Written By:  Barry P. Foley
Copyright © 28 Oct 2022

The Color Of Money….this is about Banks and the racial wealth gap, not the movie with Paul Newman and Tom Cruise.

In 1865 the black population owned about a half of a % of the wealth in America. What’s staggering is that 150 years later than percentage has barely budged.  14% of the US population own 1 to 1.5% of national wealth.  The median wealth of a black family is 15 to 20% of an average white family’s wealth. A third of black families have Zero wealth or negative wealth.

For most of our history, black men and women have been excluded from occupations, schools, neighborhoods and trades. In each historical moment in America where White, middle-class wealth is being created with the help of the Homestead Acts, FHA Mortgage loans and the GI Bill, Black communities were shut out of land and wealth accumulation thru Real Estate Covenants and Redlining.

The American banking did their part to ensure the Black population never got ahead.  When the banks finally got around in the 90’s to complying with various government regulations, they took full advantage.  Sub-Prime Mortgages paved the way to ensure the lack of equality in home mortgage loans.  Homeowners in high-income black neighborhoods are twice as likely as homeowners in low-income white neighborhoods to have subprime loans.  Sub Prime Mortgages became ideal for predatory lending activities with excessive fees and prepayment penalties.

These predatory lending practices were well known in the banking industry as far back as 1998.  When the housing market collapsed ten years later in 2008, the Black community was hit especially hard. It is estimated that 8% of African Americans lost their homes to foreclosures, compared to 4.5% of white families.

With half of the US population has less than $500 in savings, the least little blimp is a major household budget problem, like a car repair.  Struggling each month paycheck to paycheck, having to rely on Pay Day lenders and the likes.  These modern day loan sharks charge 300% to 2000% interest.  A small $500 loan might cost $2000 with interest and fees!  Many fall into the cycle of debt, borrowing from Peter to pay Paul, ruining their credit and ending up going bankrupt.

Wealth breeds wealth, debt breeds debt.  The Color Of Money

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