Pearson, a 35-year-old guidance counselor and mother of two girls. “This scarred me so badly that I never want to buy again.”
For most Americans, the real estate crash is finally behind them and personal wealth is back where it was in the boom. For blacks in the U.S., 18 years of economic progress has vanished, with a rebound in housing slipping further out of reach and the unemployment rate almost twice that of whites. The homeownership rate for blacks fell from 50 percent during the housing bubble to 43 percent in the second quarter, the lowest since 1995. The rate for whites stopped falling two years ago, settling at about 73 percent, only 3 percentage points below the 2004 peak, according to the Census Bureau.
Identical Goals
When Obama, the country’s first black president, took office in 2009, he inherited an economic and housing crisis that disproportionately affected minorities. In a speech last week on the 50th anniversary of Martin Luther King Jr.’s March on Washington, he called for expanding King’s dream of racial equality to include economic opportunity for all.
“Dr. King explained that the goals of African-Americans were identical to working people of all races: decent wages, fair working conditions, livable housing, old age security, health and welfare measures -- conditions in which families can grow, have education for their children and respect in the community,” Obama said at the Lincoln Memorial in Washington.
In Roseland, among the hardest hit neighborhoods in the country during the housing bust, many of the causes of the crash and obstacles to rebuilding black homeownership are found, according to Spencer Cowan, vice president of research at Woodstock Institute, a Chicago-based nonprofit group that researches fair lending, foreclosures and wealth creation.
Almost 40 percent of borrowers there took out high-cost loans in 2005 and 2006 as mortgage lenders backed by Wall Street targeted minority home buyers across the country for loans that required lower credit scores, reduced down payments, or featured interest rates that would start low and rise over time, contributing to an unsustainable bubble that popped when defaults rose and they cut off lending.
Vacant Properties
Now, almost one in 10 Roseland properties is vacant and the area’s homeownership rate fell to 57 percent in 2010 from 64 percent in 2000, according to the Woodstock Institute. The median home price meanwhile has dropped to $28,000 in the second quarter from $119,000 in 2005, according to Midwest Real Estate Data LLC.
The remaining homeowners, many of them elderly, live surrounded by vacant, boarded-up houses and gang violence that has led to 16 murders this year as of Aug. 30, which is a 30 percent drop from the same period in 2012.
Ernest Washington Jr., 63, bought his South Forest Avenue home for $25,000 in 1974 and had paid the mortgage down to $13,000. Now, after refinancing the house multiple times to finish the basement and make other improvements to the property, he owes $150,000 -- about $20,000 more than it’s worth. His mortgage rate is 8.5 percent.
“Being that this was a stable community, what they did was put people in the area further into debt,” Washington said.
Love Remembers
The Rev. Alvin Love remembers the day in the mid-1980s that a young community organizer named Barack Obama rang the doorbell at his Lilydale First Baptist Church Roseland.
Unemployment was on the rise in the predominantly black neighborhood in those days after local steel mills had closed and Obama, who worked with a church-based community group, was looking for allies to support job training programs.
In 1986, a year after Obama arrived in the community, the Woodstock Institute released a study of 500 Chicago-area financial institutions, showing “huge inequalities” in the distribution of housing credit, favoring suburbs over poor city neighborhoods like Roseland, which had become increasingly segregated.
The area’s history of mortgage discrimination mirrors that of urban enclaves from Boston to Los Angeles. The practice of “redlining” began eight decades ago when the Federal Housing Administration drew up maps using red ink to delineate inner-city neighborhoods considered too risky for lending.
Reverse Redlining
Congress passed the Fair Housing Act in 1968 and the Equal Credit Opportunity Act in 1974, which banned discrimination in lending and home sales based on race and national origin. Lawmakers followed in 1977 with the Community Reinvestment Act, to ensure banks were actively lending to credit-worthy borrowers in low-income areas.
The housing boom of the last decade, spurred on by the successive Clinton and Bush administrations that unleashed ambitious programs to widen buying, also brought about a practice known as “reverse redlining” or steering residents of minority neighborhoods into high-cost mortgages, which led to a flood of foreclosures when the market crashed. Many of the minority borrowers who were given subprime loans would have qualified for prime loans with better terms, according to the U.S. Justice Department.
Easy Lending
Borrowers like Washington Jr., who had nearly paid off their traditional mortgages, instead got caught up in the craze of easy lending, refinancing into loans that were twice the original balance to pay college tuition for a child, fix their home or catch up with bills, Love said.
“It’s going to take a generation to get back to the point where homeownership can build wealth in this community,” Love said.
The Obama administration’s first programs to help homeowners were geared toward keeping them in place through loan modifications, refinancing into lower-cost loans and $7 billion in neighborhood stabilization funding, 60 percent of which has been used in minority communities. The grants paid to rebuild once uninhabitable homes for first-time buyers on the south side of Chicago and Baltimore and demolish others in Detroit and Cleveland.
