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he most recent public execution of unarmed Black people at the hands of police has reignited calls to end the crisis of rampant state-sanctioned anti-Black violence in the United States. The loss of Black lives has initiated an unprecedented wave of protests, both large and small, in cities across the globe denouncing anti-Black racism and renewing calls to defund key agents of state violence in our communities. As the world’s attention is appropriately centered on systemic police violence, private equity firms and pension funds, and their anti-Black business strategies, have been less prominent in the public’s gaze and much-deserved scrutiny. While police continue to kill Black people on city streets, private equity firms tacitly engage in anti-Black violence through dispossession, devaluation and displacement in Black communities, and thus more broadly by remaking the map of where Black people can live, move, and breathe. The power and silent violence of these private equity firms are nevertheless definitive in the current crisis of Black life, and I argue that making the market mechanisms of premature death (Gilmore 2007) more visible in accounts of anti-Blackness can strengthen scholarly and popular understanding of the sites, processes, actors, and agents of racial capitalist violence.
I write in solidarity with scholars including, Ruth Wilson-Gilmore, Robin D.G. Kelly, Jodi Melamed, and Keeanga-Yamahtta Taylor who have made these arguments in needing to think not just about the state, but also capitalism itself as inherently racial, and even more specifically fundamental to producing urban space. In an earlier co-authored piece, Deborah Cowen and I (2016) argued that policing is deeply entangled in the re/making of the racial capitalist economy of cities. Beyond the deadly and racist violence of the police, we suggested that policing should be understood as a key force in the slower violence of displacement, dispossession, and the remaking of capitalist urban land markets. Here, I build on this earlier intervention to make visible financial actors and processes that currently remain hidden in plain view. I focus in particular on the housing market, which has been defining the contours of the crisis of Black life in the United States, and at once, helping to produce the geographies of anti-Black police violence. While protests have had a firm eye on the state and its police, I suggest that dismantling anti-Blackness requires rigorous critique of and divestment from the public and private financial institutions that produce racial capitalist urban space.
2008 As A Crisis of Black Life
Housing markets have a very long relationship with anti-Black racism and Black dispossession (Coates 2014; Taylor 2019), and this has become only more acute over the last two decades. The 2008 housing crisis was and remains a crisis of Black life. Between 1998-2006, mortgage foreclosures siphoned between $71 and $93 billion in wealth from Black households (McNally 2011), leading to the greatest dispossession of property and loss of wealth for Black people in modern U.S. history (Rivera et al. 2008). The increased use of predatory financial instruments coupled with relaxed lending standards and inflated home prices proved to be the catalyst of 2008 housing crisis, which disproportionately impacted Black people (Coates 2014; Taylor 2016). Black borrowers were more than three times likely to receive subprime loans, despite qualifying for traditional loans (Wyly and Ponder 2011; Immergluck 2015).
As communities struggle to recover from the initial impacts of 2008, private equity firms have continued their assault on Black people and communities, assembling their empires by acquiring hundreds of thousands of foreclosed single-family and multifamily properties across the United States to rent back to the same communities from which the homes were taken. Wall Street private equity goliath, Blackstone Group was an early pioneer in this newly developed industry. In 2016, Blackstone President and Chief Operating Officer (COO) Jonathan Gray was asked to elaborate on the firm’s real estate strategy following the housing crash which resulted in his firm becoming the largest landlord in the country with 50,000 properties. Johnathan Gray casually remarked, “well you needed a global financial crisis to occur” (School 2016). Gray further explains,
we were sitting around in 2011, and thinking where is there a large pool of assets that are going to be sold by financial institution at big discounts to underlying cost. It was pretty obvious single-family homes…We said wouldn’t it be great if we could buy these homes and ride what we think will be inevitably a recovery…Our thesis was if you did this at scale… and go out buy homes…spend $25,000 or so fixing them up, rent them out, and make incoming producing assets out of them like an apartment business. But if we do it in enough scale, we can do it efficiently (School 2016).
