Redlining - Reverse Redlining in USA

By Sampson Iroabuchi Onwuka

Redlining

Redlining is a term we can avoid if we chose to. It concerns the act of putting a demarcation or Red mark on certain neighborhood, where Banks and other financially regulated institutions are supposed to avoid in terms of lending. The practice goes back to FDR and the Depression era, where Red marks were legally permitted to be placed on neighborhoods with long defaults. Initially, it was an attempt to sort out the problems of default in payment in the Depression era, but soon it became a weapon in the hands of Banks to destroy neighborhoods of their choosing. By the end of 1950's, Redlining has already become a hate tool for denying blacks access to Public loans and it forced price fluctuation between White and Black neighborhoods.



By 1968, such an act became highly prohibited in US following the inquiry made the US president into such affair. The issue of loan denials for Small Businesses owned by colored people has gone on for years that it now involves everything, from small businesses to predatory lending, from objection to Blacks moving to certain neighborhoods to complete withdrawal of Government projects in Black neighborhoods. Such claim is unlikely to get the attention it deserves but by such act, neighborhoods in US have risen and fallen, and real estate in such places with large default rate became a feast for Realtor. Banks can cripple just about any community in US and in the world, and for that reason, US Government does its part to invest or re-invest in areas with minimum wage problem.



The larger problem however is that US presidents in the last 200 years or so have always been of a certain a racial kind, many of them from trims of the very White, occupy many areas of US Judicial activity. This is reason why the activity of the Banks who retail out loans became so decisive. And such the ability of detecting such heinous act of denial become impossible since no one who enjoys the benefit of good lending will worry themselves about the ‘niggadly’ black neighborhoods. Banks farming out White neighborhoods to the detriment of Blacks become careful to hide the facts to the concerned institutions, and outsiders may not penetrate. All that, does not mean that Americans were not aware of such monstrous practice, nor did not care but there was nothing to care about such process.
It is however up to the rest of us to write in vivid forms about the existence of such practice in America since we can testify that such practice is alive and evident in the very place of all New York City.


The monstrous consequence of Redlining so evident in many parts of the State of New York is a microcosm of what is happening throughout US, and in many parts of the world such India, Japan, Korea, and China. Houses in Major Cities across the US faced all kinds of foreclosures by the end of last July 30th 2010. These Cities included the following (1) Las Vegas (2) Merced California (3) El Centro California (4) Port of Lucia, Florida (5) Fort Myers, Florida (6) Bend, Oregon (7) Ocala, Florida (8) Detroit, Michigan (9) Rockford, Illinois (10) Toledo, Ohio, among many others. These Cities have serious default rate going by April this year from a report by Luke Mullins of USnew.com. But as July 30th the fears were proven true by the default of houses in many Cities across America.



Analysts were quick to point out that these Cities were among the worst economically hit during the collapse of world economy. They also cited that these cities had little or no improvement in terms of employment since 2008. They also said that much of the money given to bail out many of these banks and corporation in US went into all kinds of routine process and therefore, these cities could not escape the long list of default in terms of Housing. But these allegations are not new, these allegations go back to the old times of American society and these allegations also include the much deeper aspersion on black for culpability towards financial irresponsibility.



In more recent history, sluices of such allegations, has also surfaced. Many Banks during the American Depression era of the 30’s put the blame on ghettos which were mainly and ultimately Black society. As much as these Bankers can make such comments without challenge, it must be remembered that these poor African American societies held falsely responsible for 100’s of billions of dollars, trapped in bad debt, are worth only so much in dollar terms. People should not forget so easily that much of African American Business communities are approximated in mere billions, as opposed to the overall US real estate market that come down to 985 trillion dollars. The bankruptcy of many big corporations based in US drove the rest of the world to billions of US dollars worth of losses in very recent in those thirties, and in recent times, the losses were in trillions, and some people estimated at some point that the losses were up to 20 trillion dollars.



