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Berkeley Talks transcript: How the real estate industry undermined black homeownership

Keeanga-Yamahtta Taylor talking next to a photo of her book
Keeanga-Yamahtta Taylor, an assistant professor of African American Studies at Princeton University, discusses her new book Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership. (Left: Social Science Matrix photo; right: cover of Taylor's book)

[Music: “Silver Lanyard” by Blue Dot Sessions]

Podcast intro: This is Berkeley Talks, a Berkeley News podcast from the Office of Communications and Public Affairs that features lectures and conversations at UC Berkeley. You can subscribe on Apple Podcasts, Spotify or wherever you listen. Also, check out our other podcast, Fiat Vox, about the people and research at Berkeley. You can find all of our podcast episodes with transcripts and photos at news.berkeley.edu/podcasts.

Michael Watts [introduction not included in audio]: Good afternoon everyone, and welcome to Matrix. My name is Michael Watts, I’m the acting the director here at Matrix. And as you may or may not know, Matrix is a sort of portal in a way for critical social science research on campus. As the name implies, we’re a type of institutional framework that supports particularly interdisciplinary social science. And we support a raft of work, actually, of various sorts.

I don’t want to spend a lot of time right now pointing to what’s coming up this semester, but if I could just flag a couple of things before I introduce our speaker. We have our Author Meets Critics series — we have Stephanie Jones-Rogers talking about her book They were her property coming up; Brandi Summers and Nikki Jones talking about Brandi’s new book Black in Place. Rosemary Joyce in anthropology, Future of Nuclear Waste and Steven Webber’s book Bloc by Bloc on the rise of global capital. All of these are coming up.

We actually have our Matrix On Point series. These are sort of informal discussions, largely with Berkeley faculty on issues of the moment. We have a discussion on the fate of the forests coming up with Nancy Peluso and Chris Lesser; one on taxation and the 1% with Emmanuel Saez, whose book Triumph of Injustice you’re probably familiar with; we have another on electoral manipulation with Sarah Anzia, Bertrall Ross; and another on homelessness, which is going to be led by Thomas Fuller, he’s the head of the New York Times San Francisco bureau. Some of you maybe read his astonishing article about homelessness in Oakland earlier in the fall.

We have a Matrix seminar with Adam Tooze from Columbia who wrote, it might be the best book on the financial crisis, called Crashed. He’s going to be here in April. We have a couple of lectures, Jack Jackson will be talking about his book Law Without Future; Alex Gillies will be talking about Crude Intentions, her new book from Oxford University Press. And last but not least, we’re going to be having a conference on the rise of the right, organized by Wendy Brown and Dylan Riley and co-sponsored by Matrix here. All of which is to say, there’s a lot happening. Please check out our website. As I said last semester, the only thing that Matrix really is missing right now is a small film festival.

Today is our Matrix Distinguished Lecture. It’s actually our inaugural Matrix Distinguished Lecture and this is an occasion to bring to campus a critical social scientist working in an interdisciplinary vein who speaks to an audience on and off campus, which contributes directly to the themes that Matrix is focusing on this semester. Those themes are democracy in crisis and race, class and inequality. Those are the two themes. Actually, we’ll be having a second Matrix Distinguished Lecture later with Katharina Pistor, who will be talking about her new book Code of Capital. She’s at the law school at Columbia.

So, given that focus then — democracy in crisis and race, class and inequality — it’s hard to imagine a more appropriate speaker than Keeanga-Yamahtta Taylor. She’s an assistant professor and Charles H. Mcilwain University Preceptor in the Department of African American Studies at Princeton. And she’s going to be talking today about her new book Race for Profit, published by UNC Press, that incidentally was long listed for the National Book Award. Central to her research is housing and the politics of shelter, you might say. She focuses specifically on the intersection of state policy, race, class and especially the power of real estate and finance capital.

Of course, these are issues that are central to us in the Bay Area, I don’t need to tell you this, where eviction, inflated housing and rental costs, I live in San Francisco — 8,000 people living on the streets — all of these things are deeply central to our everyday politics. But it’s obviously not just a San Francisco problem. This is as relevant in Berlin as it is in New York as it is in Barcelona or London. And, in fact, housing and housing politics, in my view, have emerged as a major front along which the fight against various forms of of neoliberal capitalism and authoritarian populisms are currently being waged. And this is central of Keeanga’s work.

She was educated at Northeastern Illinois University, got her Ph.D. at Northwestern in 2013, and before she came to Princeton, she was a post-doctoral fellow at the University of Illinois, Urbana-Champaign.

