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Episode 45 – Race For Profit with Keeanga-Yamahtta Taylor
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The Great Recession was a maelstrom that hit many Americans hard – lost jobs, lost homes, for some everything but the clothes on one’s back. Despite the stock market, real recovery has been glacial at best. Yet many don’t know just how deep the crisis’ roots go when it comes to the Black community. Keeanga Yamahtta-Taylor explains the origins of the systemic discrimination behind the housing policies that skipped over, then exploited, Black families trying to find a safe, sound, and affordable place to raise their families.
Keeanga’s newest book, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, evolved from her organizing and activist work as a tenant advocate to protect tenants from eviction. The Great Recession hit while she was in grad school and she saw the parallels between her research on the origins of segregation and the subprime lending market as she studied the relationship between the federal government and housing programs over the decades.
Steve notes the changes wrought by neoliberalism and the shift of power from public to private sector; Keeanga adds that though neoliberalism was always there in some form, it became a distinct and rising ideology during the late 60s to early 70s.
Contributing factors to “include” Black people in housing were a market opportunity that arose with white homeownership’s saturation of the market; demand that increased with the Black exodus from South to North, and their growing incomes; and urban uprisings like the Watts riots which pushed the federal government to find a solution to quell the rebellion – the idea was that if more Black people owned their homes, they’d be less likely to burn them down.
Between FHA guaranteed loans to blacks and a $2 billion pool raised by the top 300 insurance companies, cracks began to appear in redlining and housing discrimination, but the ensured inclusion of Blacks in the housing market instead became predatory, as real estate operatives and speculators jumped into the mix – buying houses for pennies on the dollar, quickly flipping them and selling them high. New methods of exploitation like these were developed to take advantage of Black people.
Conditions created by those decades of discrimination became “evidence of risk” to allow creditors, bankers, and realtors to devise a different set of rules for Black would-be homeowners and business owners. Black families went from being refused housing to bending over backward to get it – only to find conditions deplorable and forcing them to walk away, while real estate brokers and lenders got away with the loot between commissions, closing costs and the eventual foreclosure. One official called it “business in heaven – you can’t lose money.” A supposed step up for the Black community became a stumbling block and another source of corporate profit.
Steve refers to Michelle Alexander, who called the situation “a horror story in racial capitalism” and Keeanga concurs: in the course of her research, it became ever clearer that “the issue is not the system failure of capitalism or American system of governance” but that the system works perfectly fine – just not for Black people.
In closing, Keeanga is inspired by the fact that thanks to Bernie Sanders and the Squad, housing as a human right is now being debated and discussed, which provides another shot to do things right this time. There must be boots on the ground to force the Republicans and centrist Democrats to do the will of the people they’re elected to serve.
Keeanga-Yamahtta Taylor is Assistant Professor of African-American Studies at Princeton University. She writes and speaks on Black politics, social movements and racial inequality in the US.
uncpress.org/book/9781469653662/race-for-profit/
@KeeangaYamahtta on Twitter
Macro N Cheese – Episode 45
Race For Profit with Keeanga-Yamahtta Taylor
December 7, 2019
Keeanga-Yamahtta Taylor [intro/music] (00:02):
The focus in the 2000s was on subprime lending. And, you know, I saw parallels between those practices in the 2000s and these programs that I was looking at in the 1970s.
Keeanga-Yamahtta Taylor[intro/music] (00:15):
The mortgage market is being flooded with money and there’s an intense demand, but the housing stock that is available to African Americans, is one that for many of these homes they’re not actually in the condition to survive the life of the mortgage.
Geoff Ginter [intro/music] (01:05):
Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Steve Grumbine (01:34):
And this is Steve Grumbine with Macro N Cheese. Today, I’m going to be welcoming a guest that, I’m very excited about getting to talk to her. Her name is Keeanga-Yamahtta Taylor. She writes and speaks on black politics, social movements, and racial inequality in the United States. She’s the author of “From #Black Lives Matter to Black Liberation”.
And she’s also an assistant professor at Princeton University for African American studies. She’s recently written a book called “Race for Profit: How Banks and the Real Estate Industry Undermine Black Ownership.” And it’s with that, that I would like to introduce my guest Keeanga. Thank you so much for joining us.
Keeanga-Yamahtta Taylor (02:14):
Thank you. Thanks for having me. Glad to be here.
Steve Grumbine (02:17):
Absolutely. So what was the motivation behind writing this book? Obviously, this is a very, very specific period in a very specific area of undermining that, you know, has happened throughout the course of history. What specifically zeroed you in on the real estate market and understanding redlining, etcetera?
Keeanga-Yamahtta Taylor (02:44):
Well, the book is a kind of long evolution of what was my dissertation research. So this began as the dissertation that I finished in 2013, but has been revised into this book. So the question for me then, you know, why did I go to graduate school, to study issues of race and real estate? And that really came out of the work that I was doing before I went to graduate school – organizing, doing political activism around housing issues.
And I was working as what was called a tenant advocate, meaning that I went to court with people to try to prevent them from being evicted or to extend their stay in their apartments. And so this was in Chicago, and when I first moved to Chicago from the East coast, and the first thing that was evident to me was how deeply segregated the city was.
And then when I got involved in this particular work, I really got interested in how that came to be. And you know, there’s a lot of work about African Americans in public housing in Chicago. That’s been a whole basis of study unto itself, but my experience working with tenants and low income homeowners was that the vast majority of African Americans were not housed in public housing, but found their housing in the private market, either as renters or buyers on the low end.
And so these questions kind of came together for me through that work. I decided to go back to school. I ended up in graduate school, which allowed me to really pursue these questions. And so I became, kind of, more narrowly focused on low income homeowners in some sense, because this coincided. I went to graduate school.
I entered in the fall of 2007. And so, you know, people will remember, you know, that the US economy is about to go into free-fall and in African American communities, the housing bust that became much more well known publicly in 2008 and 2009 was already underway. And so I was interested in the relationship between federal government and housing.
I, the focus in the 2000s was on subprime lending. And, you know, I saw parallels between those practices in the 2000s and these programs that I was looking at in the 1970s. So all of these things came together and kind of led me down the road to this research. And, you know, I really changed the book and spent a lot of the last three years working to revise things that I had written 2012 and 2013.
And you know, these questions about race and housing are always just beneath the surface in U.S. society. And so, you know, it’s definitely a topic that has held up over time and certainly held my interest in it.
Steve Grumbine (06:22):
That’s very powerful. I mean, I grew up during the seventies and witnessed the long gas lines and it felt like every day was gray in the seventies. It really did feel like a very bleak period of time. And the focus of this book seems to have taken place, you know, during, I guess the end of the sixties and into the early seventies and so forth as changes really started occurring in what I would consider to be the neoliberal era when the federal government stopped spending on the people and started instead entering into these public private partnerships.
You speak quite a bit about that in this book. Can you talk to us about what you saw as the effects of these public private partnerships in particular in the real estate market?
Keeanga-Yamahtta Taylor (07:11):
Sure. I mean, the first thing I would say is that I think neoliberalism is certainly a distinct economic and political phenomenon that emerges in the 1970s. In some sense, I think it’s more than just privatization and it’s more than just public private collaboration, because I mean, you know, you look at the role of the U.S. Government has always been quite fundamental in facilitating conditions for a thriving market.
