The Federal Government and Racism in Housing.

I think one general pattern in the development of government is evolution from the bottom, consolidation from the top.  British history has the problem of over-mighty subjects I think they're called--nobles who have their own entourages wearing their own livery carrying weapons and posing a threat to the monarchy.  Gradually their power is whittled away and the state assumes a monopoly of violence.  In the South especially there's a pattern of private and quasi-public enforcement of laws and mores, which shows most clearly in lynchings and jury nullifications.  That's been changed.  In the North roads were often developed as private enterprises, eventually to be taken over by the state. 

I could go on, but let me get to the subject: the New Deal and the federal housing agencies are commonly blamed for establishing red lines and refusing to finance housing loans in areas of the city.  IMO it's true that's what they did, but it's not true it was dreamed up in the pointy heads of Washington bureaucrats and New Dealers.  I've held that opinion all along, but it doesn't fit with the  way I see the world operating.

Now my opinion, which was based only on feelings and not on facts, is reinforce by a scholarly article in the Journal of American History.  Unfortunately it's paywalled but it includes a discussion of the development of the real estate industry. I'll quote a paragraph:

" Fisher emphasized the importance of NAREB's Code of Ethics, first created in 1913. He summarized the code and the commonsense nature of advising clients and customers on matters of value. However, he failed to mention its soon-to-be-finalized Article 34, which became one of the organization's most controversial statements: “A Realtor should never be instrumental in introducing into a neighborhood a character of property or occupancy, members of any race or nationality, or any individuals whose presence will clearly be detrimental to property values in that neighborhood.” Thus racism was already well established in NAREB by the time that Ely and Fisher reached out."

"Ely" is Richard Ely, the founder of the American Economics Association, and Fisher is one of his students who worked for what became the National Association of Real Estate Boards, now the National Association of Realtors.

The article's theme can be summarized here:

?The Federal Home Loan Bank, the Home Owners' Loan Corporation, the Federal Housing Administration, and their restructuring of the real estate sector were outgrowths of the network of academics, private sector professionals, trade organizations, and lobbyists that Ely assembled in the 1920s. "

To paraphrase the now deceased Rumsfeld, "you write the laws with the society you've got".  The New Deal solidified and rationalized racism in housing, racism that pre-existed the New Deal.