She’s going to talk about her new book today, but of course, you probably know her from her other books, which are widely known on and off campus, From #BlackLivesMatter to Black Liberation, which incidentally won the Lannan Cultural Freedom Award in 2016, and How We Get Free: Black Feminism and the Combahee River Collective, which won the Lambda Literary Award just over a year ago.

These books have been enormously influential on and off campus. They’re really now foundational texts, in terms of thinking about black politics, movement politics more generally, and the complex histories and genealogies of feminism.

These books point to her long and abiding commitment to activism and to a critical type of public intellectualism. Her writing has appeared in the New York Times, you’ve probably saw her op-ed recently in the L.A. Times and the Nation. 

And she’s an activist of note. Not only because she’s supporting Bernie, but because she was an organizer, some of you will remember, of the Day Without Women March in 2017; she was centrally involved in the anti-inauguration of 2017; and has been involved in various women’s marches. She’s an activist and public intellectual in the fullest sense. And her critical stance in response to the Trump administration in particular, has come with its own burdens, where she has suffered personal threats, invective and abuse from the Fox News and others.

All of which is to say that we’re delighted that Keeanga could… these are badges of honor, of course, here. We’re delighted that she could make time to be here today. We’re piggy-backing off her visit to UC Santa Cruz, and I have to say, Keeanga, that we cannot match that poster that was advertising her event over the last couple of days. At the west gate of Santa Cruz, there is a poster — it’s like something out of Macy Day parades. It’s gotta be like 40 feet tall. I’m sorry, we can’t match that. We do our best here, we’re struggling with austerity. We’ll try better next time.

Let me just also give a vote of thanks to Jessica Stewart and Ava Sato, who have helped organize this, and especially our co-sponsors, Leslie Salsinger, in gender and women’s studies, and Allison Post of global metropolitan studies. They’ve both been enormously supportive of this and other events here.

So, without further ado, we’re delighted to have Keeanga here. She’s going to speak to us today about her book Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership. Welcome.

Keeanga-Yamahtta Taylor: I’m very happy to be here. Let’s just get started. I know we don’t have a lot of time. I’ll talk for about 40 minutes and then, hopefully, we can have a provocative discussion. So, I wrote a book Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership. This talk is intended to give an overview of the main themes of the book. The book is what I describe as dense, but readable. There are lots of different storylines in the book, but it’s covering a relatively condensed period of time, from the 1968 Housing and Urban Development Act to the the 1974 Housing and Community Development Act.

So, it’s a tight period of time, but I’m trying to give a general overview of the main themes that I deal with in the book in this talk.

Last July, in a now typical spasm of racist vitriol, Donald Trump described the city of Baltimore as a “rat and rodent infested mess” that “no human being would want to live in.” It was cruel and thinly veiled code invoked to disparage the hardship in black working class communities of that city. In doing so, it also conveyed a fatalistic disregard for those conditions, while expressing a decided lack of ambition to actually attend to something as serious as “rodent infestation.”

Despite Trump’s rhetoric, rat infestation in black poor and working-class communities is not evidence of African American indifference to conditions in their neighborhoods, but rats have always been markers of substandard housing that thrives in the enclosure of residential segregation.

The menace of rats in black working class neighborhoods in the 1960s also inspired ridicule from mean-spirited white conservatives in government then — and it also sparked activism and even uprisings. In August 1967, nearly two weeks after riots in Detroit prompted the rare deployment of federal troops in an American city, dozens of demonstrators burst into the chamber of the House of Representatives chanting, “Rats cause riots!” Days earlier, Congress had rejected a two-year, $40 million bill to exterminate rats in inner cities across the United States. The protestors sat in the gallery of the hall for twenty minutes, repeating the slogan, “We want a rat bill!” at ever higher volumes. The previous attempt at passing the bill had not merely been voted down but had been ridiculed in the process. A Virginia Republican mocked the legislation to howls of laughter from other white representatives, saying, “Mr. Speaker, I think the ‘rat’ smart thing for us to do is to vote down this rat bill, ‘rat’ now.” One of his colleagues mocked it as another “civil ‘rats’ bill.”

No laughing matter for the people who lived in the inner city, rats were the most visceral example of the unequal living conditions forced onto black people in midcentury America. In the 1960s, African American media regularly reported on rat attacks on the most vulnerable members of black urban households: children.

