2 articles telling a sad story……
The Racist Housing Policies That Built Ferguson – The geography of America would be unrecognizable today without the race-based social engineering of the mid-20th century.
The Economic Policy Institute has just released a report by Richard Rothstein that gives some sense of how the world of Michael Brown came to be. It turns out that that world was born from the exact same forces that forged cities and suburbs across the country—racist housing policy at the local, state, and national levels. Rothstein’s report eschews talk of mindless white flight, and black-hearted individual racists, and puts the onus exactly where it belongs:
That governmental actions, not mere private prejudice, were responsible for segregating greater St. Louis was once conventional informed opinion. In 1974, a three-judge panel of the federal Eighth Circuit Court of Appeals concluded that “segregated housing in the St. Louis metropolitan area was … in large measure the result of deliberate racial discrimination in the housing market by the real estate industry and by agencies of the federal, state, and local governments.”
Similar observations accurately describe every other large metropolitan area; in St. Louis, the Department of Justice stipulated to this truth but took no action in response. In 1980, a federal court order included an instruction for the state, county, and city governments to devise plans to integrate schools by integrating housing. Public officials ignored this aspect of the order, devising only a voluntary busing plan to integrate schools, but no programs to combat housing segregation.
A lot of what’s here—redlining, housing covenants, blockbusting, etc.—will be well-known to those with a good handle on 20th-century American history. I focused on this particular era in my case for reparations. But it bears constant repeating: The geography of America would be unrecognizable today without the racist social engineering of the mid-20th century. The policy included—but was not limited to—mortgage loans backed by the Federal Housing Authority and the Veteran’s Administration:
At its peak in 1943 when civilian construction was limited, the FHA financed 80 percent of all private home construction nationwide. During the postwar period, it dropped to one-third. But even when subdivisions were not built with advance FHA commitments, individual homebuyers needed access to FHA or VA insured mortgages, so similar standards for new construction pertained. Subdivisions throughout St. Louis County were developed in this way, with FHA advance commitments for the builders and a resulting whites-only sale policy.
The FHA’s suburban whites-only policy continued through the postwar housing boom that lasted through the mid-1960s. In 1947, the FHA sanitized its manual, removing literal race references but still demanding “compatibility among neighborhood occupants” for mortgage guarantees. “Neighborhoods constituted of families that are congenial,” the FHA manual explained, “… generally exhibit strong appeal and stability.” This very slightly sanitized language suggested no change in policy, and the FHA continued to finance builders with open policies of racial exclusion for another 15 years.
In 1959, the United States Commission on Civil Rights concluded that only 2 percent of all FHA-backed loans had gone to blacks. “Most of this housing,” concluded the report, “has been in all-Negro developments in the South.”
As it relates to black America, segregation must always be understood, as a system of plunder. Once the big game has been fenced off, then comes the hunt:
According to a study by the St. Louis nonprofit Better Together, Ferguson receives nearly one-quarter of its revenue from court fees; for some surrounding towns it approaches 50 percent. Municipal reliance on revenue generated from traffic stops adds pressure to make more of them. One town, Sycamore Hills, has stationed a radar-gun-wielding police officer on its 250-foot northbound stretch of Interstate.
With primarily white police forces that rely disproportionately on traffic citation revenue, blacks are pulled over, cited and arrested in numbers far exceeding their population share, according to a recent report from Missouri’s attorney general. In Ferguson last year, 86 percent of stops, 92 percent of searches and 93 percent of arrests were of black people—despite the fact that police officers were far less likely to find contraband on black drivers (22 percent versus 34 percent of whites). This worsens inequality, as struggling blacks do more to fund local government than relatively affluent whites.
