Black America Needs a “New Normal”: Equitable Access to Credit to Build Wealth – Los Angeles Sentinel | Los Angeles Sentry


Members of Congress are struggling to figure out the best way to get the country out of the health and financial crisis, but many supporters intend everyone to be locked out, overthrown and underserved. We are looking for a new paradigm of inclusion. (Photo: iStockphoto / NNPA)

Over the past year, the COVID-19 pandemic has imposed a double crisis. Over 542,000 Americans have lost their lives and are on the rise. At the same time, the country lost 9.5 million jobs due to the fallout from the massive recession. The University of New Hampshire found that this represented more losses than during the Great Recession. Curcy Graduate School of Public Policy.

Many managers want to “get back to normal,” but millions of small businesses and communities need something new instead. Particularly in black America, “old-fashioned common sense” did not provide equitable access to opportunities for wealth creation. Instead, the long history of public policies designed to create and maintain a rapidly growing middle class has systematically eliminated blacks and other races of color.

Currently, members of Congress are trying to find the best way to get the country out of the health and financial crisis, but many supporters are calling for a new paradigm. Recent testimony before the Capitol Hill Commission focused on a variety of issues, but came to the same conclusion: The time for change is now.

For example, comments at a confirmation of charges hearing in February Adevarea from EmoA candidate nominated by President Biden for Assistant Secretary of Finance said: The color. The pandemic has exacerbated inequalities, strained families and exposed the gaps in opportunity that existed long before COVID-19. Without additional relief, this difficulty would be exacerbated and cause long-term pain to countless Americans. “

Adeyemo is a key figure in an executive order that requires all federal agencies to submit diversity and inclusion plans to the Office of Management and Budget. Tentatively, Treasury Secretary Janet Yellen, reported by The New York Times, has announced plans to invest $ 9 billion in community development finance institutions. Minority depository institution They are trying to strengthen the loans.

At the same time, the United States House of Representatives Financial Services Commission convened several hearings featuring expert testimony reflecting Mr. Adeemo’s appeal.

On March 10, the full Commission held a hearing titled “Justice for All: Achieving Racial Equality through Equitable Access to Housing and Financial Services”.

Representative Maxine Waters, California State Legislature and Speaker’s Overture Remarks Set the tone for the forum.

“Today we are here to discuss the steps this committee can take to create justice and achieve racial equality through access to fair housing and financial services… and. Institutional racism based on skin color creates barriers that affect social and economic outcomes no matter where you are or who you are, in the United States and around the world. Waters said.

Vice President Nikitra Bailey, testifying on behalf of the Responsible Lending Center, spoke about the legacy of federal housing policy, the sum of which has created the current financial inequality.

The Federal Housing Program of 1933 Homeowners Loan Company (HOLC) supported the highlighting through underwriting guidelines. As a result, black communities and other communities of color have been denied access to traditional funding. In the program’s first 35 years, only 2% of FHA-guaranteed mortgages went to black and other colored homebuyers.

Likewise, the GI bill of 1944 pursued the same systematic discrimination. For example, in Mississippi, 3,329 mortgages approved by the Department of Veterans Affairs included two black servicemen.

Fast forward to a more recent era, in the early 2000s, half of all mortgages made to black and Latin families before the foreclosure crisis were unsustainable subprime mortgages. Responsible loan.

“For these lending practices,” Bailey said. “Black and Latino families have lost over $ 1 trillion in wealth during the crisis. In addition, black property was the slowest to recover from the Great Depression. In fact, in 2000 home ownership was high. If it returns to pre-crisis levels, the number of black homeowners will increase by 770,000… The racial wealth gap will only allow black households with median incomes in the 46 largest housing markets in the country. Last year, 25% of homes on the market were available for purchase, while the median white household income was 57%. Focus on reversing these inequalities. We need urgent and bold action. “

The next day, the House Financial Services Subcommittee held another hearing. The session titled “Through Crack: Policy Options to Help American Consumers During the Pandemic” covers affordable credit or small business access to capital, debt collection and dyed credit, all. Has become inevitable, further complicating the financial disadvantages facing the community of color.

