The Wealth Gap Gets Wider

The Washington Post
By Meizhu Lui
Monday, March 23, 2009; A15

The chips are in.
Every three years, the Federal Reserve, in its Survey of Consumer Finances, takes a look at how U.S. households are doing and reports on our assets and liabilities. The euphoria of our gambling spree is over. In the harsh glare of morning, the hangover is tough. And the latest data are from 2007, so they don't even capture the worst of the decline.
The net worth of the average American family is less than it was in 2001. We borrowed more for that trip to Vegas than we brought home. Everyone knows this now.
But here's something being talked about much less: The gap between the wealth of white Americans and African Americans has grown. According to the Fed, for every dollar of wealth held by the typical white family, the African American family has only one dime. In 2004, it had 12 cents.
This is not just a gap. It's a deepening canyon.
The overhyped political term "post-racial society" becomes patently absurd when looking at these economic numbers. This week, experts on asset building in communities of color are meeting with members of Congress to talk about closing the wealth gap. While the government is rescuing failing financial institutions as a short-term measure, those at the two-day Color of Wealth Policy Summit will make the case that the nation's long-term economic future depends on the inclusion of all Americans in opportunities to build wealth.
Why such a big gap? The biggest predictor of the future economic status of a child is the net worth of the child's parents. Even modest inheritances or gifts within a parent's lifetime -- such as paying for college or providing the down payment on a home -- can give a child a lift up the economic ladder. And historically, white families have enjoyed more government support and tax-paid subsidies for their asset-building activities.
Let's look at the rules of the game in homeownership, for example.
During the Depression, the Home Owners' Loan Corp. was formed to rescue families whose homes were in foreclosure. Not a single loan went to a family of color. The black section of Detroit was simply excluded. After World War II, GIs received government-subsidized home mortgages, but there was no oversight to ensure that soldiers of color got their fair share. Of the 67,000 mortgages issued under the GI Bill in New York and northern New Jersey, 66,900 went to white veterans, as documented in Ira Katznelson's "When Affirmative Action Was White."

Full Story: http://www.washingtonpost.com/wp-dyn/content/article/2009/03/22/AR2009032201506.html