This blame game for redlining must include the very meddling comments in February 2010 by Hans-Olaf Henkel from Germany that the reason for world economic collapse of 2008, was due to the fact that Bank of America was lending money to minorities and to blacks in USA. Of course, the man would not have known that the money was lent in the first place and above all, there was nothing to hold back in a business community that is bedraggled and saturated with unemployment. When there were cases of such lending, they were predatory and crippling at mercy sake. The allegations by Henkel could not really be the case given the greater fact that European strangling of much of the loans from America in the depression era and in the latest economic downfall in 2008, has not been fully exploited. The role that Europe played in bringing down Lehman and other Investment Banks has not been that discussed. Therefore such allegations about underperforming or nonperforming loans among Blacks or African Americans are incorrect.



The issue of bad stigma is so worrying that when many Nigerians of recent memory who are indiscriminately accused of swindle complain, they must be advised that such attack is a mere consequence of labeling and social stigma which African Americans suffer from, a bad breath in financing that go back to business relationship between Europe, American, and Africans Americans and the refusal to build these neighborhoods for other demonstration of race safety. But this issue of nonpayment is also affecting Nigerian businesses, in such a way that many of them enter corruptible negotiations whose ultimate end in their losses or pressed attempt to deliver within a short window. That some Nigerians may abscond after bamboozle does not betray the larger others that leave it to the billing. Addressing the incredulous damages of such practices to African American society and the rest of world, would require long deciding factors of history which US government can only provide. But such inquiry into the evolution of the problems with loans and financing and payment will only reveal the pathetic exploitations, but not heal the injury. The damaging ammunition of unemployment, the severe stigma in financing, the dilapidation of great black neighborhoods, the appearance of drug businesses, all began with a Red mark on certain neighborhoods where blacks were majority.



Now everyone is doing it, even Indians and others Asians in any business of the world, nowadays seethes with the same measure on these Africans Americans in deriding formula.



Reverse Redline

A case in point is Detroit, Michigan. There are nothing to describe what we find in the City of Detroit, a city that is now mainly Black and a city forbidden to the progress of Blacks. Detroit Auto Makers, from all the names in Automobile in the world, do not as a matter of mocking hire Blacks to work for them. In few cases where blacks work for these manufacturers, the Job is not a career. The greater denial is in the Insurance companies and Banks that were bailed out by Obama and Bush simultaneously. Detroit is hard case since Chicago is much more mature, very subtle in the Red business. Cities like New York City, Newark, Philadelphia…the much of the East Coast, are not that different from Detroit. These places with the disappearing face of Blacks and insignificance of their business are only subtler version of Detroit. However, Detroit has unique problems which go back to the end of slave trade and the hunger strikes of the Depression era.



Detroit is one of the few American Cities where we find House prices to have fallen beyond redemption, yet the Blacks who received some months of grace from Obama, still can’t meet obligation. Detroit was not that bad, in fact Detroit was an upscale Black majority city that did not suffer from the disastrous problems of the other states. But Detroit has been strategically reduced to several ghettos within the past four decades by Banks and Insurance companies and manufacturing companies who use ranks of police. These financial institutions forced good neighborhoods in Detroit into steady decline, and as a consequence, these neighborhoods became drug invested and then default began to climb in. One of the roots of American economy is the small businesses, whose funding is that necessary, and whose cities must continue to produce successful SBA in other to survive another day. At the absence of these businesses, the City lies empty and then violence becomes another matter.



Detroit in recent times have started to file claims and allegations about the denials of loans to many blacks, citing instances of objective refusal to lend and to refinance houses in many neighborhoods. And they were variously awarded certain due to help neighborhoods recover. Such action should be followed up by Blacks throughout US, and such action should include all forms of damages over the last 42 years. They should also cite that they were all kinds of investigative study done about Detroit case but all study led to the same conclusion that Banks do not lend to minorities because Blacks and the so called minority will not pay back the loans, a claim has been demonstrated as not entirely true, therefore false.



