Transcript
Unpacking the Black Wealth Gap Webinar: Lessons in Credit Discrimination
Tuesday, February 23, 2021
2:00-3:30pm ET
Presenter:  Dr. Charles Nier

>>Coordinator:   Good afternoon everyone, my name is Susan from the CFPB events management team. Thank you for joining us today. I would like to go over some logistics before we begin. If you are having any issues with your audio, click on the audio button near the bottom middle of your screen. There you have the option of having the WebEx platform dial your phone number and receiving audio that way. The closed captioning link is available by opening in the chat box, by opening the link at the bottom of the screen and clicking on the closed captioning link. During the event, if you have any technical issues, please send me a message in the chat box, in the bottom right-hand corner. And if you have any questions during the event, we are collecting all the questions in the chat box as well. So please feel free to put your questions in the chat box and they will be Q&A at the end of the webinar. And now I am going turn it over to Heather Brown. 

>>Dr. Heather Brown:  Thank you very much Susan, I appreciate it. Good afternoon everyone, and welcome to:  Unpacking the Black Wealth Gap, Historical Lessons of Credit Discrimination. First I want to offer thanks to Imani Harvey and also our RISE Black Employee Resource group who originally conceived the idea of having this presentation internally, and when I saw it internally, I thought, that would be a fantastic thing for financial practitioners to also have the opportunity to see.  So, I also want to thank my leadership Dubis Correal and Desmond Brown for their early support on this in bringing this webinar to our financial practitioners. As timing would have it worked out well, because our acting director Dave Uejio has said that his policy priorities for the agency are going to be around racial equity and relief for consumers. So even though we started this well probably this past summer or late summer to early fall, it turned out to be very timely. So again were welcoming everybody and I want to just let everybody know that the slides will be available online, and you can also email the email address I give you in a few minutes if you want to get a copy of the deck for yourself.

Now, additionally want to go ahead and introduce Dr. Charles Nier now, so that when I get through my preliminary slides you already have the introduction out of the way, and we can just get started. So, we are very excited to have Dr. Charles Nier, he is Senior Counsel with the Office of Supervision Policy here at CFPB and he works in Fair Lending.  He works on fair lending supervisory examinations and has worked on a number of significant Fair Lending enforcement matters.  Prior to his employment with the CFPB, Dr. Nier served as the supervising attorney with the Pennsylvania human relations commission, he was responsible for investigating and litigating cases to enforce Pennsylvania's civil rights laws in the areas of lending, housing, education, employment, and public accommodations. Dr. Nier has published a number of legal historical civil rights articles, he graduated from Ohio University with a BA at Penn State Dickinson school of Law with the JD.  He also earned an LLM, a Master of Laws from the Georgetown University law school, and he has a PhD of history from Temple University. So, he is well, he has just an interesting amazing background for doing this kind of particular research, and we are so glad to have him, and we welcome him and look forward to in his presentation.  Actually, the ball [WebEx Control] was given to you, Dr. Nier, if you don't mind just dropping it back to me so I can get to my preliminary slides and disclaimer, then we will move on. Thank you. 

Okay, I should have control now, thank you very much. 

All right. So, I have to get through our standard disclaimer quickly. I know many of you have seen it, but it is important for us to do each time. This presentation is being made by Consumer Financial Protection Bureau representative, representatives, actually myself and Dr. Nier on behalf of the Bureau, it does not constitute legal interpretation, guidance or any advice of the Bureau. The opinions stated by the presenter are the presenters own and may not represent the Bureau's views. 

Inclusion of links or references to third-party sites does not necessarily reflect our endorsement of the third parties, I don’t believe there are any in this one [presentation deck], the document that was used, the documents that we're using is in support of a live discussion, so when you share it with others we want them to understand as they read through it that it doesn't necessarily express what we experience in its entirety. We are also reporting this and plan to get it posted on the website. 

I just wanted to just touch base on that, something that is so important. The work that we do. Research was done before I even came to the Bureau, and the five principles of effective adult education was developed. Many of you may have already seen it or using it, it's been out for a while, if you haven't, I encourage you go to the link at the bottom and get a copy of it.  This is a summary of the full research, we also on the website have full research on it that basically validates each of the items that you see. And I'm just going to…, I am not going to read through all of these, but these are the five principles here, but we are going to emphasize the first one for this workshop:  Knowing the individuals and families to be served. 

So, I just want to touch on a couple things around that before we get started. And we have a quote from our Acting Director, and he said that in a letter or email to our workforce, “it is well-known that there have been policies of the financial services industry that have both caused and exacerbated racial inequity”.  So, it is important for financial practitioners of all races to be aware of this for this population, and also for other populations that are marginalized. The importance of it is that it is hard to provide services to people, if you don't really understand the “walk” they have been through. It is also important for everyone to know this so they can also share with their audiences that there is no shame in being poor and struggling and people really of all economic levels probably struggle at some point. But particularly for black and brown Americans, it is important for them to understand the history and for financial practitioners to understand the history and to realize that there are reasons why there is this huge black wealth gap and there are systematic causes of it. 

So, the objective of this presentation is to help financial practitioners understand the history of those practices and to help them better serve their audience. 
When financial practitioners are working with black and brown stakeholders, it's important to understand their unique financial challenges based on historical events and how those events have led to many to experiencing the black wealth gap today. Financial education programs can be more effective if they are matched to that individual’s specific goals and circumstances rather than a one-size-fits-all approach, and also knowing your stakeholder’s approach is good for all audiences, and can help financial  educators tailor programs according to learner needs and to develop realistic expectations. So, this really just covers that first point [first bullet point on previous slide], if you want to know more, you can go back and download that [summary] document or the full research [report]. The research actually was done to show people how to help motivate their clients through financial education. 

Okay. So, with that, I think we will “hand it over” to Dr. Nier; Dr. Nier, are you all set?

>>Dr. Nier:  I am all set; can you hear me?
 
>> Yes, we can, thank you, we're looking forward to it.
 
>>Dr. Nier:  Very good, thank you Heather and thank you for that kind introduction. And thank you to everyone for joining us this afternoon. We are basically going to take a walk through 400 years of US history that focuses on the relationship between credit discrimination and racial wealth inequality. 
So, with that I just have one bit of housekeeping. I have included a number of quotes in this presentation and they are designed to give voice and agency to some of historical figures that we are going to discuss today. I have kept those quotes in their original form in the interest of historical accuracy. So, with that, why don’t we just get started. So first let's talk about what wealth in the United States even is. So, wealth is the total extent of an individual’s assets less any debt basically. And wealth has, as I think that everyone is aware, an enormous impact on a wide variety of life opportunities for folks. It impacts education, housing, employment, social capital, and it also provides for intergenerational transfers which further help in the areas of education, housing, and employment. And in fact, I think wealth is likely the single best indicator of racial wealth or [correction] racial inequality in the country. So where does it take us? So, the Federal Reserve recently released some updated racial wealth data from the 2019 Survey of Consumer Finance. And what that data reveals was a very large racial wealth disparity. So African-American households had a median net worth of about $24,000 in a mean net worth of approximately $142,000 thousand. In contrast, white households had a median net worth wealth of $188,000 and eight mean of $983,000.

