Center for Responsible Lending
This year has brought a number of significant developments. A new Congress, the 115th in our nation’s history, and similarly the 45th president have together begun a new era of government. From all indications, this new leadership seeks to create public policies and priorities that significantly alter what will remain as a governmental function. From education to environmental stewardship, health care and more, the governing toolbox of executive orders, regulation and legislation are all in use.
Despite these changing times, much of what has plagued Black America remains the same: a lack of wealth and ample access to opportunities that can virtually and permanently improve our lives.
No one needs another study that finds how Black America’s net worth is a fraction of that held by White Americans. We already know that Black families who send their children to college incur a larger family debt that includes multiple generations – the student, parents and even grandparents. And in that quest for education, each generation’s ability to maximize financial stability is at risk. Or that Black businesses and entrepreneurs often face predictable denials for loans that could bring jobs to their own communities.
It seems that in 2017, Black America’s number one need is to finally know and enjoy economic justice in all of its forms. We have already felt the brunt of predatory lending’s high costs that steal our hard-earned wages with triple-digit interest rates. Far too many of us are still denied access to mortgages, even when credit profiles tell us that we should qualify for the most affordable and sustainable home loans. And then there are the car payments that have been packed by dealers who frequently mark-up interest rates and cram additional “services” into loans that could have been purchased far more cheaply on their own.
Thankfully, the 49-member Congressional Black Caucus recently released a report with a title that was also a clear statement, We Have a Lot to Lose: Solutions to Advance Black Families in the 21st Century. Its 125 pages contain chapters that speak to our unique American experience while also proposing solutions to deliver us to the full bounty of what it means to be an American to people of all colors. While space will not allow me to explore the entire report, key elements of the chapter on economic justice deserve to be broadly shared and read.
“The racial wealth gap is widening,” the report states. “To gain wealth comparable to White high school dropouts, Blacks have to have completed high school and some college. This means that Black Americans need to invest more resources and time to achieve the same results as White citizens that have not had to make the same level of investment.”
In all, this chapter’s multiple proposals represent an alternative to that reflected in President Trump’s Budget Blueprint on how best to forgive education debts, ways to combat food deserts that rob entire neighborhoods of full-service grocery stores, strengthening financial regulation rules and more.
“The government should be investing in jobs programs, reasonable bank regulation, education, and health care to ensure economic vitality into the next century, not more tax cuts for the rich and less regulation of Wall Street. We tried those options in the 2000’s and all we got was a financial crash as thanks for it,” the report states.
A particularly innovative proposal is the CBC’s 10-20-30 Formula for all federal agencies. It would require each agency to commit 10 percent of their budgets to the 485 counties where 20 percent or more of the population has been living below the poverty line for the last 30 years. This proposal also calls for the Trump administration to establish a federal interagency task force to coordinate poverty alleviation efforts.
Other proposals in this chapter address new ways of ensuring equal access to homeownership opportunities and the inclusion of items not normally considered by traditional credit scoring models, such as mobile phone data and timely bill payments, to increase lending.
Preservation of the Community Development Block Grant, which was proposed for elimination by the White House Budget Blueprint, and increased attention to truth in lending, credit access and the Community Reinvestment Act (CRA) are also included.
In the aftermath of the foreclosure crisis, the Center for Responsible Lending (CRL) released research on the state of consumer lending that spanned a range of loan and credit products. The report also found that consumers who were harmed the most by predatory lending were often Black and Latino.
“Abusive practices not only harm the family that loses its home to an unaffordable mortgage, the student saddled with excessive education loans, the person who pays thousands of dollars extra in kickbacks on their loan when they buy a car, or the consumer who receives a ‘fee harvester’ credit card where the charges far exceed the credit extended; they also profoundly harm neighborhoods, communities, and cities, and hold back our entire economy,” wrote Sheila Bair in the report’s foreword. Bair, president of Washington College since 2015, has also served as a senior advisor to Pew Charitable Trusts and served a five-year term as chairman of the Federal Deposit Insurance Corporation from 2006-2011.
“Trapping families in financial marginalization keeps them from succeeding and from making their full contribution to the whole community and economy,” Bair continued. “They are unable to advance and generate prosperity for themselves and are blocked from increasing the prosperity of others as well.”
Real, sustainable economic justice will not only improve the lives of those so often left behind but also strengthen the nation’s economy as well. Sounds like something worth fighting for.
Charlene Crowell is the Deputy Communications Director for the Center for Responsible Lending. She can be reached at firstname.lastname@example.org.