Gray’s response helps us to understand how anti-Blackness is both routine and made invisible in real estate finance. Since 2007, more than twelve million homeowners have lost their homes to foreclosure, which continues to disproportionately affect Black households (Schwartz 2014). Black communities were three times likely to experience foreclosure than white enclaves (Matthew et al. 2015). As a result, Black neighbourhoods have struggled to recover from the 2008 housing crisis, making them the primary target of new rounds of predatory investment from Wall Street. Blackstone saw the devaluation of depressed assets in Black communities as a business opportunity to deploy its core business principles of acquiring ‘undervalued assets’. These were homes occupied largely by Black households in gentrifying areas before they were converted into ‘income generating assets.’
What makes this current situation even more concerning is that most of these homes are in communities that were previously redlined nearly a century ago, and have yet to appreciate to the values of properties in neighbourhoods chalked in green or tagged as “desirable” (Perry 2020). Redlining was instrumental in starving Black communities of much needed investments for decades, resulting in the creation of barren geographies beset with rising unemployment, dilapidated homes, and insalubrious living conditions (Coates 2014; Taylor 2016; Rothstein 2017). The effects of redlining are still felt to the present day and extend well beyond investments in housing to encompass other disparities such as health and mortality that are even more conspicuous today with the current COVID-19 pandemic. Black communities have been disproportionately impacted by the pandemic which further exacerbates the effects of the subprime crisis. Rising unemployment caused by the pandemic places immense financial pressure on Black households to remain housed. Despite best efforts to withstand the pressures many Black households are being evicted and the pandemic is leading to an increased rate of Black homelessness.
Private Equities Housing Grab
As hundreds of thousands of Black households were being evicted from their homes following the 2008 housing crash (Desmond 2016), many Wall Street entities were waiting in line to capitalize on their losses by acquiring distressed and undervalued properties to bolster their single-family rental portfolio. Growth of the rental market presented a unique opportunity for Wall Street, as millions of new renters – displaced from their homes through foreclosure - entered the market. By 2013, institutional investors had already spent nearly $20 billion to acquire more than 100,000 single-family properties. Today, over 300,000 single-family homes are in the hands of institutional investors (Tully 2019). One such entity is Wall Street private equity goliath, Blackstone Group, which accounted for half of the capital spent on single-family properties following the aftermath of the housing crisis.
In facilitating the purchases of foreclosed homes, private equity firms like Blackstone got creative and developed a sophisticated financial tool known as ‘rent-backed securities’ to facilitate the purchase of these properties. Rent-backed securities allow Wall Street entities to profit from the mess created in 2008. These securities work similarly to mortgage-backed securities, except monthly rental payments are used to pay bondholders in place of mortgage payments. The high annualized returns from the securitized bonds attract investors from across the globe, including public pensions, sovereign-wealth funds, and other large institutional investors. The sale of these securitized bonds meant Blackstone had to maintain a high occupancy rate, raise rents, and enforce a rigid eviction policy to remove all non-paying tenants expeditiously (Mari 2020).
Invested in Displacement
Public pension funds and other large institutional investors have helped to fuel the acquisition of these distressed assets as they were all in search of stable investments with longer horizon windows that would secure them with the highest possible returns. At the height of the foreclosure crisis, many public pension funds began to fill the gap left behind by banks who could no longer finance these risky acquisitions because of stringent lending regulations put in place following the 2008 housing crash. In turn, some of the largest public pension systems in the U.S. began modifying their investment strategies by moving away from government and corporate bonds to riskier alternative investments. These investments include, real estate, private equities, and commodities to overcome the retirement systems funding shortfalls. Pension plans have more than doubled their allocation of funds towards alternative investments, where in 2017 these asset classes accounted for 26 percent of pension portfolios, compared to only 11 percent over a decade earlier (Banta et al. 2019).
Public pensions, sovereign wealth funds, and even university endowments were among the largest investors to help turn private-equity firms into a rental housing empire. Since 2010, the largest public pension system in the U.S., California Public Employees’ Retirement System (CalPERS) alone has invested more than $6 billion across Blackstone’s various funds, which often seek to exploit the vulnerabilities in our communities (Singh 2020). In fact, four of the largest public retirement systems in New York and California committed over $30 billion to private real estate funds managed by some of the largest private equity and asset management firms like Brookfield Asset Management, Blackstone Group, Apollo Global Management, and the Carlyle Group (Kromrei 2020).
