The Root, October 1: Sen. Elizabeth Warren breaks down America’s ugly history of housing discrimination and how she plans to fix itÂ
Home ownership is at the heart of the American dream. Michael Smith, his wife, Janet, and their daughter, Ashley, were living that dream. They bought a modest home with a small yard in a safe Chicago neighborhood.
Then the crash of 2008 hit and the bottom fell out.
That was bad enough, but a lousy, complex mortgage made the situation even worse. Michael told me that, in hindsight, he realized he’d been scammed when his bank had talked him into refinancing his old mortgage. The subsequent foreclosure turned their lives upside down. They lost their home and moved into a rental nearby. Their $17,000 downpayment disappeared. Their credit rating was trashed. Their financial lives were destroyed.
The failure of government regulators to stop mortgage lenders from cheating millions of families like Michael’s is disgraceful. But it isn’t the only government failure—far from it. In 1935, the federal government officially adopted a policy of redlining, a practice that effectively denied home mortgages to families of color, shutting them out of the opportunity to build wealth.
By the early 2000s, major U.S. banks built up their profits by marketing mortgages that they knew posed huge risks of costing families their homes. Today, white families have a median net worth of about $171,000, while black families’ net worth is about one-tenth as much—about $17,600.
It’s time for the federal government to start righting some of the wrongs that the federal government itself caused. Last week, I introduced the American Housing and Economic Mobility Act. My bill is designed to reduce housing costs across the country for both renters and buyers, urban and rural, and one feature focused on grants to first-time homebuyers living in formerly redlined or officially segregated areas. The bill also proposes investing $2 billion in assistance to families that are still suffering from the financial crisis, and it would help bring more private capital into low- and middle- income communities by strengthening the Community Reinvestment Act. Together, these provisions would be a meaningful step toward reversing the after effects of decades of discriminatory federal government policy.
America’s housing policy should promote access and lower costs for millions of people. According to an independent economic analysis, my bill will build three million new homes in all parts of the country, and more supply means lower costs for buyers and renters. The bill will also help end needless zoning laws that prevent more affordable housing from being built in good communities—the ones closer to good jobs and good schools.
The bill covers the cost of new investments by asking 10,000 of America’s richest families to pay more taxes on their estates.These are some of the same families who quickly recovered from the recession, or even prospered, while the rest of America kept right on struggling.
Access to decent housing is a problem for working families everywhere in America. But Washington ignores all of these problems. Instead of tackling the growing housing crisis in America, Congress continues to shovel money out the door by giving special tax breaks to the wealthy and well-connected.
The American Housing and EconomicMobility Act addresses the lingering effects of housing discrimination, the growing housing crisis, and the policies that have held back so many Americans. This bill will help millions of people lower their housing costs and help millions more on the path to making the promise of the American dream become a reality.
