By the 1990s, federal housing policies were focused on creating mixed-income communities. Efforts to destroy substandard housing projects and build less dense developments with fewer affordable housing units were often necessary and noble. But without any efforts to grow or replace the below-market housing stock, gentrification was inevitable. A host of declining neighborhoods—like the Mission District in San Francisco; U Street in Washington, DC; Wicker Park in Chicago; Fort Greene in Brooklyn—became newly desirable. Young professionals and families streamed back into the cities.
Fleeing the suburban for “the urban”—that key marketing construct around which colorization in the 1990s had turned—reflected an embrace of multiculturalism. But for longtime residents the impact could be bittersweet. Redevelopment resulted in the mass disappearing of families of color. With gentrification, those who stayed suddenly had supermarkets, cafés, restaurants, bike shops that they never had before, along with expensive boutiques and real estate agencies. But many also experienced what Columbia professor of psychiatry and public health Mindy Thompson Fullilove labeled “root shock,” the trauma of loss coupled with the threat of displacement.
As the suburbs depopulated, they grew browner and became potential flashpoints. When George Zimmerman shot Trayvon Martin in cold blood, a killing that evoked the murders of Michael Griffith in Howard Beach and Yusuf Hawkins in Bensonhurst more than two decades before, it happened in Sanford, Florida, a declining node within the Orlando sprawl, inside of the kind of gated community that had once symbolized protection from non-whiteness and gun violence.
White flight continued in a new vein, too. Thousands of carpetbaggers were steering their SUVs toward the Palinesque “real America” paradise of small-town Pleasantvilles, gated eighteen-hole idylls, or sizzling boomtown exurbs. Author Rich Benjamin noted that the fastest growing white communities in the 2000s—places like Idaho’s Coeur d’Alene, Utah’s St. George, and Georgia’s Forsyth County—were already overwhelmingly white. He called them “whitopias.”
Amid demographic change, the new exodus was now driven by a sense of cultural estrangement. It was a flight into whiteness. Freedom was a highway-run away from immigrants, gangbangers, and the urban ruins, toward bigger houses, better schools, open spaces, leisure, and pleasure.
Whitopian developers almost always evoked the mythos of the frontier. But now the imperialist logic of penetration had been replaced by the apocalyptic logic of evacuation. Whitopias marked the end-vectors of tipping-point politics—soon to become Tea Party politics—the culmination of complete civic disengagement. Even a real belief in American exceptionalism seemed exhausted. Heaven on earth was not to be found in the city on a hill after all. The torch of freedom burned on in a shelter—tax-free, guilt-free, carefree—distant from the lost and dying world.
Perhaps it was premature to declare the end of the segregated century.
THE POINT OF COLLAPSE
If the 2000s had meant gentrification for urban communities of color, suburbanites of color began the millennium buoyed by rising affluence. In 2002, President George W. Bush announced his “Blueprint for the American Dream” to “close the minority homeownership gap.” His goal was to create 5.5 million homeowners of color by the end of the decade. He wanted to lead families of color into what he called “the ownership society.”
The key to his plan was an expansion in lending. At the center was the subprime loan, in which lenders charged higher interest rates than the Fed prime rate. The loans had been designed for borrowers with lower-than-average credit scores. When they were repackaged with adjustable-rate mortgages (ARMs), subprimes became a potent lure for new borrowers. During the boom of the 2000s, in fact, they would be packaged and sold for many with strong credit scores.
ARM loans started with low teaser interest rates that would increase dramatically above prime as the loan aged. Short-term interest-only or minimum-payment options were also offered to borrowers who wanted to reduce their monthly bills. There’s always tomorrow, lenders told them, to refinance, to pay down your principal, to take care of business. But when the time came, monthly bills spiked. If a borrower fell behind, there would be the cascading set of penalty fees. The subprime loan—an extremely high-cost loan; a trap, really—became the prototypical product of the Era of Debt.
