Predatory Lending in the 20th Century

The American Dream

Introduction

Home ownership in America has long been associated with the American Dream, serving as a powerful symbol of success and economic stability since early settlers began homesteading on the continent. However, in this era of widening inequality, an unfortunate reality is that not everyone can access that dream. Predatory lending practices have particularly harmed African Americans, preventing them from accruing wealth and leading to immense suffering for communities all over the nation. Eyes on the Prize is a documentary series that seeks to shed light on this issue and other related civil rights struggles, helping viewers confront stories of past injustices in order to foster greater understanding and more equitable policies going forward.

The Race for Profit

Taylor's book, "Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership," sheds light on an often unspoken problem with regards to home ownership in America. Her research reveals that many of the same systemic inequalities that have plagued communities of color for centuries, continue to contribute to a large gap in home ownership between whites and minorities. Taylor's work further argues that even though government subsidies were intended to increase access to housing for people who had been historically excluded, government programs ended up fueling discriminatory and exploitative practices within the real estate industry. Ultimately, her analysis speaks to a tension between idealistic rhetoric associated with the so-called 'American Dream' of home ownership versus the reality of still limited access afforded especially to racial minorities today.[footnoteRef:2] [2: Keeanga-Yamahtta Taylor, Race for profit: How banks and the real estate industry undermined black homeownership (UNC Press Books, 2019), 41.]

The argument of Taylor's book "Race for Profit" is that the federal government's housing policies of the 1960s and 1970s, which were intended to increase homeownership among African Americans, had the unintended consequence of creating a predatory market in which real estate speculators and mortgage lenders exploited African American homebuyers. Taylor examines this argument through a close examination of the history of the federal government's housing policies, the practices of real estate speculators and mortgage lenders, and the experiences of African American homebuyers.

The book is written in a clear and concise manner, using evidence from a variety of sources including interviews, archival documents, and statistical analysis. The chapters are organized chronologically, beginning with an overview of the federal government's housing policies and then moving through the various stages of the housing market, from the real estate speculators to the mortgage lenders to the African American homebuyers. This structure allows Taylor to trace the development of the predatory market and the experiences of African American homebuyers over time. The chapters also work together to build a comprehensive picture of the predatory practices of real estate speculators and mortgage lenders and the consequences for African American homebuyers.

Supported by Others

Taylor’s work does not have to stand alone, of course. It is supported by others, including that of Alex Gibney. In the documentary Park Avenue by Alex Gibney, the issue of wealth inequality is explored as well. The main points of Alex Gibney's Park Avenue: Money, Power & The American Dream are that the extreme wealth of the residents of 740 Park Avenue, one of the most expensive residential buildings in the world, has been used to increase their own power and influence while the rest of the country has suffered from a lack of economic mobility and opportunity.[footnoteRef:3] The documentary communicates the message that the extreme wealth of the residents of 740 Park Avenue stands in stark contrast to the little to no wealth of average Americans. That building represents the larger problem in America, which is that most of the nation’s wealth is concentrated in the hands of a few, who use it for their personal advantage. In other words, the wealth gap has created a system of inequality that is detrimental to the rest of the country. It gives evidence of this inequality by showing interviews with the residents of 740 Park Avenue, as well as interviews with people living in the Bronx, which is in the same congressional district as 740 Park Avenue. The documentary also provides evidence of the extreme wealth of the residents of 740 Park Avenue by showing the lavish lifestyles of the residents, as well as the amount of money that they have donated to political campaigns. [3: Alex Gibney, Park Avenue, PBS 2012.]

What Taylor Does Differently

The argument of Taylor's book "Race for Profit" is that the federal government's promotion of homeownership for African Americans in the 1960s and 1970s was part of a larger effort to create a market for low-income housing, and that this effort was largely unsuccessful due to the exploitation of African American communities by real estate speculators. Taylor uses a combination of archival research, interviews, and statistical analysis to make her case. Ultimately, Taylor shows that the cruel and unmitigated cycle of exploitation meant that the intended benefits from homeownership did not materialize and instead were replaced by higher rental prices, excessive fees, and more concentrated poverty.

While films like Park Avenue and Eyes on the Prize, or articles like “Myth of the Happy Worker” can be helpful in exploding the false notions of equality, Taylor’s book is helpful in that it focuses on basic facts to show how a system exists to perpetuate inequality, plain and simple. It is organized into six chapters plus a conclusion, each of which builds upon the previous one. The first chapter provides an overview of the history of federal housing policy and the role of real estate speculators in the housing market, and it is entitled “Unfair Housing”. The second chapter examines the impact of the federal government's promotion of homeownership on African American communities. The third chapter looks at the role of real estate speculators in exploiting African American communities. The fourth and fifth chapters explore the consequences of this exploitation, including the displacement of African American families and the rise of predatory lending practices. The sixth chapter examines the legacy of the federal government's promotion of homeownership and the impact it had on African American communities. The conclusion summarizes the main points and addresses issues like what still needs to be done.