So, as you can see a very large racial wealth gap. And that gap has been quite durable and quite consistent for decades, if not hundreds of years. 
So, in the United States, I think it is well understood, that is the single most important means to accumulate wealth for most families is homeownership. It is the driver of wealth accumulation for the vast majority of Americans in this country. And as of Q4 2020, the most recent data, the homeownership rate gap between African Americans and Whites stood at 30.4 percent. And that's actually pretty large. In fact, it's the largest that gap has been in the past 50 years. And that gap is also quite durable, it has consistently exceeded 25 percent throughout the entire twentieth century. And right now, is actually at near sort of historical high levels at 30.4 percent.
 
And this graph, or this image gives you sort of a graph of those disparities and how they trace over time. Starting with 1900 all the way through 2015. In the top line is basically the White rate, and the blue rate is the African-American rate. And it also includes the Asians and the Latino rates as well. But you see the rates pretty much track one another. In other words when the White rate goes up, the African-American rate also goes up as well and the inverse is also true. But what is quite consistent about this is that the gap never actually closes in any meaningful way. And actually, if you can see from the tail end of this graph, it's [the Black Wealth Gap] is actually expanding. So, I think this graph visually displays consistency and durability of the homeownership gap between Whites and African-Americans.

So, one explanation that I think for the racial wealth gap is clearly the racial home ownership gap and since few people have the financial resources to purchase a home. Most have to resort to financing. So, a key component to achieving home ownership is access to fair and equitable credit. And what we really have is a sort of a continuum. Where with wealth at top [of the chart on the slide] in order to accumulate wealth you typically need to have homeownership and to achieve homeownership you typically, need to have access to credit and that really takes us to the focus of what we'll talk about here today and that is structural discrimination in terms of accessing that credit which in turn, “feeds” homeownership and ultimately wealth accumulation.

So, it is important that when you talk about racial wealth inequality to talk about the historical context and discriminatory and structural barriers that have impeded black wealth accumulation throughout the country’s history.  And basically, what I going to argue today, or present today are what I see as three distinct generations of racial credit discrimination through predatory lending. And roughly those fall into these three categories. The first thing is the post emancipation era, which really starts in 1865 and runs through the early twentieth century. Followed by the great migration era which runs roughly from approximately 1910 to the 1960-1970 time period. And finally, the more recent subprime crisis, which was in the late 19 hundreds or 1990s up through approximately 2008 and into the aftermath.

So, let's pick it up really sort of from the beginning. So, on the eve of the Civil War, the African-American population in the United States was about 4.5 million with approximately 90 percent of that held in bondage in the south with the remaining 10 percent in the North. So, during those 246 years of slavery in America, enslaved individuals could not legally own land, assets or otherwise accumulate wealth in any meaningful fashion. Even those in the North who were able to accumulate wealth often faced rampant discrimination that impeded their ability to accumulate wealth. And you see that in 1863 after the Emancipation Proclamation was signed African-Americans have less than one percent of the total wealth in the United States, so in other words, 99.5 percent of the wealth in the United States is owned by White folks. And a lot of is essentially driven by cotton. And the production of cotton in the United States and how important that was to the economic growth of the United States. And you really can see that in the next bullet which talks about wealth for White folks. And it breaks it down by geography. So, in the North in 1860, the average white household had about $546 in wealth. Now let’s just head down further south, and the average free Southerner had almost double that, and as you proceed further south in the future Confederate states, it increases about $1255, and finally in the deep South where cotton production was most prevalent, the average white household had $1500 in wealth. In fact, the highest rate of wealth accumulation in the United States was focused in the area where cotton production was most prevalent, as of course was slavery. 
So, after the Emancipation Proclamation, and the passage of the thirteenth amendment abolishing slavery, it is not surprising that the newly freed persons immediately understood and identified land ownership as an essential element of defining their freedom. In fact, they were held in bondage for 246 years, working the lands in fields and cotton production and understood the value of land and how important that was to ensuring freedom. And despite some initial land redistribution efforts, by 1867, it is clear the federal government was not going to provide African-Americans any type of significant restitution for their years of involuntary servitude. It is clear that 40 acres and a mule is not going to happen. There were some preliminary efforts, but those were ultimately rescinded by President Andrew Johnson.

So, where does that lead us to? It leads us to the demise of slavery, the failure of land reform. Land ownership and wealth accumulation is going to occur in the context of a new system of labor. And that's system of labor is known as sharecropping. Basically, under sharecropping, most of the large plantations were subdivided into individual farms and most of those range from 10 to 30 acres. And basically, the individual plots of land were worked by African-Americans in return for a portion of the crop. And in many ways, this represented a compromise. African-Americans wanted to own their own land. Whereas the white landowners wanted to return to a gang system of labor that was prevalent in slavery. So, in some respects sharecropping was a compromise of those two positions. With African-Americans afforded a degree of autonomy, in terms of working the individual farms, but yet White folks still having the economic control over that land. And as time progresses, the institution will become much more economically coercive and we will discuss that here in the next few slides. So, how does the sharecropping relationship work? It's was really essentially a ladder. So, on the top you had farmers typically rented their land and paid for that with a fixed sum of cash or its equivalent in crop values. And they usually own their own equipment and animals and maintained ownership over that crop. And share tenets were quite similar, they also were renters and they paid for it with a share, typically a third to a fourth and again they owned their own farm equipment and animals and  maintained ownership of the crop paid for with the share of the ownership and that's really the key and distinction here. Both cash and shared tenants have legal ownership of the crop. So, in contrast, sharecroppers are working a piece of land, not renting it, and they were paid by the owner with a share of that raised crop that was typically a half. Typically, they did not own farm equipment or animals and most critically did not have legal title to the crop. 
So, what does that mean, what's the difference between a renter and a sharecropper. So, the farmer's position is directly correlated to the wealth accumulation. In other words, if you have assets, you're likely to be a renter. If you don't have any assets, you are likely to be a sharecropper. So not surprisingly in the wake of emancipation, most African-Americans had few to no assets. The majority were relegated to the status of sharecropper on the bottom rung of that agricultural ladder. And there's a quote there from Betsy Jones which I think really captures the sort of essence of this relationship. Where she said, “You see a sharecropper, don't never have nothing. Before you know it, the man done took it all. But a renter always has something, and then he go to work when he want to go to work.” I think Miss Jones, in her own way, really captures sort of the essence of the difference between sharecroppers and renters. And she is really talking about control and the ability to sort of manage one’s own affairs and direct their own agency in terms of how they choose to exercise control over their economic well-being. 
This map sort of gives you an image of the South and how prevalent sharecropping became during this time period, with the darker red being those areas with 35-80 percent sharecroppers. And you see that really traces sort of the old Confederacy, South Carolina and Georgia, Mississippi, into Texas. Having very heavy shades of red where sharecropping was quite prevalent and correlated to cotton production.