Big lenders quickly redesigned their entire mortgage loan businesses around them. Loan officers received bigger bonuses if they steered prime-worthy borrowers to subprimes, because the banks made more money on the interest rate and fees. “[A]s a company, Wells Fargo pushed the subprime loans, because it was their goal to have the subprime division pay for the fixed costs of the whole company,” said Elizabeth Jacobson, a former subprime loan officer who turned whistle-blower.33 In 2003, just 8 percent of all loan originations were subprime. By 2005, 20 percent of loans were. Interest-only and payment-option loans increased tenfold.34
Bush’s Blueprint allowed predatory lenders to see Blacks, Latinos, and Asian Americans as key growth market segments for subprimes.35 For a century the housing industry had been built on a foundation of racial inequality, abetted by racial covenants, racial steering, zoning laws, and redlining. Only the covenants had been ruled illegal. Steering, zoning, and redlining had continued apace.36 But now these old neighborhoods, along with the suburbs and exurbs to which Blacks, Asian Americans, and Latinos were being steered, were potential gold mines for “reverse redlining.”
Lenders like Wells Fargo, SunTrust, and Bank of America’s mortgage lending subsidiary Countrywide Financial—all of whom would soon be paying out hundreds of millions in civil rights lawsuit settlements to distressed cities and foreclosed homeowners—were particularly aggressive. According to sworn testimonies from former Wells Fargo bank officials, the bank’s marketing department sold what some of its white loan officers called “ghetto loans” by hiring new employees of color to seed local Black churches with finder’s fees for every loan secured, and to print up culturally correct flyers in every language including “African American.”37
When Princeton policy analyst Jacob Rugh and sociologist Douglas Massey sifted through the wreckage of the collapse, poring over data from the largest 100 metro areas, they did not find that borrowers of color were significantly less creditworthy than whites. Instead, they wrote, the government had failed to enforce civil rights laws against predatory lending.38 The result: by 2006, at the peak of the housing market, 54 percent of all Black, 47 percent of all Latino, and only 18 percent of white mortgage holders were under subprime loans.39
Flush with campaign contributions from lenders, the Bush administration then went to work at deregulating the banking industry. New York Times writers Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton wrote that they “brandished a chain saw over a 9,000-page pile of regulations as they promised to ease burdens on the industry,” bringing down the legal firewall between retail banks and investment banks in the process.40
Now banks could make money coming and going. The retail side generated subprime loans as fast as they could. The investment side bundled them up into new investment products for premium investors and cashed in a second time.
These products, called mortgage-backed securities, bundled high-risk subprime loans, but were sold to credulous investors as low-risk, high-return. Credit rating agencies certified this rapidly expanding poison pool of products as high-grade. Companies like AIG made an additional killing by selling so-called credit default swaps, worthless guarantees against the toxic mortgage-based securities.41 In this New Gilded Age, it seemed as if gravity itself could be defied.
Suddenly moral hazard—the strange term invented to describe the moment capitalism broke free from the restraint of ethics, when transactions were no longer bound by risk, and players had a criminal incentive to take the money and run—loomed as a threat to the entire system. But as long as housing prices—steroided by speculative dollars—continued to climb, few sounded alarms.
From the Clinton through the Bush y
ears, home-ownership rates soared. This was great politics, especially for Republicans like Bush and Rove eager to win the hearts of voters of color. By 2006, the administration could claim credit for historic home-ownership rates for Latinos (49.7%), Blacks (48.4%) and Asian Americans (60.8%), and for closing the racial home-ownership gap by 3% for Latinos and 5% for Asian Americans.
