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Study Prompt calls for Policy Reforms to Eliminate Racial Wealth Gaps

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(NNPA) According to a new research report, America’s racial wealth gaps will persist until public policy reforms provide every family the opportunity to build wealth.

Less than Equal: Racial Disparities in Wealth Accumulation, from the Urban Institute’s Opportunity and Ownership project, analyzed data and trends from 1983-2010. Over these years, the average household income of Whites remained double that of either Black or Latino families.

But when wealth was considered, the amount of available assets remaining after all indebtedness was deducted, White families’ wealth grew six times that of either that for either Black or Latino families.

“When it comes to economic gaps between whites and communities of color in the United States, income inequality tells part of the story. But let’s not forget about wealth. Wealth isn’t just money in the bank; its insurance against tough times, tuition to get a better education and a better job, savings to retire on and a springboard into the middle class. In short, wealth translates into opportunity.”

The report also found that although the Great Recession of (2007-2009) hit communities of color particularly hard, the type of financial losses varied. With Black unemployment double that of the rest of the nation, Black retirement assets fell by 35 percent during these years. This data suggests that lower-income Black families withdrew money from retirement savings following a job loss or other adverse events. For Latinos, the average retirement asset decline was 18 percent.

By contrast, the Great Recession years took half of Latino family home equity, compared to an average 25 percent for Black and White families. To better understand this lost wealth, it is relevant to note that in 2010 only half of Black and Latino families owned their homes, while 75 percent of Whites were homeowners.

With more assets and diversified income streams, white wealth declined 11 percent during the Great Recession. But Black wealth dropped 31 percent during these same years and Latino families dropped the greatest at 44 percent.

Yet despite these findings, it is equally true that many families of color still desire to own a home and their own piece of America. Their dreams may be deferred, but still remains strong. As the nation’s economy continues to struggle towards prosperity, tightened mortgage lending, higher FHA fees, and continued discussions of federally-mandated down payments do not bode well for more families of color reaching the American Dream.

For the Urban Institute, the answer to these growing and disturbing disparities is reconsidering public policies.

“Families of color were disproportionately affected by the recession. However, the fact that they were not on good wealth-building paths before this financial crisis calls into question whether a whole range of polices (from tax to safety net) have actually been helping minorities get ahead in the modern economy,” according to the study.

Contrasting programs such as the Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families (SNAP) as two social safety programs designed to provide basic essentials; the report noted how tax subsidies for homeownership and retirement policies actually help to build wealth.

“The federal government spends hundreds of billions of dollars each year to support long-term asset development. But these asset-building subsidies primarily benefit high-income families, while low-income families receive next to nothing.”

The Urban Institute’s conclusions are strikingly similar to those reached earlier this year by the Brandeis University’s Institute on Assets and Policies.

“The evidence points to policy and the configuration of both opportunities and barriers in workplaces, schools and communities that reinforce deeply entrenched racial dynamics in how wealth is accumulated and that continue to permeate the most important spheres of everyday life,” the Brandeis report stated.

Here’s hoping that those entrusted with policy decisions are listening.

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at: Charlene.crowell@responsiblelending.org.

Obama is Hostile Toward Venezuela

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(NNPA) When President Obama was first elected, in 2008, much of the world waited to see what sort of changes he would introduce in the relationship of the U.S. towards the rest of the planet. In fact, he was prematurely awarded the Nobel Peace Prize based on expectations that the U.S. would pull back from wars and bullying. Even skeptical leaders, such as the late president of Venezuela, Hugo Chavez, were prepared to give him the benefit of the doubt.

Despite the hopes and prayers, this administration has done precious little to rebuild ties with countries that were threatened by the Bush administration. Case in point: Venezuela. The most recent issue, which is highly ironic, to say the least, has been the refusal of the Obama administration – at least as of the writing – to recognize the results of the recent Venezuelan election. By a slim majority, Nicolas Maduro won his race for president. The opposition in Venezuela cried foul, as was expected. Yet the Venezuelan elections have not been challenged by independent observers. Rather, there has been a recognition that the election results were close, a phenomenon with which we in the U.S.A. should be quite familiar.

What happened next was odd. The U.S.A. refused to recognize the results of the election, claiming that there was a need for a recount. Now, let’s get this one straight. From the country that in November 2000 had an election that was stolen (Bush v. Gore) and where a recount was stopped by the Supreme Court, we have the audacity to demand that another country carries out a recount? In fact, the U.S.A. is asking a country that has elections that have consistently been proven to have been clean to conduct a recount?

Despite the fine rhetoric, the Obama administration has continued the tried and true path of most U.S. administrations in treating Latin America as if it is the backyard of the United States. Rather than recognizing the sordid history of the relationship between the U.S.A. and Latin America, whereby the U.S. has consistently intervened politically, militarily and economically in the internal affairs of the region, the Obama administration seems to be following a path of more subtle destabilization. It has offered fine rhetoric about better relationships with the rest of the hemisphere. At the same time it has reinforced a traditional U.S. dominant role. A case in point was the Honduran coup of 2009 where the Obama administration first condemned the coup. This was then followed by U.S. efforts which undermined attempts to return the rightfully elected president to office.