This is an image of what a typical sharecropper house might have look like back then. Basically, a small wooden structure with a chimney. So why am I trying all this information about sharecropping? And the reason is because the sharecropping relationship is not just a system of labor. It also creates a credit relationship. And the sharecropper basically planted his or her crop, it was usually cotton, almost exclusively cotton in early spring, and didn't harvest and sell until late in the year, November or December. So, with few assets during the cotton season which is a long season from spring all the way to the beginning of winter. Sharecroppers typically required some form of short-term credit to sustain themselves. And in this time period it is important to remember that the banking system of the south had basically been destroyed during the Civil War.  In fact, the first three years after the Civil War, there was 1,688 banks organized and established, but only 20 of those were in the deep south. And so, there's really no banking system to speak of, and with financial institutions both unwilling and unable to provide that credit, that vacuum, that credit vacuum was filled by the local merchants. 

And what was the merchants, there's thousands of these stores throughout the South. They ran a general store with a wide variety of goods. Ranging from basic food to clothing to luxury items. And with few people who had the ability to pay with cash. The merchants operate almost exclusively through credit transactions. So, the key to the merchants’ power it’s not what he’s selling, it's not the buying and selling of these goods, but rather it's his near monopolistic control over credit. 
And so African-Americans who wanted to commence small-scale farming in the context of the sharecropping system were basically furnished by the merchant.  And by that, I mean that the merchant basically provided food, necessities, farming equipment, all the supplies that were necessary to plant a crop. And without cash to buy that stuff, the merchant advanced these necessities to African-Americans on a fixed credit limit and most critically, secured by a lien on the crop. And that is an image of what the stores typically looked like. It’s a small general store selling a lot of supplies. 

So, the merchant was able to use his control, almost unfettered control over credit in a predatory manner; in two respects. First the merchant had a two-tiered pricing system so there is a price for goods you bought for cash and a second price for goods purchased on credit. And one study determined that the average price of goods purchased on credit was about 55 percent higher than the cash price. With ranges from about nearly as high as 90 percent to low of 33 percent. 

Now second, the merchant established an interest rate for the goods purchased on credit. Typically, the merchant had sole discretion in determining what that interest rate might be, it was based on subjective determination of creditworthiness known only really to the merchants, but typically the interest rate that was charged with 8 to 15 percent, was added to the credit price. So, you basically had  had a twofold combination, which resulted in effective interest rate running from 30 percent to 70 percent. 

This is confirmed by study in Georgia in the late 1800’s that revealed a range from 44 percent to a high of almost 75 percent. So certainly, astronomical interest rates. And particularly when you consider what the going rate was at the time. In New York short-term interest rates were about 4 to 6 percent, and they never exceeded more than eight percent. 
So, the access to credit that we provided to African-Americans was done so in a very clearly predatory manner. In terms of the interest rates. But it also had other sort of very negative connotations and implications that really happened often at settlement time.  So, at settlement time the sharecropper, harvest the crops in the fall and accounts were settled in the month of October through December. Since the merchant has legal title to that crop because of that crop lien, the sharecropper doesn't have control to sale the crop, rather the sharecropper has to turn the crop over to the merchant who then has the power to sale in the open market. 

And then it really led to the moment of truth. At settlement time, the merchant informed the sharecropper of the amount that the crop sold for on the open market. And remember the sharecropper had no involvement in the actual share, are the actual sale of the crop. It was all up to the merchant. The merchant then proceeded to add the total advances based upon purchases made during the year and they enter the interest charge against the total sales amount. So, the total of the advances plus interests was deducted from the sales proceeds to determine whether there was a profit or loss for the year. 

And there's an image of the actual cotton being weighed prior to sale. 

So African-American sharecroppers were not given any sales receipts, no itemized statements, there is no discussion about the sales price really. And they were not surprisingly routinely cheated at settlement. One Freedman Bureau official that was established after the Civil War recalled that white men who are honorable in their dealings with their white neighbors will cheat the Negro without feeling a single twinge of their honor. That was confirmed by a study in South Carolina, where 101 out of 118 African-Americans felt that they had been cheated badly by their white bosses. 

And sort of this dilemma I think is summarized by the slide from a Mississippi sharecropper who basically said that “I have been living this Delta thirty years; but there is no use jumping out of the frying pan into the fire. If we ask any questions we are cussed, and if we raise up we are shot, and that ends it.” I think that in many ways that sort of eloquently summarizes the lack of ability to in any way to question the merchant and settlement in particular. 

And just to give an example of the potential consequences. I like to talk a little bit about Anthony Crawford. And that's a picture of Mister Crawford. He was quite prosperous. He owned 427 acres of land in South Carolina was very involved in the local African-American community. But one day on October 21, 1916, he came to town to sell his cotton. However, he got a quarrel with a white merchant over the price. And as a result of the quarrel, Crawford was jailed. And later that day, a mob of 200 people removed Crawford from the local jail, beat him, dragged him through the black neighborhood with a rope around his neck, hung him from a pine tree and shot him over 200 times. The next day in the local paper explained Crawford's death basically saying it was inevitable and racially justified due to his own reckless course, due to chest inflation from wealth. And in fact, Mister Crawford's case unfortunately was not unique, the entire system in many ways was held together through violence. Ranging from daily indignities of to beatings to lynchings to mob lynchings. For several thousand lynchings during this time period. And there was sort some of the clear-cut examples of how violence was used to keep this system in place and I think that quote was in the local paper sort of accurately summarized it where it was racially justified if someone acted quote unquote basically inappropriately due to chest inflation from wealth. 

So, with that, due to high interest rate charges, this cheating at settlement time, the sales price of the crop was often less than the merchant advances submerging African-Americans into debt each year. One study found that about 62 percent broke even, 26 percent went into debt and small fraction 9.4 percent made a profit and I have a quote there from Manda Walker who expresses I think sort of the  dilemma and the frustration here of this economically coercive system. “After de last bail was sold, him come home wid de same sad tale. Well Mandy, as usual, I settled up and it was naught is naught and figger is figger, all for de white man and none for the n*****.”  So, I think Ms. Walker is capturing very clearly what happened in settlement time and how African-Americans were routinely cheated in such a way that maintain them in such a system of what amounted to being in a debt peonage.

So, in spite of all that, I think what is one of the most significant things to talk about is landownership and African Americans. And so, I know I presented some very depressing information about this sharecropping system but in spite of all these obstacles, African-Americans were able to accomplish land ownership, when I think a surprisingly large numbers in the South considering the circumstances. So, by 1910 throughout the South, African-American land ownership in rural areas was about 24 percent, one in four and in urban areas about 21 percent, about one in five. The mean value of an African-American farm including livestock basically assets was about $1,588 dollars. 