“No one wanted to stop that bubble,” Bush economic advisor Lawrence B. Lindsey told the New York Times. “It would have conflicted with the president’s own policies.”42
But Bush’s boom was balanced precariously on two dubious notions: that, without regulation, businesses would avoid moral hazard and manage risk wisely; and that housing prices would never come down. As early as 2005, urban and suburban communities of color in Cleveland, Chicago, Philadelphia, and Atlanta became ground zero for the foreclosure crisis. By the end of 2006 prices began to slip and housing inventories increased. Within the next year, subprime foreclosures doubled.43 The collapse had begun. Households of color tragically and predictably led the national plunge.
Bush had aimed for 5.5 million new homeowners of color by the end of the decade. When 2010 arrived, the Center for Responsible Lending estimated that no fewer than 735,000 African American households and 1.1 million Latino households had lost or were in imminent danger of losing their homes to foreclosure.44 What’s more, studies showed that the subprime market had been 59 percent refinance or home improvement loans.45 The foreclosure crisis was taking down long-time homeowners.
Before the Great Recession, the racial wealth gap had been so wide that economists estimated if progress continued at the same rate, by 2042 Latino household net worth would be 25% that of whites, Black net worth just 19%.46 Afterward those projections looked hopelessly optimistic. Between 2005 and 2009, white household median net worth dropped by 16%. But it dropped by 53% for Blacks, 54% for Asians, and 66% for Latinos. The median Asian household was now worth 69% of a white household, the Latino household 6%, and the Black household just 5%.47
Back in the bright summer of 2002, President George W. Bush had brought the media into the modest new home of an African American police officer in Atlanta named Darrin West. The officer had been the beneficiary of Bush’s down-payment program, which, along with a subprime loan, brought him to the instant in which cameras flashed and the president shook his hand. By the time McCain was giving his concession speech, the bank had repossessed West’s home.48
Neighborhoods that President Bush had touted as beacons of his Ownership Society—from North Philadelphia to North Little Rock—were now dotted with “For Sale” signs. The crisis spread from communities of color across the map like a contagion.
The Great Recession was a rupture that might bring a kind of cultural leveling, not only dispersing anxiety like a toxic cloud rising over all, but firing the masses to gather, to occupy, to imagine together. It might also do the opposite.
When President Obama announced a $275 billion mortgage modification plan—a modest proposal dwarfed by the $700 billion bank bailout—the Tea Party was born. In a February 2009 rant on CNBC Rick Santelli delivered from the floor of the Chicago Mercantile Exchange, he expressed fury at the Obama mortgage proposal. Should government “subsidize these losers’ mortgages,” he asked, or should it “reward people who can carry the water instead of drink the water?”
Then he pointed to a cheering crowd of traders behind him—all white men—and shouted, “This is America!”
THE NEW HOSTILITIES
As the winds of December brought 2009 to a close, the political pollster Cornell Belcher sat for an interview in his Washington, DC, office. He had spent a good part of the past few years polling voters’ attitudes on race, often self-funding the research because he had “questions about race that, frankly, none of the campaigns or institutions that I work for would fund.”
Belcher was from Norfolk, Virginia, born to a classically Democratic household—the youngest son of a cement finisher and a factory worker, union, middle-class, African American. He had come of age during the high-water mark of desegregation. He recalled his neighborhood and schools being “probably fifty-fifty” Black and white. “It wasn’t till late in elementary school where me and my friend Shawn, who was also Black, we were down at the waterfront literally skipping rocks, and someone drove past and called us ‘Niggers’ that it was like, ‘Wow,’” he said. “You never really thought about it.”
Forty years before, Kevin Phillips had helped Nixon understand the importance of the Southern white voter to a new Republican coalition. It was now Belcher’s job to help his party—first Howard Dean, then Barack Obama—understand the importance of the emerging multiracial electorate to a new Democratic coalition. “I think there’s a moral imperative to diversity, but quite frankly, in the cold hard world, it’s a strategic imperative to diversity,” he said. “We know this is a country that’s increasingly becoming more diverse. Marketers get it. People selling sneakers get it. People selling Coca-Cola get it. But from a political standpoint, we haven’t really got it.”
