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Antero Pietila author of “Not in My Neighborhood” During 1930’s Federal government red-lined American cities helping create race-based divisions

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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore. Antero Pietila worked for The Baltimore Sun for 35 years. He retired in 2004, after which he wrote the book Not in My Neighborhood, which tells the story of how one of America’s great American cities, and in fact many American cities, were shaped by quite systemic racism. Now joining us to talk about all of this is Antero Pietila. Thanks for joining us.


JAY: Talk a little bit more about this whole process, in terms of some of the findings in your book.

PIETILA: Well, what I demonstrate is something that is not unprecedented, but I outline it in more detail than anybody else, and that is the federal government’s complicity in all of this. And what we have is, in the middle of the Great Depression, in the mid-1930s, the federal government created a bailout agency called Home Owners’ Loan Corporation. And the first mission of the corporation was to redline 239 American cities.

JAY: Explain redline for anyone who doesn’t know.

PIETILA: Well, basically, this is how it happened. The federal government would assemble a group of ten or so real estate experts and a couple of banking officials. They would be given a regular street map of a city and four crayons, and they would be asked to paint the city. And there were those four crayons. The best color in terms of real estate risk, in the opinion of the federal government, they were green-colored neighborhoods, which had covenants against Jews and blacks. And then the next preferred color was blue. And what the federal government was telling the lending industry, even in the deepest days of the Great Depression, was these are secure loans, and you should not hesitate to make them. Then there were two other colors: there was yellow and there was red. And the federal government said, it is possible to make good loans in these neighborhoods, but those loans have to be made on a different basis. This is the moment in American history when a two-tier home financing system is sanctioned, federally sanctioned: conventional loans for one set of buyers, often ethnically defined, and then these speculative loans from speculators, subprime loans. We still have this problem for another set of buyers, usually blacks, and in today’s situation, Hispanics.

JAY: And the nature of the subprime in those days was much higher interest rates.

PIETILA: It was a far higher interest rate. And as I said, there was an instrument, in Baltimore particularly: at one point, about 80 percent of black sales in Baltimore were done on the basis of land-instalment contracts, which were these rent-to-buy.

JAY: This is after ’48.

PIETILA: Right. And so there was no guarantee that people buying those houses would ever own those houses.

JAY: In fact, it very much mirrors the current subprime lending scandal, in the sense that anyone that looked at those loans knew that eventually the people were going to default. And it’s somewhat similar here: eventually they knew that this rent-to-buy was going to actually bankrupt people. They reach a point where they couldn’t do it anymore, and you’d pick up these houses again.

PIETILA: Sure. Now, there is a very interesting psychological phenomenon that happened in Baltimore. Baltimore began changing racially perhaps ten years before many other American cities. The big change came in 1944 when blacks crossed a street that had been the dividing line racially for the past 30 years. And–.

JAY: The name of–this is [crosstalk]

PIETILA: No, this was Fulton Avenue. One side was black and the other side was white. And in 1944, just before Christmas, the first black family crossed over. And then everybody got scared. And this was the starting point. But it is kind of interesting that there are a couple of early racial-change neighborhoods, one particularly, Edmondson Village, which even today is relatively stable–it may have deteriorated, but it is relatively stable. And the reason is that unlike whites, average whites, who change houses every so often, the early black buyers have been very reluctant to go through that experience again, it was so traumatic.

JAY: Please join us for the next segment of our interview with Antero Pietila.

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Antero Pietila spent thirty-five years with the Baltimore Sun, most of it covering the city's neighborhoods, politics, and government. A native of Finland, he became a student of racial change during his first visit to the United States in 1964. His book, Not in My Neighborhood, is a history of residential real estate practices in Baltimore, focused on discrimination against Blacks and Jews through restrictive covenants, redlining, blockbusting and predatory lending. He lives in Baltimore, Maryland.