So there’s always been a kind of public private collaboration. The housing programs and housing policy that is really first created, for the first time, in the 1930s is certainly a collaboration between the private sector, the real estate industry, the real estate and banking industries and the federal government.
And so what I’m looking at that is different in the late 1960s is that this is a public private partnership aimed at transforming low-income renters into low income homeowners. In the previous period in the 1930s, there was an effort certainly to expand home ownership and to expand it into the ranks of working class people, to enlarge the base of homeowners in the U.S. But as you know, many people know now African Americans were cut out of that.
And that the low income housing that was developed in that period was in public housing. And so this is not public housing, this is the promotion and facilitation of low income home ownership. And so this was in many ways it was unprecedented that it was the result, I think, of three different factors.
One, I think that there was a market opportunity because by 1960, the white housing market had begun to saturate – meaning that almost all white people who could be homeowners were homeowners. And so the FHA worked to pioneer a kind of new frontier of economic investment in urban areas to essentially find new sources of home ownership.
It had become clear by this time that home ownership was very lucrative for the United States. And in part that had been opened up because of the role of the federal government, removing the risk for banks to lend widely through the use of the federal housing administration’s insuring of mortgages.
So that was one factor. Another factor I think had to do with Black demand. African Americans are moving into cities. The second wave of the great migration really takes place from 1940 to 1970, when 6 million Black people move from the South into urban enclaves across the North and the West coast.
And when they move out of the South, Black income rises to such an extent that African-Americans can actually become homeowners. White people are leaving the city, their exit is being subsidized by the federal government to outlying suburbs. And so this creates more housing opportunities in the city.
And so there becomes an opportunity to match Black people, aspiring homeowners, with existing properties in the city. And so the FHA as early as 1954 begins to actually relax its redlining restrictions and refusals to guarantee mortgages for African-Americans. The 1954 housing act creates a small experimental program that will allow for Black – you know, they never talked specifically about race – but will allow for urban based residents who are living in urban renewal areas to have their loans insured.
The problem of course, is that the FHA doesn’t lend money, it only guarantees the loans. And so there’s still an overwhelming reluctance on the part of banks and other lenders to make loans to African Americans. And so despite the kind of changing policies of the FHA, there’s still a lag. And so the third and final factor that finally opens up this opportunity are the successive waves of urban uprisings over the course of the 1960s.
And there are all sorts of polling data and interviews in the Kerner Commission, that the National Advisory Commission on Civil Disorders known as the Kerner Commission forms. And they actually send researchers out to all of the cities where these rebellions happen to interview people, to try to understand what the source of the catalist for these riots are.
And in city after city, one of the top three issues that is mentioned is substandard housing. And so there’s the combination of these three factors create an enormous pressure for the federal government to actually do something. And part of that ‘something’ involves opening up home ownership opportunities for African Americans, because there’s a market to be taken advantage of in that situation.
And you know, also there’s an abiding faith in the ability of property ownership to perhaps quell some of the restlessness that was coursing through cities at that time.
Steve Grumbine (13:36):
You speak about that in another interview I heard with you on Democracy Now, where you spoke about, there were efforts to create space, if you will, to spread folks out and to make it so that if they owned homes, they wouldn’t burn down the town, I believe was the sayings at the time.
Keeanga-Yamahtta Taylor (13:56):
Right.
Steve Grumbine (13:56):
Let me ask you, because you start the book off in a very, very specific way. You describe a young mother, single mother, who probably would have never been able to own a home in the past and now all of a sudden is in a position where she can own a home. And she jumps through a bunch of hoops, basically.
The properties are taken out of play for her, and she has to move into a lesser and lesser property until the point where she’s got rats and broken floors and just very, very vile conditions. And yet she’s walking in already vulnerable and being basically put into the American Dream by purchasing a home that in many cases would be condemned already.
Keeanga-Yamahtta Taylor (14:40):
Yes.
Steve Grumbine (14:41):
Talk to us about this conditions. It’s expensive being poor.
Keeanga-Yamahtta Taylor (14:45):
Well, yeah, you know, so what happens is when the federal government agrees to subsidize, or to not subsidize but to guarantee mortgage loans in urban areas, so this happens in 1967, after the most destructive of the uprisings occur in Detroit during that summer and a consortium of life insurance companies, the 300 largest life insurance companies in the country form a, over the course of two years, they form a $2 billion pool, mortgage pool, that will make loans for single family homes, multifamily units, and small Black businesses.
And so this opens up, this becomes the missing piece. The federal housing administration doesn’t lend money. It guarantees the loan, but you need a lender. Now there was a lender available, and this is eventually what breaks the back of redline in urban areas. And so it opens this market that has been disinvested for decades where, you know, it’s not just the home loans that were impossible to obtain during redlining, but also small repair loans that were available to white people in the suburbs, which, you know, allows you to perform necessary maintenance on a household, to keep your house up over the course of the life of a mortgage.
So those loans were also made unavailable in the inner city. So these are old dilapidated substandard homes that are now constituting the new urban housing market. So real estate operatives and speculators kind of swoosh into the area. They do cheap rehabs and immediately try to, you know, do the, what is the main game in real estate?
Buy low and sell high. And, you know, so there’s an effort to flip these properties to people who qualify for these homeownership programs. So the housing and urban development act of 1968 creates a series of low income home ownership programs. And of the most popular, the terms were a $200 down payment, mortgage payments that were 20% of your income, not the actual cost of the house and interest rates that were capped at 1%.
And so, you know, the real estate operatives would fund people who were desperate for housing, who qualified for the program and, you know, in many cases they would actually offer to pay the $200 down payment just to get the housing deal secured. And, you know, women like Janice Johnson, who is the woman that you’re describing that I write about at the beginning the book, you know, moves into the house.
And within a matter of weeks realizes that the house is actually falling down around her. And in many cases, these women would have to eventually move out of the house because of the condition that the house was in. They were the only ones who suffered consequences from that. The real estate broker makes their money on the commission when the housing deal was closed; the mortgage banker, which was the primary source of finance in these communities for these programs, they made money on the front end of the deal by securing a loan, a home loan in the first place.
Then they made money again on the back end of a deal because of closing costs. And so in the event that a homeowner would walk away or foreclose on the property because of the FHA mortgage guarantee, the lender was insured to get their entire loan back in addition to the fees that they had already accrued having made the loan in the first place.
And so, you know, one official described these homeownership programs is like doing business in heaven, that you can’t lose money. And this was the benefit of companies connected to the real estate industry. And, you know, for a lot of families, like those of Janice Johnson, they were left with shattered credit and, you know, without the proper environment to raise their family.
Intermission (19:41):
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Steve Grumbine (20:31):
This absolutely terrifying. And I love Michelle Alexander’s quote on the front of your book, “A horror story in racial capitalism.”
Keeanga-Yamahtta Taylor (20:39):
Umm hm
Steve Grumbine (20:39):
It really is. And I think to myself, if I can marry the two of you together momentarily, “The New Jim Crow.” I mean, we’re watching right now before our very eyes as the same players, albeit not the real estate agents, same similar predatory behavior as marijuana is legalized, and the very same people are profiting once again, off of…
It’s systemic, and it happens over and over and over again. But the thing that makes your book so powerful to me is understanding the relationship between not just money, but actual wealth and generational wealth and generational poverty that is so pervasive in America today. The unfortunate situation of Calvinism in the idea of the puritan work ethic, and…
if you just worked harder and you just made better choices, you would be, you know, you would be so much better and everything would be great in a land of opportunity. And as you watch and you, especially, you detail it so well, the opportunity is a charade because it’s based in predatory behaviors that are intended to take people who are already in vulnerable situations, take advantage of them, make out like a bandit and then leave them destitute once again, on the backend.
