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Conclusion Predatory Inclusion When Ronald Reaganbecame president in 1980, he called for HUD to convene a special commission on housing policy in 1982. For more than thirty years after pledging to provide decent homes for its citizens, the federal government and its department of housing had continued to fail to achieve its goal. The latest housing commission impaneled by Reagan called its report “To House a Nation ,” and it began with a criticism of the HUD Act. The HUD Act had left as its legacy “a belief in the potency of government programs.” Reagan’s Commission on Housing promised the opposite: “The genius of the market economy, freed from the distortions forced by government housing policies and regulations that swung erratically from loving to hostile, can provide for housing far better than Federal programs.”1 It was a conclusion that could only be reached by ignoring the actual origins of the HUD Act and the reasons behind its demise. Lyndon Johnson had promised the “genius of private industry” as the key to unlocking the mystery of perpetual housing crises. But lackadaisical management, erratic regulations, and trenchant racial discrimination combined with the end of redlining and the predacious inclusion of formerly excluded Black urbanites allowed the real estate industry to bleed inner cities dry. It was not government intrusion that sank the FHA-­assisted low-­income homeownership programs; it was government negligence. But this malfeasance was not just an issue of poorly motivated personnel; it was the outcome of mismatched objectives and impossible tasks. When public policies are guided by the objectives of private enterprise, as the HUD homeownership programs undoubtedly were, they are clinched in a dance of conflict. As magnanimous as 254 Conclusion the life insurance industry and other titans of business who argued for “socio-­ commercial enterprise” in the 1960s tried to present themselves, in the end, the objective of profit-­ making outpaced the necessity for safe and sound housing. One glaring reason for this spoke to the heart of the conflict: real estate profits were rooted in residential segregation. In this book I have tried to mark the pivot in U.S. policy and political history at the end of the 1960s to draw attention to how statutory changes alone are rarely, if ever, enough to undo deeply ingrained cultural, social, economic, and political assumptions that shape our society. The reality of a racialized political economy challenged the idea that inclusion in the financial and public services that for so long had excluded African Americans was enough to overcome the physical and economic devastation of Black urban communities. Indeed, I have argued that inclusion in those processes while ignoring the larger dynamics created by residential segregation laid the basis for even greater exploitative and predatory practices—or predatory inclusion—in transactions involving the urban housing market. As new as the use of mortgage-­backed securities and the privatization of the FNMA were, the value of housing was still based on a very old calculus. Housing value in the United States continued to be scaled according to the proximity of African Americans. The turn to inclusion was only allowable by maintaining other forms of exclusion. Credit inclusion became possible by holding the line on neighborhood exclusion. This inclusion/exclusion mismatch had two impacts in the urban housing market. First, all of the newly available financial resources created value in substandard and distressed urban housing where previously the property had little to no value. In city after city, real estate operatives were able to bring those properties back to life with Section 235 and Section 221(d)(2) by selling them to vulnerable Black homemakers in search of shelter. But, second, this ability to resuscitate these otherwise dead properties was also made possible when real estate brokers embraced their role as gatekeepers and continued to exclude poor and working-­class African Americans from white suburban communities. Propping up the value of these and other habitable but still substandard properties then required that the community members be able to afford them. Cultivating customers included making credit available for people to buy the houses that had now been made marketable by the various programs of HUD. But there was a dramatic shortage of housing choices available to poor and working-­ class urban residents. The physical decline of public housing developments in Conclusion 255 combination with the ever-­decreasing income requirements for an apartment in public housing transformed it into the “housing of last resort,” and it became unavailable to most...


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