And will say the farms were typically smaller in comparison to white farms. Often fewer than 50 acres and more often clustered together. And the land was generally poor quality. Nevertheless, I think those numbers are pretty significant and really represents a testament to sort of African-American tenacity and to overcome some of these obstacles to achieve and land ownership. 

So how did it work? How were folks able to purchase land in this system and well it was not uniform, and it was many ways that it happened. But the purchase of land often required several central elements. It's typically required income household production.  So, by that I mean there had to be income coming in from somewhere else besides just farming.  It typically involved asset building. Via livestock for personal property. Because that then allowed the sharecropper to move his way up the agricultural ladder, gain more economic control and build towards land ownership. It also often required a white sponsor. Typically, the purchaser was also literate. I think we see the quote from Ned Cobb talk a little bit about that and the struggles he went through. So “we watched and scuffled for four years first one way then another -  makin baskets, cuttin stove wood for people- until I could buy me a mule so I could rent a little land and go to work and run my own affairs.” 

So, Mister Cobb is talking about how he works his way up that agricultural ladder. He does eventually achieve land ownership, but it's only after many years, many different sorts of streams of income production, to allow him to buy the mule, which allowed him then to become a renter and then move his way up the ladder. 

So now let’s compare that to White land ownership. So, it does pale in comparison to the White rates. For example, the overall rate of farm ownership in the south for Whites in 1910 was about 60 percent and compare that to 24 percent for African-Americans. The overall rate of White homeownership was 48 percent in 1900. The mean value a White farm including livestock was almost $4,000 so certainly significantly higher than African-Americans farm wealth and Whites also benefited from a number of laws but essentially provided free or cheap land to settlers. For instance, Headrights. Headrights worked were if someone brought over to the colonies an indentured servant or a slave, they were essentially awarded land. And land was also given through these various land grants as well as Homestead Acts, whereby they settle on a piece of land for a specific period of time, that land would become yours. Now African-Americans were largely shut out of these programs.  There were some minor participation in the Homestead Acts after the Civil War but for the most part they were essentially precluded from participation in this way to achieve land.

So where does that take us? So, beginning in 1619 to the Civil War the vast majority African-Americans about 90 percent, basically are completely precluded from any property ownership and wealth accumulation. And then from the Civil War to the beginning of the twentieth century, the majority of African-Americans were trapped in a system of debt peonage, driven by predatory credit discrimination in an agricultural system that was based on cotton production that severely constrained their ability to accumulate wealth. And that's one of the ironies of the entire sharecropping system. While basically initially between African-Americans and Whites the system eventually over time begins tracking more more Whites within the system. So, the great irony was really sort of a tool to control African-Americans and African-American labor but over time it becomes so corrosive it also begins to impact Whites in a very negative way. Although certainly not to the same extent proportionately that it did for African-Americans. 

So, with that I just want to take a second to walk through a few slides to show some images of African-American sharecroppers. I think these are really important to provide faces and agency to the historical actors, just looking at the determinations in their eyes as well as the quiet dignity express in their faces, I think is a pretty powerful statement. 
So, with that, let's turn to what I call the second-generation racial credit discrimination really started with the great migration. So, intent on escaping the violence and discrimination of the South, between 1910 and 1970, millions of African-Americans leave the south for the urban cities of the North and West. Seeking both economic and educational opportunities. And this great migration really occurred in two waves. The first wave, from 1910 to 1940, roughly it begins really with the first world war, which in turn creates a demand for labor in about 1.6 million arrive primarily in the cities of the Northeast. You can see that in the statistics there from New York City. There in just 30 years the population just goes through the roof from 140,000 to 650,000. 

And in the second great migration again triggered primarily by World War II and then demand again the   increase demand for labor. And that's even larger than the first wav--3.5 million, and it’s also more geography, geography diverse. It is not only the Northeast but the Midwest and the West as well. In fact, you see that those statistics from Los Angeles and San Francisco. Where the population essentially grows tenfold in just 30 years. And in fact, this is the largest internal movement of any group in American history. 

The map gives you some of the main routes of the great migration. This is the first great migration.  You see basically leaving the deep South for the urban cities of the North. St. Louis, Chicago, Detroit, Baltimore, Philadelphia, New York City and later this will expand out West to California, San Francisco and other large urban areas.
So, when African-Americans are arriving in the North, they didn't give up their desire to own homes, in fact they wanted pieces of what one historian called the cultural baggage they brought with them was the desire for homeownership. And in the early twentieth century, we had much different mortgage finance system than we do today. Some mortgages were typically required a large down payment and usually half of the purchase price, with the remainder financed with a straight mortgage and the interest rates of two to six percent with fees about three to six percent. Today we would call that basically five-year term interest only with a balloon payment. And borrowers were typically required to take out a second mortgage to cover that large down payment. And remember you had to put half down in that second mortgage came at a higher interest rate four to twelve percent, with much higher fees as high as 20 percent. Again short-term, one to three-year terms. With additional fees upon renewal and typically borrowers sometimes even had to use a third mortgage, a smaller third mortgage to cover fees and the first payment. 

So, it was not easy for anybody at this in this time period to purchase a home. Given the financing system that was in place. 
With that being said African-Americans I think encountered some additional obstacles as they tried to finance home purchases. First many banks simply refused to lend to African-Americans. Even if a bank did make a loan, the terms and conditions were often much more onerous than compared to Whites. By that usually it was about double the interest rates and double the fees. If in fact they could secure financing at all. 

Raymond Pace Alexander, I included a quote from him was a very prominent African-American lawyer in Philadelphia. He explained “If a colored man owned City Hall he would be unable to get a first mortgage on it at this bank.  They absolutely refuse to lend money in any manner to Negroes.” 

So, without access to traditional mortgage credit, African-Americans often relied upon installments or land contracts to finance a home. So, under such a contract, the owner basically sold the property to the buyer at an agreed-on price it was financed through a series of installment payments that were paid directly to the original owner. So, there is no banks involved, no financing companies, it is a straight up contractual relationship. While it did facilitate homeownership, it was also subject to discriminatory to predatory practices. So, let's talk about a few ways that those practices occurred. First, the buyer did not acquire title to the property until the installment payments were complete, and they did not gain any equity in the property during the contract. So, unlike a mortgage where you gain equity over time, there's no such thing happening with an installment contract. Third, if the buyer misses a payment, the seller can cancel the contract and take back the property and they can do that through an eviction as opposed to foreclosure which was much simpler and much cheaper. Fourth, usury laws and mortgage interest rate ceilings did not apply to such contracts like they would for mortgage. The buyer could be kept ignorant of the actual value of the property since there is no appraisal associated with this  transaction, and finally the buyer was also then responsible for all maintenance, insurance, repairs, expenses associated with the property and often times these properties were in poor conditions and required considerable repairs and the buyer was responsible for all that. So just to give you an example of the Sweets who purchase a home in Detroit.  

