As the presidential election season heats up, the candidates will clash over how the country should climb back from the 2008 economic slump. But often lost in that debate is recognition of the especially harsh impact the economic downturn has had on communities of color. All communities have been touched by the economic crisis, but not all have been affected or treated equally. A meaningful debate about the path to recovery requires a careful examination of the uneven impact on African-American and Hispanic families and the role of racial discrimination in creating the ongoing distress.
As is true with so many aspects of American life, when it comes to the impact of the economic crisis, race matters: According to the Pew Research Center, the median wealth of white households has grown to 20 times that of black households and 18 times that of Hispanic households. The report noted the historic significance of such pronounced inequality, as the gap is the largest since such data collection started over a century ago.
These growing disparities stem directly from the impact the financial crisis had on different communities. While white household wealth declined by 16 percent between 2005 and 2009, black households lost 53 percent of their wealth and Hispanic household wealth dropped by 66 percent. Among other things, this reflects the effect of foreclosures, which have hit minority households with disproportionate force. Homeownership accounts for a greater share of household wealth for black and Latino families than it does for whites. The surge in foreclosures caused a greater portion of that wealth to evaporate, taking with it much of the progress communities of color made in joining the middle class over the past five decades.
These staggering inequalities reinforce themselves over the course of generations. Wealth gaps reproduce themselves as each generation enjoys advantages inherited from family. This means that current racial wealth gaps will beget future racial inequality. "Study after study," according to a recent NPR report, "shows that white families are more likely than blacks and Hispanics to enjoy certain economic advantages -- even when their incomes are similar." Those advantages tilt the scales in favor of those who begin with a leg up. Uneven starting points, in other words, mean that current losses of wealth -- especially because of economic shocks, like foreclosure -- will shape the fortunes of one's children and grandchildren.
Why did the economic collapse hit communities of color with such amplified force? These gaping wealth disparities reflect many sources of inequality, but flow in large part from abuses in the subprime lending market, which sent the wider economy into a tailspin. And those abusive lending practices were rooted in racial discrimination.
Subprime lending and race were inextricably linked from the outset. A 2000 government report found that borrowers in black neighborhoods were five times as likely to refinance in the subprime market as borrowers in white neighborhoods, even when controlling for income. Worse, the report indicated that these disparities could not be linked to preexisting differences in economic conditions, because "borrowers in upper-income black neighborhoods were twice as likely as homeowners in low-income white neighborhoods to refinance with a subprime loan."
These disparities became entrenched as subprime lending expanded. A 2006 report found that, within the subprime market, minority borrowers were over 30 percent more likely to get higher-rate loans than whites, even after risk differences were accounted for. Communities of color consistently received loans with higher price tags and riskier terms, even when white borrowers with similar qualifications received safer loans.
Predictably, discrimination in the subprime market led directly to massive disparities in foreclosure rates. By 2010, African Americans and Latinos were 47 percent and 45 percent more likely than whites to face foreclosure. The link between race, subprime lending, and elevated rates of foreclosure has become crystal clear. According to Princeton researchers, "the greater the degree of Hispanic and especially black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences."
And yet, the vicious cycle continues. Abusive subprime lending caused foreclosures to hit communities of color especially hard; now, as the foreclosure crisis grinds on, new racial disparities emerge in how those foreclosed homes are managed by the banks that become responsible for their upkeep. One recent study found that, in hard-hit communities across the country, foreclosed properties "in predominantly White neighborhoods were more likely to have neatly manicured lawns, securely locked doors, and attractive 'for sale' signs," while "homes in communities of color were more likely to have overgrown yards littered with trash, unsecured doors, broken windows, and indications of marketing as a distressed sale." These differences have consequences for entire neighborhoods. If you live on a block with bank-owned houses in visible disrepair, your quality of life -- not to mention your property value -- starts to deteriorate.
Economic recovery, in other words, is a civil rights issue. It is inextricably linked with the nation's promise -- enshrined in our civil rights laws -- that discrimination must be banished from the basic spheres of society. Discriminatory lending contributed to a dynamic that placed the entire economy at risk. That means that any policy debate about how to improve economic conditions must grapple with the uneven burden that black and Latino communities have shouldered. An honest and responsible presidential contest ought to deliver nothing less.
This post is part of the HuffPost Shadow Conventions 2012, a series spotlighting three issues that are not being discussed at the national GOP and Democratic conventions: The Drug War, Poverty in America, and Money in Politics.
HuffPost Live will be taking a comprehensive look at the persistence of poverty in America August 29th and September 5th from 12-4 pm ET and 6-10 pm ET. Click here to check it out -- and join the conversation.
In terms of success in life, the divide in my family is so clear: The conservative individuals within my family have all carved out successful lives, even within the economic downturn, while those who believe in liberal ideals have all failed completely, falling into bad financial decisions, second mortgages, drug abuse, and institutionalization. The conservatives in my family are businessmen and businesswomen, property owners, a US navy officer, architects, ranchers, and engineers. The liberals are drug users and welfare recipients, and have squandered the value of their family home in a desirable real estate location on the California coast. While the liberal members of my family have spent more time in college (per capita) they have squandered their education as well -- the conservatives have basically gone to college just long enough to get their degrees, and then leveraged their education to success in real life. The same lines apply with my hispanic and my white family members.
Unless you we're being taken out of your home at gunpoint and forced to sign a mortgage, you really can't point a finger at anyone else.
Unless these subprime lenders were presenting fake documents with trumped up numbers.
Further, subprime lending being in greater proportion in the black community does not prove racial discrimination either. People have a choice to borrow money or not regardless of color, no one is forcing anyone white or black to borrow money. Are you saying that blacks were more easily fooled into signing bad loans?
Likewise, foreclosure rates being higher for blacks and latinos does not mean there is discrimination. It could be that since minorities were harder hit with unemployment during the recession, they were less able to service their mortgages and therefore faced greater foreclosure rates?
Until we can instill in parents the absolute importance of seeing that their children get a good education, we will just be flapping our gums. And I don't mean college. Many kids aren't college material but they must get a better K-12 education.
I'm reminded of a hurricane that hit my town several years ago. Not a national disaster but still a category 1 that effected everyone. As I drove around town afterwards I couldn't help but notice that those with the least, lost the most. An old lady who lived in a run down mobile home was sitting in what was left of her home crying. All that was left was the flooring and a few meager possessions. A family I knew that lived in what was slightly above a shack only had their living room left intact. Both of these families had very little to begin with and now had even less. Across town are very nice new homes. Multistory brick homes built to hurricane standards overlooking the bay. Not a one was damaged beyond a few missing shingles. If they had been damaged I'm sure insurance would have covered the repairs.
I make this comparison, an economic downturn vs a Hurricane to illustrate a point. No matter the tragedy it's always those barely surviving that end up taking the hardest hit. It's not racial it's pure economics and comes with already being poor.
AAs have little respect for education. Even O ama raised that issue in the last campaign. They produce most of their children out of wedlock, thus insuring poverty and lack of discipline (and trou le) among the young males.
The Hispanic community is constantly dragged down y the ongoing arrival of countless new illegal immigrants, most of whom are poor and uneducated. These are the real reasons that li erals won't acknowledge. It's always the race card; and people are really sick of that Another reason why the Dems will lose in Novem er.