Otherwise celebrated for making homeownership accessible to white people by guaranteeing their loans, the FHA explicitly refused to back loans to black people or even other people who lived near black people.
- The Atlantic, 2014
The video above illustrates the systemic way government programs served to under-capitalize black Americans by excluding them from one of the biggest wealth building vehicles available to families: home mortgages.
"Between 1934 and 1962 the federal government underwrote $120 billion dollars in new housing. Less than 2% went to nonwhites," narrator says. Consider the generational implications of bolstering white home ownership and devaluing black home ownership over time.
Ghettos aren't an accident. Racial inequality and it's economic cousin are not a fluke. These ills are by design.
Black poverty is mapped with the invisible lines that keep black people concentrated in designated areas where the value of their place drops. This happens purposefully and to the compounding benefit of white America.
But exclusion from homes is only one way black families have been redlined out of wealth-building programs in the United States.
There are others.
Consider this from the PBS series RACE: The Power of Illusion:
Less known are more recent government racial preferences, first enacted during the New Deal, that directed wealth to white families and continue to shape life opportunities and chances.
The landmark Social Security Act of 1935 provided a safety net for millions of workers, guaranteeing them an income after retirement. But the act specifically excluded two occupations: agricultural workers and domestic servants, who were predominately African American, Mexican, and Asian. As low-income workers, they also had the least opportunity to save for their retirement. They couldn't pass wealth on to their children. Just the opposite. Their children had to support them.
Like Social Security, the 1935 Wagner Act helped establish an important new right for white people. By granting unions the power of collective bargaining, it helped millions of white workers gain entry into the middle class over the next 30 years. But the Wagner Act permitted unions to exclude non-whites and deny them access to better paid jobs and union protections and benefits such as health care, job security, and pensions. Many craft unions remained nearly all-white well into the 1970s. In 1972, for example, every single one of the 3,000 members of Los Angeles Steam Fitters Local #250 was still white.
But it was another racialized New Deal program, the Federal Housing Administration, that helped generate much of the wealth that so many white families enjoy today. These revolutionary programs made it possible for millions of average white Americans - but not others - to own a home for the first time. The government set up a national neighborhood appraisal system, explicitly tying mortgage eligibility to race. Integrated communities were ipso facto deemed a financial risk and made ineligible for home loans, a policy known today as "redlining." Between 1934 and 1962, the federal government backed $120 billion of home loans. More than 98% went to whites. Of the 350,000 new homes built with federal support in northern California between 1946 and 1960, fewer than 100 went to African Americans.
These government programs made possible the new segregated white suburbs that sprang up around the country after World War II. Government subsidies for municipal services helped develop and enhance these suburbs further, in turn fueling commercial investments. Freeways tied the new suburbs to central business districts, but they often cut through and destroyed the vitality of non-white neighborhoods in the central city.
Today, Black and Latino mortgage applicants are still 60% more likely than whites to be turned down for a loan, even after controlling for employment, financial, and neighborhood factors. According to the Census, whites are more likely to be segregated than any other group. As recently as 1993, 86% of suburban whites still lived in neighborhoods with a black population of less than 1%.