So, in 1925, Mr. Sweet is an African-American doctor and his wife bought a home in a white neighborhood in Detroit. They paid about $18,500 to the white sellers when the standard price was about $12,000-$13,000. So, they are paying approximately a 30 something percent markup on the sales price. They made a down payment of 20 percent. With the remainder financed with an installment contract. Consisting of 120 months of monthly payments of $150 for effective interest rate of 18 percent. 

So interesting here is you seeing  some of the same dynamic that we saw in sharecropping.  That we had inflated prices, and very high interest rates. The same dynamic that incurring in installment contracts. Of course, the Sweets case became quite famous because after they moved in, they were greeted by white mobs who obviously did not want African-Americans moving into their neighborhood. Shots were fired, a white person was killed. The Sweets were charged with murder.  In a very sort of celebrity case  Clarence Darrow represented the Sweets after a mistrial, the charges were ultimately dropped against them. 

But again, it speaks to sort of the oppressive terms were applicable in installment contracts. 
At the same time again, and I do not want to focus on sort of all the negatives, this also was a golden age of black banking. So as the African-American migration heats up, it is increasing racial violence and housing segregation as we clearly saw what happen with the Sweets. But in turn, this is creating a separate African-American economy and presents economic opportunities and encourages civil rights activism. 

So, from 1900 to 1934, a 130 African-American-owned banks were established. By 1930 there were 73 African-American- owned building and loan associations and most of those were typically affiliated with an African-American church. So, these financial institutions are able to provide mortgages and they are able to do that on reasonable terms and conditions. And Does provide some access to credit for African-Americans. And we see this in Philadelphia. Where one study from 1910 to 1929 found that 19 building loan associations originated at least 1,216 mortgage loans to African-Americans. So, there's unquestionably credit vacuum in African-American neighborhoods but to a certain extent, African-American-owned financial institutions are able to fill part of that vacuum. That being said, they still faced capital and liquidity limitations, market constraints, and asset depreciation. We do want to talk about one sort specific example. His name is Major Richard Wright, Sr. and his bank known as the Citizens Bank. So, this is really an incredible story. Mr. Wright was born an enslaved person in a log cabin in Georgia in 1855. He manages, his mother is determined to get him education. He ultimately graduates from Atlanta University became president of the Georgia State Industrial College for Colored Youth, which is now known as Savannah State. He was very prominent figure in the local community, a well-known educator. But one day after Wright's daughter was insulted in a local bank, while she was trying to make a deposit, he demanded an apology from the bank's president. Who he knew, given they were both members of the local community. The bank president refused to apologize and Wright on the spot vowed that he was going to start his own bank. 

So, the age of 67 after entire career of basically in education, spurred on by the insult, Wright left the South and on September 15, 1920, he and his family open the Citizens and Southern Bank in Philadelphia, Pennsylvania. To counter discrimination and fraud in the mortgage market, which he was keenly aware of because he studied the mortgage market in Philadelphia and understood that African-Americans were being routinely cheated out of hundreds of thousands of dollars.  So, what he does is he establishes a trust company, the first African-American trust company. And is asked to design and provide a full range of financial services to African-Americans homebuyers. 
So, with reviewing documents, protecting down payments, examining closing documents, representing buyers at closing.  With the goal being to achieve homeownership and protect African-Americans from real estate sharks. 

So, by 1930, Citizens had $161,000 in capital, 6,000 deposit accounts, 1,300 checking accounts and they had provided over 1,000 loans to African-Americans. And Wright also goes on to establish and being the first president of the National Negro Bankers’ Association. 
So really a remarkable career. And in fact, he was a Major as well. He was appointed a Major in the Spanish American War. And the Citizen Bank was around until into the seventies when the Wright family finally sold their controlling interest. 

So, what else happened in this time. Of course, the big event is October 29, 1929, the stock market collapses and getting into the Great Depression. And it is devastating to the country. Over 5,000 banks closed. We talked about Citizens Bank and Wright’s bank; it did survive but a number of African-Americans banks did not survive as did thousands of other banks. 7 billion depositor funds vanished. Housing construction comes to an almost standstill—a 95 percent drop. By 1933, just remarkable, half of all mortgages are in default in the Country with the foreclosures running at a thousand a day. 

So, with the election of Franklin Roosevelt, the federal government basically decided to revolutionize housing finance to rescue the market, and to make homeownership more accessible.
Now unfortunately the system that the government does introduce to support homeownership placed discriminatory barriers in the path of African-Americans. 
It starts really with the Home Owners’ Loan Corporation, which was established in 1933. It’s designed to assist families in danger of foreclosure basically refinanced their existing delinquent mortgages. It was quite successful over three billion dollars for over one million mortgages. 40 percent of all qualified mortgagees sought assistance from the program, so very widely used, and for the first time, we talk a little bit about what mortgages look like back then, but for the first time we have 15-year term notes,  fully amortized at interest rates of five percent. Now, today you that’s sort of a standard product, 15/30-year mortgage, but that was revolutionary at the time. 
Since the HOLC was dealing with mortgages in default and potential foreclosure, it was making loans on those properties and it introduced appraisals of properties in communities and I mean standardized appraisals across the industry in order to access possible risk. And to do that it commenced a City Survey Program to appraise the level of real estate risk in cities throughout the United States. Every city in the United States, 239 cities, every major city.
 
And it did this by distributing questionnaire forms to local real estate professionals and mortgage lenders designed to measure risk. Now unfortunately, in rating the neighborhoods, the risk assessments incorporated existing notions of ethnic and racial worth. And in fact, there was no more important socioeconomic characteristic, for appraisal purposes than race. For example, the HOLC monitored the movement of African-Americans.  Another example it charted the density of African-American neighborhoods. In fact, this relationship between race and real estate value was critical to the entire appraisal process. 

This is one of the survey forms that were sent out. And I know it is a little difficult to read but it does talk about sort of the detrimental influences and references Negro specifically ask whether there is a Negro population, the percentages, and has a question of infiltration of and then a blank space this particular form also notes quote unquote Negroes and in turn, the neighborhood was rated red, which was the most risky classifications.  So, these forms are going out with thousands and thousands of them and they in turn drive this entire system, this risk assessment system. When the HOLC developed for color-coded categories of risk of all the cities across the country. So, first category are coded green. These are the best areas. They were demand in good times and bad. Blue represented areas that had peaked but that are still quite desirable. Yellow are areas that were definitely declining, and the D represented hazardous areas. It was the things taking place in the C areas that had already happened, “characterized by detrimental influences of a pronounced degree, undesirable populations or an infiltration of it.” 

African-American neighborhoods given the criteria were almost always rated fourth by the HOLC, coded red and hence that's where the term “redlining originated”. For example, in Detroit every neighborhood with any degree of African-American population was rated “D” or hazardous coded red and redlined by federal appraisals. Following completion of this rating system, the HOLC prepared a series of color-coded residential security maps that detailed the various real estate risk ratings. Some of you may be familiar with them. They received a fair amount of attention over the last few years but for a number of years, these were just sitting in the national archives in Washington DC. Nobody was even really aware of them or recalled them until an historian can cross them in the eighties. And these basically sort of represent risk detail on a map. And you see the areas of red and as you proceed out the core this is Atlanta. You get some more yellow and some blue and then it begins to turn green.
This is Los Angeles you could see the same dynamic. 

