One of the most devestating forms that racism has taken place in this country is the practice of redlining, in which private or public entities discriminate against minority communities through the denial or increased cost of services. While rolled back by the passage of laws such as the Fair Housing Act of 1968 and Community Reinvestment Act of 1977, it is increasingly prevalent today in much newer forms. Enabled by deregulation and lax enforcement of regulations by both corporatist Republicans and neoliberal Democrats, this new modern day redlining occurrs through numerous ways.
This diary will discribe the numerous ways minorities in America, predominantly African-Americans, are discriminated against in the provision of financial services. I hope to help dispel the despicable right-wing myth that racism is no longer a problem in America and that blacks have no one but themselves to blame for their disproportionate levels of poverty.
Car Loans: An analysis of a study of the Federal Reserve Board's Survey of Consumer Finances data for 2004 done by the Consumer Federation of America found that "[b]lacks paid a typical auto loan rate of 7 percent for new cars, compared with a rate of 5 percent for whites." Additionally, for loans on used cars, 27% of blacks were charged more than 15 percent interest on their loans, compared with 19% of Hispanics and only 9% of whites.1
Property Insurance: A study done in 1995 found that the number of poor and minority homeowners who cannot obtain full-coverage property insurance is about 50 percent greater than the number of residents of mostly white, middle-class areas. The same study also found that on average poor Americans pay more than twice of what middle-class neighborhoods pay for property insurance.2
Access to Banks: In 1995, there were about 38 bank branches for every 100,000 residents in predominantly white areas but only 22 branches in minority neighborhoods.3 Between 1975 and 1995 the number of banks in lower class areas declined by 21 percent. Additionally, in 1996, there was one bank for every 10,000 households in black communities compared to eight banks for every 10,000 households in white communities.4
Home Loans: A study by the Woodstock Institute recently found that blacks tend to receive higher-cost home loans at a rate 3.8 higher than that for whites.5 Also, the US Department of Housing and Urban Development estimated in 2000 that residents in predominantly black communities are five times as likely as residents of white communities to receive subprime refinancing loans.6
References:
- Associated Press (2007, May 7). Auto Loan Rates Higher For Blacks.
- Loeb, Penny, Warren Cohen and Constance Johnson (1995, April 17). The New Redlining. U.S. News & World Report.
- Ibid.
- Squires, Gregory D. (2003). The New Redlining: Predatory Lending in an Age of Financial Service Modernization. SAGE Race Relations Abstracts. 28(3), 11.
- Knight, Rebecca (2007, March 17). Home loans more expensive for blacks. Financial Times.
- Squires, 6.
If anyone else has any good examples (with a good source of course), it would be greatly appreciated.