Keeanga-Yamahtta Taylor (22:03):
And then blame them…
Steve Grumbine (22:03):
Can you talk a little bit about this concept that you raise called “predatory inclusion?”
Keeanga-Yamahtta Taylor (22:09):
Yeah. I mean, predatory inclusion was a way for me to talk about two things. And so one of the kind of central premises of American liberalism over the second half of the 20th century was that among some, there was a recognition that Black people suffer from racial discrimination and exclusion. And exclusionary policies and practices, Jim Crow, segregation being perhaps the most extreme, but across the urban North and outside of the South, there were all sorts of exclusionary mechanisms in place that kept African Americans segregated, whether it was written into law or not.
And of course, housing is the most prominent of these from racially restricted covenants, you know, to the FHA ban on redlining in cities and thus banning mortgage loans for African Americans, that there are a number of segregated mechanisms that keep African Americans excluded and isolated. And so at the same time, you have this dramatic growth of a white middle class through the intervention, the tools created by The New Deal, by the GI Bill, that seem to show that, you know, through these particular mechanisms, that in fact you can have robust growth, the development of a successful middle class.
And that, you know, in many ways, this is evidence that our system actually works for people. And so the issue is not the systemic failure of capitalism or the American system of governance. The issue is exclusion because if Black people had access to the same mechanisms that created the white middle class, then you know, they too could do the same thing.
And so what we need to do is find ways to integrate Black people into the system instead of continuing to exclude and lock them out. So inclusion becomes the motivation of this kind of post World War II liberalism. But I think with housing, perhaps more than any other area, it really shows the hollowness of this and the necessity of actually examining the institution itself.
And so with “predatory inclusion,” I’m trying to highlight the ways that the inclusion of African Americans into conventional real estate practices did not stop their exploitation, did not stop racial discrimination, but in fact, new methods of extraction and exploitation were innovated to essentially, you know, take advantage of this population.
And so what did that process look like is really a lot of what the book is about. And part of that is understanding the relationship between the past and the contemporary moment in the book that I’m trying to illuminate. And that is that after decades of disinvestment and under development, that once redlining ends and once racial discrimination in housing is declared to be illegal, the conditions that had been created by those practices over a previous 50, 60, 70 year period prior to the end of redlining, and before the fair housing act, then become evidence for why African-Americans should be treated differently in the marketplace.
Meaning that the substandard housing in Black communities, the empty lots, the dilapidated housing, the concentration of poverty, the lack of opportunity in urban areas become evidence as to why these areas should be considered risky. And risk becomes a mechanism that allows in a post-racial discrimination in housing period, in a post-fair housing period to allow predators, bankers, realtors, to treat African Americans cautiously in the marketplace.
And that means different kinds of banking; that means later it comes to mean higher interest rates on loans; different kinds of loans that are supposed to absorb this risk. But in the period that I’m looking at in particular, we’re looking at banking practices and how, because of the perception of risk, because of the conditions in Black neighborhoods, big commercial banks continue to refuse to lend in Black communities, and instead mortgage bankers flooded into the market.
And the biggest problem with this is that commercial banks hold deposits, which presumably gives them some interest in making good loans and caring about what happens to the loans, making well-informed decisions. Mortgage bankers don’t hold loans. They accumulate a number of loans and then sell them to long term investors.
So they’re not holding loans and don’t really care about what happens to them beyond the time, the short amount of time, that they have it. And also they make their money on volume sales because they’re not holding deposits. They make their money on selling, securing as many loans as possible because of the origination fee and because of closing costs alone.
And so this creates in this scenario, in this newly developing market, a kind of feeding frenzy where there’s an effort to push as many loans as possible. And so in Chicago, the activists refer to the practices of bankers, mortgage bankers, this “fast foreclosure” because they are looting often with FHA agents, with appraisers to inflate the value of the homes because the mortgage payment is tied to the participant’s income, not the actual cost of the home.
And so there’s an effort to sell these dilapidated homes. People will foreclose on them, and then you initiate the process over and over and over again, as a way to wrench money out of these communities. And this is happening at the same time that mortgage backed securities are really used and come into fashion on a mass scale for the first time.
And so the mortgage market is being flooded with money and there’s an intense demand, but the housing stock that is available to African Americans as one that for many of these homes they’re not actually in the condition to survive the life of the mortgage. And so, you know, these are new problems that are created in the aftermath of redlining, the issue of mortgage backed securities, the new money that that infuses into the market, the proliferation of mortgage banks selling as many loans as possible in Black communities, all of these things.
And, you know, there are more that develop over the course of the 1980s and 1990s become new ways of exploiting African Americans in the real estate market, post redlining. And so the culmination of these practices I refer to is ‘predatory inclusion.’ So not equal, you know, equality, equal terms, equal inclusion, but the absorption of African American into the so-called conventional real estate practices leads to more predation, not less.
Steve Grumbine (30:35):
Wow, just the nature of the game. I mean, the inflating of the values in there’s no risk to these folks at all.
Keeanga-Yamahtta Taylor (30:42):
No risk at all.
Steve Grumbine (30:44):
It’s just absolutely brutal. And then this takes me to what I consider to be the next piece of this, which is after they have sold and resold these properties over and over and over again on these fast foreclosures, as they say, you’ve got the process of folks buying up these things for a dollar and then gentrifying the entire region after they’ve already pillaged everyone’s money from them, they’ve really extracted incredible amount of wealth from people who really didn’t have it to give.
Now on the flip side, they turn around and gentrify. Can you talk about that transition?
Keeanga-Yamahtta Taylor (31:24):
Somewhat. I’m looking at a pretty tight period from 1968 and the passage of the Housing and Urban Development Act to 1974, and Nixon leaves right before and Gerald Ford actually signs the legislation, but it’s essentially a Nixon bill, and this is the Housing and Community Development Act, which transitions from the hands of direct federal funding from the federal government to cities and moves to block grants.
And they kind of devolution to the state distribution of social welfare funds. But I will say that, you know, HUD and the FHA, which becomes a subsidiary of HUD in 1969, play a really nefarious role during this period. So there’s less gentrification in the Black neighborhoods where this is happening, but much of the city, white people have been moving out, there’s been a massive out migration of whites over the 1950s, 1960s and even into the early 1970s.
And so, you know, to try to entice young white professionals to come back into the cities, in some neighborhoods, not all, there are two things that happen. In some neighborhoods there’s a Homestead Act that is passed that creates the means for cities to sell properties to people for very low amounts of money and to get all kinds of loans to repair the houses, which is the initial wave of gentrification that happens in cities in the 1970s.
That’s one phenomenon that’s happening. Another one is that, you know, typically when a house goes into foreclosure, it is returned to the bank, and that dynamic in and of itself is intended to dissuade banks from foreclosing, which banks are not real estate companies, they’re banks. And so the idea is that, you know, banks want to do as much as they can to avoid having to take on a property, which then requires the maintenance and upkeep, and then finding a way to resell it.