Ferguson, the Foreclosure Crisis and America’s Hedge-Fund Landlords September 5, 2014 by John Light
The events in Ferguson last month laid bare many of the tensions that are simmering in America. In areport for The New York Times’ Dealbook, Matthew Goldstein adds another to the list: Americans are still reeling from the 2008 fiscal meltdown, the resulting crash in the housing market and monied interests taking advantage in minority neighborhoods like Ferguson’s.Nationally, 17 percent of homeowners are underwater — they owe more on their mortgages than their homes are actually worth. In Ferguson, that figure sits at 50 percent. Because so many homeowners are struggling, the town is ripe for institutional investors — often hedge funds or private equity groups on the coasts, thousands of miles away — to buy up homes, then rent them to low-income tenants. And that’s what has happened. Investment firms are responsible for roughly a quarter of all recent housing purchases in the town.
Goldstein profiled two Ferguson families renting from one Los Angeles-based investment firm, Raineth Housing:
Housing advocates worry about what will happen if investors in firms like Raineth become dissatisfied with the returns from leasing homes to low-income families. The commitment of out-of-state landlords to maintaining properties also is a concern. Tenants and local housing officials have given Raineth mixed grades as a landlord.
Mr. Bryant, 24, who lives on Mueller Avenue in Ferguson, said he and his mother had been generally pleased with their home, which they have rented for four years. He said the landlord’s property manager had been fairly responsive about making repairs, although Mr. Bryant said the house, which has white siding and burgundy trim, “needs to be worked on, or updated.”
The Walkers, who moved into their two-bedroom white brick home on La Motte Lane a year ago, tell a different story. Ethel Walker, 54, a custodian at a local school, said her asthma has worsened because of a persistent mold problem in the house, which she blames on a leaky pipe and water in the basement. More recently, Ms. Walker and her daughter said they had had to deal with raw sewage gurgling up in their yard.
“When you’d flush the toilet it’d come up in the backyard,” Tasha Walker, 31, said.
As Goldstein notes, tenant advocates say the problem comes when investors try to turn too quick a profit on their investment — or fail to turn a profit at all. In New York City, for example, private equity firms have invested in neighborhoods — often low-income communities that investors were unfamiliar with — where the economics of their investment didn’t work out and tenants suffered. In some cases, residents watched their buildings fall into disrepair as their new Wall Street landlords sought to wring maximum profit. In others, tenants faced intense pressure to leave their homes as new landlords tried to gentrify neighborhoods and raise rents. Tenants’ rights groups have dubbed this style of landlordship “predatory equity.”
These practices have spread far beyond urban neighborhoods to the suburbs, where an abundance of cheap homes are teetering on the brink of foreclosure. In the wake of the housing crisis, Bloomberg reported, Blackstone Group raised $20 billion to purchase “as many as 200,000 homes.” As of 2013, the fund was renting residences in 14 cities. Ferguson was “largely avoided” by Blackstone, Goldstein writes, but other investment groups filled the gap.
So increasingly, in Ferguson and across America, homes that went through foreclosure during the crisis are now owned by large financial entities, many of which are staffed by individuals who had a hand in creating the crisis in the first place. And increasingly, Americans are renting from them.
But this issue too — specifically in Ferguson — comes back to race. In his cover story for The Atlantic, “The Case for Reparations,” Ta-Nehisi Coates pointed to housing as one key area of society in which racism has become institutionalized. The foreclosure crisis is one of his more recent examples:
In 2010, Jacob S. Rugh, then a doctoral candidate at Princeton, and the sociologist Douglas S. Massey published a study of the recent foreclosure crisis. Among its drivers, they found an old foe: segregation. Black home buyers—even after controlling for factors like creditworthiness—were still more likely than white home buyers to be steered toward subprime loans.
The chart below shows that people of color with good credit received high-interest mortgages or subprime mortgages far more often than white borrowers with similar credit. These mortgages were meant for only the riskiest borrowers. Because of their higher rates, houses purchased with these mortgages were harder to pay off, and were more likely to face foreclosure.
Ferguson is roughly two-thirds black, and white residents are moving away. The town’s racial shift occurred in the run-up to, and during, the recession. It seems very likely that the town’s growing black population, and its large number of underwater homeowners, are related: Housing is a major factor tying America’s fraught relationship with race and the recent financial crisis. And both contributed to the unrest in Ferguson.