In 1933, the Home Owners Loan Act allocated emergency financial relief to homeowners struggling through the Great Depression. But this legislation led to nearly a century of racist consequences — and George “Mac” McCarthy, president and CEO of the Lincoln Institute for Land Policy, fears that the United States will suffer through the same series of events again.
At 3:30 p.m. EDT Wednesday, Aug. 12, on the CHQ Assembly Video Platform — as part of the African American Heritage House lecture series — McCarthy will present a lecture detailing the ways in which this act and the Home Owners’ Loan Corporation failed minority communities for generations, and how the United States is risking the same mistake again.
“The designers of the Home Owners’ Loan Corporation actually went out to the different cities in the United States and they met with real estate and banking professionals. They mapped the cities and created the secret maps in which they were deciding where they would offer refunds, refinanced mortgages, and where they wouldn’t,” McCarthy said. “Basically, it was plainly stated in the way they were doing this that areas with high densities of minorities or immigrants were going to be designated as hazardous areas.”
These redlining maps were uncovered in the 1970s in the National Archives. In the time since, people have been able to map the long-term consequences of this secret black-listing.
“If you look at those maps, what happened in the neighborhood that they decided were hazardous for lending (in) the 1930s until the present is eerie,” McCarthy said. “Basically, almost every indicator of success or quality of life that one would have is markedly different in those areas. Every other (plan or decision made) after the Great Depression (happened) in ways that continue to disadvantage those neighborhoods.”
McCarthy noted that as the COVID-19 pandemic that swept the globe this spring, the United States has fallen into financial recession. The Great Recession of last decade, while not directly resulting in redlining, disproportionately harmed minority communities. He hopes that by bringing attention to this history, people can urge elected representatives to provide financial relief in equitable ways.
“If we’re going to find trillions of dollars to try to stimulate this economy, let’s do it right this time,” McCarthy said. “In the Great Recession, while we bailed out … all the big banks and the car companies, we let Hispanics lose two-thirds of their wealth. Two-thirds of their wealth was lost in four years. And 53% of the wealth of African-American households was lost in four years during the Great Recession from 2007 to 2012. And if you’re white, the wealth fell by 16%, and then it was made up really quickly afterwards — but it hasn’t recovered for African Americans and Latinos.”
The presentation will feature one region in particular: the Twin Cities of Minneapolis and St. Paul.
“Over the course of 90 years, that neighborhood has been kind of the target of what one could only describe as race warfare,” McCarthy said. “First, they deny access to financing, so people can’t keep their homes. Then they used urban renewal and eminent domain to take away a big chunk of the neighborhoods so they could build Interstate 94 right smack through the middle of it. Then they locate newly built affordable housing all around it.”
McCarthy noted that by putting affordable housing in these neighborhoods, the government was keeping children from low-income families away from well-funded public schools, among other public services.
“Then you look at the current statistics that describe the (gauges of quality of life) — like life expectancy, wealth, income, those kinds of things — right there in St. Paul, Minnesota, the life expectancy in the neighborhood that was designated in 1933 as hazardous is 10 years shorter on average than life expectancy in a neighborhood a mile away that was considered to be one of the nicest neighborhoods in America.”
Minneapolis has made headlines in recent months after the police killing of unarmed Black man George Floyd — but McCarthy said that the police are just one entity in the city that should atone for racism.
“It’s easy to get upset when you see something as horrifying as the murder of George Floyd. But it’s much harder to think about how you remedy 90-plus years of basically direct assault on people because of the color of their skin,” McCarthy said. “It’s not just the actions of the police that need to be addressed, it’s actually 90 — if you go back to the Civil War it’s 150 — years (of) constant assault and … an unbalancing of the scales of justice that we have built into our own public policy. Until we admit that, then we’re not really going to be able to understand the measures that we are going to need to take to kind of remedy that situation in a meaningful way.”
The presentation looks at McCarthy’s professional expertise: land policy. This largely unseen force is a major shaper of quality of life. It influences infrastructure, public health, sanitation systems, water access, public transportation, green spaces in urban areas, and a community’s ability to withstand natural disasters.
McCarthy said that fixing issues of inequality in these areas can be difficult. It cannot be fixed by a simple band-aid: sometimes complete reconstruction is necessary.
“We built in all these explicitly racist policies or practices in our public policy, particularly in lending in housing policy. Then we decided that we were going to address it when people really realized just how unfair and unequal the treatment of (people of color), particularly African Americans was. We passed the Civil Rights Act of 1964, the Fair Housing Act in 1968, (and) the Community Reinvestment Act in 1976,” McCarthy said. “Every one of (these policies) was predicated as the same basic remedy to inequality — which was, ‘Now we’re going to make the opportunity equal.’ But you can’t make opportunity equal when you’ve unbalanced the playing field so far that giving somebody equal opportunity only then just maintains the difference.”