And so this is supposed to dissuade banks from foreclosing; but for HUD, in order to kind of sweeten the deal for the bank’s participation in the first place, they agree to take back the homes if they go into foreclosure. And so HUD’s inventory begins to rise dramatically so much so that by 1974 HUD has 78 or 80,000 single family homes.
And these homes have been overvalued because of bribes happening among appraisers. So they can’t sell them for anything. You know, if a house has been appraised at $20,000 and it’s actually worth $3,000, that’s just a loss. And so what they do to try to offload their inventory is they do start selling these homes for pennies on the dollar, essentially giving them away.
And who are they selling them to? Who is in a position to just buy up dilapidated, falling apart houses? It’s speculators, who then initiate this process all over again. So HUD is just, you know, it’s more than incompetence. It’s like a commitment to a business and policy model that is doomed to fail.
And that, you know, gets to a much deeper and systemic problem, which is that HUD has always existed to facilitate private enterprise in the real estate world. And that is how it is always been envisioned as a cabinet position. And that is always how it’s functioned. And so part of what I’m looking at in this book is the way that really the mismatch between the profiteering impulse of the real estate industry and the public purpose that housing policy and public policy is supposed to perform.
It is supposed to be in the interest of the public. It’s supposed to protect the public welfare and so profiteering an the public’s welfare and public interests don’t really go together. They don’t match, and this is part of the conflict then HUD that has produced a kind of ineffectiveness or just outright destructive programs for the entirety of its history.
There’s no moment in time when HUD has not operated as a completely dysfunctional organization, because from its inception, it’s envisioned as a tool for the private sector to, you know, figure out how to play more of a role in housing policy, in urban development. And the problem, I mean, one of the reasons why in this country, we continue to have such a dramatic shortage of safe sound and affordable housing for people is because it’s not profitable.
It’s not profitable to house poor and working class people. And when the federal government divest itself from developing, building, managing any housing and completely outsources that to the private sector, well, there’s, you know, the private sector makes money building million dollar condos, not building 700 square foot , thousand square foot homes for two or three people at a time.
There’s no money in that. And so this is why we never have effectively solve the so-called housing crisis. And, you know, it’s about the relationship between the public sector and the private sector that inevitably, and almost always ends up creating policies that bend to the will of the private sector, to the detriment of the general public.
Steve Grumbine (38:03):
The public purpose to me is a very, very key term there. I don’t think we’ve seen a government serving the public purpose in many, many years. And in fact, I think the term public purpose has long been lost in just general society. We’ve gotten to the point where we feel like our government is so inept, so incapable of doing great things that we just assume that we have to rely on the private sector.
But as you eloquently stated, the conflict of profit motive and public purpose, couldn’t be further at odds with one another. And so how do you reconcile that? And I guess that brings us to some modern day stuff. As it stands now is you’ve addressed a very specific period. And we’ve gotten to see the impacts that it’s had not only on African Americans, but the exacerbating of the wealth divide as there are people profiting off of the misery.
But now we enter into an era where we’ve witnessed wages flatlined for 40 plus years. We’ve witnessed great wealth divide. It’s now leaving many, many others, not just minorities behind it. Now it’s leaving the entire middle class behind, and you’ve got a person in Bernie Sanders and Alexandria Ocasio-Cortez, and others like Ilhan Omar that are advancing bold policy proposals within this Green New Deal construct.
And one of the most recent ones that has come out is Housing as a Right. And by definition, that would have to be public purpose – housing as a right doesn’t say housing is a profit motive.
Keeanga-Yamahtta Taylor (39:40):
Right.
Steve Grumbine (39:40):
Housing as a right is a very different construct. Can you relate the present circumstances and the present needs for housing in solving the housing crisis with a housing guarantee and the plight that we see with this public-private partnership and the profit motive that you so perfectly described in your book?
Keeanga-Yamahtta Taylor (40:04):
Well, I mean, for me, one of the reasons why I wanted to write the book or that I eventually arrived at, was the fact that our government continues to go back to the well of the public-private partnership and always reintroduces each new kind of public-private partnership as a new idea and an innovative idea that we’ve never heard of before.
And so I wanted to show that no, actually these practices, these policies have a history and in housing it’s a history of failure and we should understand that history so that we stop doing the same things over and over again. And so there’s a direct relationship between the kind of history that I’m looking at and the constant pushing, proselytizing around these public-private partnerships.
And so I think that right now, we’re in a political moment where growing numbers of people are no longer willing just to accept the status quo as the best that can happen. I think Bernie Sanders helped to crack open that space in 2016, but he himself had been moved to crack open that space by all number of things that begin to happen in the immediate aftermath of Obama’s election.
The emergence of Occupy, the battle in the state house in Wisconsin 2010, the Arab Spring, the emergence of Black Lives Matter. All of these were expressions of exhaustion and aspiration with the political status quo and the need for something different to happen. And so Sanders took that charge and ran a campaign that was mocked by the establishment in 2016, but was heard by people on the ground.
The fact that an open socialist could get 13 million votes in the primary in many ways was shocking to the political establishment. You know, this is the bastion of anti-communism. This is the United States of America, where we believe in the American dream, and we have no class inequality in this country.
We just have unfettered social mobility. And much of that was exposed as a lie because, you know, you have people who are living through what are supposed to be fantastic economic conditions. You know, there’s 3% growth, there’s historically low unemployment. This is supposed to be the good times. And yet, you know, people are willing to listen to Bernie Sanders, all kinds of people are willing to listen to what Sanders is offering and argue for because of the complete failure of the market, so called free-market capitalism to produce substantive and meaningful change in people’s lives.
Instead, most people are saddled with debt that there is no way that they can ever repay. They’re saddled with the threat of even more debt. Because even if you have health insurance, you’re, under-insured, you know, and all the things that have kept Sanders campaign alive, even as the mainstream media has systematically tried to ignore it, and the leadership of the Democratic Party has systematically tried to bury it.
And so this means that there’s a new opportunity to at least think about doing things differently. I think in the same way that there is space for a new conversation about healthcare, there’s space for a new kind of discussion about free college, canceling student debt, things that were mocked in 2016, are starting points for the discussion today.
So that even if you don’t agree with it, you have to have something to say about it. And I think that housing has been elevated to that plane. And we can see Illan Omar introduced the $1 trillion bill around housing and the human right to housing. This is totally unprecedented. And you know, of course there would have to be a huge political struggle and battle for that to happen.
But we are having the conversation in ways that four years ago, eight years ago, I mean, you couldn’t broach the subject, let alone have a congressperson, actually introduce a bill. And so we have take advantage of this political opportunity, political moment to build the kind of forces that are necessary on the ground to force the Neanderthals of the Republican Party to succumb to the will of the majority of people, but also the neoliberals at the rein of the Democratic Party.
So there’s a lot of work to do, but the space has opened considerably wider for us to engage in those battles.
Steve Grumbine (45:30):
This has been an absolutely fantastic discussion. I really appreciate you taking the time with us, and I hope I can have you back on for part two, because I have so much more I want to talk to you.
Keeanga-Yamahtta Taylor (45:46):
I know, I know. Well, thank you so much. I appreciate it.
Steve Grumbine (45:49):
Thank you so much. And Keeanga, I really do wish you well. And thank you so much for writing this great book, and we look forward to talking to you again soon.
Keeanga-Yamahtta Taylor (45:59):
Alright, cool. Thanks so much.
End Credits (46:07):
Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressive Patreon account. If you would like to donate to Macro N bacco and cheese, please visit patreon.com/real progressive .
