The Community Reinvestment Act, passed in 1977, was designed to go beyond simply preventing discriminatory lending practices. It was written to encourage investment in all communities. But while the law explicitly targeted low to moderate income neighborhoods, it did not explicitly address racial economic inequality.
The results speak for themselves. Today, more than 40 years since the CRA and more than 50 years since the Fair Housing Act, the homeownership rate among blacks is only 42%, as low as it was before. the implementation of the CRA. At the same time, whites have record home ownership rates of nearly 73%.
This leads to lower net worth for black families – and lower income for black-owned businesses.
In 2019, the median wealth of blacks was only $ 9,000, compared to $ 160,000 for the median wealth of whites. And despite a threefold increase in the number of black companies, the turnover of African-American companies actually declined as a percentage of total turnover – from 1 to just 0.5% – from 1992 to 2012.
This inequality of wealth stems from historical discrimination and exploitation. And asset poverty is compounded in our current financing system, where few financial products or investments are designed to meet the reality of the low wealth of African Americans, as well as Latinos or Native Americans.
Much remains to be done to build wealth for black families and other historically excluded groups. A good first step would be to explicitly include race in the ARC.