Loraine McTush, a single African American mother, complained to a Chicago Defender reporter that she stayed up most nights because of rats — the rats crawling in her bed, which made her nervous, and the rats in her children’s beds, which terrified her: “They … get into the bunk beds, and so I sit up all night. I am miserable and afraid.”

Two days before his first birthday, little Andre Adams was “chewed to death” by a rat while sleeping in his crib, a death so shocking that more than a thousand African Americans gathered on Chicago’s West Side in protest. One activist recalled the prior summer’s deadly riot — “Remember Watts?”— describing in grisly detail the infant’s remains: “When he lay in his crib, you could see the holes where the rats had chewed. The little finger of his right hand was tied on with a string.” Chicago health officials disagreed, claiming the child died of malnutrition but nevertheless conceding that rats had fed on the baby’s corpse. Civil rights leader Dr. Martin Luther King Jr., who spoke at the hastily organized protest, reminded the crowd, “This is why we are fighting the slums in Chicago.”

The rat infestation in black neighborhoods was profound. When African American children in a Chicago neighborhood were given a vocabulary test and asked to identify various familiar objects, more than 60% of the children misidentified a rat as a teddy bear. In the aftermath of riots in Philadelphia in 1964, a city commissioned report found that 100% of reported rat bites happened in segregated, black majority neighborhoods. Housing segregation — maintained through a vexing combination of white terroristic violence, public policy and the exclusionary practices of the private sector — insured the dilapidated and substandard condition of black housing. These were the evidence of exclusion and enclosure and they boiled over into the electricity of successive waves of uprisings across the country.

A Harris poll taken in the summer of 1965 after riots in South Central Los Angeles, found housing conditions listed among the top three concerns of all Americans. In the weeks after the uprising in Detroit in 1967, a Washington Post poll forcefully linked deteriorating conditions in black communities with the uprisings. Fully 70% of blacks “attributed rioting to housing conditions.” Fifty-nine percent of blacks said they knew someone living in rat-infested housing; 57% reported holes in their ceilings; 49% said their housing was overcrowded; and 68% reported cockroaches in their housing. In the poll, even 39% of whites said they believed the condition of black housing was responsible for the ongoing rioting.

By the end of the 1960s, the National Advisory Commission on Civil Disorders, known as the Kerner Commission, had left no doubt that substandard housing, evidenced by rat infestation was a recurring factor in the annual bout of riots that roiled American cities throughout the decade. Identifying segregation at the root of those conditions and as a significant source of rage black communities, the commission’s findings called for historic changes to American housing policies. A landmark Supreme Court case, Jones v. Mayer, decided just weeks after the passage of the Fair Housing Act in the spring of 1968, drew upon the 1866 Civil Rights Act and the Thirteenth Amendment in comparing housing segregation to slavery arguing that: “when racial discrimination herds men into ghettos and makes their ability to buy property turn on the color of their skin, then it … is a relic of slavery.”

The final piece of the battle to open the US housing market to African Americans came with the Housing and Urban Development Act in August of 1968. The 1968 HUD Act was Lyndon Johnson’s last greatest legislative accomplishment. It was a bill planned in collaboration with representatives from private enterprise in what was known as the Kaiser Commission. The businessmen who participated described their promotion of single-family homeownership for poor people as “socio-commercial enterprise” — business with a conscience. Johnson described the legislation as the, “Magna Carta for the cities.” And its focus on the market and ownership ensured that it was a bipartisan bill.

For decades, federal officials had relied on public housing to shelter poor and low-income people. But by the end of the 1960s, public housing had become politically untenable, with endless jousts over its maintenance, location, and inhabitants. Housing for the poor suffered from a mixture of government neglect and shrinking tenancy, a result of the dangerous conditions endured by residents and the constant pressure for such housing to exclude anyone other than the poorest tenants.

The HUD Act was a pivot away from the notion of public or state responsibility for housing the poor or low-income. At the heart of the legislation was a low-income homeownership plan that aimed to transform low-income renters into homeowners. Federal officials turned to homeownership as a cheaper program where the cost of the houses were absorbed by the program participants while the federal government paid regular subsidies to banks which kept the state’s costs lower than the upfront expenses necessary to develop, build and manage public housing.

These economic concerns also fit with the growing idea that homeownership could stabilize the anger, and restiveness coursing through American cities. Freshman Senator Charles H. Percy, a Republican from Illinois described the benefits of expanding homeownership as a “new dawn of opportunity…on which a new national effort to bring dignity and a better life to today’s slum dwellers must be based. We can democratize our cities. We can give people of the ghetto a piece of the action—let them be somebody and achieve something.”

