"The federal insistence on rigid racial separation found its most pernicious expression in the Federal Housing Administration, created in 1934 to promote homeownership by insuring mortgages. As the sociologists Douglas Massey and Nancy Denton document in “American Apartheid: Segregation and the Making of the Underclass,” the government typically denied mortgages to African-Americans, shutting out even affluent black people from the suburban homeownership boom that remade the residential landscape during the middle decades of the 20th century.
Government at all levels embraced racial covenants that forbade even well-to-do African-Americans from purchasing homes outside of black communities. Cut off from homeownership — the principal avenue of wealth creation — African-Americans lost the opportunity to build the intergenerational wealth that white suburban families took for granted. The vast wealth gap that exists today between whites and African-Americans has its roots in this era."
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