The Editor of Bloomberg Businessweek has offered a half-hearted apology for an offensive, racist cover showing a caricature of Black and Latino people literally rolling in cash because of the improved housing market.
It's titled "The Great American Housing Rebound" and the cover line reads: "Flips. No-look bids. 300 percent returns. What could possibly go wrong?"
The image and the cover lines are particularly offensive because Blacks and Latinos were disproportionately impacted by the subprime crisis from 2007–2009, which has been demonstrated by the billions of dollars of fines levied against the likes of Bank of America and Citigroup.
Pew Research Center noted that the bursting of the housing bubble caused far greater damage to these two communities, mostly because of the subprime loans given to people who didn't have enough money or credit to qualify.
According to Pew, from 2005–2009, Latino wealth fell by 66 percent and Black wealth fell by 53 percent, compared with 16 percent for whites.
One study found that during the subprime years, banks were twice as likely to approve whites for prime mortgages with the best interest rates, while Blacks and Latinos received two to four times more subprime loans, most of which had such high rates they put the borrowers "under water" quickly. Another study found that the major banks made 70 percent of their high-cost loans in neighborhoods that were predominantly Black and/or Latino.
Reaction to the cover has not been pretty.
"The cover stands out for its cast of black and Hispanic caricatures with exaggerated features reminiscent of early 20th century race cartoons. Also, because there are only people of color in it, grabbing greedily for cash. It's hard to imagine how this one made it through the editorial process," Ryan Chittum wrote in the Columbia Journalism Review. "Compounding the first-glance problem with the image is the fact that race has been a key backdrop to the subprime crisis."
"The claim that minorities are creating a housing bubble through flipping, no-look bids, and 300% returns is simply not reality," Jacob Gaffney wrote on HousingWire.com. "Flipping is a form of fraud and not a typical transaction. No-look bids are not exclusive to Hispanic and African-American investors. No one is making a 300% return."
"Businessweek Warns That Minorities May Be Buying Houses Again," was the headline on Slate.com.
Editor Josh Tyrangiel issued this "apology": "Our cover illustration last week got strong reactions, which we regret. Our intention was not to incite or offend. If we had to do it over again we'd do it differently."
Who's Behind This?
The cover was designed by Andres Guzman, a freelancer who was born in Peru and now lives in Minneapolis. But the more important question is who at Bloomberg is running the show and allowed this to be published.
A look at the top management of both the magazine and its parent company, Bloomberg LP (which bought the magazine in 2009), shows its senior management is mostly white and male. That includes Tyrangiel, Creative Director Richard Turley and Publisher Hugh Wiley at the magazine, and President Daniel Doctoroff, Chairman Peter Grauer, Chief Content Officer Norm Pearlstine and Bloomberg News Editor-in-Chief Matthew Winkler at Bloomberg LP.
Bloomberg does not participate in the DiversityInc Top 50, so we do not have actual management demographics. By comparison, 18 percent of the senior level (CEOs and direct reports) of the DiversityInc Top 50 are Black, Latino or Asian, 80 percent more than the average of the Fortune 500. And 24 percent of the senior level of the DiversityInc Top 50 are women, 20 percent more than the Fortune 500 average.