Centering Equity: How Systemic Racism Feeds Wealth Inequality

In the past week, I’ve found myself steeped in conversations with white people--men in particular--eager to learn about race and racism. One person that I have learned from lately and believe has a critically important perspective for this moment is Anne Price. Anne is the first woman president of the Insight Center for Community Economic Development, a 50-year-old economic justice and research organization. In a recent report Anne wrote with the Roosevelt Center, she argues for a reframing of our national discourse on wealth inequality. “Ultimately, by focusing on the root of racial wealth inequality rather than fixating on the racial wealth gap,” she writes, “we can identify a path forward for creating a fairer and more sustainable economic and political system—one that will right our historical wrongs and prevent such injustices from occurring in the future.”

As excited as I am with how many people are now talking about the need to root out “systemic racism,” the next step is to begin identifying and understanding the history of policies that have discriminated against black people. Take banking for example. The Community Reinvestment Act was designed to require banks with branches in communities that had faced discrimination and disinvestment to invest in those communities through home loans to qualified applicants. Two years ago, a Reveal  investigation showed banks were still discriminating against black people who were equally if not more qualified than their white counterparts. The investigation led to a January 2020 congressional inquiry into the banking industry that could have led to the enforcement of the law. But then COVID-19 hit and the world as we know it stopped. It didn’t stop the Comptroller of the Currency, Joseph Otting, a former banker who notably chafed at the law he was brought in to oversee, from quietly changing the rules regulating the act while no one was paying attention. In a May 28th New York Times story about the move, reporters Emily Flitter and Jeanna Smialek wrote: 

“Critics say that the revised rules have the potential to defang the C.R.A. by making it easier for banks to meet their obligations — for example, by letting them get credit for financing a few big projects in low-income neighborhoods that they would have done anyway, rather than offering banking services, which can be less lucrative but more important to the broader community.”

Having completed what he set out to do when he took the job back in late 2017, Otting resigned. His last day on the job was May 29th. 

This is what we mean when we talk about systemic racism. On its face, Otting’s move might appear to the average American as merely a shift in policy that can be explained by politics, the need to revise a law that had been on the books since 1977, a desire to cut burdensome red tape to create more efficiency or to increase investment flexibility so banks could generate higher returns on investment. All of these could be true, and even ideologically valid were it not the case that racism has been at the heart of banking since slavery. The impact of the new rules is almost certain. Rather than require banks to conform to the law and help ameliorate the effects of redlining, the rules have now been changed so that banks can legally avoid lending to black and brown people who Reveal showed are still facing unjust, race-based discrimination across the country. 

The challenge of rooting out systemic racism is understanding how it operates and evolves and to courageously call it out even when it does not appear facially racist and may even be profitable. Fact is, racism has always been profitable, and that’s part of the problem. (For a primer on the history of systemic racism in housing and its wealth-generating and stunting effects, I highly, highly recommend watching Richard Rothstein’s Segregated by Design or a shorter version of the same story on NPR’s Code Switch.) 

Anne Price does this work for a living. She understands how anti-black racist policies originate, do harm and she has some ideas about how to fix them. You can hear more of Anne on our most recent episode of the Re:Settlement pod.