“Without safety nets and reliable pillows, people of color have a much harder time surviving an economic disaster,” he said. Carla Sanchez Adams, Texas Rio Grande Legal Aid, Inc. Manage attorneys. “People of color are more likely to fall into the poverty trap because they use fewer assets. “

“Debt collection activity increased in 2020,” said Sanchez Adams. With the spread of automatic ownership, consumers were at the mercy of lenders. Consumers will benefit if all debt activity ceases during a pandemic. Problems with our credit reporting system continued, highlighting the need to reform the methods of consumer information and reporting reported during a pandemic. … Consumers will benefit from the moratorium on negative reporting of outstanding debt during a pandemic. Fraud and fraud have also exploded. “

On behalf of minority lenders and small businesses, Robert James II, President of Carver Development CDE and President of the National Banking Association, stressed the importance of small minority-owned businesses and convenient access to traditional banks. Stressed the lack and decrease of. The number of minority depositories as issues requiring attention and correction.

“Minority-owned SMEs are the lifeblood of their community,” said James II. “SMEs owned by 1.1 million pre-pandemic minorities employed more than 8.7 million workers and generated over $ 1 trillion in economic output per year. Women own about 300,000 people. Despite their importance, these businesses face the fundamental challenge of becoming vulnerable in normal times. “

“Overall, black-owned businesses, whether they are investments or bank loans, tend to start with much less capital than white-owned businesses,” continued James II. “And only 1% of black business owners get a bank loan in the first year of business, compared to 7% of white business owners. The COVID-19 crisis has exacerbated this problem. Forty-two percent of minority-owned small businesses that responded to McKinsey’s Small Business Pulse Survey said it was getting harder to get credit than 29 percent of all respondents. “

However, according to James II, the credit conditions and the apparent lack of accessible credit are also loan conditions which must be more complete.

“Restricted access to credit is a compound factor that undermines the underlying health of minority-owned SMEs,” said James II. “Black small business owners may be required by white small business owners to provide more personal financial details, such as personal financial statements and personal W-2 forms,” according to a survey. Turned out to be very high even when dealing with credit scores and company characteristics. “

At the same time, as pointed out by James II, the number of minority deposit processing institutions (MDIs) grew from 215 to 155 nationwide from 2009 to the second quarter of 2018. MDI’s assets are also well below the non-MDI average. Bank.

“The average assets of black and Hispanic MDIs are $ 245 million and $ 2.7 billion, respectively, compared to the average assets of all US banks of $ 3.1 billion.”

“Even before the COVID-19 pandemic, US household debt was rising, topping $ 14 trillion,” said Ashley Harrington, federal director of advocacy for CRL. “Most of this debt comes from mortgages, but the increased amount comes from non-mortgage consumer debt such as student loans, credit cards, installment loans and auto loans. People continue to lose their jobs, and these non-mortgage delinquencies and defaults are expected to increase as time is reduced and deferred rents and other debts are incurred. “

Harrington has provided important recommendations to federal lawmakers that can give consumers more control over their financial management.

“By allowing all adults to save at least $ 1,000 per week and keep $ 12,000 in their bank accounts, families can avoid peasant evictions and pay for basic costs such as medicine and food. Family savings cannot replace social safety nets, but it is important that families can obtain them at a minimum basic level. These protections are more urgent than ever. According to a recent survey, more than 8 million families have been living in poverty since May 2020. ”

Charlene Crowell is Senior Fellow at the Center for Responsible Lending. She can reach to [email protected]..

Black America Needs a “New Normal”: Equitable Access to Credit to Build Wealth – Los Angeles Sentinel | Los Angeles Sentry Black America Needs a “New Normal”: Equitable Access to Credit to Build Wealth – Los Angeles Sentinel | Los Angeles Sentry

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