The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together (One World Essentials)

by Heather McGhee

“many of these customers could have qualified for less expensive or prime loans, but because Wells Fargo Financial only made subprime loans, managers had a financial incentive to put borrowers into subprime loans

The bank’s incentives to cheat its customers were rich.

I’m sure that most of the people involved in the industry would claim not to have a racist bone in their body—in fact, I heard those exact words from representatives of lending companies in the aftermath of the crash.

structural racism both made it easy to prey on people of color due to segregation and eliminated the accountability when disparate impacts went unheeded.

“Wells Fargo’s managers were almost entirely white, and there was little to no opportunity for advancement for minorities,” he testified.

They referred to subprime loans made in minority communities as ‘ghetto loans’ and minority customers as…‘mud people.’

According to an analysis conducted by the U.S. Department of Justice of 2.5 million mortgage loans made from 2004 to 2008 by Countrywide, black customers were at least twice as likely as similarly qualified whites to be steered into subprime loans;

they were eight times more likely to get a subprime loan than white borrowers with similar financial histories.

AmeriQuest, BancorpSouth, Citigroup, Washington Mutual, and many other banks and financial companies contributed to a wave of foreclosures that shrank the wealth of the median African American family by more than half between 2005 and 2009 and of the median Latino family by more than two-thirds.

Bank regulators and federal policy makers were well aware of what was happening in communities of color, but despite pleas from local officials and community groups, they did nothing to stop the new lenders and their new tactics that left so many families without a home.

the Office of the Comptroller of the Currency, the regulator in charge of national bank practices, took one action: preemption, to make sure that no state’s consumer protections applied to its national banks.

most of the predatory loans we were talking about weren’t intended to help people purchase homes, but rather, were draining equity from existing homeowners.

the majority of subprime mortgages created were for refinancing, and less than 10 percent were for first-time homebuyers.

then New York City mayor Michael Bloomberg told a Georgetown University audience that the end of redlining was to blame.

The public conversation and the media coverage of the subprime mortgage crisis started out racialized and stayed that way.

Ronald Utt of the Heritage Foundation claimed that “some portion of the problem—perhaps a significant portion—may stem from ‘predatory borrowing,’

With this banker-as-victim tale, the casting was familiar:

the commission’s conclusion that the crisis was the result of insufficient regulation of the financial system.

Unable to see those with power as sufficiently blameworthy, the federal prosecutors declined to pursue Rokakis’s case.

researchers simply switching the race of a man posing in front of a home with a Foreclosure sign from white to black made Trump-supporting whites angrier about government mortgage assistance programs and more likely to blame individuals for their situation.

the lenders were getting away with it, mostly escaping unharmed while making loans that were designed to fail.

lenders were selling mortgages to investment banks who bundled them and sold shares in them to investors, creating mortgage-backed securities.

its first victims didn’t matter nearly as much as the profits their pain generated.

“With an option ARM, you could pick what you wanted your monthly payment to be based on.

borrowers could choose their payments for only so long, a couple of months to a couple of years, before the lender reset the terms so that borrowers had to pay off the full amount of the loan during the remaining years of the mortgage. “And you’d have a huge increase in your monthly payment,”

That gamble worked only if the housing prices kept climbing.

Wall Street firms that had bet heavily on the IBGYBG formula knew better than to trust the other investment houses that had done the same, and suddenly the market froze.

the predatory practices were allowed to continue until the disaster had engulfed white communities, too—and only then, far too late, was it recognized as an emergency.

I saw how money can obscure even the most obvious of truths.

on September 15, 2008, I was struck by an even deeper truth: ultimately, it’s impossible to sever the tie completely. Wall Street had recruited the brightest technological minds—those who a generation ago would have been putting a man on the moon or inventing vaccines—to engineer a way to completely insulate wealthy people and institutions from the pain inflicted by their profits.

It wasn’t until years later that my research would reveal just how literally the country’s original economic sin was connected to the financial crisis of 2008.

first mortgages and collateralized debt instruments in the United States weren’t on houses, but on enslaved people,

the biggest bankruptcy in American history, in 2008, was the final chapter of a story that began in 1845

Lehman would go on to underwrite more mortgage-backed securities than any other firm in America.

the dispossessed homeowners ruined by Lehman-owned mortgages in the twenty-first century, but it is a reminder that a society can be run as a zero-sum game for only so long.

Chapter 5 NO ONE FIGHTS ALONE

the Knights stuck together. The union spread throughout the country during the 1880s, boasting seven hundred thousand members at its peak,

the 1890s saw the birth of Jim Crow, the end of black-white fusion politics under Reconstruction,

employers held the line on worker demands and essentially militarized, funding standing militias and building local armories for National Guard troops increasingly deployed as strike breakers.

1886 explosion in Chicago’s Haymarket Square during a demonstration for shorter working hours created a public backlash against the violence

the less radical and more discriminatory American Federation of Labor had replaced the Knights as the primary la...

AFL allowed affiliates to exclude b...

organized labor that grew in the early twentieth century had self-defeating...

AFL endorsed eugenici...

whites in early unions saw black people as synonymous with strike breakers;

when external pressures forced racial and gender integration on unions—labor shortages during World War II and the Great Migration

women and people of color in factories—did the barriers begin to fall.

more radical faction of unions split off from the AFL to form the Congress of Industrial Organizations (CIO) in 1935, with an exp...

Probably no movement in the last 30 years has been so successful in softening race prejudice among the masses.

unions experienced a Solidarity Dividend, with membership climbing to levels that let unions set wages across large sectors of the economy.