Just a few months ago, Pennsylvania Human Relations Commission received complains about discrimination in the wake of Housing crisis. Their prizing for neglect, go the distance of demonstrating what we find in many isolated housing areas of Philadelphia, but not just in Housing but in small business which are the roots of major societies in the world.



Philadelphia’ Board of Pension & Retirement and other active groups were also involved in that respect of claim, and the allegations. But this kind of Reverse Redlining becomes the only way out if the US Government would still ignore the side effects of dealing with Banks and Insurance Companies who will apply all kinds of measurements to deny certain neighborhoods loans for other reasons besides loans. Many of these banks can cripple neighborhoods in order to make them cheap and then force a default on the loans, and from such defaults, these Blacks lose their homes.



The problem is sometimes finding the real culprits since many of them hide under various shades in loan practice. The very bail out of banks explain just how badly these financial institutions have become in many years since parts of a place like New York awarded 8.2 billion dollars, has not received that major boost in terms of small businesses.



But need must be maintained on the very issue of Reverse Redlining since many of these neighborhoods in US are not that different from what is happening to black businesses in general and in many parts of the world. But the US Fair Housing Act of 1968, the Disclosure Act of 1975, and Community Re -investment Act of 1977, all emerged from requirement of US President’s National Advisory Panel on Insurance in Riots Affected Areas of 1968. The difficulty with such laws is actually getting to the culprits, since many of these Banks and corporation will deny you the access to relevant information and we will need forensic accountants to get to the rest of them.



But using parameters in terms of Hedge funding and funding activities of the market, we can exploit better holes in the whole question since many of these institutionalized lending societies, can only be possible through certain indexing, which reflect all kinds of activity in wilder world of lending, a form of pool where Banks and Insurance companies themselves cannot essentially hide from.



Using indexes such as Credit Suisse First Boston, Hedge Fund Research-HFR, Hennessey Group, Standard and Poor's S&P, and probably the Hedge index from Center for 'International Securities and Derivatives Markets' and other managed account Report over a given number of years - given the record of number of IPOs at all stock exchanges in the US, there is a possibility we can arrive at the conclusion. It is possible to illustrate how neglected the African American businesses and societies have been participations in the larger economy has completely become. The gap is that monstrous, so monstrous that the word ‘African American’ in American business and in Hedge Funds is almost nonexistent.



This idea of financial profiling - artificially racial among other sorts - is so serious in New York that Banks, regardless of what they preach are willing to employ anyone, even especially Asians and Asian Americans of certain stock, that never lend to you as African American. Except for occasional scattered few who may go that route of American lending practice, such exercise do not exist at all. But threat is a very rare treat and many of those lenders are leading at the ropes end.



If no one is willing to take the blame for the use and abuse of lending in New York, then attention should be made to those who will the Federal Banking Acts in New York and other Federal Reserves on the ground. Such persons will also include the former Federal Reserve secretary of Bank of America, Timothy Geithner, who is now the US secretary of Treasury, and former Associate of Federal Housing Authority, Andrew Cuomo, who is the so-called New York State attorney General. It is difficult to clarify how such acts could actually take place in a State like New York where much of the citizens are seriously struggling to earn a living and how it could go unnoticed for many decades.



Today's society of learners, especially among the African Americans who feel seriously disfranchised from everything, including Public Television and Television Rights, are not even concerned with this problem of the 'Redlining' and other loan malpractices in US and in New York. For several reasons, much more should be done to make public the facts that the monstrous practice of the last century leading to civil rights era is still a very present and threatening danger to American Urban life.



It should also be known that African Americans society and market is no more different from other world emerging economy which gravitate Billions of dollars every day from US and, and if enough attention is given to the African American market, there is a tendency to believe that America would likely be better off than much of its current performance. That this view is seriously mistaken as side effect of capitalism might have deceived the world into thinking that investigative inquiry into banking activities by third parties should not be taken seriously