Speaker 1: Just over 150 years ago, this was money for almost half of America. On multiple bills were people picking cotton. Enslaved people. These slaves didn’t just represent wealth in America, they were wealth by 1863, they were worth over three billion dollars. Since then, America has slowly, painfully transformed as a country breaking down racial barrier
Speaker 2: after racial barrier. I am very optimistic about the future. Frankly, I have seen certain changes in the United States that surprised me. So on the basis of this, I think we may be able to get a Negro president in less than four years, I would think in 25 years less.
Speaker 1: Wealth is different.
Speaker 3: Wealth is where the past injustices, greed, present suffering.
Speaker 4: I think the racial wealth gap speaks to the fact that we still have a long way to go to achieve ideals of equality in this country.
Speaker 5: The racial wealth gap as a measure of the white family in the African-American family, that’s right smack dab in the middle, the
Speaker 1: median the median white households wealth, their savings assets minus their debts is 171 thousand dollars. The median black households is seventeen thousand six hundred dollars. And that gap is still growing and growing.
Unidentified: Why? We hold these
Speaker 2: truths to be self-evident, that we have the right go to any school in America, but we can’t pay the tuition. I wake up every morning in a house that was built by the young American dream, need not forever be deferred and all men are created and
Unidentified: they can’t have their equal share in the House. Bill, bring it down. I forgot.
Speaker 2: And I built the railroad under someone else’s with. For nothing. For nothing.
Speaker 1: In January 1865, the civil war was ending, Union General William Sherman and Secretary of War Edwin Stanton gathered a group of 20 black leaders and asked them what the black community needed to build lives and freedom. Reverend Garrison Frazier, the leader of the group, answered simply, The way we can best take care of ourselves is to have land. Four days after the meeting, Sherman issued special field order number 15, it set aside hundreds of thousands of acres of land, saying each family shall have a plot of not more than 40 acres of tillable ground. The day before his second inauguration, Lincoln signed a bill that made the plan official. America was almost a very different country. But it didn’t turn out that way. Weeks later, Lincoln was dead, his successor, Andrew Johnson, quickly reversed course immediately.
Speaker 3: Once we say, OK, equal rights, then you have a white backlash that says, well, what about our rights?
Speaker 1: By the end of that year, thousands of freed slaves who had received land were evicted in just a year after slavery, President Johnson complained about discrimination against whites, quote, in favor of the Negro. But slaves had been creating wealth for their owners for 246 years. That wealth whites got to keep. And there’s an amazing thing about wealth that people who have it, no, well, it grows across generations, just as Jay-Z.
Speaker 2: I bought some artwork for one million two years later, that worth two million years later that she won eight million.
Speaker 5: I can’t wait to give this shit to my children. One thing it says is that wealth begets wealth. Turn one million into eight. Raise your hand if you want to take that deal.
Speaker 1: It doesn’t take a risky Picasso sized bet to see wealth grow dramatically. It just takes time. If you live in a stable country and can invest, long term values generally go up. That’s why you need to know about compounding interest. Imagine you took 100 dollars and invested it in 1863. The average annual inflation adjusted return in the U.S. stock market has been around seven percent. The next year it’s worth a bit more and a bit more and a bit more. Today, that hundred dollars would be worth more than three point five million dollars. To this day, African-Americans make a lot less money than whites, they’re far more likely to be unemployed and studies show employers still discriminate. But even if we manage to close those gaps right now, centuries of inequality have already compounded most powerfully through land and housing.
Speaker 3: Usually in this century, any wealth is captured is through property.
Speaker 1: For the American middle class, home equity accounts for around two thirds of wealth. So if you’re a white American, you’re likely to have parents or grandparents with a story like this.
Speaker 6: My parents bought a house probably now 50 years ago. Paid fourteen thousand dollars for it then. And it is worth now probably about 600 to 700 thousand dollars.
Speaker 4: Most people don’t understand the power of housing of where you live off what opportunities exist in that community.
Speaker 1: The government played a huge role in making that happen. During the Great Depression, almost half of all city homeowners were in default,
Speaker 2: many are sitting in the park all day long out of work. Muttering to himself,
Speaker 1: Franklin Delano Roosevelt took action with the New Deal
Speaker 2: by providing further easing the problem.
Speaker 3: And so far, the New Deal unleashes mortgage credit to the population.
Speaker 1: The American dream and owning a home became synonymous. But the new Federal Housing Administration wouldn’t insure mortgages in areas it decided were too risky.
Speaker 3: And the way that risk is calculated is by race.
Speaker 1: A black family moving in was seen as a threat to housing prices.
Speaker 2: Do you think a Negro family moving here will affect the community as a whole? I think that while the property values will go down if
Speaker 3: they are allowed to move in here and any number.
Speaker 1: So when the FHA drew maps of where they wouldn’t insure loans, the neighborhoods with more black families were colored in red.
Speaker 4: Redlining is not a figurative metaphor. You would literally see maps drawn when entire neighborhoods were redlined off.
Speaker 1: The effects of racism became a justification for more racism.
Speaker 5: If two thirds of America’s middle class wealth is in the form of homeownership, that opportunity to own a home has not just been excluded.
Speaker 1: Federally enforced segregation affected every part of life. The jobs you could access, where your children went to school, how safe they were, and whether your home increased in value. It wasn’t until 1968 that housing discrimination was outlawed.
Speaker 2: Fair housing for all human beings is now a part of the American way of life.
Speaker 1: But that didn’t mean housing discrimination ended. Consider what it took for Cory Booker’s family to get their house in 1969,
Speaker 4: so my parents began looking for homes, but finding just odd things happening where real estate agents, if they saw them beforehand, they would only show them homes in African-American communities. And if it was a house in the white neighborhood, my parents would be told this house is already sold.
