Reverse redlining: the financialization of redlining and the effects of the housing bubble in Cleveland, Ohio

Abstract

This thesis discusses the development of “reverse redlining” in the Black neighborhoods of the Cleveland East Side during the American housing bubble between the mid-1990s and early 2010s. It argues that reverse redlining was the outcome of the intersection of two major forces in American history, the development of racially segregated “redlined” neighborhoods originating in the first half of the twentieth century, and the transition of the American economy away from productive forms of capital accumulation mid-century and towards financialization beginning in the 1970s. It tracks the creation and evolution of the Black neighborhoods of Cleveland and the intervention of the federal government in housing markets during the New Deal and how redlining defined the urban social geography of Cleveland as the city experienced economic and demographic decline.

Subsequently this thesis details how the breakdown of the New Deal's system of mortgage financing combined with deregulation of financial markets and the negative long-term effects of redlining to encourage a rush of predatory mortgage lending targeted at poor Blacks beginning in the 1990s. While redlining was defined by credit scarcity aimed at denying lending to segregated Black neighborhoods, the new system of reverse-redlining was defined instead by credit abundance and inclusion aimed at proliferating predatory lending into these same neighborhoods. This system of predatory lending contributed to the growth of the American housing bubble and the Financial Crisis of 2008. This thesis also discusses the housing bubble's effect on demographic trends in Cleveland after the crisis with attention to depopulation in the East Side, white flight in the suburbs, and strategies in response to the crisis oriented around “demolition as crisis management,” and alternative development strategies around the city's vacant lots.

Primary source materials consulted for this thesis are the online archives of Cleveland's largest newspaper, The Plain Dealer, U.S. Census data, as well as two visual databases, the American Neighborhood Change Project and the Historical Housing Unit and Urbanization Database, with the intent of examining a quantitative and qualitative approach to the demographic changes that resulted from reverse redlining and the housing bubble in the Cleveland between 2000 and 2016.