The Dream Revisited
Discussion 18: Segregation & the Financial Crisis

Discussion 18: Segregation & the Financial Crisis

February 2016

The eighteenth discussion debates the extent to which segregation exacerbated the unequal effects of the mortgage-driven financial collapse of 2007 and ways to address racial disparities in mortgage lending.


  • Segregation Exacerbated the Great Recession and Hindered Our Policy Response

    by Jacob Faber

    Although the impact of America’s Great Recession was widespread, the collapse of the housing market and the subsequent rise in unemployment were highly structured by race. Foreclosures and job loss landed disproportionately on blacks and Latinos—even five years into the recovery, the black unemployment rate was more than twice the white rate and higher than the national rate at the peak of the recession. The distressingly large racial wealth gap also widened during this time, as did disparities in homeownership.


  • Segregation May Hurt Minorities, But Its Role in the Foreclosure Crisis is Far Less Clear

    by Stephen L. Ross

    In his essay, Jacob Faber argues that racial segregation exacerbated the great recession. He bases this view on two major premises: 1. That residential segregation is a long standing feature of U.S. cities that has had significant negative effects on African-Americans, and 2. That poor African-American neighborhoods were disproportionately affected by the subprime lending boom and the foreclosure crisis that followed. Both of Faber’s premises are correct, but his conclusion does not follow inevitably, and the evidence indicates that it is overstated.

  • The Contemporary Relevance of Decades-Old Fair Lending Laws

    by Patrice Ficklin

    In the recent financial crisis, millions lost their jobs; millions lost their homes; and many lost a considerable portion of their household wealth.  As so often seems to be the case, communities of color were hit the hardest, with their net worth being approximately cut in half.

  • The Connection between Segregation, Predatory Lending, and Black Wealth

    by Ngina Chiteji

    The effects of segregation are more ubiquitous than we realize, reaching into a number of different domains. Researchers have long known that it affects schooling opportunities, access to neighborhood amenities, and even access to jobs in some cases. Professor Faber's article reminds us that it also has important implications for wealth accumulation. 

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