The most important distinction for who could get these mortgages or not was race. They mapped out the country through racial zones. This was explicit, through government programs. This created the white suburbs, and created generational prosperity. It also created the black ghetto. The wealth gap existed before then, because of Jim Crow and segregation, but in the 20th century, these government credit facilities cemented the wealth gap for our generation.
Even as we have the Civil Rights Era, and the Civil Rights Act outlaws de jure Jim Crow, all of these economic cycles and processes remain intact. Banks are the engines of the economy. And when you dissect these engines—and I do it through looking at their loans and their deposits—you see exactly how white banks create wealth, and you see exactly how black banks are stuck in this trap of segregation, of concentrated poverty.
And then there’s this cynical and ironic twist that happens in the post-civil rights era. Martin Luther King Jr. is assassinated. JFK is assassinated. Lyndon B. Johnson is out of office. And you have Nixon confronted with this new civil rights coalition, which is the Black Power movement. And this awkward, weird thing happens with black banks, is that they become this decoy, where Nixon says, ‘OK, you want black power? You want wealth? Here, I’m going to give you black capitalism.’ And what that means for Nixon is, ‘You own the problem of poverty now.’ After a generation of white Americans gained wealth through these federally subsidized credit structures, all of a sudden Nixon points to the free market, and says to the black community, ‘Best of luck.’
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