Racism After Redlining

Practically any modern American historian can narrate a brief history of redlining in the United States. As the story goes, between the mid-1930s and the late 1960s, white buyers received essentially all of the loans approved or insured by the federal government (around 98% of such loans, or as many as 35 million total white households by some counts).¹ Across these decades, this account continues, African Americans remained trapped in government public housing projects or were left to languish as tenants in privately built slums that, by the 1960s, made their communities fitting targets for urban renewal and the attendant development of even larger public housing projects. Today, center-left journalists and politicians can readily tell this story, as well, usually with the same basic characters in place—“FHA,” “maps,” “banks,” “generational wealth,” and so on. The belief is that, with this story, you can pretty much explain the origin of racial inequality and wealth disparity. You know how segregation foreclosed Black futures—one home, one family, and one neighborhood at a time.

Or so it seems. As important as the story of New Deal- and post-World War II-Era discrimination is, we’ve generally only been telling half of the story. (To be clear, even half the story has been, for many, revelatory!) Yet, one of the dangers accompanying fresh popular awareness about redlining in American history has been a set of tangled and somewhat misleading assumptions. The first concerns the benefits of homeownership, in the abstract, or how correcting the legacies of redlining, in particular, simply means providing Black people the choice of owning their own home. A second related assumption depicts, in the telling of redlining’s history, a single straight line between mid-twentieth-century housing discrimination and twenty-first-century inequities in wealth, education, health outcomes, and the like. The apparently clean causality between the New Deal discriminations and today often reads like some version of, “Look at this map from 1938…. Now… the wealth gap!”

Keeanga-Yamahtta Taylor has provided us a much needed second half of the story. And, perhaps no surprise, the story is actually worse than we thought. In Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, Taylor walks us through how, following the passage of the 1968 Fair Housing Act, racist housing policy survived the abolition of redlining. Sensitive to the particulars of specific cities, agencies, and power relations, Taylor’s book details how policy makers kept the profit motive at the center of housing reform. She replaces our all-too-swift causal parable about the FHA with a no-less-digestible but infinitely more nuanced exploration of “fair housing’s” for-profit design. Targeting communities of color and working people with dangerous forms of housing credit has been called “reverse redlining,” and reverse redlining has a history. Keeanga-Yamahtta Taylor provides its first comprehensive treatment, boring down into the programs, financial interests, and crass political calculations that encouraged Black homeownership and that served Black people up for new forms of discrimination and exploitation.

For a fleeting moment in the mid-1960s, it seemed that decades of arguments on the civil rights and labor left had worked their way into American housing policy. The high water mark came in 1968. That year saw the passage of the Fair Housing Act and the US Supreme Court decision in Jones v. Mayer, which merely enforced for the first time a Reconstruction Era equal rights provision to extend “white” ownership protections to all Americans. Nested within this moment of liberal promise however, lay deeper anti-Black political and economic commitments. And it started within the nations ranking housing agency.

Established in 1965, HUD was born of a world still governed by Jim Crow’s fundamental economic logic, namely that Black people must be heavily regulated if they were to be put to productive use. It’s a moment when, as Taylor describes, “a bootlegger,” brothel owner, gangster, and “a colored man of means” all presented the same kind of threat to a neighborhood’s civic and economic health (40). HUD was also founded, in somewhat reactive ways, as a much-needed response to the urban rebellions of the late 1960s. Its policies were intended to build-up America’s so-called “ghettos.” But in its efforts to incentivize investment, HUD policies presumed that Black communities had little intrinsic value; that they were all some version of vast unvariegated ghetto.²

During the late 1930s, “ghetto,” as a term, found increased usage among American housing activists by virtue of its association with the intentional confining of Jewish Europeans under Nazism. By the 1960s, that same term had become synonymous with Blackness.³ Thus, as the logic went, fixing Black America meant “gilding the ghetto” with more aggressive slum clearance and urban renewal programs, followed by incentivizing banks, insurance companies, and other mortgage lenders to extend home loans and new state-of-the-art rental developments to African American urbanites.

