Prior to the current mortgage crisis, the median wealth of a White family was $88,000.00, the median wealth of a Black family was $5,900.00. The forthcoming evidence proving the Federal Governments’ role in producing this startling statistic will be overshadowed by the controversy over the truthful statements of Rev. Jeremiah Wright and subsequent division in the Black community over color blindness and culpability. It appears the color blind faction will prevail as their membership explodes with the congregants from the churches of Obama, Davis, Booker, Patrick and other Ivy-league preachers. Members are being baptized in droves. Never in the history of the Black community have we seen so many answer the call to hope, with all supplicants expressing faithfulness and devotion to the color blind ideology.

The flock has been unwittingly seduced into believing America has abruptly become an egalitarian society. Thus, rendering the sacrifices made by the Jeremiah Wrights, Dr. Kings, Messrs. Garvey, Delaney, Vessey, Turner, and brave women like Truth, Tubman, Wells, Haimer and Parks almost meaningless. Yes, meaningless. Membership in this neo-color blind club prohibits members from speaking of America’s past sins. Violation of this tenet is banishment and the inglorious label of being old, angry and irrelevant. But what is really disturbing about this issue, the color blind faction has moved into the phase of race relations that are replete with the same characteristics that have defined America since 1789 - denial, delusion and hypocrisy.

Denial of one’s history, culture, ancestry and America’s past sins is a bit much to join some club, albeit an exclusive one. This is no less than an abomination or blasphemy. One of the greatest hoaxes in America’s history is the lie we learned in public school called American History and now those advocates of color blind politics want you to abruptly step into a disinfected society by denying any of the terror and mayhem against Blacks in America has taken place. If today’s generation cannot speak of it in public, tomorrow’s generation will know only the antiseptic history taught in public schools. A democratic nomination is not worth it due to the limited economic benefits the Black community can expect to receive for such a tradeoff. We drank the kool aide en masse several times before. Let us not do it again. Think of the number of Blacks who are rotting away in prison because of their alleged crimes. But you will swing open the pearly gates for America before she confesses her sins?

America should pay for her sins just as America forced Belgium, Germany, Switzerland, Japan and South Africa to pay reparations for their crimes and oppression of various minorities. I know the response, “we have tried to make America pay reparations”. I agree, we have tried but our efforts were based upon a legal theory America is prepared to defeat each time we go into the courtroom. The challenge to any Black legal scholar is to go beyond where you are today in your thinking about reparations. Just as Charles Houston persevered until he was able to have the Supreme Court declare restrictive covenants unconstitutional, legal theorists must be willing to step outside their comfort level to prove America has a debt to Blacks in this country and she cannot simply ignore this debt by asking at a convenient time for Black people to become color blind. And those who strongly believe America is culpable will support your efforts because there are some morally upright citizens who do not want America to get into heaven without confessing her sins.

Economic injustice and discrimination against Blacks date back to the beginning of America and continues through today. A prime example of economic discrimination is the subprime mortgage debacle. The predictable response is, “the subprime crisis affected people across all color lines”. That is true but it disproportionately impacted Blacks. In Prince Georges County, Maryland, improperly called the wealthiest Black county in America, there were twice the number of foreclosures as any other county in Maryland. Why was this particular county so vulnerable to subprime lending?

My argument is that we can look at any point along the continuum since the ratification of the constitution and observe economic discrimination against Blacks. Notwithstanding the spiritual argument, why do proponents of reparations and legal scholars restrict their advocacy to the period of enslavement? Reparations for lost wages due to slavery are problematic for several reasons. The slavery issue is too emotionally charged for either side (Black or White) to discuss civilly or in a manner that will lead to meaningful results. Moreover, you witnessed the vilification of Rev. Wright when he spoke of America’s more recent transgressions. Imagine what would happen if one presented an argument as distant as the slavery issue. Also, many Americans actually believe the blood of Union and Confederate soldiers cleansed the sin of slavery.

From a legal point of view, the following are some of the reasons courts have refused to grant plaintiffs reparations based upon what occurred during slavery (lost wages and unjust enrichment). The courts have consistently cited three reasons why Blacks are unable to receive reparations: 1) statute of limitations; 2) political question; and 3) causation. Any of the three barriers is a reason to dismiss a case but the strong cases generally will overcome two of the three challenges. According to one reparation attorney, the statute of limitation hurdle will be difficult to overcome and depending on the defendant, causation may present a challenge.