Speaker 1: Booker’s parents set up a sting operation with a civil rights group the next time they were turned away. A white couple arrived and made an offer on their behalf.
Speaker 4: The bid was accepted. And on the day of the closing, the white couple did not show up. My father did. And the lawyer and a real estate agent so angry stands up and punches my dad’s lawyer. Literally, they’re fighting, scrambling. And there was a dog in the corner and he took the dog to my father. So my father is now trying to fight off. A big dog window was smashed, but eventually things settled and the real estate agent was desperate, sort of begging my father, you don’t want to move here. Your people are not here. He was so afraid that one black family would move in and somehow it would destroy his business and drive down real estate rates.
Speaker 1: Cory Booker and his parents ended up getting that house and that house helped build his future.
Speaker 4: It built wealth. Incredibly, my father rolled into another house in the same town, an even bigger house, and going from poverty to being in very comfortably in the middle class in the United States of America and really thriving.
Speaker 1: That wasn’t the typical story. 100 years of discrimination since slavery left a huge homeownership gap by the 90s, banks and politicians realized what that meant and opportunity.
Speaker 2: Discrimination is patently immoral, but it is now increasingly being seen as unprofitable.
Speaker 1: In the 90s, the government made a push to open up the
Speaker 2: mortgage market to help families who have historically been excluded from homeownership.
Speaker 1: Black homeownership started ticking up. It looked like the wealth gap might start closing at long last.
Speaker 3: So you’ve got people who are hungry for these loans. What they want is the regular loans that everyone else got from 1934 until 1980.
Speaker 1: Instead, African-Americans were twice as likely as white Americans to get subprime loans, a loan that starts out cheap and gets much more expensive for borrowers with lower credit. But one in five black borrowers with good credit still ended up with a subprime loan.
Speaker 6: I was a loan officer at Wells Fargo in their subprime division.
Speaker 1: So Beth heard the conference calls where Wells Fargo plan to target black churches.
Speaker 6: They were termed wealth building seminars, and that was about purchasing homes. The minister of these churches thought this was a great idea, something to help the parishioners in the community.
Speaker 1: The bank would give the church a donation for each parishioner who ended up getting a mortgage so
Speaker 6: that the people in the congregation didn’t realize the loan officer they were talking to was only going to sell them a subprime loan even if they had 800 credit scores
Speaker 2: in the stock market breakdown. Worst financial crisis since World War Two, fueled by mortgage lending that wasn’t sound or responsible.
Speaker 3: Led by borrowers of high risk subprime loans, black communities lost 53 percent of their wealth.
Speaker 4: It’s hurtful to see a lot of those folks who are at the highest levels of the world of finance who made. Fabulously irresponsible decisions that those people made, whole those institutions have been made whole, but for communities like mine that are still struggling, that there wasn’t some kind of vision or plan to try to help those folks get back on their feet.
Speaker 1: Many of the biggest mortgage lenders in the country settled discrimination lawsuits, although it denied targeting black borrowers. Wells Fargo agreed to pay 175 million dollars. Unlike in FDR New Deal, the government’s 440 billion dollar program to address the housing crisis mostly didn’t go to homeowners. The assistance and a single viral clip triggered a backlash.
Speaker 2: How many you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise their hand? How about we all President Obama, are you listening, thinking of having a Chicago Tea Party in July? Are you Catholic? I want to show the Lake Michigan. That if we
Speaker 5: were to go to an equity scenario where whites and blacks have the same amount of educational achievement, it would lower the racial wealth gap somewhat minimally
Speaker 1: and maybe not even that much.
Speaker 5: The Fed Reserve Bank of St. Louis did a study that came up with finding that white college graduates over a couple of decades, their wealth increased dramatically, as one might expect, black college graduates over the same period of time. Their wealth actually decreased.
Speaker 1: The reason isn’t that graduates made very different amounts of money. It was how they spent it.
Speaker 5: It’s much more likely to be the case that an African-American college graduate is the most successful in their family network and therefore relatives asked them for help and they give it. That doesn’t mean that white college graduates are less charitable or less forgiving or anything like that. It just means that they’re like others in their network.
Speaker 1: African-Americans were wealth for 246 years. For 100 more years, a patchwork of laws excluded them from building wealth and discrimination continues today. The wealth gap has grown so large over so many years, it would take something truly radical to close it.
Speaker 2: How do you close this gap, this huge gap in wealth between whites and blacks? Reparations, reparations? How much are we talking about here, Tennessee? Well, we don’t actually know. I will tell you as much as anyone on the stage for reparations for slavery for African-Americans. Are you? I am. The Bible says we shall be and must be repairers of the breach and breach has occurred. And we have to acknowledge that.
Speaker 4: This does have a generational cost to it, we just can’t hope that we are going to thrive as a nation when there’s still so many wounds that have not been addressed.
Speaker 3: This is something that started with slavery, but it’s never diminished over time. And that’s because government policy keeps perpetuating the circumstances for the wealth gap. I miss the Billie Holiday song. Write them that’s got shall have them. That’s not shall lose it. It is truly self-perpetuating.
Speaker 4: Whenever this issue of compensatory or preferential treatment for the Negro is raised, some of our friends recoil in horror. The Negro should be granted equality. They agree. But you ask for nothing more. On the surface, this appears reasonable, but it is not realistic, for it is obvious that if a man enters starting kind of a race 300 years after another man there first would have to perform some incredible feat in order to catch up to his fellow runner.
Speaker 2: Bless the child, that’s got it so. Oh, Scott is.