So, what is the impact of all this? Now HOLC did have a mixed record of mortgage lending.  It did make loans in yellow and red areas. However African-Americans were still subject to discriminatory practices. The “D” rated areas typically charged higher interest rates. It reinforced segregation because it refused to sell make loans to African-Americans for properties in white areas. So, it was reinforcing segregation in an under-appraised typically the value of African-American areas, but really major damages, it adopts, elaborates, explicitly places the government, the federal government’s seal of approval on this notion. This relationship between real estate values and race.  This system is than adopted by private financial institutions in the entire practice of redlining being essentially institutionalized in the finance system. 

And that really becomes even more significant with the Federal Housing Administration, which was established in 1937 to facilitate financing on reasonable terms. The FHA did not directly lend money but rather it provided financial incentives by assuring up to 90 percent on any loss. And with that loss the risk reduced.  The FHA success is really remarkable. Housing starts just to explode. Remember at the end of during the Great Depression that housing “starts” had basically stopped.  When you see this as hugely successful by 1972 the FHA had assisted 11 million families in achieving homeownership and truly really remarkable program, but it came at a price. Because it largely is provided to white areas in the suburbs to the detriment of African-Americans who being segregated and residing in the urban areas throughout the country. 

So how did that work? So the FHA like the HOLC required an unbiased professional estimate in order to guarantee a loan to ensure the value of the property would exceed the mortgage debt. So, it acted upon the HOLC guidelines in developing even more elaborate advice on race and real estate value in Underwriting Manual, which was its manual designed to assess whether it was going to make a loan or not.   

So this is an excerpt from the manual. It basically says if a neighborhood is to retain stability it's necessary that the property shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally leads to instability and reduction in values. So, there you really have it right there sort of the relationship, the negative relationship between race and values. And the manual warned of the dangers of infiltration of the inharmonious racial groups nationality groups, it recommended to avoid this by using restrictive covenants, as an excellent tool to maintain neighborhood stability and restrictive covenant, which is a clause contained in the Mortgage Deed that said the property cannot be sold to African-Americans or additional ethnicities. And these are still in a lot of the mortgage records and in fact I have been approached by folks who said I went back and looked at my Deed and sure enough it had a restricted covenant. 

So, in short, the entire appraisal process is based on the premise that racial segregation is necessary to ensure property values. 
And like again like the HOLC, the FHA actions were adopted by private financial institutions, institutionalizing the practice of redlining. So, for example in Chicago a survey of 241 savings and loan institutions found that only 19 were willing to make loans to blacks purchasing homes in black areas and only a single institution was willing to grant a mortgage to an African-Americans moving to a white neighborhood. 

So, I really think captures, that survey captures how prevalent the practice of redlining was, and it also summarized by I Maximilian Martin, who was an African-American real estate expert in Philadelphia. He said “Today, however, a very decided bias exists on the part of mortgage lending agencies. Upon learning the racial identity of an applicant or a finding that the property is occupied by colored people, the loan is often immediately rejected without any further investigation.” 

So I think you can dramatically see in some of the documents so, in late, as late as 1951, the McMichael's appraising manual, which was at the time considered quote unquote the bible of appraising, and actually included a listing, a ranking of ethnic groups in terms of those who are most desirable to those who have the greatest negative impact on property values. English, Germans, Scotch, Irish and Scandinavians sort of Western Europeans being the top of the list and at the bottom 9 and 10 were Negroes and Mexicans. I think this sort of speaks to how widespread these notions of race and real estate value had been incorporated in the industry to the fueling the practice of redlining. 

And just give you another example of Detroit. There was developer that proposed an all-white subdivision next to a black neighborhood, which had previously rated as “D” or hazardous.  Not the   neighborhood. The black neighborhood was rated hazardous. The FHA denied the developer financing due to its close proximity to the hazardous black neighborhood, and as a compromise, the FHA agreed to finance it, provide the guarantees, provided the developer build a foot-thick, six foot wall for a half a mile to separate the black and white neighborhoods. And you can see that wall in the distance in this picture.  I think that really just speaks to the incredible levels that the industry was willing to go to preserve segregation in this financing system. 

So, what is the impact of the FHA? That is not entirely clear. But the analysis revealed the clear pattern of redlining in center city areas and abundant loan activity in suburban counties. In between 1946, 1960 for example, 350,000 homes in Northern California were financed with FHA, less than a hundred were for African-Americans. A 20 year study of Philadelphia included that FHA policies virtually guaranteed that few homeowners in these areas, by these areas I meant older homes with African-Americans were the beneficiary of FHA insurance so overall during this time period, from 1930 to 1960, which was one of the greatest expansions of homeownership in American history, scholars have demonstrated that fewer than one percent of all mortgages in the nation were issued to African Americans. Again, where does that take us, takes us back to installment contracts. So, without access to traditional mortgage market, African-Americans were targeted by real estate speculators or installment contracts to purchase homes. And if you go back and look at the African-American newspapers, in any major city, you will see their filled with property advertisements. And typically list low down payments, with no total sales price. Which was a clear indicator that property was being sold on contract. 
At the same time a secondary market begins to develop for installment contract paper. And this in turn provided liquidity to the market. It allowed for the speculators to continue to flip properties, issue installment contracts, sell those contracts to generate more capital. In fact, speculators and investors often recoup their entire equity investment within just two years. So extremely lucrative and profitable for speculators. 

Again, this was the primary tool, if you wanted to purchase a home. An Chicago expert estimated 85 percent of the property sold to African-Americans in neighborhoods undergoing racial change were financed with installment contracts. Another 1962 study in Chicago found the same thing. The study also found not only were they being financed with installment contracts but African Americans on average paid a price 73 percent greater than the original price paid by an investor. So again, it the exact same dilemma as sharecropping as the first wave of installment contracts were--buying properties at inflated prices on predatory and discriminatory terms.

I want to give you an example of how this works it really was remarkable. So, the Jameses’ they purchased a home on contract from Charles Peters who was a real estate speculator for $13,500. Peters told the Jameses’ the home was occupied or owned by a white couple but in reality, he had purchased the home just 13 days earlier for $8,000. So, he bought it and marked up the price, the contract required a down payment of $1,000, monthly payments of $105 with a balance of $10,500 due at the end of the term.  So basically, a balloon payment was attached to the contract.   Now Peters promised to help the James to secure that mortgage to finance the balance at the end of the term given that they may have troubles because quote unquote they were colored.

