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The Community Reinvestment Act: Misguded Notions And The Origins Of The Financial Crisis Part I

      
 
    By 1950 35% of African Americans owned their own homes as compared to 57% of whites. The desire to increase home ownership among minorities and those with limited financial means was the desire to extend the American dream. By giving more people a stake in their country thru home ownership democracy could flourish and the artificial barriers that had segregated people along racial and economic lines would disappear. Forty years later by 1990 the number of Blacks that owned homes had increased by only 9% the total percentage of ownership being less that the percentage of homes owned by whites in 1920. For many this was proof that opportunity for African Americans was actually beginning to diminish and that the gains made by blacks were slowly eroding.   
   

     Other statistics were equally troubling. The number of African Americans that lived in the suburbs was half of that of other minorities like Latinos and Asians.  While those segregated in inner cities meant worse public schools, higher crime and urban decay.  African Americans were also far more likely to be unemployed and remain unemployed for longer periods of time.  With blacks as a group losing ground on so many fronts there could be only one explanation, a combination of innate unfair advantage by whites and ongoing institutional racism. It appeared that America threatened to slip back into two nations one white and one black separate and unequal.     

    With the 1950’s and 60’s came landmark legislation to end discrimination in 1954 Brown v. the Board of Education, nine years later the Civil Rights Act of 1964 followed by The Equal Employment Opportunity Commission and the Equal Employment Clause. The following year saw the Civil Rights Act of 1965 and 3 years later brought the Open Housing Act. The widespread expansion Affirmative Action as well as new busing laws all sought to make amends for previous discrimination. The theory of government as the primary solution for the ongoing plight of minorities became deeply ingrained in much of the nations political thinking.      
    
    For Jesse Jackson and other civil rights leaders of the 1960’s equality for blacks didn’t really begin until the civil rights act of 1964.  From slavery which became law in 1654 and ended with the passage of the Thirteenth amendment to the constitution in 1865. Including 100 years of Jim Crow, constitutes more than 300 years of legal discrimination. Starting with Martin Luther King’s Alabama bus boycott in 1955 till the voting rights act of 1965, a span of 10 short years culminates with the end of 300 years of legal discrimination. According to this world view there could be only one conclusion. A combination of community activism with enlightened government leadership could do more in 10 years than society alone could achieve in 3 centuries.

      In spite of the new civil rights laws, The Johnson Administrations great society programs and the redistributive efforts of the Warren Courts by the 1970’s many of Americas largest cities had deteriorated into violent, decaying urban jungles. The city as a symbol of American achievement gave way to a new vision of an inner city. A city within a city defined by the artificial boundaries of poverty and race. The flight of whites from urban America left behind a shell of boarded up tenement house and abandoned business’s. With a remaining economy sustained by welfare checks, food stamps, pawn shops and liquor stores. In 1977 as a result of national pressure to address the deteriorating conditions of American cities the 95th U.S. Congress along with the Carter Administration passed into law The Community Reinvestment Act. 

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