President Richard Nixon said of the bill, “People who own their own homes don’t burn their neighborhoods. Rather in pride and self-interest, they turn to fixing up their communities and making them livable for themselves and their neighborhoods.”

The terms of the new homeownership program were a low $200 down payment, 20% of a participant’s income as their mortgage regardless of the cost of the house and an interest rates capped at 1%. The inclusion of federal mortgage insurance for the first time meant that in the worst-case scenario — foreclosure or abandonment — the federal government was obligated to pay back the mortgage to the lenders. These terms kept the price of the homes manageable for low-income and working-class people.

But it also removed almost all of the risk for the real estate industry. As one official described the program, “It’s like doing business in heaven. You can’t lose money.” The unprecedented program linked federal agencies to real estate brokers and mortgage bankers to supply the loans housing and loans to people and in neighborhoods these organizations had previously excluded or redlined. But with the promise of lucrative subsidies and the guarantees of mortgage insurance and the promise of profit that came with them, the historic hostility of these private sector forces melted away.

But these same conditions also opened new pathways for corrupt real estate practices. Speculators and brokers bought up cheap, dilapidated properties hoping to then flip them for higher prices in sales to people who would qualify for the new programs. The entirety of the program was in the hands of real estate operatives. HUD sent brokers lists of eligible properties. When real estate brokers matched a person with a house, they connected the prospective buyer with a mortgage lender. The mortgage lender consulted with HUD to determine if the person qualified for the program. At no time did an individual speak with a representative of the federal government. Not only could money be made by flipping cheap properties, but brokers found it easy to bribe poorly paid FHA appraisers to inflate the value of the houses in the new urban market. Bankers made money on the front end of the real estate deal by securing the loan and then they made money on the back end with expensive closing costs associated with selling the property. Everyone made money — accept the poor black families that were disproportionately saddled with these broken homes in cities across the country.

The federal government’s turn to homeownership was, also, a consummate expression of postwar racial liberalism which viewed inclusion into American democracy through the vehicles of citizenship, law, and free market capitalism as the key to unlocking equality and social mobility for black citizens — just as it had done for white Americans through the New Deal and the GI Bill after World War Two.

But in narrowing their focus to “access” alone, racial liberals overlooked the racist practices embedded within those institutions. This was shockingly clear in the real estate industry. Banks and the real estate industry had played a central role in creating the urban housing crisis—exemplified by the persistent presence of rats in black housing — so the sudden involvement of these same private sector forces was a recipe for disaster.

This obviously did not mean that African Americans should continue to be excluded, rather it demanded greater scrutiny, greater enforcement of rules regarding the protection of civil rights and specific plans to undo the practices that had resulted in black exclusion in the first place. Without that level of scrutiny and the threat of behavior-altering punishment, there was nothing in place to prevent the continuation of those practices.

Instead of scrutiny and regulation, predatory practices continued. In other words, the racist exclusion of African Americans gave way to their predatory inclusion. The notion of risk facilitated the charade of race neutrality as the neighborhood conditions and financial insecurity of African Americans that had been created by the racist actions and behavior of government agencies, bankers and real estate brokers were now twisted into evidence that African Americans should be treated cautiously in the marketplace. Predatory inclusion described the different, more expensive and ultimately exploitative terms upon which African Americans were admitted into the world of conventional real estate under the guise of colorblind neutrality.

In reality, decades of color-conscious exclusion created poverty and the conditions of dilapidation and deterioration in working class and poor black communities that were then twisted into evidence, the visual proof, that these neighborhoods — and most importantly the people who lived in the neighborhoods — posed a risk to property values and loan repayment. More generally “predatory inclusion” described the ways that African Americans were welcomed into institutions and practices from which they had formerly been excluded because there were new, supposedly colorblind ways in which they could be extracted from or financially exploited. In the supposed colorblind, race-neutral American marketplace, black investment in the housing market could result in a credit-shattering, insurmountable debt with no hopes of their house gaining value over time. This, of course, did not mean that the homes of black people had no value. black housing, even in its greatest distress, could be fortresses of refuge, places of communion, sites of connection — but rarely was it the financial asset that it had been for millions of white Americans.

