*This post is part of our roundtable on Keeanga-Yamahtta Taylor’s ‘Race for Profit’
The cover of Businessweek’s February 13, 2013 issue was a visual shortcut of the narrative that quickly emerged around the 2008 subprime mortgage disaster: the debacle that triggered the Great Recession was largely the fault of irresponsible, ignorant and profligate buyers of color: “the busty, sassy Latina, the barefooted black man waving cash out his window, that woman in the upstairs left-hand corner who looks about as dim-witted as her dog.” Conservative economic commentators linked 2008’s origins and outcomes to the Section 235 program (a HUD mortgage subsidy program enacted in 1968) as a prescient example of liberalism and Black irresponsibility run amok. 1 Conveniently left out of both stories was the convergence of America’s racialized metropolitan areas that white supremacy helped to build; the structurally racist real estate industry which facilitated the spatialization of race; and the federal government’s emerging commitment to the socialization of private market failures in the service of an embryonic neoliberal order. Both in the early 1970s and in the first decade of the 21st century, Black and Brown communities were systematically targeted by predatory lenders and speculators, whose machination led to these Black communities being “destroyed for cash,” crippling both present and future.
One way to understand the racialized effects of both disasters is to take Taylor’s approach and focus on the racialization of space endemic to the political economy of the U.S.’s metropolitan areas. This centering of race and space leads us to Taylor’s singular formulation of “predatory inclusion.” Predatory inclusion describes the processes by which “African American homebuyers were granted access to conventional real estate practices and mortgage financing, but on more expensive and comparatively unequal terms” (4). As Nathan Connolly and others have noted, the inverse of predatory inclusion was predatory exclusion; the process of private market exploitation and extraction of Black spaces, sanctioned, and at times facilitated, by public authority. Central to these processes, whether they took place in the urban core or the suburban periphery, was a key article of faith created and elaborated on by white society and its institutional structures, “White [space] is worth more, precisely because it is not Black [space].” Indeed as Taylor argues, embedded in the “popular consciousness” was “[t]he idea that Black owners and renters were destructive and careless” (191). As a result of these spatial imaginaries, Taylor argues that the movement of urban Black bodies, especially poor Black women, into formerly white spaces was “conditional, contingent, and tiered” (17). The pivotal figure in this policy narrative and necessary towards understanding the broader implications of predatory inclusion was the allegedly irresponsible and “unsophisticated” poor Black woman buyer. Indeed Taylor draws from Rhonda Williams’s work, which notes that “Low-income black women[‘s]… citizenship struggles draw attention to the issues shaping postwar urban residency as well as the character of the liberal state and U.S. democracy” (4).
Taylor’s analysis helps to elucidate the political challenges that beset postwar racial liberalism and the American state: the faltering of the urban Keynesian order; the “racial fingerprints” of both Nixon’s Philadelphia Plan and the Party’s “southern strategy” (93); and the seeds of an an emergent neoliberal order that fused the mainstream Republican beliefs in the “genius of free enterprise” while following the advice of neoliberal architects like Milton Freidman to take advantage of the crises like the racial politics that Section 235 235 set ablaze as crises allow for the “politically impossible [to become] politically inevitable” (234).
The 1968 Act embodied all three of these trends. Praised by President Johnson as “Magna Carta for the cities, the goals of the Federal Housing Act of 1968 Housing Act were multifaceted and often conflictual.The federal fair housing law was accompanied by a slew of new housing programs like Section 235, which was seen as a way to “open up the suburbs” for Black residents of the U.S ‘s rebellious ghettoes, as well as provide a new source of financial support to the real estate industry and Wall Street. Tucked into the legislation, like a weapon of mass destruction ready to be set off, was the privatization of the Federal National Mortgage Association (FNMA) and the Government National Mortgage association (GNMA). As Taylor notes, both entities would be critical elements in creating a secondary market for low-income mortgages, and thus part of the newly created “mortgage-backed securities” market that transformed “debt into liquid cash.” Like 2008, money was to be made not only on the mortgages but on the churn. For speculators, appraisers and mortgage brokers each mortgage and foreclosure generated a slew of lucrative fees. In a clash between the goals of private profit and public welfare, and under the spreading aegis of neoliberalism, the primacy of profits would become defined as the essence of public welfare. Both then and in 2008, Black and Brown homeowners were the detritus left in the wake.
