The Color of Law: A Forgotten History of How Our Government Segregated America

Blockbusting was a method real estate speculators used to buy properties in borderline Black/White areas, then sell or rent them to African Americans. These agents then stoked fears that these new African American residents would lower the value of White homeowners’ property, encouraging them to sell their homes to the real estate agents for less than their value. The properties were then sold to African Americans at an inflated cost.

The 1917 Supreme Court ruling Buchanan v. Warley declared that the residential segregation ordinances in Louisville, Kentucky, were unconstitutional. The court determined that these ordinances infringed on freedom of contract, or the property owner’s right to sell to whomever they want.

De facto segregation refers to racial divisions that stem from private activity or individual choices. Rothstein argues that de jure segregation, which stems from the law, establishes discriminatory norms that perpetuate de facto segregation within society.

De jure segregation refers to racial divisions derived from government policy or law. Plessy v. Ferguson, the Supreme Court ruling that upheld “separate but equal” divisions between the races, sanctioned such segregation, paving the way for Jim Crow laws in the South and other discriminatory policies.

The Federal Housing Authority (FHA) was founded by President Franklin D. Roosevelt in 1934 to insure loans for homeowners. However, while the FHA backed loans for White homeowners, it refused to do the same from African Americans. Neither would it insure loans without a prohibition on sales of homes to African Americans.

A ghetto is a neighborhood where the government has concentrated a minority population, limited economic opportunities, and established barriers that make leaving these neighborhoods difficult. For example, Eastern European Jews were segregated into ghettos. There are similar patterns in the United States. People are often uncomfortable with this term and use “inner city” instead. However, this is just a polite euphemism and “ghetto” is a more accurate term.

Restrictive covenants were contractual agreements with stipulations that perpetuated racial segregation. For example, a stipulation might limit the types of trees that could be planted on a piece of property. These covenants also prohibited property owners from selling or renting to African Americans. In the 1920s these stipulations proliferated as a way to evade the Supreme Court’s Buchanan v. Warley ruling, which declared that such practices violated the individual’s right to sell and enjoy their property as they see fit.

Reverse redlining describes the marketing of exploitive loans to African American communities. Subprime loans were designed for borrowers at a higher risk of default who consequently had higher interest payments. These subprime mortgages were designed to be hard to repay, and lower-income African Americans took them out at twice the rate of lower-income Whites. This practice, unregulated by the federal government, contributed to the financial crisis in 2007.