In his work, Belcher had come to the same conclusion Phillips once had: voters tended to vote for the candidate they thought best shared their values. Through the 2000s, voters believed Republicans shared their values. But in 2008, Belcher said that Democrats exposed the gap between Republicans’ stated values and real actions: “We hammered Republicans on jobs and the economy and on health care, and drove up a huge advantage.” What resulted, he said, was “a realignment. Suddenly there’s nothing the matter with Kansas because Democrats are winning in Kansas.”
But Belcher, whose intellectual hero was W. E. B. DuBois, also realized that the values argument was double-edged. It had allowed the Republicans to reframe the debate for nearly five decades. The most vexing question facing this Democratic realignment, Belcher believed, had to do with the white voter and what Belcher called “racial aversion.” How, Belcher wondered, might racial aversion impact candidates of color or campaigns around issues that had been racialized?
Even before Obama had been elected, Belcher had concluded that “a Black man can’t become president of the United States of America. A unique, inspiring, intelligent individual who also happens to be Black can be. And to understand the difference is awfully important. It’s about individuating you or your candidate.” Obama became a viable candidate, Belcher believed, because he had undergone a “Michael Jordanification,” “which means I don’t have to carry around all the baggage of my racial stereotype.”
But how true was that, really? And did it mean that a Black president could not engage in a politics that pointed toward cultural equity, racial justice, and real integration? Belcher paused for a long moment. Finally he said, “I’ve been looking at numbers. It is a pickle because you always have to walk a very fine line in order not to trigger an appearance of tribalism.”
By the summer of 2012, another polarizing election was ahead and Obama appeared on the wrong end of the enthusiasm gap. The president had won majorities in Congress, but he had miscalculated on stimulus proposals and on healthcare reform. If some had hoped that he might address foreclosures, immigration, prison sentencing, and the racial wealth gap, their disillusionment was now complete.
“As a country we’re increasingly diverse, we have tremendous white anxiety and we have a racial polarization in our structures, our schools, our housing, in our lives. Where is the leadership?” asked John A. Powell, then director of the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University. “We will have a multiracial future. Is it Arizona? Is it Texas?”
The writer Ta-Nehisi Coates evoked the lost promise of the 2008 election. He wrote, “Obama’s primary triumphs in predominantly white states gave rise to rumors of a new peace, one many Blacks were anxious to achieve.”49 Hope had been more than symbolism. It was the possibility of being able to move past what Sheryll Cashin had described as “integration exhaustion.” It was being able to ask, with Cashin, “Is segregation an inheren
tly natural consequence of human nature?” And it was being able to answer along with her, “I think not.”50 But now Coates noted that although Obama’s election “was alleged to demonstrate a triumph of integration,” the reality had fallen very short of the hope.
“The irony of Barack Obama is this,” Coates wrote, “he has become the most successful black politician in American history by avoiding the radioactive racial issues of yesteryear, by being ‘clean’ (as Joe Biden once labeled him)—and yet his indelible blackness irradiates everything he touches,” he wrote.
How far had we come since DuBois and Ellison? In the spring of 2011, in order to quell a media furor created by disbelievers of his Honolulu birth, the president had been forced to show the world his long-form birth certificate, as if he, too, were an immigrant stopped by Arizona police. To some he would always be what the historian Ron Takaki had once called “the perpetual foreigner,” “a stranger from a different shore.”
Here was what Coates called “integration’s great limitation—that acceptance depends not just on being twice as good but half as Black. And even then, full acceptance is withheld.”51 Coates pointed to the research of University of Pennsylvania political scientist Daniel Gillon, who had “found that in his first two years as president, Obama talked less about race than any other Democratic president since 1961.”52 The most powerful Black man in the world had been rendered all but colormute. Now the president seemed not just the new face of neoliberalism but of the modern racial state, a tragically constrained figure presiding over a government that limited claims to racial justice and reinforced structures of exclusion.
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