The author is Richard Rothstein, and the subtitle of this excellent and important book is the apt A Forgotten History of How Our Government Segregated America. The upshot is that twentieth century segregation had a lot more to do with government restrictions — and not just government toleration — than many of us had thought. Here is one bit of many:
Calling itself the Peninsula Housing Association of Palo Alto, the co-op purchased a 260-ranch adjacent to the Stanford campus and planned to build 400 houses as well as shared recreational facilities, a shopping area, a gas station, and a restaurant on commonly owned land. But the bank would not finance construction costs nor issue mortgages to the co-op or its members without government approval, and the FHA would not insure loans to a cooperative that included African American members. The cooperative’s board of directors, which included [Wallace] Stegner, recommended against complying with the demand that the cooperative reconstitute itself as an all-white organization, but the membership, attempting to appease the government, voted…to compromise.
At the time [immediate post-war era], the Federal Housing Administration and Veterans Administration not only refused to insure mortgages for African Americans in designated white neighborhoods like Ladera; they also would not insure mortgages for whites in a neighborhood where African Americans were present. So once East Palo Alto was integrated, whites wanting to move into the area could no longer obtain government-insured mortgages.
Furthermore, a bit earlier, many of the New Deal agencies shared a commitment to residential segregation, and were willing to enforce it. Keep in mind that residential integration started moving backwards in 1880, through the middle of the twentieth century.
Recommended, and here is NPR coverage of the book. Here is coverage from Slate. Here is an earlier MR post on the roots of racial segregation in Baltimore.