But it was this issue of value that so much of the housing market turned on. The key to the American Dream of homeownership, was not just simple possession of property, but just as important was whether the value of that property would rise over time increasing the owner’s equity. In a society with an anemic social welfare state, the boost in home values were determinative of one’s quality of life. The ascending value of a home could help finance a college education, an unforeseen crisis, or contribute to a comfortable retirement. But homes did not ascend or descend in value on their own terms. The surrounding neighborhood and the value or lack of value of the other buildings, businesses and other institutions helped determine whether a neighborhood was good or bad. In the United States, valued was also shaped by whether a property owner was white or black, surrounded by other white people or surrounded by black people.

There is a perception in our society that “value” is intrinsic, tangible, real. We know what has value when we see it, just as clearly as we understand the lack of value when we see it. But in this way, value within the housing market is socially constructed — a strange alchemy of race, place, and the perceptions of the buying public. Or as sociologist Dalton Conley put it: “Property values are where culture meets economics.”

Frederick M. Babcock, considered an originator of real estate appraisal, wrote in his seminal book The Appraisal of Real Estate, “it is obvious that there is no absolute iron-clad method of computing real estate values … because values are a social phenomenon dependent upon human behavior.” The intensely subjective process of determining the value of property or a neighborhood — the pseudo-science of real estate appraisal — was inherently informed by the presence or absence of African Americans. The American Institute of Real Estate Appraisers said as much when its professional manual maintained that, “the clash of nationalities with dissimilar cultures…contribute to the destruction of value. When a new class of people of different race, color, nationality and culture moves into a neighborhood … old inhabitants think that the neighborhood is losing desirability.”

Thus, the intensity of anti-black racism in American society was inevitably wound into these notions of property value, neighborhood and community value. The assumption that African Americans were harmful to property values drove the desire to keep them segregated. It justified their marginalization in the housing market. It offered a “common sense” explanation for the disproportionate conditions of dilapidation, distress, and substandard housing — largely owned by whites and rented to African Americans.

This difference in value in white housing compared to black housing produced a tension between exchange value and use value in housing or more intimately, the difference between real estate and a home.

These contradictory objectives of real estate and home — one a commodity and the other intimating a place of belonging — also reinforced reactionary racial norms and deepened the perception of dual housing markets working at dual purposes. Midcentury narratives of normative whiteness embodied in conceptions of the suburban-based nuclear family shaped the perceptions of home as an expression of use value within white communities. Conversely, developing narratives concerning perceived domestic dysfunction within black living spaces — whether non-normative family formations or poverty or dilapidated living structures — cast black dwellings as incapable of achieving the status of home, thus reducing them to their base exchange value.

Where white housing was seen as an asset developed through inclusion and the accruable possibilities of its surrounding property, black housing was marked by its exclusion and isolation, where value was extracted, not imbued. These racialized narratives of families, communities, and their built environments reinforced and naturalized the segregative practices among real estate brokers, mortgage bankers, and the white public. Indeed, these perceptions of insurmountable difference steeped in the permanence of blood, race, and culture constituted the underwriting criteria that determined who was to be excluded and who should be included.

In this way, segregation was profitable. Value accrued to white housing the further it was from African Americans and their neighborhoods. But value could also be found in segregated and distressed housing for African Americans — only the value did not flow to black homeowner. Black people functioned as vessels through which capital flowed from enclosed black neighborhoods out to banks and real estate operatives.

Real estate operatives confined each group to its own section of a single housing market to preserve the allure of exclusivity for whites, while satisfying the demand of housing for African Americans. This was evidence not of a dual housing market, but of a single American housing market that tied race to risk, linking both to the rise and fall of property values and generating profits that grew into the sinew that bound it all together. “White housing” and “white neighborhoods” did well because “black housing” and “black neighborhoods” were robbed of federal subsidies and guaranties. A “white housing market” would have actually been unintelligible without its black counterpart; both relied on the other to make each legible; One could not have existed without the other.

This reality exposed the thinness of American liberalism where inclusion alone was offered as a palliative to the rigid structures of white supremacy that held the market, the governing institutions and the law itself together. The collusive relationship between the public and private sector in the production of public policy, housing policy, undermined the potential for inclusion to make meaning of African American citizenship.

These limits became starkly clear with the new Housing and Urban Development Act of 1968.

Consider the experience of Janice Johnson. On September 18, 1970, Janice Johnson bought her first home in Philadelphia with a mortgage guaranteed by the Federal Housing Administration (FHA). By all previous standards, Johnson was an atypical buyer. She was a black single mother on welfare and living with her eight-year-old son in a decaying apartment in a building that had recently been condemned by city officials in Northeast Philadelphia. Now facing eviction, Johnson needed to quickly find a new place to live, when she found an apartment for rent in the same neighborhood. Johnson called the landlord in anticipation, but her hopes were dashed when he told her that she could not rent the apartment because she was a welfare recipient.

