DearColleague.us

Letter

Sending Office: Clarke (NY), Yvette D.
Sent By:
Jaime.Cobham@mail.house.gov

Formally Acknowledging the Impact of Redlining (FAIR) Resolution

Sponsor: Rep. Yvette D. Clarke

Current Original Cosponsors: Reps. Sewell, Adams, Lee, Moore, Pressley, Kelly, Fudge, Johnson (TX), Plaskett, Carson, Thompson, Clyburn, Payne Jr., and Jackson Lee

Original Cosponsor Deadline: COB 1/24/20

 

Dear Colleague,

Historically, the federal government has played an outsized role in providing home ownership opportunities for the American public. During the buildup to World War Two and the post-war period, the federal government became the primary underwriter of the
American Dream, financing home loans for millions of Americans. The Home Owners Loan Corporation owned one in five U.S. mortgages in 1934 while the FHA insured mortgages using the same criteria. By 1950, the VA and FHA were insuring half of all new mortgages
nationwide – effectively underwriting the creation of the middle class.[1] This period represents one of the greatest spurts of wealth generation in American history with the federal government acting as the primary
driver of homeownership – still the primary source of
household wealth
.

Despite this massive growth in homeownership and the associated spike in household wealth, the federal government did not equitably distribute the benefits.
Maps and

manuals
used by the Home Owners Loan Corporation were used across the mortgage lending space to distinguish the type of loans that would get FHA guarantees. By delineating some neighborhoods as sub-investment grade based on “undesirable residents,” “lower
class occupancy,” or worst of all “inharmonious racial groups,” these manuals incentivized the private sector to avoid lending to residents of these neighborhoods. This resulted in the systematic exclusion of minorities and new immigrant groups from homeownership
by exposing them to
predatory lending practices
thus limiting their capacity to strive for the American Dream.

The far-reaching implications of redlining span from disparate access to quality education and food options to the negative health outcomes associated with living in an overpoliced neighborhood. A strong overall economy or converging incomes will do little
to ameliorate the harms of redlining. Because wealth compounds over generations, these problems will persist absent direct acknowledgement and intervention from the federal government.

With this in mind, I invite you to cosponsor the Formally Acknowledging the Impact of Redlining (FAIR) Resolution. Specifically, this resolution acknowledges:

  1. The history of government-sponsored redlining;
  2. The connection between redlining, wealth and life outcomes such as education and employment;
  3. The federal government’s responsibility to address the history and lasting negative impacts of redlining.

If you would like to become an original cosponsor of the Formally Acknowledging the Impact of Redlining Resolution, please contact Jaime Cobham (Jaime.Cobham@mail.house.gov) or call my office at (202) 225-6231.

 

Sincerely,

 

Yvette D. Clarke

Member of Congress

 

 

Acknowledging the history and lasting impact of the Federal Government-created problem of redlining and the responsibility of the Federal Government to address such impact.

Whereas access to opportunity plays a fundamental role in determining the prospects of an individual with respect to achieving upward mobility and the American Dream;

Whereas where an individual lives plays an outsized role in determining the access of such individual to life-altering opportunities, such as finding a well-paying job and avoiding illnesses caused by environmental factors;

Whereas a persistent wealth gap exists in the United States between the wealthy and the vast majority of Americans, a gap that particularly impacts communities of color;

Whereas a lack of wealth increases the vulnerability of a family to socioeconomic emergencies, such as health-related emergencies that can cause financial ruin;

Whereas an income gap only explains a small portion of the racial wealth gap;

Whereas housing, as the most common household asset and largest source of private wealth, is the largest driver of the racial wealth gap;

Whereas Federal Government redlining provided the financial foundation and legal impetus for the racially discriminatory housing practices principally responsible for a disparity in housing wealth;

Whereas redlining used the authority of the Federal Government and leveraged the borrowing power of that Government to reinforce racially discriminatory incentive structures in the housing market that substantially contributed to the persistent segregation
still seen today;

Whereas segregation creates an additional barrier to upward mobility for minority communities by concentrating disadvantage regardless of income;

Whereas neighborhoods with high concentrations of Jews and immigrants from Ireland, Italy, Poland, and other Eastern European countries were also redlined, creating a multiethnic diaspora of the intentionally marginalized;

Whereas the financial crisis of 2007 and 2008 exacerbated the racial wealth gap;

Whereas intentionally malicious and racially motivated lending practices by large financial institutions directly resulted in the widening of the racial wealth gap in the ruthless pursuit of profits;

Whereas efforts to incentivize the private sector to lend to the victims of redlining and historically financially underserved areas have failed to generate the private lending necessary to close the wealth gap or address disparate access to credit; and

Whereas the Trump administration seeks to undermine the already weak incentive structure that pushes financial institutions to lend to the victims of redlining: Now, therefore, be it

Resolved, That the House of Representatives acknowledges—

  1. The history and lasting impact of the Federal Government-created problem of redlining; and
  2. That the Federal Government has a responsibility to take any and all necessary affirmative actions to ameliorate the direct negative impacts of redlining.
 


[1] Rothstein, Richard. The Color of Law: A Forgotten History of How Our Government Segregated America.
Liveright Publishing Corporation. NY, 2017, p. 70

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