Fannie Mae's Raines Shares His Strategy

By Franklin Raines
SPECIAL TO THE OBSERVER

WASHINGTON - "Asset-building strategies," such as pro-homeownership public policies, are the key to narrowing the estimated $1 trillion gap in wealth between African Americans and White families, and building financial security among African Americans, according to Franklin D. Raines, Fannie Mae's Chairman and CEO.

In a speech to Howard University's 135th Charter Day Convocation, titled "Mending the Broken Promise of '40 Acres and a Mule,'" Raines said that homeownership is absolutely critical to closing the wealth gap.

"Owning a home is the working man and woman's capital engine, the democratization of capital," said Raines.

"Owning a home is the only investment - and the only leveraged investment - available to most Americans. It is a powerful way to transmit wealth from generation to generation," the Fannie Mae Chairman added.

Raines noted that a significant cause of the racial wealth gap is that the legacy of slavery, segregation and discrimination systematically has denied African Americans property, property rights and the ability to generate capital - and thus wealth - from property.

Closing the 20-point gap in homeownership between minorities and the national average will help to remedy the legacy of property denial and close the wealth gap, he said.

The national minority homeownership rate of 49.5 percent - and in particular, the African American rate of 48.1 percent - remains far behind the 74.4 percent rate among White Americans.

The national average for homeownership is 68 percent.

"Fannie Mae is determined to expand minority homeownership," Raines said.

"We have pledged to provide $420 billion in housing to serve three million minority Americans by the end of the decade. We are committed to bringing flexible, low-cost housing capital to families and communities that have been overlooked, underserved and overcharged. And, we are going to rescue African American families from costly subprime lending and vicious predatory lending," he added.