Six years on, America’s “Great Recession” is still actively destroying the wealth of African American communities. That’s the thesis of a profile in The American Prospect on Maryland’s Prince George’s County, the richest black-majority county in the whole country. The background story told by the piece is sadly familiar. In 2009 a black middle class was finally starting to come into its own, creating pockets of affluence like Prince George’s Country, where the median household income is $20,000 higher than the national median. But then the recession hit, and the subprime mortgage crisis led to a rash of home foreclosures that disproportionately affected African Americans.This was, seemingly, by a kind of design: risky subprime mortgages with higher interest rates were routinely foisted on African Americans, even ones who had respectable credit ratings:
Black homeowners in the D.C. region were 20 percent more likely to lose their homes compared to whites with similar incomes and lifestyles….The foreclosure crisis also affected blacks of all income brackets; high-earning blacks were 80 percent more likely to lose their homes than their white counterparts, making the homeowners of Prince George’s County prime targets.Even the most stable of P.G. County homeowners wound up with subprime mortgages, presumably made to believe that subprime was their only option. Not even a good credit score would have spared blacks from these discriminatory lending practices. The Center for Responsible Lending found that during the housing boom, 6.2 percent of whites with a credit score of 660 and higher received high-interest mortgages but 21.4 percent of blacks with a score of 660 or higher received these same loans.
This wiped out huge amounts of wealth African Americans had built up through home-buying, exploding the wealth gap between blacks and whites and setting African American financial achievement back at least a generation, if not more. It has had long-term effects on the credit ratings of African Americans, the full cost of which we have not yet seen. Moreover, this loss in wealth is exacerbated by a trend not even discussed in the article: the loss of stable government jobs. Clerical-type government jobs have were a hugely important source of financial support for the black middle class, but many of those jobs are now disappearing.The most notable thing about the piece, however, is that it shows how the tragic consequences of the subprime crisis are still unfolding. A 2010 law passed in Maryland made it harder and more time-consuming for banks to foreclose on homes, leading to a backlog of causes banks had to work though. They are now doing so, and the foreclosure rate is spiking. From 2013 to 2014, foreclosures increased by 50 percent in Prince George’s County over the previous year. This ongoing erosion of the black middle class is one of the greatest social policy failures of American history. Read the whole thing to get a picture of how this has happened, and how it continues to suppress black wealth.