The Color of Money: Black Banks and the Racial Wealth Gap

by Mehrsa Baradaran

The modern credit system created by New Deal reforms segregated access to loans based on race. The alphabet soup of new credit and banking agencies, the Home Owners Loan Corporation (HOLC), the Federal Home Loan Banks (FHLB), the Federal National Mortgage Association (FNMA or Fannie Mae), the Federal Housing Administration (FHA), and the Federal Deposit Insurance Corporation (FDIC), were all geared toward the rapid and effective dissemination of low-cost credit to new homeowners. These agencies coupled with postwar economic growth created a robust homeowning, capital-creating, and predominantly white middle class. They also made the black ghetto a permanent feature of the twentieth century.