The behavior of the Obama administration gives every Latin American and Caribbean leader pause because, in effect, it suggests that the U.S.A. will continue to exert its influence, not through diplomacy, but through implied threats. In the case of Venezuela, the failure to recognize the legitimate Venezuelan elections is tantamount to giving the signal that a coup in Venezuela would be a legitimate response.

No more nice speeches, Mr. President. If you want to act like Teddy Roosevelt, let’s be more honest.

Bill Fletcher, Jr. is a Senior Scholar with the Institute for Policy Studies, the immediate past president of TransAfrica Forum and the author of “They’re Bankrupting Us” -And Twenty Other Myths about Unions. Follow him at www.billfletcherjr.com.

New Efforts to Curb the 'Debt Trap' of Payday Lending

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(NNPA) The small-dollar loans that generate long-lasting debt for consumers and cost them billions of dollars each year are drawing the active attention of legislators and regulators alike. On April 24, the Consumer Financial Protection Bureau (CFPB) released a white paper on payday loans made by storefronts and by banks. Despite years of bank efforts to portray themselves as anything but payday lenders, the CFPB strips them of that cover.

According to CFPB Director Richard Cordray, “What we found is there is not much difference from the consumer’s perspective, between payday loans and deposit advance loans. They have similar purposes and, as it turns out, similar usage by consumers.”

At the same time, three members of Congress – Congressional Black Caucus Members Elijah Cummings D-(MD) and John Conyers (D-Mich.) were joined by Oregon’s Rep. Suzanne Bonamici in urging federal regulators to take actions on bank payday loans.

“We urge you to take meaningful joint regulatory action to ensure that no bank, regardless of its prudential regulator, traps borrowers in high-cost payday loans,” the members said in a statement. “Our constituents, and consumers everywhere, deserve better from our nation’s financial institutions.”

The following day, two regulators, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) announced new regulatory actions to address potential consumer risks associated with the products as well as the safety and soundness of operations. The two regulators’ actions are very similar, focusing on a borrower’s ability to repay while meeting ongoing expenses, safe and sound underwriting, and limiting the numbers of loans.

According to Thomas J. Curry, OCC Comptroller, “We have significant concerns regarding the misuse of deposit advance products.”

OCC supervises all national banks and federal savings associations with combined assets of $10.1 trillion, representing 71 percent of total U.S. commercial banking assets, according to its most recent annual report.

Similarly, FDIC Chairman Martin J. Gruenberg said, “The proposed supervisory guidance released today reflects the serious risks that certain deposit advance products may pose to financial institutions and their customers.”

FDIC insures deposits in more than 7,000 banks and savings associations.

According to CFPB’s findings these actions could benefit about 12 million households that borrow payday loans each year, a potential reduction in the $7 billion in annual fees that are generated by more than 18,200 payday storefronts across the country.

CFPB’s report examined 15 million payday loans made during a 12-month period, covering more than 90 percent of the market. Both storefront and bank versions exposed consumers to the risk of being caught in a revolving door of debt. What was sold as a short-term bridge became an expensive, long-term loan. Risky loan structure, loose lending standards, sustained usage and accompanying high costs were cited as characteristics of both products.

According to the report, 75 percent of storefront payday lending revenue is derived from borrowers taking out 10 or more loans a year. For 68 percent of these borrowers, their annual income is $30,000 or less.

Among the findings:

 

  • Nearly one-in-four borrowers received government assistance or benefits such as Social Security, disability, unemployment or welfare benefits;
  • The average borrower took 11 loans in the 12-month period, paying $574 in fees for $392 in credit; and
  • Despite lender attempts to reject the use of an annual percentage rate (APR), a two-week loan with a $15 fee per $100 borrowed is actually a 391 percent APR.

 

On banks’ deposit advance loans, CFPB also found that:

 

  • Borrowers usually had much lower average balances than other bank customers, suggesting a smaller financial cushion to cover unexpected shortfalls;
  • Nearly two-thirds of consumers also incurred additional fees such as overdraft or non-sufficient funds;
  • The annual percentage rate (APR) of interest was 304 percent; and
  • Most borrowers remained in debt for at least 149 days.
  • Commenting on these findings, Director Cordray said, “We want to make sure that consumers can get the credit they need without jeopardizing or undermining their finances. Debt traps should not be part of their financial futures.”

 

Earlier this month and in an effort to heighten Capitol Hill awareness of payday lending’s debt trap, Congressman Conyers convened a briefing that included representatives from the NAACP, Native Community Finance, Consumer Federation of America, Pew Charitable Trusts, and the Center for Responsible Lending.

Also this month, CRL and National People’s Action delivered to regulators more than 150,000 petitions urging the officials to crack down on high-cost payday lending. Also part of the petition drive were CREDO and Green America and Americans for Financial Reform.

For more than a decade, payday lending has been a centerpiece of the Center for Responsible Lending’s policy efforts. The new CFPB findings strengthen earlier independent research by CRL.

Commenting on CFPB’s findings, Uriah King, CRL’s vice-president of state policy, said, “This white paper affirms our long-standing critique of payday lending. The debt trap of payday loans is now official.”

Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.

Understanding the NRA's 'Logic'

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(NNPA) Every time the National Rifle Association (NRA) or its political allies block any form of gun control, people throw up their hands in complete frustration trying to figure out why the NRA will, seemingly, never agree to any sort of reasonable gun control. The answer is quite simple: the NRA believes that any degree of gun control is a slippery slope which will inevitably lead to more restrictions on the use of fire arms. Once you appreciate the NRA’s “logic,” their positions—as backward and anti-social as they are—take on a different meaning.

What is critical that one appreciates is that the NRA is not so much focused on this or that piece of gun control legislation. I would wager that they probably care little about whether a clip has three bullets or 300. What they care about is that restrictions on any ammo clip will result, over time, in greater restrictions on guns.

It is, therefore, important that those of us who believe that it is not a great idea for mentally disturbed individuals to have access to firearms, to never assume that passionate pleas to the NRA or its political allies will work. The NRA has inoculated itself against passionate pleas. The ghosts of the children killed at the daycare center in Newtown, Conn. could appear in front of the headquarters of the NRA and it would make no difference.

In appreciating what motivates the NRA one must, therefore, understand that winning reasonable gun control, e.g., universal background checks, will not happen through television commercials or the tears of victims of gun violence. Such legislation will result from raw power and intense organizing among the public. The NRA is a very well-funded and well-organized lobby that has the capacity to put the fear of God into many elected officials. The only way to counter that is not through attempts at compromise but rather by developing a sufficient counter-force that will cause elected officials to pause before they give away the store to the NRA.

A country built on racial slavery and genocide finds it difficult to accept that there need to be controls over the use of firearms. That history of rampant, frequently uncontrolled – yet directed – violence is the toxin which is in the political system that periodically produces moments of complete insanity. This toxin leads too many people to believe that having nearly unfettered access to firearms is paramount regardless of how many innocent individuals lose their lives.

It is not the 2nd Amendment that fundamentally motivates uncompromising firearms fanatics, but the fear that was engendered through the scars resulting from the violent history of this country. Given that history, the NRA is successfully able to play a tune to which so many will dance. In the bizarre universe which the NRA has constructed, built upon and within a very real and violent history, it all starts to make sense…and is equally sickening.

Bill Fletcher, Jr. is a Senior Scholar with the Institute for Policy Studies, the immediate past president of TransAfrica Forum, and the author of “They’re Bankrupting Us” – And Twenty Other Myths about Unions. Follow him at www.billfletcherjr.com.

Message to Congress: Show Courage on Gun Safety

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“Sometimes I close my eyes and all I can remember is that awful day…But other times, I feel Ben’s presence filling me with courage for what I have to do…” - Francine Wheeler, mother of 6-year-old Ben Wheeler, one of the 26 victims of the December 14 Sandy Hook tragedy.

(NNPA) I recently took my children to see the newly released movie, “42,” the story of Jackie Robinson’s courageous struggle to become the first African American Major League Baseball player. The movie also highlights the courage it took for Branch Rickey, the owner of the Brooklyn Dodgers, to sign Robinson to a major league contract in 1947, marking the end of more than 50 years of all-White teams.

In his first year with the Dodgers, Robinson was subjected to racial taunts and threats from White fans and opposing teams, as well as hostility from some of his own teammates, who objected to sharing the field and locker room with a Black ballplayer. But Jackie Robinson exhibited a rare brand of courage, refusing to lash out as he piled up hits and blazed the base paths on his way to becoming Major League Baseball’s first Rookie of the Year. Robinson went on to have a Hall of Fame career, and until his death in 1972, he was also an all-star champion of civil rights. Dr. Martin Luther King, Jr. once described Jackie as, “… a pilgrim that walked in the lonesome byways toward the high road of Freedom. He was a sit-inner before sit-ins, a freedom rider before freedom.”

The life of Jackie Robinson is a profile in courage that has inspired generations of Americans, including millions of young children. I thought about that this past weekend as I watched the tearful plea of a mother who lost her child on December 14 at Sandy Hook Elementary School in Newtown, Conn. Just four months after the loss of her son, Ben, Francine Wheeler found the courage to deliver President Obama’s weekly address to the nation. Visibly shaken, she used the opportunity to passionately implore Congress to “come together and pass commonsense gun responsibility reforms that will make our communities safer and prevent more tragedies like the one we thought would never happen to us.”

After the Senate failed last week to display similar courage by passing bipartisan measure to expand background checks for online gun purchasers and gun show sales, it is clear that Congress could use some courage.

As the movie “42” makes clear, change occurs when people choose to show courage in the face of adversity. The film demonstrates that it takes the courage of more than one to bring about change and that courage means doing what’s right, regardless of the odds. Jackie Robinson broke the color barrier in baseball years before Thurgood Marshall argued Brown v. Board of Education and Rosa Parks took her seat on the bus. There was no blueprint for him to follow. But Congress has a blueprint to guide them as they are challenged to enact meaningful legislation to make America safer. It’s time to put the politics aside, and pick up some courage.

Marc H. Morial, former mayor of New Orleans, is president and CEO of the National Urban League.

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