Wages of White Affirmative Action: Predatory Lending & The Ghetto

By Sikivu Hutchinson

White people have started to return to South Los Angeles.  They can be seen watering lawns, walking dogs, and frequenting local restaurants.  Legend has it that there are a few white families that never left during the postwar mass exodus that magically transformed what was once Southwest L.A. into “South Central”—that internationally notorious, mythic den of drugs, drive-bys and destruction that launched a thousand gangsta rap careers and corporate parasites rolling to the bank on the backs of “bitches” and “hos.”

Back in the day all of the “bad” black and brown schools in Compton, Watts, and Inglewood were teeming with whites.  Americana Leave it to Beaver mom icon Barbara Billingsley even graduated from a local ‘hood school in the 1930s.  But these new white transplants are merely symbols of the turbulent real estate market, not inner city missionaries slumming for an ethnographic high.  They’re canaries in the coalmine of negative equity. Priced out of the “better” (read white) areas of the city some white homebuyers have been forced to venture back into the hood.  Snapping up Spanish or Craftsman-style bungalows in savvy short sales they’re rediscovering the “quaintness” of Black neighborhoods that their forebears escaped decades ago courtesy of government programs like the GI Bill and FHA mortgage lending.  Touring the streets wide-eyed with their travelogues some register surprise at the area’s suburban aura, the “tidiness” of the homes, the “unexpected” pride in ownership that the natives demonstrate. But having the luxury to move back to the “ghetto” they built through generations of apartheid housing policies is part of whites’ democratic birthright.

White American democracy has always meant the bliss of segregation and the willful ignorance of the bodies that get displaced.  It’s ladled out in cultural initiations like being warned to keep the car windows up when driving through Black areas or having a nifty cell phone app nicknamed “Avoid Ghetto.”  Even in the era of rampant “Main Street” foreclosure and negative equity white American democracy still means the privilege of mobility.  When whites move into neighborhoods that residents of color have been forced to leave due to plummeting home values and high unemployment it’s called gentrification.  It is only cause for national political action and reform when white middle class homeowners are impacted by imploding housing bubbles.  Bipartisan political rhetoric that fixates on the “middle class” (as the default category), while marginalizing disproportionately asset poor working class people of color, merely reinforces a colorblind class myth where struggling white people have it “just as bad” as people of color.

This is true, because, for the party of the Religious Right, poor people don’t work and they don’t pay taxes.  God’s pecking order does not favor being on the dole and accepting handouts.  American exceptionalism is validated by the specter of the Black ghetto as den of immorality.  According to this narrative African Americans have squandered the advantages of living in a democratic society in which everyone has an equal chance at economic mobility.  Black poverty is only immoral insofar as it reflects a certain cultural indolence and pathology on the part of shiftless blacks.  While “cultures of poverty” corrupt, cultures of success, based on capitalism, free enterprise, and hard work, uplift and moralize.  Systemic discrimination has never been deemed immoral in the American mainstream.  For the Right, systemic discrimination is a quaint oxymoron, vestige of a primitive era when the U.S. was presumably less evolved.  The moral universe consists of getting ahead in a manifest destiny mish mash of Darwinism and divine providence; i.e., the way God wanted it, free of the fetters of restrictive public policy that rewards the sloth of homeowners of color.

In 2011 former mortgage giant Countrywide was found guilty of engaging in predatory lending which targeted Black and Latino homebuyers.  Last week lending titan Wells Fargo settled a lawsuit after it was accused of steering over 30,000 Black and Latino homebuyers to subprime loans.  The class action stemmed from a Baltimore city lawsuit in which former employees alleged that Wells Fargo “loan officers referred to minority borrowers as ‘mud people’ and called subprime mortgages ‘ghetto loans.’”  During the lending boom Wells Fargo officials regularly conducted “wealth building” seminars in communities of color, (often headlined by talk show host Tavis Smiley) where reps secretly peddled subprime loans.

So while homebuyers of color were essentially taxed for being black or brown; white homebuyers “bootstrapped” their way to the American dream with lower interest rates and better terms handed to them by the big banks.  “Homebuying while white,” many of them had the same credit scores and incomes as applicants of color.  What they didn’t have was the same capital and asset holdings. Not only is Black and Latino wealth a fraction of white wealth but the vast majority of it is based on home equity; home equity that has been pillaged by Wells Fargo, Countrywide, Bank of America and other lenders.  As Yuan Miu of the Washington Post argues, the housing bust has “left a scar on the finances of black America…(it) has not only wiped out a generation of economic progress but could leave them at financial disadvantage for generations to come.”

Yet mainstream narratives on the housing meltdown tend to revolve around irresponsible homebuyers lapping up variable mortgages they couldn’t pay off or vulnerable homebuyers sacrificed on the altar of Wall Street’s credit default swap morass.  After President Obama finished bailing out the big Wall Street banks his rhetoric turned to shoring up Main Street.  To hear Obama tell it, the brunt of the crisis was squarely centered in Middle America.  Urban neighborhoods devastated by the TKO of predatory lending, foreclosure, job discrimination, and mass incarceration barely registered on the radar of the administration or the mainstream media.  There was little mass outrage over the immoral systematic disenfranchisement of Black and Latino homebuyers by the banking crooks.  Neither GOP lawmakers, nor prominent Democrats, other than those in the Congressional Black Caucus, rushed to criticize the lending industry’s white affirmative action. Nor did they condemn the racist practices of bankruptcy attorneys who refer debt-ridden Black consumers to more costly Chapter 13 bankruptcy filings.

