Last week, Bloomberg Businessweek magazine released its latest issue to much-deserved uproar and outrage. On its cover, the magazine featured Jim Crow-esque caricatures that portrayed people of color as money hungry and implicitly suggested that they will cause a future housing bubble. Unfortunately, this offensive image is only the second worst thing about this cover.
Since the housing bubble burst in 2008, a myth has been perpetuated that minorities, not predatory lenders, are responsible for and profiteers of housing bubbles. The implications of this false narrative are particularly problematic as they can inform the very economic and housing policies that will determine the availability of homeownership for most Americans today.
Discriminatory lending has existed in the housing market since the Great Depression, when government incentivized homeownership chiefly for White Americans. Homeownership (the primary source of wealth) catapulted many White Americans to the middle class, leaving African Americans behind. The result was an economic chasm between Whites and Blacks now commonly referred to as the racial wealth divide.
During the 1960s and 1970s, the civil rights community helped convince the government to enact policies to break down many barriers for African American homeownership. But, many of these gains were eroded with the onset of deregulation. During the 2000s housing bubble, minority borrowers were near 30% more likely to be sold a subprime high-cost loan than a homeowner in a White suburb. And African Americans with similar credit profiles and down-payment ratios to White borrowers were more likely to be given subprime loans as well. Mortgage lenders and brokers were even incentivized to exploit minority borrowers as lenders were paid more to push them towards riskier products and not underwrite their loans.
By 2008, the housing bubble burst due to reckless banking and the mortgage market was in freefall. While foreclosure rates skyrocketed all over the country, communities of color experienced disproportionate rate of foreclosures and lost a disproportionate amount of wealth. White families in America lost 16% of their net worth on average while Black, and Hispanic families lost 53% and 66% respectively.
In fact, the erosion of wealth in minority communities was so severe that a recent study finds the ratio of wealth between Black and White families has tripled over the past 25 years.
However, with all this documented history, many Americans still believe that racial inequality is related to individual behavior, choices, character, marriage and child bearing. As Thomas Shapiro of the Institute on Assets at Brandeis University notes, “…homeownership has been the biggest cause of racial wealth disparity.”
Though Bloomberg Businessweek’s actual article, ‘The Great American Housing Rebound,’ notes how homeowners have yet to recover from the financial crisis, the corresponding cover only included Blacks and Latinos in a home surrounded by mounds of dollars. Apparently, and to our profound disappointment, the editorial team decided it was an “easier sell” to have a cover scapegoating minorities for a possible second housing bubble than a cover that honored the facts in their very own article.
Faced with a vocal response, Businessweek issued a classic ‘non-apology’ expressing regret for the strong reactions their cover may have generated. They then, ironically, attempted to scapegoat their Latino illustrator for the offensive and misleading cover art. We cannot let Businessweek off the hook for this grave offense.
Bloomberg Businessweek needs to respond to the demands put forth by organizations like the NAACP, the National Council of La Raza, The National Coalition for Asian Pacific American Community Development and the Center For Responsible Lending. We are asking Businessweek to take full responsibility and appropriate action for their outrageous cover and to print a story on the importance of homeownership particularly for communities of color. Such a well-regarded magazine such as Bloomberg Businessweek should welcome the opportunity to set the record straight on this important economic issue. And organizations like the NAACP look forward to the day they do.
(Dedrick Muhammad is director of the Economic Department of the NAACP. He can be reached at 410-580-5777.