Uneven Recovery
Initiatives to help people avoid foreclosure came too late for many borrowers who got their loans at the height of the boom. One in 10 black borrowers has already lost their home to foreclosure in the worst housing crash since the Great Depression, double the rate for whites, according to a 2012 Center for Responsible Lending report.
“The President remains deeply concerned about the uneven recovery,” according to a White House statement. He’s consistently called on Congress to act on mortgage refinancing legislation, provide more help to communities rebuilding and confirm Representative Mel Watt, a North Carolina Democrat, to head the Federal Housing Finance Agency, the statement said.
The administration is also cracking down on discriminatory lending and trying to expand homeownership at a time when banks’ underwriting standards are tightest for those rebuilding from the recession. Lenders have raised down payment and credit score requirements and debt-to-income thresholds, which has had a disproportionate impact on minority communities, said Cowan at Woodstock.
New Redlining
“This is a new form of redlining,” Cowan said. “The same communities that bore the initial brunt of the foreclosure crisis, targets of the toxic lending, are now finding it more difficult to access credit as the economy starts to improve.”
Obama last month introduced new housing reforms targeted at middle-class communities. Borrowers with foreclosures or bankruptcies resulting from a job or income loss will be able to finance a home purchase with a Federal Housing Administration mortgage as long as they demonstrate 12 months of timely payments, complete housing counseling and otherwise qualify. The FHA, a government mortgage insurer, now requires a three-year wait.
“Places facing a longer road back from the crisis should have their country’s help to get there,” Obama said during a speech on housing in Phoenix last month.
The Justice Department under Obama has cracked down on both redlining and reverse-redlining.
Subprime Loans
Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC) agreed to pay a combined $569 million during the past two years, in the two biggest residential cases in the history of the Fair Housing Act and the Equal Credit Opportunity Act. Borrowers with loans from Wells Fargo and Countrywide Financial Corp., the biggest U.S. mortgage lender acquired by Bank of America in 2008, were more likely to be put in subprime loans if they were black or Hispanic, even when they qualified for lower-cost mortgages.
Bank of America spokesman Rick Simon, who declined to comment for the story, referred to a statement the bank released at the time of the $335 million Countrywide settlement.
“When we acquired Countrywide, we immediately discontinued origination of subprime and other higher cost mortgage products that were not in keeping with our commitment to responsible lending and sustainable homeownership,” the 2011 statement said.
Tom Goyda, a spokesman for San Francisco-based Wells Fargo, said, “We’ve denied the claims made by the Department of Justice from the beginning and stand behind our record as a fair and responsible lender.”
The Wells Fargo and Countrywide settlements did not include admissions of wrongdoing, according to the Justice Department.
Tough Position
Lenders are in a tough position because “when they don’t lend to minorities they’re accused of discrimination and when they do lend and there are foreclosures they’re accused of predatory lending,” said Paul Willen, a senior economist at the Federal Reserve Bank of Boston.
Credit scores and other automated underwriting criteria help prevent discrimination by taking the loan officer’s judgment out of the transaction, Willen said. Allowing more discretion based on an individual borrower’s circumstance makes lenders vulnerable to unconscious prejudice, he said.
“After 40 years of trying to get lenders’ judgment out of the equation, policymakers are trying to put it back in,” Willen said.
Wealth Gap
Credit already is loosening for the wealthiest Americans. While applications for jumbo mortgages of at least $729,000 increased 59 percent in the first four months from a year earlier, loans of less than $150,000 fell by 2.1 percent, according to the Mortgage Bankers Association.
The median wealth of white households was 20 times that of blacks and 18 times the Hispanic rate, a record gap in data going back three decades that is twice the pre-recession size, according to a 2011 Pew study.
“African Americans are starting way behind into this recovery,” Cowan said. “Because African American buyers were last into the market and bought at the most inflated prices, when the market deteriorated, they were the ones who lost the most.”
As prices recover, cheap properties are in short supply because they’re being purchased by flippers, private equity firms such as Blackstone Group LP (BX), and other cash buyers.
Nationally, the median price rose 13.7 percent in July from a year earlier as nearly 1 in 3 properties were purchased with cash, according to the National Association of Realtors. The share of first-time buyers, which historically averaged about 40 percent, has fallen to 29 percent, according to the Realtors’ group.
Flippers Win
Dajeune Tillman, 26, who works in the insurance billing department at a Los Angeles area hospital, has been looking for a larger place with a backyard for herself and her 5-year-old son since she qualified a year ago for a $109,000 Neighborhood Assistance Corporation of America mortgage that allows low-to-moderate income borrowers to purchase without a down payment and without paying closing costs. She keeps losing out to investors paying cash and buyers with traditional mortgages.
“I get beat out even before I get a chance to make an offer,” Tillman said. “All the investors do is they come in fix the houses and flip them up and crank the prices above what anybody can afford.”
The difficulty in Roseland is finding buyers willing to invest in the community of 45,000 people.