An unsettling, perhaps necessary aspect of Taylor’s account is the refusal to paint the Section 235 story as ultimately one of Black agency and triumph. Indeed, one of the subtexts of the analysis is the failure of Black leadership with civil rights groups and real estate interests who stood as cheerleaders at the beginning, and powerless bystanders by the program’s end. The aftermath of Section 235 was dire for both Black homeowners, targeted cities, for federal support for affordable housing, and the racial desegregation of metropolitan U.S.. By 1972, the foreclosure rate for Section 235 mortgages was around 4.4 percent compared to 1.9 percent foreclosure rate in the FHA’s “traditional” suburban housing program. This translated to tens of thousands of foreclosed homes such as the 15,000 houses in Detroit alone. At the federal level the Section 235 program provided justification for Nixon’s moratorium on HUD housing programs and then enactment of the Housing and Community Development Act (HCDA) of 1974 which led to a dramatic restructuring of HUD’s housing and community development programs. An unsteady path towards neoliberal housing policy was put into place: direct subsidies were rolled back or eliminated and “market” mechanisms like tax credits and vouchers were rolled out, with one result being the institutionalization of a permanent subprime mortgage crisis in which Black communities were periodically subjected to being targeted by predatory lenders and their enablers. Like its Section 235 ancestor, for subprime mortgages the risk was the profit, the value lay not in their durability, in an ability to build assets for Black homeowners and stabilize communities, but instead the collective value of subprime mortgages in 2008 was their ability to provide profit to investors, through individual and communal asset stripping.
Race for Profit is revelatory in the ways in which it helps us understand both the endurance of the metropolitan color line as well as its mutability under both Keynesian capitalism as well as the emergent neoliberal order. Yet in the wake of communal catastrophe, Taylor’s work offers a glimpse of the resistance and rebuilding that emerged in the aftermath of disaster. Led by coalitions of Section 235 owners, primarily Black women, community organizations emerged as a “counter narrative” both to the allegations of failed spatial citizenship and began fighting back even as a “new urban crisis” was deployed to attack cities. Beyond creating a counter-narrative, in their search for ways to repair their neighborhoods, the community development movement was born. Though limited in scope and rarely more successful than staunching the bleeding rather than curing the conditions, these organizations posed (both then and now) an alternative to a neoliberal order which has posited that there was no alternative to the market, and as such continues to impose and reproduce racialized inequalities on Black communities. Yet despite this arduous task of rebuilding and repair, the racialized roots of federally backed asset stripping continues to haunt Black communities. For Black families already standing far behind the starting line, this loss of wealth crippled both current as well as future possibilities: a space to nurture and shelter extended family and kin; of college educations that could be financed without taking on crippling amounts of student loans; or, in a world where pensions are rapidly becoming obsolete, the comfort of securing a safe retirement.
The takeaway for the reader of Race for Profit who may be an activist or resident of these sites of predation is that the roots of racial and spatial inequality run deep and that so-called private markets play a huge role in building and sustaining these inequalities. While reform can perhaps pause the relentless production of inequality, reform by itself cannot undo the fundamental inequities of this system. For scholars, Race for Profit points to the continued need to continually root out and expose and help upend the deep inequities of race, place and space.
- Andrew Highsmith, (2012). Prelude to the Subprime Crash: Beecher, Michigan, and the Origins of the Suburban Crisis. Journal of Policy History, 24(4), 572-611. doi:10.1017/S0898030612000218; and also, Louis Hyman, “The Original Subprime Crisis,” https://www.nytimes.com/2007/12/26/opinion/26hyman.html. ↩