The landlord quickly pivoted from offering a rental to suggesting that Janice Johnson buy a house in the same neighborhood. As a welfare recipient, Johnson qualified for one of HUD’s new low-income homeownership programs and was able to purchase the house with an FHA-backed loan for $5600. Within weeks, Janice Johnson realized that her home was not the fulfillment of the American dream; it was the beginning of an American nightmare. Within days of moving into her new home, the sewer line broke, spewing wastewater all over the basement floor. The electricity for the house was sporadic and haphazard. There were holes and other irregularities in the foundation of the home. The compromised structure of the house was not the worst of it. On Halloween night, Johnson’s son, Edward, woke up to find a rat in his bed. Janice saw rats throughout her house, including in the kitchen and bathroom. She called the agent who sold her the house to complain its condition. He sent workmen out on a couple of occasions, and they even patched the failing plaster in her dining room; but soon after, the real estate agent reminded her that the problems in her house were now her own. They were “homeowner’s business.”

Miserable and dangerous housing conditions in the existing urban market led people to walk away from the homes they had recently purchased, and the numbers of defaults, foreclosures, and FHA insurance payments began to rise. By the end of 1973, 10% of Section 235 homes were in foreclosure, along with tens of thousands more in other FHA-assisted low-income homeownership programs. In May of 1974, HUD was in possession of 78,000 single-family homes that had been foreclosed upon.

Indeed, Congressional investigations into impropriety in the homeownership program showed that federal appraisers were taking bribes and inflating the value of dilapidated houses by three or four times their actual worth. Local mortgage bankers also were accused of accepting bribes to ignore inconsistencies in paperwork needed to authorize the purchase and sale of a particular house. Newspaper reports and hundreds of federal indictments identified local FHA officials, appraisers, real estate agents, and mortgage lenders as all involved in the swindle. These were not only scandals, but crimes that had been committed against poor and working-class blacks and Latinos. In cities as diverse as Chicago, Detroit, Philadelphia, Seattle, San Jose, and Columbia, South Carolina, real-estate brokers, FHA officials, and mortgage bankers were arrested and indicted for a criminal conspiracy to commit fraud. By 1974, twenty-eight HUD officials had been indicted for their role in the housing scandal along with other mortgage brokers and real-estate brokers. The FBI was conducting another 1,930 active investigations for fraud.

The crises in the programs coincided with an end to the long postwar economic boom that had been the foundation of the American Dream. Instead, by the end of 1973, unemployment was on the rise as was inflation, creating the economic conundrum of “stagflation.” The onset of recession — the deepest since the 1930s — created a political opportunity to roll these programs back by stoking the racial resentment of white suburbanites and the perception that these programs were for undeserving African Americans. This opportunity helped to shape the political climate that allowed the Nixon Administration to implement their long-held plan to shift power back to the states when it came to the distribution of social welfare. The overriding objective was to unravel the Johnson welfare state and replace it with revenue sharing, block grants and a devolved role of the federal government while promoting an agenda of local control of the distribution of social welfare funds for cities and states. While there had been bipartisan support for low-income homeownership, the mounting scandals were becoming a political problem. Advocates and other elected officials also argued that there should be less emphasis on “existing” housing and more of a focus on building new homes in cities to give African Americans more, better and cheaper housing options. This was certainly not in Nixon’s plans — not after he had carefully cultivated the white “silent majority” coalition made up of disaffected white suburbanites who fought to keep their communities exclusive.

The growing spectacle of scandal and mounting foreclosures within the HUD homeownership programs generated the momentum for the right to attack on housing policies. The political attacks were, of course, not confined to housing, but the entire social welfare state came into question.

These programs had been won largely in part to the insurgent black movement that had helped to redefine black poverty and inequality to the exclusive policies of the state, rampant discrimination, and capitalism itself. From the March on Washington’s insistence on freedom and “jobs;” to Malcolm X’s link between capitalism and racism; to Stokely Carmichael coining the phrase “institutional racism;” and the black Panther Party’s anti-capitalist, anti-colonial framing — the movement had clearly identified the foundation of black inequality and more importantly the need for programs that addressed the structural inequality. To effectively undermine these programs, then, the Right attacked the participants as undeserving, ungrateful and ultimately, untrustworthy.