Taylor essentially puts more information and data to the overall picture. That picture is supported, meanwhile, by others such as Swados. In “Myth of the Happy Worker,” one can see how the established opinion about the working class being of a new kind of bourgeoisie class was all wrong.[footnoteRef:4] Swados pointed out that the working class was constantly being preyed upon by the ruling class, which fits in well and dovetails nicely with Taylor’s main point in Race for Profit. There is also Danielle Allen's Our Declaration, which notes that this nation was founded on the principle of equality and that the Declaration of Independence “starts and finishes” with this reference to equality.[footnoteRef:5] Yet, somewhere in between the start and the finish, the focus on equality was lost and attention was given to treating the nation like it was a business. That is how the exploitation of African American communities by real estate speculators became a common practice while at the same time it was a violation of the ideals of the American Revolution. By weaving together the work of these scholars one can see a better picture of American reality and wake one up from the fact that the so-called American Dream was never really realized. That is why movies like Eyes on the Prize and Park Avenue are also so helpful. They show the reality and help one to see that the American Dream is not like a coupon that shows up in the mail for everyone. Those who possess the wealth get to live the Dream—and everyone else has to fight tooth and nail just for a taste of it. Taylor is able to provide a comprehensive and compelling argument about the consequences of the federal government's promotion of homeownership, for instance, and it reinforces the point that Gibney, Swados, Allen, and Eyes on the Prize all make. [4: Harvey Swados, “Myth of the Happy Worker,” Josephson, E. and M.(Eds.): Man alone: Alienation in modern society, New York (A Laurel Edition) 1962, pp. 105-113. ] [5: Danielle Allen, Our Declaration (W.W. Norton & Company, 2014), 3.]

For instance, with Eyes on the Prize, the main points of the documentary are the struggles, successes, and failures of the civil rights movement in America. The documentary focuses on the people who fought for civil rights and the events that shaped the movement. It also looks at the political and social changes that occurred as a result of the civil rights movement. The Eyes on the Prize documentary series, released in two parts between 1986 and 1990, is composed of 14 episodes that span from the 1954 Brown v. Board of Education Supreme Court ruling through the late 1980s and early '90s.[footnoteRef:6] Thus, the series covers such topics as the Montgomery Bus Boycott, the Freedom Riders Movement, The March On Washington, and more. These episodes are very impactful in their ability to capture themes of protest and resilience during some of deepest moments of struggle for African Americans. Because it is a film, it allows one to see with one’s own eyes the reality of the struggle. But whereas this film hits the emotions through the image, Taylor’s book fuels the intellect with facts and arguments. Eyes on the Prize transports the viewer back to events that shaped our nation, giving an intimate account of civil rights movement heroes so that future generations may truly understand their legacy. But Taylor’s book sheds light on the reality of the so-called American Dream of home ownership and how it was used to take advantage of an already marginalized group of people. [6: Eyes on the Prize, PBS, 1990.]

Overall, the Eyes on the Prize documentary and Taylor’s book do the same thing—but they also do some things differently: Eyes on the Prize communicates a message of hope and progress, showing how individuals and communities can band together to fight for change. It also emphasizes the importance of perseverance and resilience in the face of adversity. The documentary provides evidence of the civil rights movement through interviews, archival footage, and photographs. It also includes accounts from those who were directly involved in the movement, as well as those who witnessed it from the sidelines. The documentary highlights the courage and determination of those who fought for civil rights, and the lasting impact their actions had on American society.

Taylor’s book is not really so much about hope as it is about the problems that persist. Like Gibney’s documentary, it exposes the underbelly of the system and shows how that system is used to enrich the already rich. It shows how the Dream was used by social controllers and investors: “For some, the promotion of homeownership and access to credit in neighborhoods and communities that previously had been ignored was appealing as a new means of social control. Desperate federal and local officials believed that a greater investment and inclusion in mainstream society would stem the tide of rebellion and property destruction….For other reformers, specifically businessmen, formerly neglected urban markets were oases of new investment opportunities….”[footnoteRef:7] In short, everyone was in on the game, whether they knew it or not, liked it or not. It was never about the kind of equality that Allen said originally framed the Declaration of Independence. It was always about putting profits before people, as it has been in every industry in America. The Dream is sold as a commodity, and if it is beyond one’s price range there are predatory lenders willing to make sure one is not left out of the overpriced market. [7: Keeanga-Yamahtta Taylor, Race for profit: How banks and the real estate industry undermined black homeownership (UNC Press Books, 2019), 58.]