The Fha And How They'Re Racist

Oliver and Shapiro's discussion of the institutional structures that created and perpetuated an economic gap betweens whites and blacks really opened my eyes. I have always been conscious that there has been some sort of economic gap between white and basically every other race. But I didn't know that the gap involving blacks and whites was that large. In addition, I didn't know that the institutions created in the early 1900s (the government established) to promote economic equality actually widen the gap between whites and blacks.

The first Shapiro and Oliver discussed was established in 1934. This was the FHA (Federal Housing Authority). "The FHA aimed to bolster the economy and increase employment by aiding the ailing construction industry. The FHA ushered in the modern mortgage system that enabled people to buy homes on small down payments at reasonable interest rates (Shapiro + Oliver, pg 81-82)." It seemed to work to perfection. Housing starts dramatically climbed from 332,000 to a staggering 619,000 in 1941. But looks are in this are deceiving.

In fact, there was an underlying problem with the FHA. The most basic sentiment the FHA's concern was its fear that property values would decline if a rigid black and white segregation was not maintained. The Underwriting manual openly stated, "If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes." The FHA went even further to enforce restrictive covenants which basically are segregated developments. One of the infamous examples of the FHA being discriminatory is the Levittown project. This illustrates of how blacks missed out on this asset accumulating opportunity. Here the houses were very affordable and thus was built on mass scale. Thanks to the FHA out of the 82,000 residents of this town, not one was black. The reason this happens is mainly because blacks are continuously getting denied of mortgages in certain areas. The authors refer to this as "redlining" communities or counties, where no blacks would be allowed to live in a county or development.

Denying blacks mortgages is still seen today more frequently than whites. In May of 1988 the issue of banking discrimination exploded to the front page of the Atlanta Journal and Constitution. In this article they uncovered that out of 6.4 million home mortgage applications by race and income confirmed suspicious of bias in lending by reporting a widespread pattern of institutional discrimination in the nation's banking system! Land of democracy and equality doesn't seem that way. Furthermore the article showed that black applicants were twice as likely to be rejected of a mortgage as whites nationwide. Even in our backyard, Philadelphia blacks were three times likely

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