"It is an old maxim and a very sound one that he that dances should always pay the fiddler. . . I am decidedly opposed to the people's money being used to pay the fiddler."
President Abraham Lincoln made this profound statement in 1837, yet it remains applicable today. The people have once again bailed out financial institutions paying for the dalliances and excesses of Wall Street. Those on Main Street never got invited to the soirees but they are footing the bill -- to the tune of $9.7 trillion by one Bloomberg estimate.
Indeed, over the past two years, everyday Americans have found little reason to sing or dance as news of the arrogance and greed of those in the financial sector seems never ending. Just when we think we've heard the worst, another ball drops. Just when we thought big bankers were sufficiently chagrined by the anger of hard-working taxpayers, we're told that big Wall Street firms are gearing up for another round of ridiculously high and undeserved bonuses. It has seemed that there is little that the government or the public can do to make financial institutions benefiting from the public's generosity place the interests of consumers and communities above those of their own. But, hope does spring eternal in an often overlooked provision of an important civil rights statute.
The federal Fair Housing Act -- passed in 1968 -- has a dual mission to both eliminate housing discrimination and promote residential integration. To help promote integration, the Fair Housing Act requires that government agencies spend funds dedicated to housing and community development in a manner that "affirmatively furthers fair housing." This obligation is not limited to government agencies; rather it applies broadly and affects any entity receiving federal funds for housing or community development. Essentially, any federal funds used for these purposes must be used in a way that affirmatively furthers fair housing and helps create integrated, healthy neighborhoods.
As America struggles to emerge from its current economic struggles, the requirement to affirmatively further fair housing is as important as ever. Government efforts to jump-start the economy have involved massive spending on housing and community development. For example, the Troubled Asset Relief Program (TARP), the single largest program in place to address the economic crisis, has recapitalized banks with the intention of restoring their ability to lend. By the nature of the program, this federal funding is clearly being used for both housing and urban/community development. It is therefore subject to the obligation to affirmatively further fair housing as described in the Fair Housing Act. In fact, $50 billion in TARP monies are being used to fund the Home Affordable Modification Program (HARP) to help save homeowners from foreclosure.
Advocates can work with government agencies such as the Department of Treasury to use the Fair Housing Act to require TARP recipients to expend the federal dollars they receive in a way that promotes fair housing and stabilizes neighborhoods. Because the foreclosure and financial crises have hit communities of color the hardest, and because the recession began in part because of failed discriminatory mortgage loans made in those communities, any attempts to ease the recession must involve explicit plans to increase residential and economic opportunities for the residents of those neighborhoods.
If TARP funds are to be administered in a way that affirmatively furthers fair housing, the federal government must:
- Analyze its own programs for racially disparate impacts and adjust programs to eliminate those impacts,
- Monitor banks and other entities receiving TARP and other federal funds to insure that those funds are being utilized in a way that affirmatively furthers fair housing,
- Identify ways in which grantees and recipients of its funds can affirmatively further fair housing and evaluate their performance based upon this criteria,
- Allocate funds to community groups with experience connecting people to economic and residential opportunities.
The financial services industry must also take specific steps to meet its fair housing obligations. Over the decades, the industry has often employed policies and practices that worked against fair housing achievements and promoted residential segregation. Redlining practices are but one example. The industry has a keen responsibility to not only try to undue its past failures but to live up to its duty to promote fair housing by offering responsible loans that enable community choice, assuring fair marketing of properties (particularly REO (rent-to-own) units), sponsoring non-discriminatory foreclosure prevention efforts, and financing fair economic development opportunities.
Advocates play an important role in this equation as well. Frederick Douglass admonished us to "agitate"; and if we will not require those responsible to face the music, who will? As advocates, we must diligently remind the federal government of the importance of affirmatively furthering fair housing, use publicly available information to evaluate the performance of TARP recipients, challenge TARP recipients that are neglecting their responsibilities, and partner with willing TARP recipients to provide meaningful opportunities for the American public.
Cross-posted from Race-Talk.