For the HUD homeownership programs, this meant demonizing the poorest of the program participants as undeserving recipients of HUD’s subsidies and mortgage guarantees. The effort to encourage low-income homeownership among African Americans was castigated as a bizarre and naïve exercise in social engineering. As an Ohio Congressman, Thomas Ashley, tartly argued, “You cannot run a middle-class program in the ghetto.”

Members of Congress and news reporters turned their attention to the poorest participants in the program — black women on welfare who had been aggressively targeted to become homeowners. These women, many of whom had been recruited from deteriorating public housing complexes, were particularly vulnerable to buying homes that were in poor shape because they were desperate for housing for themselves and their children. But when questions surfaced about the condition of their housing, as an act of self-preservation, HUD investigators linked the distressed housing to the homemaking skills of black women, like Janice Johnson. In one hearing in 1970 to discuss the growing problems in the homeownership programs, Romney complained, “in the case of lower income families, you have many … who have not had the responsibility of homeownership previously, and therefore … [there is a] greater tendency on their part to not undertake the work necessary to maintain the home.”

Some officials were even more explicit in their attacks. Georgia Congressman, Ben Blackburn said:

“The problem is that we have been putting families into homes who have no sense of responsibility of homeownership and that is where the problem has been, and that is the intrinsic problem in the program. Is that not true? …We found welfare mothers whose sole income was aid for dependent children, plus other benefits that come from that status in life, and they were put in housing, presumably as owners and yet, they could not even fix a faucet washer. Have we concluded there are some people who should not be put in the status of home purchasers? Can we not conclude that there are some people who do not have the sense of responsibility or the economic income to own a home?”

Of course, there was the undeniable irony of the rich white men of Congress who relied upon Black women as maids and caretakers for their families now complaining about their homemaking skills, but there was a larger issue. Focusing on African American women’s housekeeping abilities deflected attention from the more pressing question of why the FHA was insuring properties in uninhabitable condition. After all, an earlier audit of HUD’s homeownership programs concluded that, “no homeowner can be expected to cope with poor construction, cracked foundations, improper wiring, and a general failure of contractors to meet local building and maintenance requirements.”

It is important to say that black women were not just victims of this kind of abuse, and it was really their willingness to seek out help and use the resources of Legal Aid to engage in litigation that the criminal aspects of these programs came to light. By the mid-’70s, especially in Philadelphia, black women were at the helm of important grassroots organizing efforts to make HUD and the FHA fulfill the promises to repair the broken houses that had been sold to them on the watch of those organizations. Other activists also rejected this kind of victim blaming. One homeowner turned activist described the devastating effects of HUD’s failed programs as the outright murder of our neighborhoods in America, aided and abetted by the Federal Housing Administration, the mortgage industry, the insurance industry, and the unscrupulous real estate industry. These four institutions are working together to systematically destroy what’s left of America’s cities. What for so long has been considered a natural phenomenon — changing neighborhoods, deteriorating cities — are not natural. It’s an outright plan, and the government, the realtors, and the big money people are making a lot of money out of changing neighborhoods, out of the communities we call home.

But Nixon officials were able to use the spectacular fraud and corruption of HUD’s homeownership programs as evidence that the government should get out of the business of housing poor and low-income people. The highly visible collapse of the low-income homeownership program not only raised questions about the role of the state in housing people, but it also allowed officials to gain support for keeping poor and working-class black people out of white suburban communities.

In January of 1973, in his last act as HUD Secretary, George Romney announced a national moratorium on the construction or funding of all federally subsidized housing programs, including all of the FHA-assisted low-income homeownership programs. Months later Nixon would tell Congress, “All across America, the Federal Government has become the biggest slumlord in history. Leaders of all political persuasions and from all levels of government agree that the federally subsidized housing approach has failed.” Instead, he suggested, “of the policy alternatives available, the most promising way to achieve decent housing for all of our families at an acceptable cost appears to be direct cash assistance.”

This was the beginning of the federal turn to Section 8 housing vouchers, first issued in 1974. The introduction of vouchers was coupled with a demand from the Nixon administration that the “existing” housing stock be utilized for low-income housing. Existing housing was understood to be in cities, further cementing the racial division in low-income housing. Meanwhile, the Nixon administration secured $3 billion for the construction of new low-income homes that were all but guaranteed to be built in suburbs and largely reserved for white residents. With existing housing in the cities for black renters and new construction in the suburbs for white buyers, Nixon’s segregated vision for housing in the United States was fulfilled.

