© 2007 American Bar Foundation.
399
Law & Social Inquiry
Volume 32, Issue 2, 399–434, Spring 2007
Blackwell Publishing LtdOxford, UKLSILaw & Social Inquiry0897-6546 © 2007 American Bar Foundation.XXXOriginal Articles
InsuringInequality JOHNKIMBLE
Insuring Inequality: The Role ofthe Federal Housing Administrationin the Urban Ghettoization ofAfrican Americans
John
Kimble
A reexamination of Federal Housing Administration (FHA) documentsreveals that the agency played a more direct role in the ghettoization of African Americans than previous scholarship has established. The FHAwent far beyond merely approving of racial discrimination, and exploring the extent to which it did so is crucial to understanding the origins of urbanracial inequality in America. Agency publications, many of them largely passed over by historians, called unequivocally for the containment of African Americans in the older residential neighborhoods where they were mostlikely to settle after migrating to the city. The agency then disguised itsleadership in advancing a national segregationist agenda by deflecting blameonto the private market for policies that it had standardized and mandated.For nearly a decade after the Supreme Court invalidated one of its coreracial programs, the FHA resisted providing greater opportunities for African Americans in the housing market.
INTRODUCTION
“No agency of the United States Government has had a more pervasiveand powerful impact on the American people over the past half-century
John Kimble
is the New Orleans Public Policy Director for the Louisiana Associationof Nonprofit Organizations. This article was originally written as his undergraduate thesis inPrinceton University’s History Department, where it was awarded the C. O. Joline Prize forBest American History Thesis in 2003 and the Law and Society Association’s Best UndergraduatePaper Prize in 2004. The author benefited greatly from the Lawrence Stone Research Fellowship,which supported his research. He would like to offer his deepest thanks to Professor Dirk Hartogat Princeton for his academic as well as personal support and mentoring. The author wouldalso like to dedicate this piece to his family and to all New Orleanians far and wide—maywe learn these painful lessons from the past that we may build a better future. To contactthe author, please e-mail him at jgkimble@gmail.com.
LAW & SOCIAL INQUIRY400
than the Federal Housing Administration” (Jackson 1985, 203). At thecore of this bold assertion, made by historian Kenneth Jackson, lies thestory of how the federal government encouraged the rapid suburban-ization and segregation of metropolitan America through intense involve-ment in the national mortgage market. Though largely omitted frompopular narratives of civil rights history, this story has been well documentedby a number of urban historians. Jackson’s
Crabgrass Frontier
, along withthe works of Arnold Hirsch, Thomas Sugrue, and others have shed lighton the FHA’s role in institutionalizing racial inequality in the UnitedStates.Yet crucial elements of the story remain untold. Scholarship, to date,has focused on a limited set of FHA policies that discouraged mortgage lendersfrom providing home loans to African Americans or anyone living in raciallyintegrated neighborhoods during the 1930s and 1940s. Limitations on primarysource evidence have restricted our understanding of the agency’s motivationsfor doing so and its understanding of the government’s role in socialengineering. The dearth of direct evidence has constrained scholars’ abilityto declare with certainty whether the FHA merely condoned existing racistpractices in the market or in fact sought to expand such biases as a primarygoal of its operation.I will demonstrate that the FHA went far beyond merely acquiescingto racial discrimination, and that it in fact explicitly intended to isolate blackurban neighborhoods to a greater degree than has been previously establishedin FHA scholarship. Passages in FHA underwriting manuals and publicationsthat have been largely overlooked by historians called unequivocally for thecontainment of African Americans in designated residential neighborhoodsas part of a broader effort to establish stable, homogenous communities of white homeowners. Control over billions of dollars of mortgage insurancefunds, desperately needed by ailing lending institutions during the 1930s and1940s, enabled the agency to dictate national lending and planning practicesto an unprecedented degree in the housing market’s history, with a powerand scope that private institutions could have never achieved alone or evenin concert.I will also examine how the agency actively disguised its leadership inadvancing a nationwide segregationist agenda by deflecting blame ontothe private market for policies that it had standardized and mandated.Demonstrating the centrality of race to the FHA’s vision of the marketilluminates a critical and often overlooked period of its history in whichthe agency resisted reforms thrust upon it by the civil rights movement inthe late 1940s and 1950s. As the Supreme Court eroded its legal power todiscriminate, the FHA disavowed any responsibility for discriminatory decisionsmade in the private market while persisting in supporting segregationistactivity. The FHA’s ambiguous position in the real estate economy providedcover from the ideological conflict that overwhelmed other areas of federal
Insuring Inequality401
housing policy while simultaneously affording the agency vast influence overAmerican society.
1
THE STATE OF THE FIELD
While a handful of scholars have highlighted the FHA’s complicity inracial segregation in American cities, most have overlooked a substantialbody of evidence illuminating the FHA’s agenda and the evolution of itspolicies. Thomas Sugrue’s
The Origin’s of the Urban Crisis
offers an exceptionalillustration of how various bodies of government, including the FHA, erodedthe economic position of African Americans in Detroit. Yet while Sugrueidentifies ways in which the FHA buttressed racist activity in the housingmarket, he neglects the important role the agency played in underminingcivil rights reforms, focusing instead on how private agents in the marketresisted those efforts (Sugrue 1996). Nathaniel Keith, in
Politics and the Hous-ing Crisis since 1930
, provides a remarkable insider’s analysis of the real estatelobby’s influence on federal housing policy and politics. However, Keithlargely ignores the racial policies of the FHA, focusing instead on conflictover race in public housing policy. His chronology of congressional housingdebates does offer interested readers useful background on the broader contextof the changing national political climate (Keith 1973).In “Choosing Segregation,” Arnold Hirsch tackles the issue of FHAresistance to racial integration. He correctly concludes that “a conscious,deliberate choice for segregation lay at the heart of national policy” (Hirsch2000a, 207) and that “political resistance, bureaucratic foot-dragging, andinstitutional inertia” subverted attempts to reform that agenda (211). Thisarticle seeks to expand the direct evidence of internal bureaucratic resistanceto ground Hirsch’s insightful analysis on firmer documentary footing.Finally, Kenneth Jackson’s groundbreaking
Crabgrass Frontier
, whoseresearch provides the basis for most of the field’s analysis, constructs a“ground-up” narrative of the ghettoization process in which the FHAacquiesced to forms of racial bias already practiced within the housing market.He concludes that the FHA “put its seal of approval on ethnic and racialdiscrimination and developed policies which had the result of practicalabandonment of large sections of older, industrial cities” (Jackson 1985, 217). Jackson’s analysis of the FHA, however pioneering, remains incomplete,primarily because he neglects crucial evidence that suggests a significantlymore top-down interpretation of how segregation evolved in America. Inreconstructing FHA policy, he claims that neither “the 1938 nor the 1947FHA
Underwriting Manual
specifically endorsed ‘racial’ covenants [private,
1.For an analysis of racial policies in other federal agencies, which goes beyond the scopeof this article, interested readers should read Irons (1982) and Sitkoff (1978).
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Insuring Inequality: The Role of the Federal Housing Administration in the Urban Ghettoization of African Americans
A reexamination of Federal Housing Administration (FHA) documents reveals that the agency played a more direct role in the ghettoization of African Americans than previous scholarship has established. The FHA went far beyond merely approving of…
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