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The Great Recession was a maelstrom that hit many Americans hard – lost jobs, lost homes, for some everything but the clothes on one’s back. Despite the stock market, real recovery has been glacial at best. Yet many don’t know just how deep the crisis’ roots go when it comes to the Black community. Keeanga Yamahtta-Taylor explains the origins of the systemic discrimination behind the housing policies that skipped over, then exploited, Black families trying to find a safe, sound, and affordable place to raise their families.
Keeanga’s newest book, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, evolved from her organizing and activist work as a tenant advocate to protect tenants from eviction. The Great Recession hit while she was in grad school and she saw the parallels between her research on the origins of segregation and the subprime lending market as she studied the relationship between the federal government and housing programs over the decades.
Steve notes the changes wrought by neoliberalism and the shift of power from public to private sector; Keeanga adds that though neoliberalism was always there in some form, it became a distinct and rising ideology during the late 60s to early 70s.
Contributing factors to “include” Black people in housing were a market opportunity that arose with white homeownership’s saturation of the market; demand that increased with the Black exodus from South to North, and their growing incomes; and urban uprisings like the Watts riots which pushed the federal government to find a solution to quell the rebellion – the idea was that if more Black people owned their homes, they’d be less likely to burn them down.
Between FHA guaranteed loans to blacks and a $2 billion pool raised by the top 300 insurance companies, cracks began to appear in redlining and housing discrimination, but the ensured inclusion of Blacks in the housing market instead became predatory, as real estate operatives and speculators jumped into the mix – buying houses for pennies on the dollar, quickly flipping them and selling them high. New methods of exploitation like these were developed to take advantage of Black people.
Conditions created by those decades of discrimination became “evidence of risk” to allow creditors, bankers, and realtors to devise a different set of rules for Black would-be homeowners and business owners. Black families went from being refused housing to bending over backward to get it – only to find conditions deplorable and forcing them to walk away, while real estate brokers and lenders got away with the loot between commissions, closing costs and the eventual foreclosure. One official called it “business in heaven – you can’t lose money.” A supposed step up for the Black community became a stumbling block and another source of corporate profit.
Steve refers to Michelle Alexander, who called the situation “a horror story in racial capitalism” and Keeanga concurs: in the course of her research, it became ever clearer that “the issue is not the system failure of capitalism or American system of governance” but that the system works perfectly fine – just not for Black people.
In closing, Keeanga is inspired by the fact that thanks to Bernie Sanders and the Squad, housing as a human right is now being debated and discussed, which provides another shot to do things right this time. There must be boots on the ground to force the Republicans and centrist Democrats to do the will of the people they’re elected to serve.
Keeanga-Yamahtta Taylor is Assistant Professor of African-American Studies at Princeton University. She writes and speaks on Black politics, social movements and racial inequality in the US.
uncpress.org/book/9781469653662/race-for-profit/
@KeeangaYamahtta on Twitter
Macro N Cheese – Episode 45
Race For Profit with Keeanga-Yamahtta Taylor
December 7, 2019
Keeanga-Yamahtta Taylor [intro/music] (00:02):
The focus in the 2000s was on subprime lending. And, you know, I saw parallels between those practices in the 2000s and these programs that I was looking at in the 1970s.
Keeanga-Yamahtta Taylor[intro/music] (00:15):
The mortgage market is being flooded with money and there’s an intense demand, but the housing stock that is available to African Americans, is one that for many of these homes they’re not actually in the condition to survive the life of the mortgage.
Geoff Ginter [intro/music] (01:05):
Now let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Steve Grumbine (01:34):
And this is Steve Grumbine with Macro N Cheese. Today, I’m going to be welcoming a guest that, I’m very excited about getting to talk to her. Her name is Keeanga-Yamahtta Taylor. She writes and speaks on black politics, social movements, and racial inequality in the United States. She’s the author of “From #Black Lives Matter to Black Liberation”.
And she’s also an assistant professor at Princeton University for African American studies. She’s recently written a book called “Race for Profit: How Banks and the Real Estate Industry Undermine Black Ownership.” And it’s with that, that I would like to introduce my guest Keeanga. Thank you so much for joining us.
Keeanga-Yamahtta Taylor (02:14):
Thank you. Thanks for having me. Glad to be here.
Steve Grumbine (02:17):
Absolutely. So what was the motivation behind writing this book? Obviously, this is a very, very specific period in a very specific area of undermining that, you know, has happened throughout the course of history. What specifically zeroed you in on the real estate market and understanding redlining, etcetera?
Keeanga-Yamahtta Taylor (02:44):
Well, the book is a kind of long evolution of what was my dissertation research. So this began as the dissertation that I finished in 2013, but has been revised into this book. So the question for me then, you know, why did I go to graduate school, to study issues of race and real estate? And that really came out of the work that I was doing before I went to graduate school – organizing, doing political activism around housing issues.
And I was working as what was called a tenant advocate, meaning that I went to court with people to try to prevent them from being evicted or to extend their stay in their apartments. And so this was in Chicago, and when I first moved to Chicago from the East coast, and the first thing that was evident to me was how deeply segregated the city was.
And then when I got involved in this particular work, I really got interested in how that came to be. And you know, there’s a lot of work about African Americans in public housing in Chicago. That’s been a whole basis of study unto itself, but my experience working with tenants and low income homeowners was that the vast majority of African Americans were not housed in public housing, but found their housing in the private market, either as renters or buyers on the low end.
And so these questions kind of came together for me through that work. I decided to go back to school. I ended up in graduate school, which allowed me to really pursue these questions. And so I became, kind of, more narrowly focused on low income homeowners in some sense, because this coincided. I went to graduate school.
I entered in the fall of 2007. And so, you know, people will remember, you know, that the US economy is about to go into free-fall and in African American communities, the housing bust that became much more well known publicly in 2008 and 2009 was already underway. And so I was interested in the relationship between federal government and housing.
I, the focus in the 2000s was on subprime lending. And, you know, I saw parallels between those practices in the 2000s and these programs that I was looking at in the 1970s. So all of these things came together and kind of led me down the road to this research. And, you know, I really changed the book and spent a lot of the last three years working to revise things that I had written 2012 and 2013.
And you know, these questions about race and housing are always just beneath the surface in U.S. society. And so, you know, it’s definitely a topic that has held up over time and certainly held my interest in it.
Steve Grumbine (06:22):
That’s very powerful. I mean, I grew up during the seventies and witnessed the long gas lines and it felt like every day was gray in the seventies. It really did feel like a very bleak period of time. And the focus of this book seems to have taken place, you know, during, I guess the end of the sixties and into the early seventies and so forth as changes really started occurring in what I would consider to be the neoliberal era when the federal government stopped spending on the people and started instead entering into these public private partnerships.
You speak quite a bit about that in this book. Can you talk to us about what you saw as the effects of these public private partnerships in particular in the real estate market?
Keeanga-Yamahtta Taylor (07:11):
Sure. I mean, the first thing I would say is that I think neoliberalism is certainly a distinct economic and political phenomenon that emerges in the 1970s. In some sense, I think it’s more than just privatization and it’s more than just public private collaboration, because I mean, you know, you look at the role of the U.S. Government has always been quite fundamental in facilitating conditions for a thriving market.
