Kamala Harris knows economic justice and racial justice go hand in hand.  A sign of economic justice in our country is the distribution of wealth, which is the measure of a person’s or family’s financial net worth.  Wealth makes it easier for people to move between jobs and places, handle an emergency financial situation, and retire with dignity. But on our current trajectory, by 2053, the bottom 50% of Black households’ liabilities will equal or exceed assets.  Overall Black households will continue to have just a fraction of the wealth held by white households.

One major cause for this is historic redlining – the Home Owners’ Loan Corporation’s practice of identifying neighborhoods, often majority Black neighborhoods, where traditional lenders should not lend.  Redlining has resulted in households of color receiving just 2% of the FHA loans extended between 1934-1962, and formerly redlined neighborhoods are sites of deep racial disparities in home value and lending activity.

The second main cause was the G.I. Bill, which is credited with providing millions of low-income returning veterans with access to wealth-building opportunities that helped to create the American middle class.  Veterans of color, however, were largely excluded because, under the G.I. Bill, private lenders were free to refuse mortgages and loans to Black borrowers.

Black and minority families were also disproportionately impacted by the subprime mortgage crisis and the subsequent Great Recession. Throughout the subprime market, Black borrowers were subjected to higher cost and higher risk loans than white borrowers, even when both had similar levels of creditworthiness. During the years of recovery, 2009-2011, the wealth gap between white households and households of color widened in part due to housing-market weakness.

Today, nearly three-quarters of white households (73%) are homeowners, while under half of Black households (45%) and Latinx households (47%) are homeowners.  This percentage of Black homeowners has remained basically unchanged since 1968.

If we eliminate racial disparities in homeownership rates, median Black wealth would grow $32,113 per household, and the wealth gap between Black and white households would shrink 31%.  Median Latinx wealth would grow $29,213 per household, and the wealth gap between white households would shrink 28%.

Here are the key points of Kamala’s plan:

  • Invest $100 billion to provide assistance purchasing a home to homebuyers in historically red-lined communities. 
  • Amend the Fair Credit Reporting Act to require the credit scores reported by credit reporting agencies to include payments of rent, phone bills, and utilities, helping prospective borrowers build stronger credit. 
  • Strengthen anti-discrimination lending laws and commit to robust enforcement.
  • Require lenders to calculate debt on a monthly basis and expand the number of income sources used in the calculation.