Conclusions

In 1949 the Congress of the United States enacted legislation in whichit announced a national housing objective: "A decent home and a suitable living environment for every American family." This pronouncement marked the end of a long period of piecemeal measures largely inresponse to crisis2014first the Great Depression, and later World War II.In short, housing had been a means to the solution of greater problems,rather than an end in itself.

The Housing Act of 1949 inaugurated a new housing era and a vastFederal responsibility. It is an era of which we are still a part; andit is a responsibility from which we have not retreated. The declaredobjective remains the unfulfilled promise of the Federal Government.It is, as President Kennedy has declared before the Congress, an unredeemed "pledge" to the American people. This pledge goes beyondan increase in the Nation's housing supply. Incorporated as its cornerstone is the constitutional principle of equal opportunity. As this Commission pointed out in its 1959 Report:

It is the public policy of the United States, declared by the Congress and the President, and in accord with the purpose of theConstitution, that every American family shall have equal opportunity to secure a decent home in a good neighborhood (page 534).

In the past decade 17 States and numerous cities have taken legislative and administrative action to eliminate racial discrimination inhousing, but the Federal Government has not acted meaningfully inthis connection. Several of the agencies that administer Federal housing programs have taken small and essentially ineffectual steps, butneither the President nor Congress has exerted the authority available.

The Federal Government has been without question the majorforce in the expansion of the housing and home finance industries. Itsfunds, its credit, many of its facilities, and its name have been madeincreasingly available in an effort to achieve the professed goal of "adecent home and a suitable living environment for every Americanfamily." Governmental measures include cash contributions to locali-139

ties, FHA and VA mortgage insurance and guarantees, FNMA mortgage purchases and special assistance, chartering and support of financialinstitutions, as well as insurance of their accounts. But the benefits ofthese governmental activities have not been available to the Americanpeople on an equal-opportunity basis.

The Commission's first housing study revealed the central fact thathousing was "the one commodity in the American market . . . notfreely available on equal terms to everyone who can afford to pay."The present study emphasizes the extensive nature of the Federal contribution. The private housing and home finance industries, throughwhich governmental housing assistance largely reaches the Americanpeople, rely heavily on that contribution. They profit from the benefitsthat the Federal Government offers2014and on racial grounds deny largenumbers of Americans equal housing opportunity. At all levels of thehousing and home finance industries2014from the builder and the lenderto the real estate broker, and often even the local housing authority2014Federal resources are utilized to accentuate this denial. This is thecentral finding of the Commission's present study.

Denial of equal housing opportunity means essentially the deliberateexclusion of many minority group members from a large part of thehousing market and to a large extent confinement in deterioratingghettos. It involves more than poverty and slums, for it extends to thedenial of a fundamental part of freedom: choice in an open, competitivemarket. This is a strange phenomenon in a Nation that cherishes individual freedom. For in housing, as elsewhere, the essence of freedomis choice. Nevertheless Federal programs, Federal benefits, Federal resources have been widely, if indirectly, used in a discriminatory manner2014and the Federal Government has done virtually nothing to prevent it.

SUPERVISION OF LENDING INSTITUTIONS

At the end of 1960 the Nation's nonfarm home mortgage debt stood at$160 billion. More than 60 percent of this amount ($100 billion) isheld by financial institutions that are benefited in varying degrees bythe Federal Government and closely supervised by one or more of fourFederal regulatory agencies2014the Federal Home Loan Bank Board, theComptroller of the Currency, the Board of Governors of the FederalReserve System, and the Federal Deposit Insurance Corporation. National banks (regulated by the Comptroller of the Currency) and Federal savings and loan associations (regulated by the Federal Home LoanBank Board) operate under Federal charters and are subject to the

exclusive control of the Federal Government. These institutions represent almost $180 billion in assets and hold $44 billion in nonfarm homemortgages. Member savings and loan associations of the Federal HomeLoan Bank System and member banks of the Federal Reserve Systemreceive the benefits of a nationwide, governmentally controlled systemof financial institutions, and are regulated by the Federal Home LoanBank Board (in the case of savings and loan associations) and the Boardof Governors of the Federal Reserve System (in the case of banks).These institutions represent almost $290 billion in assets and hold $75billion in nonfarm home mortgages. Insured associations and banksreceive the benefit of Federal insurance of accounts and deposits, and areregulated, in the case of savings and loan associations, by the FederalSavings and Loan Insurance Corporation (under the direction of theFederal Home Loan Bank Board) and, in the case of banks, by the Federal Deposit Insurance Corporation. These institutions represent almost$360 billion in assets and hold $99 billion in nonfarm residentialmortgages.

According to the evidence that the Commission has received frommany parts of the country, these institutions are a major factor in thedenial of equal housing opportunity. Mortgage credit, upon whichhomeownership so largely depends, is often denied to members of minority groups for reasons unrelated to their individual characters or creditworthiness, but turning solely on race or color. Although all four ofthe Federal supervisory agencies appear to agree that outright discrimination is improper, none apparently has conducted any inquiry into theextent to which the institutions under their supervision engage in it.Until recently none had proclaimed or followed any antidiscriminationpolicy. In June 1961, however, the Federal Home Loan Bank Boardadopted a resolution opposing discrimination by financial institutionsover which it has supervisory authority. The Board further indicatedthat its examiners had been advised of this resolution for their guidancein examining member institutions, and that if discrimination were foundsupervisory action would be taken to abolish it. None of the three otheragencies has given any indication of a similar policy. A broad array ofmeans is available to each of these agencies to reduce discrimination inmortgage lending. Except for the Federal Home Loan Bank Board,however, they appear to believe that this is a private matter with whichthey are not concerned. In addition, all of them (including the FederalHome Loan Bank Board) have expressed the view that race may properlybe a consideration in deciding whether to make a real estate loan. Theintroduction of minority group members into a white neighborhood, theyappear to believe, may predictably cause a decline in property values.This view of the propriety of racial consideration is not shared by FHA,VA, FNMA, nor the Voluntary Home Mortgage Credit Program.

Moreover modern real estate opinion, supported by several studies onthe relation of race and property values, tends to cast doubt on the viewthat the one necessarily affects the other.

FEDERAL ASSISTANCE TO HOME FINANCE

The agencies most directly involved in Federal assistance to homefinance are FHA, VA, and FNMA. Their policies, unlike those of theFederal banking agencies, are affirmatively, if not effectively, hi favor ofequal housing opportunity for all people. Each has expressed itself asopposed to the inclusion of race as a factor in its operating decisions.None of them, however, has taken effective...

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