Inequality Has Rigged Our Economy and It Is Time to Change the Rules

The economic crisis is built on the country’s long history of racial discrimination.

President
Obama's recent announcement to reappoint Federal Reserve Chair Ben S.
Bernanke came on the heels of Bernanke's meeting with world bankers who
declared the global economy to be back on track to normal. But for
most, "normal" is not something to look forward to.

Earlier this year I traveled the country researching race and the
recession. From Detroit to Tucson, Providence to San Antonio, I met
people for whom the recovery could mean very little if it fails to
address the structures of racial inequity in the economy. And just as
these disparities are hazardous to people of color, these structures
are some of the same that helped push us all into recession.

In Detroit, I met Leila* who recently lost her job as a teacher's
assistant, supporting her four children alone. She was laid off late
last year because of state budget cuts. Her unemployment benefit ran
out and she applied for government cash assistance. A month later, her
welfare checks were also cut off and she was suddenly without any
income.

Leila fell behind on her mortgage payments on the house she had
just moved into. She realizes now she was sold an adjustable rate
subprime loan. Her house went into foreclosure. Without any other
wealth to fall back on, she's not sure what will happen.

People of color have been hardest hit by the recession. In July,
Blacks experienced rates of unemployment 70 percent higher than whites
and Latinos almost 50 percent higher. Strikingly, even before the
downturn, Black, Latino, Asian and American Indian communities had
faced recession-like levels of unemployment for decades. Moreover,
people of color are paid less, often 60 cents to every dollar of white
family income, and they hold pennies to every dollar of white wealth.
They are segregated into low-wage jobs and face barriers to equal
opportunity including discrimination and lack of workplace protections.

This is the economy of normal; the economy that pushed us into recession.

Meanwhile,
foreclosures are still pummeling American families. And because people
of color were disproportionately saddled with predatory loans, they've
been stripped of much of the wealth they had carefully accumulated over
the years. The recession has deepened the racial divide.

That Blacks, Latinos, Asians and American Indians face higher rates
of foreclosure is no coincidence. Until the 1970s, people of color were
broadly excluded from owning homes as a result of practices of racial
redlining and racially restrictive neighborhood agreements. Then
Congress passed the Community Reinvestment Act (CRA) to end
discrimination in lending. Suddenly redlining and racial exclusion were
made illegal and people of color slowly began to access prime loans.

But in the late 1990s Congress deregulated the mortgage industry
along with Wall Street, opening the space for industry to circumvent
the CRA. These were the same anti-regulatory maneuvers that made the
subprime securitization possible. As the CRA was weakened and
incentives to sell subprime loans grew, neighborhoods of color provided
fertile ground for the sale of these faulty products. Since
neighborhoods like Leila's were largely devoid of prime lenders as a
result of the history of redlining, there was little competition and
the credit vacuum created conditions for the predatory sale of
high-cost loans to communities of color.

The streets of central Brooklyn and Detroit filled with predatory
lenders, millions of these mortgages were sold, and they ultimately
burst, flooding the economy with toxic assets and submerging all of us
in an economic storm.

The economic crisis is built on the country's long history of racial discrimination.

As
we move forward, we must set a new foundation. Only by tackling racial
inequity in the economy can we ensure a stable recovery. This will
require that we emphasize racial justice.

An immediate moratorium on foreclosures and modernization of the
Community Reinvestment Act will help. Rigorous enforcement of
anti-discrimination laws and labor protections for undocumented workers
and people with past criminal records are necessary to ensure everyone
has an opportunity to work. Fixing the broken healthcare system, which
is responsible for more than half of personal bankruptcies, and the
cultivation of a new green workforce that trains people of color in
skills for a better economy should be prioritized.

Recovery will not mean much if we return to the normal economy. Let's demand an economy that is good for all of us.

*Name changed.

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