Pearson sees her home as a liability and will be happy when the bank takes it. She’s locked into a mortgage with a more than 8 percent rate and it’s a struggle to keep up with the payments. And her house, which sits on the same block as about five abandoned homes, has been broken into four times, she said.
“It’s sad because Roseland is where I was born and raised and I wanted to keep the tradition of homeownership going,” said Pearson, whose parents became homeowners two years before she was born. “It’s a great community. But I just can’t do it.”
http://www.bloomberg.com/news/2013-09-03/black-homeownership-dying-where-obama-revitalized.html
Despite rebound, minorities still hardest hit by U.S. housing bust
Despite rebound, minorities still hardest hit by U.S. housing bust
By Jennifer Chaussee
May 8, 2014 6:54 PM
SAN FRANCISCO (Reuters) - Despite a rebound in the U.S. housing market, African-American and Latino neighborhoods remain disproportionately impacted by the real estate crash, with many minorities still underwater on their mortgages, a report showed on Thursday.
The city with the highest rate of underwater homeowners - at 56 percent - is Hartford, Connecticut, where 83 percent of the population is Latino or African American, according to the report by the University of California, Berkeley's Haas Institute for a Fair and Inclusive Society.
Newark, New Jersey came in second with 54 percent of homeowners underwater and 89 percent of the population either Latino or African American, according to the report, which matched 2013 housing data to race and income data for zip codes across the country.
California, the most populous U.S. state, was home to 17 of the country's most underwater zip codes in 2013, the report shows. The predominantly Hispanic Inland Empire region has been hit especially hard, with 35 percent of homeowners underwater, meaning they owed more on mortgages than their homes are worth.
The report also showed that, during the housing bubble, these minority populations were less likely to be sold conventional mortgage loans and more likely to receive sub-prime loans when purchasing homes.
"At the peak of the housing market, the financial industry targeted the African-American and Latino communities with subprime loans," said Peter Dreier, a co-author of the report and professor of urban and environmental planning at Occidental College in Los Angeles. "They were lied to and misled to think they didn't qualify for conventional loans."
The report was released in the blue collar San Francisco suburb of Richmond, where 34 percent of homeowners were underwater in 2013. In neighboring San Pablo, home values remain 50 percent below their peak value in the 2007, just before the housing bubble burst.
In both areas, more than half of all residents are either Latino or African American.
The report comes as Richmond is pushing to implement a controversial program that would allow local municipalities to take over and restructure underwater loans and convert vacant foreclosure properties into affordable housing.
Last September, a federal district judge dismissed a lawsuit Wells Fargo had filed against Richmond challenging the program.
"In the absence of the federal government taking initiative, more and more cities are looking to Richmond to see if they can do what Richmond is doing," Dreier said.
http://news.yahoo.com/despite-rebound-minorities-still-hardest-hit-u-housing-225420137--sector.html
Despite rebound, minorities still hardest hit by U.S. housing bust
By Jennifer Chaussee
May 8, 2014 6:54 PM
SAN FRANCISCO (Reuters) - Despite a rebound in the U.S. housing market, African-American and Latino neighborhoods remain disproportionately impacted by the real estate crash, with many minorities still underwater on their mortgages, a report showed on Thursday.
The city with the highest rate of underwater homeowners - at 56 percent - is Hartford, Connecticut, where 83 percent of the population is Latino or African American, according to the report by the University of California, Berkeley's Haas Institute for a Fair and Inclusive Society.
Newark, New Jersey came in second with 54 percent of homeowners underwater and 89 percent of the population either Latino or African American, according to the report, which matched 2013 housing data to race and income data for zip codes across the country.
California, the most populous U.S. state, was home to 17 of the country's most underwater zip codes in 2013, the report shows. The predominantly Hispanic Inland Empire region has been hit especially hard, with 35 percent of homeowners underwater, meaning they owed more on mortgages than their homes are worth.
The report also showed that, during the housing bubble, these minority populations were less likely to be sold conventional mortgage loans and more likely to receive sub-prime loans when purchasing homes.
"At the peak of the housing market, the financial industry targeted the African-American and Latino communities with subprime loans," said Peter Dreier, a co-author of the report and professor of urban and environmental planning at Occidental College in Los Angeles. "They were lied to and misled to think they didn't qualify for conventional loans."
The report was released in the blue collar San Francisco suburb of Richmond, where 34 percent of homeowners were underwater in 2013. In neighboring San Pablo, home values remain 50 percent below their peak value in the 2007, just before the housing bubble burst.
In both areas, more than half of all residents are either Latino or African American.
The report comes as Richmond is pushing to implement a controversial program that would allow local municipalities to take over and restructure underwater loans and convert vacant foreclosure properties into affordable housing.
Last September, a federal district judge dismissed a lawsuit Wells Fargo had filed against Richmond challenging the program.
"In the absence of the federal government taking initiative, more and more cities are looking to Richmond to see if they can do what Richmond is doing," Dreier said.
http://news.yahoo.com/despite-rebound-minorities-still-hardest-hit-u-housing-225420137--sector.html
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