So there’s always been a kind of public private collaboration. The housing programs and housing policy that is really first created, for the first time, in the 1930s is certainly a collaboration between the private sector, the real estate industry, the real estate and banking industries and the federal government.
And so what I’m looking at that is different in the late 1960s is that this is a public private partnership aimed at transforming low-income renters into low income homeowners. In the previous period in the 1930s, there was an effort certainly to expand home ownership and to expand it into the ranks of working class people, to enlarge the base of homeowners in the U.S. But as you know, many people know now African Americans were cut out of that.
And that the low income housing that was developed in that period was in public housing. And so this is not public housing, this is the promotion and facilitation of low income home ownership. And so this was in many ways it was unprecedented that it was the result, I think, of three different factors.
One, I think that there was a market opportunity because by 1960, the white housing market had begun to saturate – meaning that almost all white people who could be homeowners were homeowners. And so the FHA worked to pioneer a kind of new frontier of economic investment in urban areas to essentially find new sources of home ownership.
It had become clear by this time that home ownership was very lucrative for the United States. And in part that had been opened up because of the role of the federal government, removing the risk for banks to lend widely through the use of the federal housing administration’s insuring of mortgages.
So that was one factor. Another factor I think had to do with Black demand. African Americans are moving into cities. The second wave of the great migration really takes place from 1940 to 1970, when 6 million Black people move from the South into urban enclaves across the North and the West coast.
And when they move out of the South, Black income rises to such an extent that African-Americans can actually become homeowners. White people are leaving the city, their exit is being subsidized by the federal government to outlying suburbs. And so this creates more housing opportunities in the city.
And so there becomes an opportunity to match Black people, aspiring homeowners, with existing properties in the city. And so the FHA as early as 1954 begins to actually relax its redlining restrictions and refusals to guarantee mortgages for African-Americans. The 1954 housing act creates a small experimental program that will allow for Black – you know, they never talked specifically about race – but will allow for urban based residents who are living in urban renewal areas to have their loans insured.
The problem of course, is that the FHA doesn’t lend money, it only guarantees the loans. And so there’s still an overwhelming reluctance on the part of banks and other lenders to make loans to African Americans. And so despite the kind of changing policies of the FHA, there’s still a lag. And so the third and final factor that finally opens up this opportunity are the successive waves of urban uprisings over the course of the 1960s.
And there are all sorts of polling data and interviews in the Kerner Commission, that the National Advisory Commission on Civil Disorders known as the Kerner Commission forms. And they actually send researchers out to all of the cities where these rebellions happen to interview people, to try to understand what the source of the catalist for these riots are.
And in city after city, one of the top three issues that is mentioned is substandard housing. And so there’s the combination of these three factors create an enormous pressure for the federal government to actually do something. And part of that ‘something’ involves opening up home ownership opportunities for African Americans, because there’s a market to be taken advantage of in that situation.
And you know, also there’s an abiding faith in the ability of property ownership to perhaps quell some of the restlessness that was coursing through cities at that time.
Steve Grumbine (13:36):
You speak about that in another interview I heard with you on Democracy Now, where you spoke about, there were efforts to create space, if you will, to spread folks out and to make it so that if they owned homes, they wouldn’t burn down the town, I believe was the sayings at the time.
Keeanga-Yamahtta Taylor (13:56):
Right.
Steve Grumbine (13:56):
Let me ask you, because you start the book off in a very, very specific way. You describe a young mother, single mother, who probably would have never been able to own a home in the past and now all of a sudden is in a position where she can own a home. And she jumps through a bunch of hoops, basically.
The properties are taken out of play for her, and she has to move into a lesser and lesser property until the point where she’s got rats and broken floors and just very, very vile conditions. And yet she’s walking in already vulnerable and being basically put into the American Dream by purchasing a home that in many cases would be condemned already.
Keeanga-Yamahtta Taylor (14:40):
Yes.
Steve Grumbine (14:41):
Talk to us about this conditions. It’s expensive being poor.
Keeanga-Yamahtta Taylor (14:45):
Well, yeah, you know, so what happens is when the federal government agrees to subsidize, or to not subsidize but to guarantee mortgage loans in urban areas, so this happens in 1967, after the most destructive of the uprisings occur in Detroit during that summer and a consortium of life insurance companies, the 300 largest life insurance companies in the country form a, over the course of two years, they form a $2 billion pool, mortgage pool, that will make loans for single family homes, multifamily units, and small Black businesses.
And so this opens up, this becomes the missing piece. The federal housing administration doesn’t lend money. It guarantees the loan, but you need a lender. Now there was a lender available, and this is eventually what breaks the back of redline in urban areas. And so it opens this market that has been disinvested for decades where, you know, it’s not just the home loans that were impossible to obtain during redlining, but also small repair loans that were available to white people in the suburbs, which, you know, allows you to perform necessary maintenance on a household, to keep your house up over the course of the life of a mortgage.
So those loans were also made unavailable in the inner city. So these are old dilapidated substandard homes that are now constituting the new urban housing market. So real estate operatives and speculators kind of swoosh into the area. They do cheap rehabs and immediately try to, you know, do the, what is the main game in real estate?
Buy low and sell high. And, you know, so there’s an effort to flip these properties to people who qualify for these homeownership programs. So the housing and urban development act of 1968 creates a series of low income home ownership programs. And of the most popular, the terms were a $200 down payment, mortgage payments that were 20% of your income, not the actual cost of the house and interest rates that were capped at 1%.
And so, you know, the real estate operatives would fund people who were desperate for housing, who qualified for the program and, you know, in many cases they would actually offer to pay the $200 down payment just to get the housing deal secured. And, you know, women like Janice Johnson, who is the woman that you’re describing that I write about at the beginning the book, you know, moves into the house.
And within a matter of weeks realizes that the house is actually falling down around her. And in many cases, these women would have to eventually move out of the house because of the condition that the house was in. They were the only ones who suffered consequences from that. The real estate broker makes their money on the commission when the housing deal was closed; the mortgage banker, which was the primary source of finance in these communities for these programs, they made money on the front end of the deal by securing a loan, a home loan in the first place.
Then they made money again on the back end of a deal because of closing costs. And so in the event that a homeowner would walk away or foreclose on the property because of the FHA mortgage guarantee, the lender was insured to get their entire loan back in addition to the fees that they had already accrued having made the loan in the first place.
And so, you know, one official described these homeownership programs is like doing business in heaven, that you can’t lose money. And this was the benefit of companies connected to the real estate industry. And, you know, for a lot of families, like those of Janice Johnson, they were left with shattered credit and, you know, without the proper environment to raise their family.
Intermission (19:41):
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Steve Grumbine (20:31):
This absolutely terrifying. And I love Michelle Alexander’s quote on the front of your book, “A horror story in racial capitalism.”
Keeanga-Yamahtta Taylor (20:39):
Umm hm
Steve Grumbine (20:39):
It really is. And I think to myself, if I can marry the two of you together momentarily, “The New Jim Crow.” I mean, we’re watching right now before our very eyes as the same players, albeit not the real estate agents, same similar predatory behavior as marijuana is legalized, and the very same people are profiting once again, off of…
It’s systemic, and it happens over and over and over again. But the thing that makes your book so powerful to me is understanding the relationship between not just money, but actual wealth and generational wealth and generational poverty that is so pervasive in America today. The unfortunate situation of Calvinism in the idea of the puritan work ethic, and…
if you just worked harder and you just made better choices, you would be, you know, you would be so much better and everything would be great in a land of opportunity. And as you watch and you, especially, you detail it so well, the opportunity is a charade because it’s based in predatory behaviors that are intended to take people who are already in vulnerable situations, take advantage of them, make out like a bandit and then leave them destitute once again, on the backend.