Being against “big government” or social welfare for working class communities of color has always been about morality.  It is reflected in right wing venom against public employee unions and health care reform which are both overwhelmingly supported by people of color.  It is amplified in racist discourse around illegal immigration, spearheaded by Christian fascist states in the Bible Belt and the Southwest.  As the white population and white births continue to decline nativist propaganda against racial, social, and gender justice has become more unabashedly Christian fascist.  It’s the wages of white affirmative action that have always defined American democracy—model for the civilized world.

Sikivu Hutchinson is the author of Moral Combat: Black Atheists, Gender Politics, and the Values Wars and the forthcoming Godless Americana: Race and Religious Rebels.



Wages of White Affirmative Action: Predatory Lending & The Ghetto

9 thoughts on “Wages of White Affirmative Action: Predatory Lending & The Ghetto

  1. 1

    …or having a nifty cell phone app nicknamed “Avoid Ghetto.”


    I know that the lending practices are a much more serious violation of things like decency and ethics (not to mention the law), but that really drives home the racial divide.

    I don’t know if people will ever stop turning and feeding off those they deem ‘lesser’ beings, but it’d be really, really nice if they’d choose to stop this shit. And it most certainly is a choice.

  2. 2

    It is amplified in racist discourse around illegal immigration, spearheaded by Christian fascist states in the Bible Belt and the Southwest. As the white population and white births continue to decline nativist propaganda against racial, social, and gender justice has become more unabashedly Christian fascist.

    You are making me think. Regarding the recent actions towards illegal immigrants, my husband claims “They don’t even hate Mexican people; they just want to create a fascist state.” To which I reply, “Nuh-uh, I’m pretty sure they hate and fear them.” We go back and forth, “fascism”, “hatred”, “fascism”, but can’t figure out which is the stronger force. I suppose hatred comes from people, yet can be institutionalized, but corporations are seeing a profitable upside in fascism. So if corporations are the power behind most of what happens, then a desire for fascism might be even more powerful than hatred based on racial or ethnic categories. But I’ll admit I could easily be wrong.

    1. 2.1

      On fascism or racist hate…why choose? Don’t they go hand in glove? Doesn’t one make the other more potent..regardless of who the target is this go round? The targets of the KKK were varied… Jews, Black folks, Catholics…which is not to say they were not especially focused on Black people…

      Teasing out the whys and whatfors is important – I’m not trying to undermine the question…I genuinely don’t know why it’s important to choose…If you are a chosen target that is good enough for them…

  3. F

    It’s not like some lenders had been busted for predatory lending long prior to the current incarnation of economic meltdown. (And those are the ones which simply could not avoid being busted for it, and the gov couldn’t avoid busting them.)

    The problem is always somewhere else, never in horrific business practices, fueled by racial bigotry or not. (But definitely not because of racism. Oh no, never.)

    Obama, well, he seems pretty much about “moving forward”, that is, he doesn’t want to fight against wrongdoing that is in the past. (Which is where everything ever has occurred, so there.)

  4. Kes

    Bipartisan political rhetoric that fixates on the “middle class” (as the default category), while marginalizing disproportionately asset poor working class people of color, merely reinforces a colorblind class myth where struggling white people have it “just as bad” as people of color.

    I think the reason talking about what the “middle class” needs has such traction politically is that very few white Americans like to consider themselves “poor”, even when they demonstrably are. This recalls the Steinbeck quote: “Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”

    Steinbeck would have been more accurate if he’d specified “the white poor”, because people of color in the US have always been well-aware that the American Dream of social mobility is a myth.

  5. 5

    The thing that always bugs me about the gentrification issue is that I don’t think I fully understand how to avoid it. From what I’m told, a lot of gentrification took place shortly before I moved here to Philadelphia, in particular in the neighborhoods near the University of Pennsylvania and Drexel University (my partner’s and my graduate schools). The universities started giving faculty and staff financial incentives to encourage them to buy and rehab houses in the surrounding neighborhoods, and started stepping up on-campus and near-campus police enforcement, and generally tried to make the nearby neighborhoods less run-down and crime-ridden. And, from our perspective, this sounded like kind of a good thing, what with the corresponding improvements in housing and service quality and reductions in crime. But how does one avoid these kind of improvements having the illiberal effect of displacing disenfranchised people by pricing them out of their own neighborhoods?

    It seems like there’s got to be a way to simultaneously help improve the quality of life in these poor areas and hopefully desegregate them, rather than just replacing a segregated minority “ghetto” with a segregated white yuppie enclave. But I don’t know what it is. Perhaps somebody here has a better handle on this?

    1. 6.1

      Yeah, maybe, but that’s hard too, because you want to give landlords an incentive to actually spend money on renovating and maintaining the places, and if they can’t charge rents commensurate with their costs then they’re not gonna do it. But that almost makes it seem like the only way to make this happen is for the government to step in as the landlord, and I’m not sure that will work out well in the long run.

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