Gentrification and the Death of Breonna Taylor
The deep entanglement of policing, anti-Black violence, and the restructuring of cities came together in the brutal shooting death of Breonna Taylor at the hands of Louisville police. Lawyers representing Taylor’s family allege her shooting death is linked to an elaborate multi-million dollar “urban renewal scheme” led by the City of Louisville to remove Black people from the Russell neighbourhood, an area once commonly referred as “Louisville’s Harlem” (Bailey and Duvall 2020). The federally funded revitalization plan titled “Vision Russell” is a comprehensive redevelopment project to transform Russell into a culturally vibrant, mixed-income area with higher quality services and amenities (Initiative 2020). Attorneys representing Taylor’s family allege an investigative unit in the Louisville police department “deliberately misled” the narcotics unit to secure a no-knock search warrant for five different homes, including Taylor's apartment despite her having little connection to the investigation. In fact, the alleged suspect resided on Elliott avenue, which was ten miles away from Taylor’s apartment, and his home was identified as one of many homes impeding the progress of the revitalization project (Riley 2020). The law firm representing Taylor’s family alleges her brutal death had very little to do with illicit drug activities, instead, it was the result of a violent political strategy that used the police to force the removal of residents from land required for the redevelopment of Russell. Even though these allegations have not yet been heard before a court, the case itself offers compelling insight into the broader relationship between police violence and gentrification, which are generally incontrovertible.
The deadly police violence as observed in Breonna Taylor’s case is often the hallmark of neighborhoods undergoing gentrification. Anti-Black state violence operates through the implementation of policy and policing that not only facilitates the confinement of Black people, but also displaces them to make way for private capital (Cowen and Lewis 2016). Over 50 years ago, urban renewal policies were key in orchestrating the displacement of Black households. Today, those practices have worsened, as evictions and increasing rates of incarcerations, especially of Black men are still being used to advance the gentrification of Black communities. On average, nearly 8,000 households are evicted in Jefferson County each year, which is more than twice the national average, according to the Princeton University’s Eviction Lab (Ryan and Kanik 2018). Predominantly Black neighbourhoods in Western Louisville, like Russell, where nearly 50 percent of the homes are headed by single women, led the way with the highest rate of evictions in the county and state.
In this current moment, state monuments of colonial power are being torn down and the state itself is being called to task, especially because of the its capacity for violence through policing. The symbolic and visual dimensions of protest around anti-Blackness have largely focused on the state, which is of critical importance. But what would it mean to bring into focus financial actors like Blackstone and public pension funds more centrally in our organizing, activism, and conceptualizations? How would this reshape our understanding of the city or add to the focus of those fighting anti-Blackness whether that be on the ground or through scholarly knowledge production? Divestment work is one clear direction, and we see this work echoed in similar movements working in related forms of decolonization and antiracism, which have become increasingly focused on the financing behind colonial and racist violence. For instance, the anti-pipeline movement in Canada was recently successful in pressuring Swiss-based, Zurich insurance to withdraw its coverage of the Transmountain pipeline project (Staff 2020). The migrant rights movement was equally instrumental in their divestment campaign to compel Canada’s largest pension fund, Canadian Pension Plan Investment Board (CPPIB), to divest their nearly US$10 million interest in border carcerality along the Mexico-US border (Lindeman 2019).
So, while policing and other forms of state violence remain critical in the current moment, questions of housing have become central in many Black organizing initiatives. The movement for Black lives coalition has offered a number of solutions to address the issues of housing insecurity in the wake of the current pandemic, including a moratorium on mortgage payments and a freeze on rents ((M4BL) 2020). But this kind of longer-term work of re-thinking questions of capital, land, and Black futures will be key in building on these initiatives to end the war on Black lives.
(M4BL), Movement for Black Lives. “Housing and Healthcare for All!” M4BL, 2020. August 13, 2020 here.
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---. 2019. Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership, Justice, Power, and Politics. Chapel Hill, N.C.: University of North Carolina Press. Original edition, 349.
Tully, Shawn. 2019. "Meet the A.I. Landlord That’s Building a Single-Family-Home Empire." Fortune June 21, 2019
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Nemoy Lewis is a Provost’s Postdoctoral Fellow in the Department of Geography and Planning at the University of Toronto. His research explores the complex intersections of anti-Black racism, race, housing, and financialization.