Keeanga-Yamahtta Taylor (22:03):
And then blame them…
Steve Grumbine (22:03):
Can you talk a little bit about this concept that you raise called “predatory inclusion?”
Keeanga-Yamahtta Taylor (22:09):
Yeah. I mean, predatory inclusion was a way for me to talk about two things. And so one of the kind of central premises of American liberalism over the second half of the 20th century was that among some, there was a recognition that Black people suffer from racial discrimination and exclusion. And exclusionary policies and practices, Jim Crow, segregation being perhaps the most extreme, but across the urban North and outside of the South, there were all sorts of exclusionary mechanisms in place that kept African Americans segregated, whether it was written into law or not.
And of course, housing is the most prominent of these from racially restricted covenants, you know, to the FHA ban on redlining in cities and thus banning mortgage loans for African Americans, that there are a number of segregated mechanisms that keep African Americans excluded and isolated. And so at the same time, you have this dramatic growth of a white middle class through the intervention, the tools created by The New Deal, by the GI Bill, that seem to show that, you know, through these particular mechanisms, that in fact you can have robust growth, the development of a successful middle class.
And that, you know, in many ways, this is evidence that our system actually works for people. And so the issue is not the systemic failure of capitalism or the American system of governance. The issue is exclusion because if Black people had access to the same mechanisms that created the white middle class, then you know, they too could do the same thing.
And so what we need to do is find ways to integrate Black people into the system instead of continuing to exclude and lock them out. So inclusion becomes the motivation of this kind of post World War II liberalism. But I think with housing, perhaps more than any other area, it really shows the hollowness of this and the necessity of actually examining the institution itself.
And so with “predatory inclusion,” I’m trying to highlight the ways that the inclusion of African Americans into conventional real estate practices did not stop their exploitation, did not stop racial discrimination, but in fact, new methods of extraction and exploitation were innovated to essentially, you know, take advantage of this population.
And so what did that process look like is really a lot of what the book is about. And part of that is understanding the relationship between the past and the contemporary moment in the book that I’m trying to illuminate. And that is that after decades of disinvestment and under development, that once redlining ends and once racial discrimination in housing is declared to be illegal, the conditions that had been created by those practices over a previous 50, 60, 70 year period prior to the end of redlining, and before the fair housing act, then become evidence for why African-Americans should be treated differently in the marketplace.
Meaning that the substandard housing in Black communities, the empty lots, the dilapidated housing, the concentration of poverty, the lack of opportunity in urban areas become evidence as to why these areas should be considered risky. And risk becomes a mechanism that allows in a post-racial discrimination in housing period, in a post-fair housing period to allow predators, bankers, realtors, to treat African Americans cautiously in the marketplace.
And that means different kinds of banking; that means later it comes to mean higher interest rates on loans; different kinds of loans that are supposed to absorb this risk. But in the period that I’m looking at in particular, we’re looking at banking practices and how, because of the perception of risk, because of the conditions in Black neighborhoods, big commercial banks continue to refuse to lend in Black communities, and instead mortgage bankers flooded into the market.
And the biggest problem with this is that commercial banks hold deposits, which presumably gives them some interest in making good loans and caring about what happens to the loans, making well-informed decisions. Mortgage bankers don’t hold loans. They accumulate a number of loans and then sell them to long term investors.
So they’re not holding loans and don’t really care about what happens to them beyond the time, the short amount of time, that they have it. And also they make their money on volume sales because they’re not holding deposits. They make their money on selling, securing as many loans as possible because of the origination fee and because of closing costs alone.
And so this creates in this scenario, in this newly developing market, a kind of feeding frenzy where there’s an effort to push as many loans as possible. And so in Chicago, the activists refer to the practices of bankers, mortgage bankers, this “fast foreclosure” because they are looting often with FHA agents, with appraisers to inflate the value of the homes because the mortgage payment is tied to the participant’s income, not the actual cost of the home.
And so there’s an effort to sell these dilapidated homes. People will foreclose on them, and then you initiate the process over and over and over again, as a way to wrench money out of these communities. And this is happening at the same time that mortgage backed securities are really used and come into fashion on a mass scale for the first time.
And so the mortgage market is being flooded with money and there’s an intense demand, but the housing stock that is available to African Americans as one that for many of these homes they’re not actually in the condition to survive the life of the mortgage. And so, you know, these are new problems that are created in the aftermath of redlining, the issue of mortgage backed securities, the new money that that infuses into the market, the proliferation of mortgage banks selling as many loans as possible in Black communities, all of these things.
And, you know, there are more that develop over the course of the 1980s and 1990s become new ways of exploiting African Americans in the real estate market, post redlining. And so the culmination of these practices I refer to is ‘predatory inclusion.’ So not equal, you know, equality, equal terms, equal inclusion, but the absorption of African American into the so-called conventional real estate practices leads to more predation, not less.
Steve Grumbine (30:35):
Wow, just the nature of the game. I mean, the inflating of the values in there’s no risk to these folks at all.
Keeanga-Yamahtta Taylor (30:42):
No risk at all.
Steve Grumbine (30:44):
It’s just absolutely brutal. And then this takes me to what I consider to be the next piece of this, which is after they have sold and resold these properties over and over and over again on these fast foreclosures, as they say, you’ve got the process of folks buying up these things for a dollar and then gentrifying the entire region after they’ve already pillaged everyone’s money from them, they’ve really extracted incredible amount of wealth from people who really didn’t have it to give.
Now on the flip side, they turn around and gentrify. Can you talk about that transition?
Keeanga-Yamahtta Taylor (31:24):
Somewhat. I’m looking at a pretty tight period from 1968 and the passage of the Housing and Urban Development Act to 1974, and Nixon leaves right before and Gerald Ford actually signs the legislation, but it’s essentially a Nixon bill, and this is the Housing and Community Development Act, which transitions from the hands of direct federal funding from the federal government to cities and moves to block grants.
And they kind of devolution to the state distribution of social welfare funds. But I will say that, you know, HUD and the FHA, which becomes a subsidiary of HUD in 1969, play a really nefarious role during this period. So there’s less gentrification in the Black neighborhoods where this is happening, but much of the city, white people have been moving out, there’s been a massive out migration of whites over the 1950s, 1960s and even into the early 1970s.
And so, you know, to try to entice young white professionals to come back into the cities, in some neighborhoods, not all, there are two things that happen. In some neighborhoods there’s a Homestead Act that is passed that creates the means for cities to sell properties to people for very low amounts of money and to get all kinds of loans to repair the houses, which is the initial wave of gentrification that happens in cities in the 1970s.
That’s one phenomenon that’s happening. Another one is that, you know, typically when a house goes into foreclosure, it is returned to the bank, and that dynamic in and of itself is intended to dissuade banks from foreclosing, which banks are not real estate companies, they’re banks. And so the idea is that, you know, banks want to do as much as they can to avoid having to take on a property, which then requires the maintenance and upkeep, and then finding a way to resell it.
And so this is supposed to dissuade banks from foreclosing; but for HUD, in order to kind of sweeten the deal for the bank’s participation in the first place, they agree to take back the homes if they go into foreclosure. And so HUD’s inventory begins to rise dramatically so much so that by 1974 HUD has 78 or 80,000 single family homes.