However after one year Peters sold the contract at a discount to Arthur Krooth, a liquor store owner but nearly the end of the contract, the Jameses who did not know about that, sought out Peters in the hopes that he would fulfill the promise of assistance. He told them since he no longer had an ownership interest in the property, he could care less what happened to them. 
The James [Correction] attempted to secure mortgage financing the application was denied by six banks since the property was not worth $10,500. And remember Peters had only paid $8000 for it in the first place.  Krooth proceeded with eviction. The court rejected the James's efforts to delay the eviction in the hopes that they might secure financing. And ultimately, they were evicted from the property.  I think this example really speaks to way that this installment contracts work in a very sort of a vicious predatory manner, with predatory terms and conditions and in exorbitant sale prices. 

The issue with financing were not just limited to homeownership. At the same time large national retail stores are typically operating in suburban areas and avoiding African-American neighborhoods. So, in the absence of these traditional retailers, African-Americans relied upon small merchants operating stores and segregated neighborhoods to purchase consumer products such as appliances and furniture. So again, what do have here? We have the merchants again in African-American neighborhoods 100 or so years later, the sharecroppers had sort of the same dynamics. The retailers courted customers through advertising, promises of easy credit and door-to-door sales. Most of the purchases were financed.  In fact, an FTC study found that 92 percent of the sales in such stores were credit sales compared to 27 percent of general retail stores. So again, it is a simple dynamic where all the sales are being financed. 
Most consumer lending took the form of installment loans typically had high interest rates and retailers often charge more than the legal limit by simply elevating the base price of the goods. So again, inflated prices and high interest rates. Paul Dixon, Chairman of the FTC at the time explained sort of how the pricing worked selling at wholesale was about a hundred dollars would retail for $165 at a general store but for $250 at a local store at a huge price premium.  However, these consumers were basically in a captive market given there was little to no price competition among the retailers. And borrowers often fell into a continuous debt relationship with these merchants. Who operated in African-American neighborhoods using a wide range of exploitative practices.  Ranging from high-pressure sales tactics, misleading and bait and switch advertisements, misrepresentation of prices, shoddy merchandise, substitution of used goods for promised new ones or refusal to repair or replace and quite frankly outright fraud. Contract defaults often entailed repossession, wage garnishment, court judgments and even outright shakedowns that could even include violence by the merchants. 

So, my 1967, the Federal Reserve does a study about the racial wealth gap.  It concludes that the evidence appears overwhelming that the net wealth position of black families is substantially poorer than that of white families with similar characteristics and then looked at sort of African-Americans and Whites at higher income levels and those at lower income levels and found large disparities with higher earning African-Americans they had it net wealth of 30,000  compared to 100,000 for Whites. At the lower end almost $11,000 versus $2,000.  The Fed study concluded that the source of the wealth gap was historical inequalities in income and opportunities. The legacy of past economic deprivation it cannot be fixed by only eliminating the income gap. So, the Fed itself is noting the long history that we have covered today. 

So, I think that then takes us to what I call the third generation of credit discrimination--reverse redlining. Which some you might be a little more familiar with since it happened not too long ago. So, beginning in late 1900s and early 2000s, the subprime lending increases dramatically in the United States. And subprime product basically intended to provide credit to individuals who do not qualify for prime loans. And while it can serve a beneficial purpose by providing access to credit to someone might not ordinarily qualify, it also was subject to widespread abuse.  It typically had high interest rates and fees, often involved flipping or repeated refinancing, design to strip equity of out a product or out of the home. High-pressure sales and advertising tactics. Prepayment penalties, balloon payments and again, outright fraud. 

Unfortunately, African-American areas were frequently targeted for subprime products and often predatory mortgage loans, in a practice known as reverse redlining. And how does reverse redlining work? Residential segregation combined with lack of access to credit from the mainstream financial institutions, has actually created market conditions favorable to targeting black areas for subprime and predatory loans. Essentially a market failure that results in credit vacuum in black neighborhoods allowing lenders to aggressively market and exploit such areas with predatory loan products.  So, you see this combination of unfair products, the targeting of African-Americans, which is the exact opposite of redlining hence the term reverse redlining. 

In a very prevalent in African American neighborhoods, so HUD study found that 51 percent of refinance loans in African American areas were subprime compared to 9 percent for white areas.  Income was irrelevant, African-American families earning more than $200,000 so quite well off were more likely to get a subprime loan than white family making just $30,000 a year. Even after you control for underwriting variables and consider of factors African-American borrowers were up to 34 percent more likely than Whites to receive a high rate subprime loan during this time period. 

So of course, then we had the subprime mortgage crisis when basically everything collapses.  So, the targeting of minorities for these products had major consequences when the market collapsed in 2008 including increased debt, loss of equity, increased foreclosures and entire devaluation of neighborhoods. Overall, for example just between 2005 and 2008, 240,000 African-Americans lost their home to foreclosure. And really see that in the wealth decline. Just in that short four-year time period, the net worth of black households declined by 53 percent and basically cut in half over a four year time period. While white households declined by 16 percent. 

So, where's that sort of take us today? The post subprime mortgage crisis African-Americans homeownership reached a 50 year low in 2019 at 40.6 percent, down nine percent from its high in 2004 where it almost hit 50 percent. And continues to be quite high today as I mention in beginning of the presentation.  So, we see all sorts of contributing factors, tightening of credit standards, continuing redlining, emergent of contract lending in some areas, and continued discrimination. 

And I think we also have to consider we could be on the potential verge of a fourth generation of potential credit discrimination with COVID and the impact it's having a minorities and minority communities.  We definitely see disproportionate infection rates, unemployment rates, small business closures, evictions, and foreclosures. It's still pretty early and certainly the federal government has responded in sort of foreclosure moratorium in various programs. I think we need to be very cognizant of the impact and the racial impact of COVID-19 having a minorities and minority communities as we are currently living in this right now. 

So, what to do? So, what is the impact of all this? So overall one study indicated that if disparities in homeownership rates were eliminated, in other words you equalize those rates that 30 percent gap becomes nothing. Wealth gap between black and white households would shrink 31 percent. If you combine that with equalization of equity, because African-American homes typically appreciate often at slower rates but to equalize appreciation, that would shrink the wealth gap by another 16 percent. So, the combination of those two homeownership equalizes appreciation would almost wipe out half the racial wealth gap according to one study. 

So overall in conclusion, I think one of the primary explanations for the large racial wealth gap is the historical and structural discrimination in credit markets. As the last slide indicated as many as potentially  50 percent of that gap with remainder by way being income and to a smaller extent education. Now these structural and historical discriminatory patterns, which we now sort of covered, from the Civil War, just after the Civil War all the way up to now has limited African-American wealth accumulation, I think in at least two significant ways.  It is limited African-American homeownership due to lack of access to traditional sources of mortgage credit, which we see through the practices of redlining or the subprime lending crisis. It also increased the cost of achieving homeownership through increased reliance on nontraditional sources of credit and by that, I mean installment contracts basically. So, I think what I'm trying to argue and show you the history is this two-part problem where it is a lack of access to fair and equitable credit. The alternative is typically high-priced and potentially predatory and discriminatory and those two factors and largely and driven the homeownership gap in terms of racial wealth gap. 


So, with that concludes my presentation. We got a couple minutes left.
 
