A new Pew Research Center study found the black-white wealth gap has risen to a record high. The median net worth of white Americans is 20 times that of black Americans.
Thirty-five percent of black households have zero net wealth. By contrast, only 15 percent of white households have zero assets.
The Pew study found:
The net worth of black households fell from $12,124 in 2005 to $5,677 in 2009, a decline of 53%. Like Hispanics, black households drew a large share (59%) of their net worth from home equity in 2005. Thus, the housing downturn had a strong impact on their net worth. Blacks also took on more unsecured debt during the economic downturn, with the median level rising by 27%.
The drop in the wealth of white households was modest in comparison, falling 16% from $134,992 in 2005 to $113,149 in 2009. White households were also affected by the housing crisis. But home equity accounts for relatively less of their total net worth (44% in 2005), and that served to lessen the impact of the housing bust. Median levels of unsecured debt among whites rose by 32%.
The study underscores the disparate impact of the subprime mortgage crisis. It is unconscionable the NAACP and the National Urban League are in bed with Wells Fargo, a predatory lender that was fined $85 million for steering creditworthy borrowers into subprime loans.
The Huffington Post reports:
The Department of Justice is preparing a lawsuit against Wells Fargo, the nation’s largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.
The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.
The allegations mirror those in public actions taken by the Federal Reserve and a separate lawsuit filed by the city of Baltimore.
Taken together, the various investigations paint a picture of a lender that profited by knowingly targeting less-sophisticated borrowers, in particular preying upon those communities that traditionally lacked access to a full range of consumer credit products.
The state of black America? Busted and broke.