America is suffering from a substantial wealth gap. A small number of residents control a disproportionate amount of the nation’s wealth. With the publication of The Color of Wealth in Boston report, the issue of wealth disparity took a shocking twist. This study by the Federal Reserve Bank of Boston found that while white households in Boston had a median wealth of $247,500, African American households averaged close to zero.
This was not a measure of household income. It was, rather, a tally of the assets that households had accumulated over the years with their income, less the amount of outstanding debt. The list included liquid assets, bank accounts, stocks, IRAs and homes. On the debt side were student loans, medical and credit card debt and home mortgages. U.S. blacks were short on the asset side and long on the debt side.
The study performed a significant service by distinguishing the data of U.S. blacks, Caribbean blacks, Cape Verdeans, Puerto Ricans, Dominicans, other Hispanics and Asians. It was not the objective of the study to analyze the reasons for the failure to accumulate assets. However, size of family income is a great predictor of asset growth. Whites in Boston had a median family income of $90,000 compared to only $41,200 for U.S. blacks in Boston.
America has become a predatory culture and blacks are often its victims. Wily realtors induced unsophisticated blacks to buy homes they could not afford. The objective was to bundle subprime mortgage loans into collateralized debt obligations (CDOs) to be sold on Wall Street. The failure of those loans almost collapsed the banking system.
The predation continues. The Federal Consumer Financial Protection Bureau is investigating a pattern of exorbitant auto loans and is in the process of regulating payday loans. There seems to be an unrelenting practice of cheating blacks and other low-income citizens.
Inquiry into these matters was beyond the scope of the Federal Reserve study, but the loss of black wealth through predation is undoubtedly substantial.
Updated: *A recent article on CBS that lists the 11 poorest cities in United States listed Boston as 10th. The Banner is going to be focusing on the issue of building black wealth on an ongoing basis, and will be hosting a money conference in the late fall to address these issues in a public forum. Follow the conversation #buildingblackwealth.
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