>>Dr. Brown: Thank you, Charles, that was excellent, and we do have a bunch of questions also in the chat. So I'm just putting this slide up and leave it here so everyone can, the third sort of paragraph down where the email if you want get a copy of the slides or have other questions but I will answer as many questions as I can. Those they I don't get to, if you send in, if you request the slides I will go ahead and send the answers to any questions we don’t get to.  Hopefully will get to most of them. 
So, let's see here. Charles, I don't if you are looking at them now, but let's see, start with the first when they came in around 2:30. And that question was from David Rowe,  a lot of them are from Mr. Rowe, and I will covers as many as we can, we may skip just a few just to get to the others but I don’t think there was lot of others beside that. He asks is the housing gap because of not being a able to get a home loan or not being able to keep the home, but I think you did a good job of explaining that in the last few slides so I think he may that was earlier so we can probably skip that one. Were blacks allowed to own land? Maybe you can answer that one. Of course, early on they weren't, I think you talked about, I don’t know what time, looks like around the late 1900s that blacks begin owning land is that correct? No, it earlier than that? 

>>Dr. Nier:  In the North or during the slavery period, free blacks could own land in some areas of the North and in fact did own land. Obviously not in the South. And then immediately after emancipation of African-Americans were not legally prohibited from owning land. Due to some the civil rights amendments that were passed. And as well as some of the civil rights laws that were passed. So legally, no. But as I think what we saw with the example of Mister Crawford, it was potentially quite dangerous and onerous to achieve land ownership and quite challenging. So, the answer to that is after the Civil War is not legally prohibited it but certainly all sorts of other issues associated those efforts as we discussed in the presentation. 

>>Dr. Brown:  Thank you. We have somebody that posted…Benita Johnson posted a link to Slavery by Another Name. And that was in reference to you talk about the peonage system so that link you want to visit that was around 2:23 for those are trying to find it. 

>>Dr. Nier:  I mean to suggest that sharecropping was one of the only sort of labor systems out there. That work really talks about the  convict leasing system where folks were often wrongly convicted crimes and then leased to major companies essentially to put more labor at work and just brutal positions. 
And that's an excellent historic read if anyone has the time. 
Okay, I also see a question from Mr. Rowe about whether white sharecroppers are offered different interest rate and I think you also covered that later and in fact they were and that of I think you said around 1925 the black interest rate was in the 20 to 24  percent and that white was 4 to 5 percent owned around that time. 
It’s definitely true that more Whites became ensnared in this system. Although they probably were charged higher interest rates, not sure if they rivaled that of African-Americans but the violence the lynching, the additional obstacles that I think were unique to the African American system, unique to African-Americans in the sharecropping system were not necessarily applicable to Whites. So, it is definitely historically accurate that Whites became increasingly ensnared in sharecropping. And I think it is also fair to say, the system while oppressive it was different in some respect than from the African-American experience. 

>>Dr. Brown:  Okay and we had a message from somebody Carmichael, it said he wants to know about using the slides and the recording for them to brief others.  Absolutely all of our materials we welcome you to do that and Dr. Nier has graciously allowed us to use his slides which comes from his personal research for the same purpose.  He mentioned he was glued to the screen so thank you for that so that 

>>Dr. Nier: And everything is available.  If you have any interest in subsequent follow-up presentation or have others interested in this feel free to reach out and we can see what we can arrange. 

>>Dr. Brown:  Great, thank you. And David also asked about the mortgage rate in 1925, looked up and that was 4% to 5% percent. 
We have something from Reverend Doctor Suzanne Kershaw, and she asked is the Citizens Bank, is this a Citizens Bank we know today? I think she's thinking, speaking on slide 48.  You mentioned Citizens Bank. 

>>Dr. Nier:  It is not. It is not.
Ultimately, the Wrights sold their controlling interest, it became a White-owned bank. It ultimately collapsed, I believe in the late seventies, early eighties. It is a different institution. 

>>Dr. Brown: Okay. Let's see. Somebody asked about the impacts of Black Wall Street decimating riots in Tulsa and other cities across the country. 

>>Dr. Nier:  That is consistent with the experience that Mister Crawford had.  We talked about that in sort of the dynamics of violence that was used as a tool of oppression. It was central in some respects to white supremacy in United States where wealth accumulation by African-Americans was a potential threat to the economic system that prevailed. And be it Mister Crawford owned land in South Carolina. Or the success of African-American in Tulsa its essentially the same dynamic that generated the sort of the violent response to those successes. 

>>Dr. Brown:  Okay it is 3:31. I will just squeeze two other quick questions real quick. And then I think we can wrap up. But one says were institutions willing to make loans to whites to buy in black communities, do you have any information on that? 

>>Dr. Nier:  That's a good question. You know I have not come across a lot of data on that. I suspect the “no”, because the same, because of the notion of racial race in real estate values. So, and the importance of segregation. So, if a white person was trying to buy an African American neighborhood that would still challenge sort of the segregation boundaries. But I haven't seen any information on that, but I would suspect sort of the same dynamic would be applied. Now, later on that's will become an issue I think more recently as we talk about issues associated with gentrification and things like that. 
But back then I'm not aware of much historical research on that particular aspect of it. That's a great question. 
Yes. I will give one more question and those after that if you send an email reminding me of your question, we will try to get answer directly to you. 

>>Dr. Brown:  The last question, I see a lot of REI I think that is Real Estate Investment Groups that  promote rent to own contracts to get low income for credit consumers and properties, is this the new form of installment contracts by predatory REI's, targeting poor credit consumers who don't have down payments? Does the CFPB have any programs that warn consumers about this rent to own gimmicks? 

>>Dr. Nier:  Good question on whether we have any programs. It is certainly true and that we are aware and have taken notice of the REI issues and other Federal regulators are certainly aware of those and cognizant of it, I do think in some ways it is quite similar to some of the installment contract issues. If not almost identical. And it's definitely something that is presents some significant discriminatory and fair lending implication.

>>Dr. Brown:  Okay. There's a lot of other good questions in here. So, I hope some of you will like repeat your question in an email to me. Again, my email that I get responses in are the third sort of link from the top of this CFPB_FinEx@cfpb.gov and we will try to get those back to you.  Well again, thank you so much Dr. Nier for your time. This has really been great. Lots of positive comments on your presentation, and I am sure you get other the calls and invites to this because it really is fantastic information. Thank you everyone for joining. And please do check out some of our links because educating your consumers about their rights regarding credit, we have a lot of information on that on the webpage, and also letting them know where to go if they have a problem through our consumer complaints and response line.  These are two important ways that you can use what we have to help your consumers that you serve, black and brown and others and everybody, overcoming any challenges that they face in being treated fairly in the markets.
So, email CFPB FinEx@cfpb.gov. So, everyone have a great day. 

And I look forward to maybe seeing you on Thursday from 2:00 to 3:00, we have a webinar on CFPB resources for servicemembers and veterans.  Take care. 

[Event concluded] 

END