There was only one major problem. Few within the housing sector proved willing or able to correct the industry’s abiding racial myths. Deep into the 1970s and after, policy makers and business people held fast to skewed logic about the economic impact of Black culture. These included assumptions about Black criminality, the supposed lasciviousness of Black women, and the apparent destiny of every Black community to depreciate in value. On this last score, the common sense went, stated crudely: Landlords exploit stupid people. Black people get more exploited. Thus, Black people are stupid (and, among liberals, in need of being saved from themselves). In the parlance of 1970s housing officials, this was, of course, put more clinically—Black people are “unsophisticated buyers.”⁴ The prognosis remained clear regardless—paternalism and the profit motive. Get smarter Black people, and we’ll think about regulating exploitation. Let welfare workers inspect your home, then we’ll approve your home appraisal (185). Subject yourself to a counseling regimen, Black woman, and we’ll let you take on five-figure debt. Remarking on the coercive instruments built into “fair housing” practices, HUD’s FHA director in Milwaukee, Lawrence Katz, had to admit in 1972, “I’m convinced that many of the low-income families currently buying homes in our central cities—if given the alternative—would prefer renting. Many are buying because that have no choice” (187).

In the 1970s, Taylor’s “predatory inclusion” might be considered redlining by another name. As she explains, “the resurrection of the viability of redlining was made possible by highlighting the perceptions of urban dysfunction.” “The more intense the problems in American cities,” she continues, “the more legitimacy was lent to the boundaries that limited the spatial movement of the people who lived in those cities” (226). In many corners of the country, local expressions of fair housing offered little more than fresh forms of containment. And nationally, complaints of discrimination filed at HUD remained locked in a five-month backlog.⁵ Even, when regulators caught violators of civil rights law, punishments amounted to, if anything, a slap on the wrist. HUD rarely withdrew federal funds in cases of proven discrimination. The point, after all, was to use the programs.

Industry wide, fat carrots and brittle sticks kept the profitability of Black poverty firmly in place. White thinking within the housing sector assumed that African Americans were riskier borrows; that Black people, by default, wanted to remain in ghetto neighborhoods; and that Black people cared more about merely owning something than about gaining greater access to suburban housing or rigorous open-housing and anti-discrimination enforcement. Black agents and developers in local real estate markets, by and large, “remained firmly committed to maintaining the urban housing market and [their] role it” (110). Even federal regulators, those most ostensibly committed to the spirit of fair housing law, avoided imposing aggressive standards on large players in the real estate industry, such as the life insurance companies, lest these corporations opt out of the new federal programs completely (79, 83). Again, the point was to use the programs.

Through an almost reflexive commitment to expanding Black ownership, racial assumptions held fast at the core of housing policy. And with predictable results. Between 1968 and the mid 1970s, urban landlords became heavy beneficiaries of efforts to turn renter-heavy communities into neighborhoods of owners. They took advantage of rental subsidy programs, sold Black people their run-down properties for top dollar, and left Black buyers with older housing stock often requiring heavy renovation and capital-intensive repairs. Lenders also ate at HUD’s trough. They raised interest rates, in affirmation of the perceived hazards of extending credit to Black people. Real estate developers received their own perverse federal inducements. With the aid of practiced bigotries on the part of realtors and well within the racial risk provisions of the lending sector, America’s home builders professed to solve the deepening “urban crisis” by building newer housing on cities’ white suburban fringes. Hardly a solution, but in keeping with the designs of the housing sectors most powerful players. By 1974 (and just like 1964!), housing policy had devolved back onto the local governments, with Black America, via public scandals at HUD, stained anew as the beneficiary, rather than the target, of public/private corruption (209).

The product of a seasoned author, Taylor’s book strikes a tough balance. It details the intricacies of HUD policy while holding readers close through very human depictions of the experiences and manipulations of those policies. The basics are as tangible as they are disgusting. Lenders offered potential Black buyers higher interest rates, and, under HUD Section 235, the government picked up the tab. Landlords raised rents, and under Section 236 and Section 8, the government covered that increase as well (247). In 1973, 40% of the HUD budget—some $1.8 billion—merely went toward lenders’ interest payments.⁶ And while scores of African American buyers pursued homeownership, they saw their modest nest eggs quickly depleted by capital-intensive home repairs, typical of the older housing stock from which realtors, appraisers, and lenders forced Black people to choose.

