Some people have a difficult time understanding the distinction between bigotry or discrimination and “racism.” The recently announced settlement regarding Bank of America and its subsidiary, Countrywide Mortgage, provides a helpful concrete example and its implications. Racial bigotry is the prejudgmental attitude or belief regarding someone different from one’s own racial or ethnic group that is based neither on fact nor experience. It may or may not be acted upon by word or deed. When that bigotry is acted upon, it is discrimination that serves to accord certain advantage or privilege to a member or members of one group over another based upon race or ethnicity. The race or ethnicity may be real or perceived, in that one may discriminate against another believing the recipient of the discrimination to be of a certain race even if the person is not of that race or ethnicity. In contrast, racism is the operation of institutional and systemic power to privilege and accord advantage to one dominant group and to disadvantage a subordinate group because of race or ethnicity. Racism is dependent upon systemic power where bigotry is not.
In the case of Countrywide Mortgage, purchased by Bank of America with the indirect benefit of TARP bailout funds from taxpayers, the company engaged in a systematic course of discrimination against people of color seeking home mortgages. It extended loans at higher interests than mortgages offered to whites and systematically steered people of color to loans that were riskier and which contained traps of ballooning interest rates. These differences were strategic and systematic, and as a government official described: “the cost and quality of loan that you received from Countrywide depended upon the color of your skin.”
Looking to the implications of the difference, we can see how racism can be more insidious in a society. When an individual engages in acts of bigoted discrimination, the individual may be held accountable for such actions, up to and including criminal prosecution for hate crimes. Let us look, however, at the consequences of institutional racism. Not one individual was terminated or disciplined from bank of America or Countrywide specifically because of the strategic and concerted policy and practice of discrimination against tens or hundreds of thousands of individuals solely on the basis of race or ethnicity. The evidence is that the borrowers of color were equally qualified for the superior quality and lower cost loans offered to white customers. Bank of America has agreed to a “settlement” following the investigation demonstrating the practice, which was not termed a penalty or fine and so can be written off as a business expense – which the taxpayers ultimately bear as a cost. That settlement of approximately $353 million represents about 5% of ONE QUARTER’S profit for Bank of America.
What we see is the deliberate and strategic use of institutional power, aided and abetted by the government, to disadvantage certain customers and privilege others solely upon the basis of race and ethnicity. The white controlled and operated bank of America has direct economic power and the support of governmental power in the effectuation of this systematic discrimination. That is the essence of racism. Some talk about reciprocal or “reverse” racism which is a fallacy and a misconception in the United States. The simple reason is that the power and the ability to exercise that power does not rest in the hands of the people of color affected. If the large national institution like bank of America were owned and operated by people of color and engaged in a practice of discriminating in lending in favor of people of color and against whites, it would be racism. But it would not be “reverse” racism. The notion of “reverse” is appended to the false term precisely because it occurs in practice only by whites against people of color. In other words, we have only experienced white operant racism and so there is a desire to look for a term to describe an occurrence when systemic discrimination is used against a target that is not the norm or the expected target.
One final point in this argument relates to the methodology. The corporate and institutional nature of racism serves to aid its operation and to shield it against consequences. An individual can be deprived of property or liberty as a consequence of personal and individual acts of bigotry and discriminatory conduct. It is conceivable that an individual bigot may experience remorse and alter his or her behavior in the future. A corporation is not a person, despite the pronouncement of the US Supreme Court. As a result there is no individual that will feel the loss or pain from any consequences that might result from a determination of wrongful damage based upon racist practices. There is really no person to learn from a mistake and no way to imprison a corporation that is unrepentant. That same corporation, directly or through reformation of a new corporate entity under another name, can continue and repeat the practice of racial discrimination knowing that the government and judicial system will not be able to do much about it.
Only if the financial cost exacted from the corporate or institutional racist is so high as to preclude it from operating or reformation s a new entity can anything approaching effective regulation of such behavior occur. Obviously, 5% of profits [not operating revenues – net profits] from one quarter is not the kind of consequence that is likely to deter recurrence of the racist practices. Indeed, the settlement is more likely to be read as confirmation that the “authorities” cannot or will not do anything to stop the racism. More subtlety and deception may be employed in order to avoid the nuisance of the payment of small settlement amounts and further increase profits. The message to the racist corporation is mainly that they were too blatant in the discrimination.