And these homes have been overvalued because of bribes happening among appraisers. So they can’t sell them for anything. You know, if a house has been appraised at $20,000 and it’s actually worth $3,000, that’s just a loss. And so what they do to try to offload their inventory is they do start selling these homes for pennies on the dollar, essentially giving them away.
And who are they selling them to? Who is in a position to just buy up dilapidated, falling apart houses? It’s speculators, who then initiate this process all over again. So HUD is just, you know, it’s more than incompetence. It’s like a commitment to a business and policy model that is doomed to fail.
And that, you know, gets to a much deeper and systemic problem, which is that HUD has always existed to facilitate private enterprise in the real estate world. And that is how it is always been envisioned as a cabinet position. And that is always how it’s functioned. And so part of what I’m looking at in this book is the way that really the mismatch between the profiteering impulse of the real estate industry and the public purpose that housing policy and public policy is supposed to perform.
It is supposed to be in the interest of the public. It’s supposed to protect the public welfare and so profiteering an the public’s welfare and public interests don’t really go together. They don’t match, and this is part of the conflict then HUD that has produced a kind of ineffectiveness or just outright destructive programs for the entirety of its history.
There’s no moment in time when HUD has not operated as a completely dysfunctional organization, because from its inception, it’s envisioned as a tool for the private sector to, you know, figure out how to play more of a role in housing policy, in urban development. And the problem, I mean, one of the reasons why in this country, we continue to have such a dramatic shortage of safe sound and affordable housing for people is because it’s not profitable.
It’s not profitable to house poor and working class people. And when the federal government divest itself from developing, building, managing any housing and completely outsources that to the private sector, well, there’s, you know, the private sector makes money building million dollar condos, not building 700 square foot , thousand square foot homes for two or three people at a time.
There’s no money in that. And so this is why we never have effectively solve the so-called housing crisis. And, you know, it’s about the relationship between the public sector and the private sector that inevitably, and almost always ends up creating policies that bend to the will of the private sector, to the detriment of the general public.
Steve Grumbine (38:03):
The public purpose to me is a very, very key term there. I don’t think we’ve seen a government serving the public purpose in many, many years. And in fact, I think the term public purpose has long been lost in just general society. We’ve gotten to the point where we feel like our government is so inept, so incapable of doing great things that we just assume that we have to rely on the private sector.
But as you eloquently stated, the conflict of profit motive and public purpose, couldn’t be further at odds with one another. And so how do you reconcile that? And I guess that brings us to some modern day stuff. As it stands now is you’ve addressed a very specific period. And we’ve gotten to see the impacts that it’s had not only on African Americans, but the exacerbating of the wealth divide as there are people profiting off of the misery.
But now we enter into an era where we’ve witnessed wages flatlined for 40 plus years. We’ve witnessed great wealth divide. It’s now leaving many, many others, not just minorities behind it. Now it’s leaving the entire middle class behind, and you’ve got a person in Bernie Sanders and Alexandria Ocasio-Cortez, and others like Ilhan Omar that are advancing bold policy proposals within this Green New Deal construct.
And one of the most recent ones that has come out is Housing as a Right. And by definition, that would have to be public purpose – housing as a right doesn’t say housing is a profit motive.
Keeanga-Yamahtta Taylor (39:40):
Right.
Steve Grumbine (39:40):
Housing as a right is a very different construct. Can you relate the present circumstances and the present needs for housing in solving the housing crisis with a housing guarantee and the plight that we see with this public-private partnership and the profit motive that you so perfectly described in your book?
Keeanga-Yamahtta Taylor (40:04):
Well, I mean, for me, one of the reasons why I wanted to write the book or that I eventually arrived at, was the fact that our government continues to go back to the well of the public-private partnership and always reintroduces each new kind of public-private partnership as a new idea and an innovative idea that we’ve never heard of before.
And so I wanted to show that no, actually these practices, these policies have a history and in housing it’s a history of failure and we should understand that history so that we stop doing the same things over and over again. And so there’s a direct relationship between the kind of history that I’m looking at and the constant pushing, proselytizing around these public-private partnerships.
And so I think that right now, we’re in a political moment where growing numbers of people are no longer willing just to accept the status quo as the best that can happen. I think Bernie Sanders helped to crack open that space in 2016, but he himself had been moved to crack open that space by all number of things that begin to happen in the immediate aftermath of Obama’s election.
The emergence of Occupy, the battle in the state house in Wisconsin 2010, the Arab Spring, the emergence of Black Lives Matter. All of these were expressions of exhaustion and aspiration with the political status quo and the need for something different to happen. And so Sanders took that charge and ran a campaign that was mocked by the establishment in 2016, but was heard by people on the ground.
The fact that an open socialist could get 13 million votes in the primary in many ways was shocking to the political establishment. You know, this is the bastion of anti-communism. This is the United States of America, where we believe in the American dream, and we have no class inequality in this country.
We just have unfettered social mobility. And much of that was exposed as a lie because, you know, you have people who are living through what are supposed to be fantastic economic conditions. You know, there’s 3% growth, there’s historically low unemployment. This is supposed to be the good times. And yet, you know, people are willing to listen to Bernie Sanders, all kinds of people are willing to listen to what Sanders is offering and argue for because of the complete failure of the market, so called free-market capitalism to produce substantive and meaningful change in people’s lives.
Instead, most people are saddled with debt that there is no way that they can ever repay. They’re saddled with the threat of even more debt. Because even if you have health insurance, you’re, under-insured, you know, and all the things that have kept Sanders campaign alive, even as the mainstream media has systematically tried to ignore it, and the leadership of the Democratic Party has systematically tried to bury it.
And so this means that there’s a new opportunity to at least think about doing things differently. I think in the same way that there is space for a new conversation about healthcare, there’s space for a new kind of discussion about free college, canceling student debt, things that were mocked in 2016, are starting points for the discussion today.
So that even if you don’t agree with it, you have to have something to say about it. And I think that housing has been elevated to that plane. And we can see Illan Omar introduced the $1 trillion bill around housing and the human right to housing. This is totally unprecedented. And you know, of course there would have to be a huge political struggle and battle for that to happen.
But we are having the conversation in ways that four years ago, eight years ago, I mean, you couldn’t broach the subject, let alone have a congressperson, actually introduce a bill. And so we have take advantage of this political opportunity, political moment to build the kind of forces that are necessary on the ground to force the Neanderthals of the Republican Party to succumb to the will of the majority of people, but also the neoliberals at the rein of the Democratic Party.
So there’s a lot of work to do, but the space has opened considerably wider for us to engage in those battles.
Steve Grumbine (45:30):
This has been an absolutely fantastic discussion. I really appreciate you taking the time with us, and I hope I can have you back on for part two, because I have so much more I want to talk to you.
Keeanga-Yamahtta Taylor (45:46):
I know, I know. Well, thank you so much. I appreciate it.
Steve Grumbine (45:49):
Thank you so much. And Keeanga, I really do wish you well. And thank you so much for writing this great book, and we look forward to talking to you again soon.
Keeanga-Yamahtta Taylor (45:59):
Alright, cool. Thanks so much.
End Credits (46:07):
Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressive Patreon account. If you would like to donate to Macro N bacco and cheese, please visit patreon.com/real progressive .