Racism in the Recent Forclosure Crisis? Eh, Duh

While other economic studies have concluded that leveraged refinancing, overbuilding, collapsing home prices and a poorly regulated mortgage market were primarily responsible for the rise in foreclosures, the authors of a new Princeton University study argue that the foreclosure crisis also had racial dimensions.

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“While policy makers understand that the housing crisis affected minorities much more than others, they are quick to attribute this outcome to the personal failures of those losing their homes — poor credit and weaker economic position,” noted Douglas Massey, the study's other author and a professor at Woodrow Wilson.

“In fact, something more profound was taking place; institutional racism played a big part in this crisis.”The authors call on the federal government to take stronger steps to rid U.S. real estate and lending markets of discrimination via amendment of the Civil Rights Act with enforcement mechanisms to uncover discrimination and sanction those who discriminate. The pair recommends sending "testers" — black and white purchasers into the marketplace to test whether they are treated differently.