Posts Tagged ‘redlining’

[the Birwood Wall in Detroit]

Beware of “The Ascent of Money,” produced by PBS and narrated by Niall Ferguson.

I’m currently using the two-hour version in my Commodities: The Making of Market Society course. (There’s also a four-hour version and, of course, Ferguson’s book of the same name.)

The program is very useful, starting with money as debt (and not as, as neoclassical economists often teach it, as the medium to overcome the limitations of barter) and passing through the various bubbles and busts of a monetary, financial economy.

But, in the section on the subprime mortgage crisis, Ferguson draws a straight line from federal redlining in the 1930s through the Detroit riots of 1967 and George W. Bush’s call for expanded homeownership to the crisis of 2007-08. He therefore leaves viewers with the impression that the housing crisis was a result of (a) federal policy (and not private mortgage lenders) and (b) too many mortgages to racial and ethnic minorities.

Don’t get me wrong: I’m glad the ignominious history of redlining is raised (a reminder of which is the Birwood Wall in Detroit). But what happened in the run-up to the subprime mortgage crisis was a combination of reverse redlining, as private mortgage lenders descended on minority neighborhoods to extract higher interest rates, and a plundering of working-class people, regardless of race or ethnicity, by private banks.

The result is both that racial and ethnic minorities have suffered from much higher subprime rates (and, then, foreclosure rates) than whites and that the majority of subprime mortages (and, later, foreclosures) were imposed on white homeowners.

Data from the Center for Responsible Lending make this clear.

So, my advice: go ahead and use Ferguson’s program to teach the commodification of money—but use it as an opening to a discussion of the a history of the role of money and finance in the United States and around the world that is much more complicated than Ferguson leads one to believe.