1.    Statute of limitations: Courts have said too much time has elapse between the time the injury occurred and filing of the suit.

2.    Political question: In our system of jurisprudence there is a theory that some issues are outside the scope/purview of the court and the issues are best resolved by the executive and/or legislative branches of government. The courts have concluded reparations/slavery is one of those issues.

3.    Causation: A sometimes dubious and vague concept but succinctly, it is the relationship or behavior between the accused and the aggrieved. In the last reparation case the court said the plaintiff failed to show a relationship between the injury and the behavior of the defendants.

Outside the context of slavery, there were many other instances of economic discrimination that led to the conditions of wealth disparity we have today. We can start with the land grant of 1785 whereby the government sold land for the purchase price of $1.00 an acre with a minimum of 640 acres. Or the land grant of 1862 which required grantees to farm the land for 1 year. Blacks were excluded from these allocations of resources that later turned out to be a foundation for wealth creation for many American citizens. More recently, Blacks were excluded from one of the most robust wealth building activities in the history of America. From 1932-1968, Blacks were systematically excluded, by governmental regulations and policy, from housing and banking programs created to revitalize an economy that had been wrecked by the Great Depression. The Federal Government allocated $450 billion to White Americans through housing and related subsidies but less than 2% of that amount was distributed to Blacks. If you believe this information is old and irrelevant, you will never understand or have the ability to accurately explain why the median wealth of a White family is almost 14 times that of a Black family.

Most of the wealth families have (excluding those in the upper income bracket) is in the equity found in their homes. Homeownership was greatly expanded from 1934-1968. However, the policies of the federal government through the Federal Housing Administration (FHA) and the Federal Home Loan Bank Board (FHLBB) prevented Blacks from purchasing homes or equally as oppressive, enforced policies that dictated where Blacks could purchase homes. The government, in clear violation of the 14th Amendment to the Constitution, provided a benefit to Whites through very liberal housing policies while impeding Blacks from accessing the same benefits.

Prior to 1934, borrowers had to put 60% or greater down to purchase a home. So if a home cost $5,000.00 the borrower had to put $3,000.00 down. The remaining balance of $2,000.00 was an interest-only loan for 3-5 years. This made homeownership unaffordable to many citizens as well as economically imprudent. As an interest-only product, the loan did not amortize and at the end of the term there was a balloon payment of $2,000 plus cost, before the borrower could take title (ownership). If the borrower could not pay the $2,000-plus, the other option was to refinance and start the cycle over again. The risk to the borrower in this type of transaction was, they could be in the cycle for years. An unforeseen event could occurred (job loss, illness, etc.) and the bank could called in the loan. All the money paid on the property would be lost, along with the home. This type of transaction was common prior to FHA and FHLLBB. However in 1934, Congress passed the National Housing Act, which created the FHA, to implement a housing program that would stimulate the economy after the depression. FHA guidelines required a 20% down payment with the loan to be paid over 20 years at a fixed interest rate. More importantly, after 20 years the home was paid off.

These changes made homeownership affordable as well as a great investment. Homeownership in 1900 stood at 46.5%. Thirty years later in 1930 the rate was 47.8%. The increase was only 1.3% but if you look at the next 30 years, by 1960 the homeownership rate was 61.9%, an increase of 13.1%. At no other time in the history of this country, during a 30 year span, has there been such a significant increase in the homeownership rate. Even with the introduction of exotic financial products during the last decade, the homeownership rate since 1960 has only increased by 7%.

Unquestionably, the amazing growth in homeownership during this period (1934-68) had its origins in the shift of housing and banking policies. Similar to what we witnessed during the housing bubble from 2002-2006, there was a change in the underwriting guidelines in 1934 which made homeownership accessible. But unlike this recent housing bubble, the explosive growth in homeownership experienced immediately after the depression was putrefied with Jim Crow. To be continued.

BlackCommentator.com Guest Commentator, Lloyd Wynn was a consultant in the secondary market. Lloyd is the author of Residential Real Estate Finance: From Application Through Settlement. Click here to contact Lloyd Wynn.

 

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