Rats, collapsing roofs, gaping holes in ceilings and floors—these and other physical dangers often awaited aspiring Black owners. Foreclosure, eviction, litigation, and bankruptcy—such and more stood among the financial calamity of the post Fair Housing Act Era. It’s a process Taylor describes, quite fittingly, as “predatory inclusion.”

But there’s more to the book than some new nomenclature. There’s within its pages new ways to interrogate the story we tell about policy gone wrong. Taylor’s Race for Profit is not a story of unintended consequences, blunders of liberal governance, or simply allowing the market to compound white people’s nest-egg to a degree that, today, exceeds Black wealth seven fold. Race for Profit offers, instead, a story about tensions between predatory and reformist tendencies, between forces malignant, on the one hand, and compromising on the other. It ask us to name the securing of profit among the intended consequences of housing reform. It prompts in readers, just as forcefully, a subsequent realization that, for many, “housing reform” went exactly as planned.

Taylor, of course, is too careful a historian not to give a question of motivation the appropriate finesse. To say that something worked as planned should merely prompt one to interrogate the plan, not to treat individuals as all-powerful.

This attention to the design of housing policy, and the persons executing it, represents a second critical balance Race for Profit strikes. Taylor gives us an important window into the limitations placed on key individuals. In the braided history of the Black Freedom Struggle and durable white supremacist culture, President Richard Nixon protected Black rights perhaps more than he wanted, and HUD Secretary George Romney proved far less effective in ending housing segregation than he likely hoped. Both were boxed in by a moment of nominal commitments to civil rights, durable commitments to a for-profit housing sector, and glacial government responsiveness to all but white interests.

Then there’s the more fundamental matter of capital’s raw historical weight, its causal power. Even with the many breakthroughs in housing one saw in the legislative arena, nothing decentered the profit motive or, for that matter, broke up the existing concentrations of capital that Jim Crow Era real estate interests had amassed through generations of egregious housing discrimination. What this means for Taylor is, if we must talk about culture and its ties to affordable housing, then let it be about cultural consequences of the profit motive for housing reformers themselves.

We have a literature which explores how, during the 1960s and 1970s, white flight exacerbated the privatization of city services and propelled anti-tax organizing. We also know that, at this same time, several U.S. Supreme Court decisions on education and housing ensured that property rights arguments would help preserve white racial privilege. Taylor offers yet another way of appreciating the 1970s as a time in which Americans rolled back the will to generate broad support for attacking segregation when they increasingly drowned out cries about “structure” and imposed illusions of “choice.”

Indeed, segregation itself, in the decade after the Fair Housing Act, increasingly seemed the result of personal preference, not law. Testifying before the US Commission of Civil Rights in 1971, HUD Secretary George Romney drew false equivalency between housing location—a state action determined by zoning, permits, and the availability of government mortgage insurance—and consumer and broker preferences, both ostensible expressions of the market. Speaking before Congress at a different point, Romney went even further. “We will not solve these problems, if we pretend that housing is the cause…Housing didn’t destroy the quality of public education in the schools. Housing didn’t bring the drug addiction in…Too often the result is being accused of being the cause” (223). As Taylor’s book makes clear, the late 1960s and the 1970s were an age when, in the fog of faith in choice and the markets, cause and effect got easily confused.

Taylor avoids the trap of choice by showing how the outcomes of Black people’s choices depended less on their demonstrable “sophistication” or values, and more on something as basic as the terms of their insurance, and not merely their mortgage insurance either. What Black choice needs, Taylor’s book affirms, is insulation from political risks. Since at least Reconstruction, African Americans’ commitment to owning a home represented both a personal choice and a political act. It promised a measure of freedom, serving as an exercise in hope and faith. It also existed, though, in a broader history and economy of white supremacy wherein such pursuits, for many, ultimately came at great economic and existential cost.

Owning one’s own home or farm, starting one’s own business—basically, any endeavor that requires lump sums of money—winds up decimating Black people to a disproportionate degree. For this reason credit and insurance discrimination against Black people sits at the foundation of a broader history within which redlining serves as but a part (though certainly a devastating part). Those less familiar with the more general history of anti-Black land-grabbing may be surprised to learn, for instance, that, between 1920 and 1975, the number of Black-owned farms dropped by 95%. Today, African Americans make up just 1% of America’s rural landowners.⁷ Similar numbers define the racial preponderance of small business failures, the impact of medical bills, the outsized costs of student loans among students of color, and so on.