In closing:

When Ronald Reagan became president in 1980, he called for HUD to convene a special commission on housing policy in 1982. For more than thirty years after pledging to provide decent homes for its citizens, the federal government and its department of housing continued to fail to achieve its goal. The latest housing commission paneled by Reagan called its report “To House a Nation,” and it began with a criticism of the HUD Act. The HUD Act had left as its legacy “a belief in the potency of government programs.” Reagan’s Commission on Housing promised the opposite: “The genius of the market economy, freed from the distortions forced by government housing policies and regulations that swung erratically from loving to hostile, can provide for housing far better than Federal programs.” It was a conclusion that could only be reached by ignoring the actual origins of the HUD Act and the reasons behind its demise. Lyndon Johnson had promised the “genius of private industry” as the key to unlocking the mystery of perpetual housing crises. But lackadaisical management, erratic regulations, and trenchant racial discrimination combined with the end of redlining and the predacious inclusion of formerly excluded black urbanites allowed the real estate industry to bleed inner cities dry.

It was not government intrusion that sank the FHA-assisted low-income homeownership programs; it was government negligence. But this malfeasance was not just an issue of poorly motivated personnel; it was the outcome of mismatched objectives and impossible tasks. When public policies are guided by the objectives of private enterprise, as the HUD homeownership programs undoubtedly were, they are clinched in a dance of conflict. As magnanimous as the life insurance industry and other titans of business who argued for “socio- commercial enterprise” in the 1960s tried to present themselves, in the end, the objective of profit-making outpaced the necessity for safe and sound housing. One glaring reason for this spoke to the heart of the conflict: real estate profits were rooted in residential segregation. Race was turned into profit.

There is a tendency to view the post-riot city as trapped in the stasis of blight and the inevitability of decay over time, but my research offers a radically different interpretation of the inner city during this period. The late 1960s and the 1970s were defined by changing political, social and economic dynamics, and the inner city was at the nexus of these processes. New financial instruments, such as mortgage-backed securities produced an intense international demand for more homeowners and more money for home financing, while lax oversight and regulation incentivized unscrupulous and predatory targeting of urban communities. Far from being a static site of dilapidation and ruin, the urban core, was becoming an attractive place of unparalleled opportunity, a new frontier of economic investment and extraction for the real estate and banking industries. The race for profit in the 1970s transformed blighted urban space into what one U.S. Senator described as a “golden ghetto”, where profits for banks and real estate brokers were never-ending and shattered credit and ruined neighborhoods were all that remained for African Americans who lived there.

These are not just important historical lessons, but they have direct bearing on the communities and neighborhoods we live in today. Housing policies over much of the twentieth century and certainly the housing crisis of the 1970s contributed to the uneven development of black urban and suburban communities compared to white urban and suburban communities. The geographic scars created by the HUD-FHA crisis where nearly 80k single family homes were repossessed but hundreds of thousands more multi-family units also went into foreclosures exacerbating a crisis of abandonment that animated the optics of distress and dilapidation. A generation later these conditions became the basis for designating a place and the people who lived there as “subprime.”

For more than 50 years now, the private sector has been viewed as most capable of ending the persisting urban housing crises. And yet those crises have become even starker over time, creating even greater degrees of housing precariousness. This is especially true in the realm of homeownership. The acceleration of subprime lending in the atmosphere of deregulation in the late 1990s and the early 2000s resulted in unprecedented home losses for African Americans. The practice of subprime lending was contingent on racial practices and assumptions across the housing industry and among the general public. The cascade of foreclosures and mortgage defaults further eroded the value of properties in black communities, once again, hollowing out the notion of homes as assets for African Americans. The net loss of more than 240,000 homes for African Americans has created the pretext for mortgage lenders to, once again, engage in exclusionary practices that marginalize potential black homeowners. But this is only one aspect of the crisis.

The recurring perception of “risky” black buyers has opened pathways for the reemergence of naked, predatory practices in the real estate market. From rent-to-own schemes to the reappearance of LICs in lieu of conventional mortgages, real estate continues to pilfer African Americans in search of their American dream in the housing market. It is not history repeating itself. It is the predictable outcome when the home is a commodity and it continues to be promoted as the fulfillment and meaning of citizenship.

[Music: “Silver Lanyard” by Blue Dot Sessions]

Podcast outro: You’ve been listening to Berkeley Talks, Berkeley News podcast from the Office of Communications and Public Affairs that features lectures and conversations at UC Berkeley. You can find more talks with transcripts at news.berkeley.edu/podcasts.