‘Tis not enough to own, Race for Profit reminds. One must have the political power to protect that ownership. Federal housing policy after the Fair Housing Act offered African Americans increased paths to ownership, but nothing in the way of protection. It offered mortgage insurance, but not political insurance, not the kind of protection that corporate developers and landlords enjoyed, that capital purchases. With Race for Profit close at hand, the framework of “predatory inclusion” can be quite widely applied. Taylor’s book brilliantly casts usury as a regrettable precondition of social reform, of Black fortunes. And in so doing, it opens our popular understanding to include within our tales of American inequality accounts of dispossession, and not just exclusion.

The abiding question when assessing policy’s impact, then, is not whether an outcome is intended, but rather whose intention most determined the outcome. Did Black people in 1970s America want to buy houses in already established Black neighborhoods? Did mortgage brokers elect to avoid using government housing programs? At times, yes on both counts. But even in those moments, Taylor reminds, such choices did not occur in a vacuum. They were predetermined by larger intentions of government powers and tendencies in the business community to only offer certain mortgage products for certain communities. Certain intentions set the terms for others. Consider how, as Taylor explains, the very same companies blocking fair housing in one regulatory environment, like, say Metropolitan Life Insurance Company in the 1940s, can retain the same power over where Black housing goes in the 1970s—three decades later!—but this time by way of extending credit to African Americans (69, 83). Says Taylor, succinctly, “The end of redlining was intended to create greater penetration and mobility for capital, not people” (85). Government regulation, Race for Profit reminds, has never been the enemy of business in some abstract sense. It has routinely served as the savior of entrepreneurship, in fact. Well, for some.

Our popular memory about redlining and racism tends to get cloudy—quite cloudy—once the story gets to and through the 1960s. Only genuine policy wonks can narrate even a cursory history of housing in the Nixon Era and after.⁸ But this is, in so many ways, the era of housing policy we still call home. It’s one outfitted with narratives about Black cultural dysfunction, unthinking faith in the private sector, and platitudes about the benefits of ownership leveled at the politically powerless. And it provides a lucid and powerful bridge between historical and sociological treatments of the how governments and entrepreneurs have preserved segregation as an “All-American” money maker. Poverty for some, prosperity for others.

To make Taylor’s story of predatory inclusion stick within our popular storytelling the way, say, the New Deal redlining story currently enjoys, a more specific sense of scale, written by the Urban History field at large, will likely still be necessary. If, as Taylor maintains, the federal government and private industry preempted the spirit of the Fair Housing Act by forcing Black people into more dangerous forms of credit, then we’ll need, through future research, a sharper statistical sense of the degree to which former Black renters became preyed-upon owners. This is not a criticism of Race for Profit, but rather the charge Taylor’s impressive synthesis lays at our feet.

And answering such a charge won’t be easy. HUD, Taylor points out, did not keep racial data on its mortgages, likely an unfortunate byproduct of a nascent commitment in the late 1960s to color-blindness.⁹ We’ll therefore need many deeply granular case studies committed to parsing the post-1968 story through regional and municipal housing records. Similarly, what do we make of the fact that, similarly, at no point in U.S. history have a majority of African Americans owned their own home? (Researchers at the Urban Institute have pegged today’s Black homeownership rate to just above 40%.) What’s the degree of “predatory inclusion” for a population whose principal residential experience remains defined by the power of landlords? And how does it differ by city?

Such questions, frankly, will have to be answered the same way a generation of urban historians had to take to the archives—book by book—to detail their specific city’s version of New Deal-Era housing discrimination or, say, urban renewal. In this way, expect Keeanga-Yamahtta’s Taylor’s Race for Profit to perform historiographical work similar to what Kenneth T. Jackson’s Crabgrass Frontier or Hirsch’s Making the Second Ghetto achieved following their respective publications in mid-1980s.¹⁰ Expect it to launch several studies and, in time, to change the housing story still most widely told.