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Credit Check Can be a Barrier to a Job or Promotion

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(NNPA) As Black America continues to struggle with high unemployment rates, a new research report by Demos, a public policy organization titled, Discredited: How employment credit checks keep qualified workers out of a job, unveils how the use of credit history in employment decisions is often leaving people of color in the unemployment lines.

Among employers with fiduciary responsibilities, it is a long-standing practice to include credit reviews in hiring decisions. Banks, credit unions and similar employers should be careful in handling others’ money and deposits. But the Demos report found that employment credit checks now are becoming standard operating procedures for many employees without such responsibilities. In these instances, disproportionately screening people of color out of jobs can lead to discriminatory hiring.

With higher rates of unemployment and the additional burden of wealth disparities, many African-American and Latino households have a greater need to borrow for emergencies and are also at a greater risk for foreclosure or loan default.

Surveying nearly 1,000 low- and middle-income households with credit card debt, Demos found that people of color are disproportionately likely to report worse credit than Whites. Even for employed persons seeking a promotion at work, credit scores can be a factor in deciding which employee will get the better job.

Consumers surveyed shared that much of the debt going to collections agencies was for unexpected medical costs rather than for retail credit card usage. Households without health coverage were more than twice as likely to report that their credit score had declined in the past three years.

“It makes little sense to say that someone is not a good candidate for a job because they are still coping with the expense of a costly family medical emergency several years ago,” the report said. “Yet this may be exactly the type of situation that a blemished credit history indicates: having unpaid medical bills or medical debt is cited as one of the leading causes of bad credit among survey respondents.”

Amy Traub, the report’s author and a senior policy analyst at Demos, was even more frank. “This practice continues because it financially benefits the companies that market and sell this information to employers with little concern for the negative impact to the economic security of those with most at stake – low and middle-income Americans struggling to find work in a tough job market.”

This specific finding on medical debt mirrors another by the Federal Reserve Board. According to the Fed, 52 percent of all accounts reported by collection agencies consisted of medical debt.

These consistent findings on medical debt are also reflected in America’s disproportionate unemployment data. The U.S. Bureau of Labor Statistics continues to show that Black unemployment doubles that of Whites. From December 2012 through February 2013, White unemployment averaged 7 percent. By contrast, Black unemployment stood at 14 percent.

So what is a debt-burdened, unemployed consumer to do?

The Fair Credit Reporting Act (FCRA) allows employers to request credit reports on job applicants and existing employees. The statute also lays out specific steps under which these credit checks must occur. By law, employers must:

First obtain written permission from the affected consumer before a credit review;

Notify individuals before any adverse action is taken as a result of the credit review;

Offer the employee or applicant a copy of the credit report, along with a written summary of his/her consumer’ rights; and

Provide job applicants with a brief period of time to dispute any errors in their report.

Additionally, eight states have laws against employment discrimination involving applicants’ credit history: California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Washington, and Vermont.

Currently three other states are now considering similar legislation: Colorado, Massachusetts and New York.

If your state lacks laws against this type of discrimination, contact your local legislator about passing such legislation.

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

Time to Stop Appeasing AIPAC

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(NNPA) When I saw in the news that Vice President Biden had gone out of his way to assure the American Israel Public Affairs Committee (AIPAC) that the Obama administration was completely serious about military action against Iran if Iran moves forward with its alleged nuclear ambitions, I became sick.

AIPAC is the most prominent anti-Palestinian lobby in the U.S.A. and is known for the considerable weight that it carries in Washington. Candidates for office and elected officials on a regular basis make a pilgrimage to AIPAC to get their blessings and to demonstrate how opposed to Palestinian rights they are. Biden, it appears, has done it once again.

What makes Biden’s speech so sickening is that it comes at a moment intense negotiations are underway with Iran regarding Iran’s nuclear plans. Biden emphasized that the U.S.A. was not interested in containing a nuclear Iran but in preventing Iran from going nuclear.

By the way, the only country that has nuclear weapons in the Middle East is Israel. They have at least 100 such weapons, though they will not admit to possessing them. Second, Israel is not a signatory to the Nuclear Non-Proliferation Treaty while Iran is. Third, Israel has repeatedly violated United Nations resolutions in connection with its illegal occupation of Palestinian territory. Iran is occupying no one’s territory.

The mainstream U.S. media, along with groups such as AIPAC, are insisting that Iran plans on developing nuclear weapons. Iran denies this. The reality is that no one, other than the Iranians, know the objectives of Iran. What Iran does say, however, is that they want to use nuclear power for peaceful means. Now, leaving aside what you think about nuclear power, the reality is that Iran has that right under the Nuclear Non-Proliferation Treaty.

The negotiations underway to assure various countries that Iran harbors no intent to develop nuclear weapons remain complicated. Brazil and Turkey were able to get Iran to work through a compromise a couple of years ago. The Obama administration ignored this effort and continued to squeeze Iran.

While the Obama administration should be applauded for not acceding to the wishes of the Israeli government and their front groups, including AIPAC, in attacking Iran, Vice President Biden’s saber-rattling is not helpful. Something more helpful would be a U.S. suggestion for a “nuclear weapons free” Middle East. That would mean that there should be no nuclear weapons at all held by any side.

When we see what has happened in Libya where, with the collapse of the Qaddafi regime, significant amounts of non-nuclear weaponry got into the hands of some very bad people, it reminds us of what can happen with nuclear weapons in an unstable region. There is no reason to believe that Israel is impervious to nuclear weapons falling into the hands of fanatics who might use them for any number of reasons against any number of targets. No one should possess such weapons; no one should be given a pass.

Both President Obama and Vice President Biden need to pull back from their embarrassing overtures to anti-Palestinian groups such as AIPAC. In addition to inflaming tensions with Iran, tensions that could quite accidentally spark a war, such administration bowing to AIPAC does nothing to assure Palestinians that the U.S.A. wants to do anything other than serving as a supply depot for Israeli ambitions, regardless of the costs.

Time for a change.

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.

Detroit Unable to Outrun its Past

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(NNPA) I visited Cleveland a few years ago. As I was heading towards downtown I noticed a sign that showed pictures of blighted structures. There was a quote at the bottom of the sign which read, “Cheer up – we are not Detroit!” I guess all major U.S. cities can say the same thing. Nowhere in this nation is a city so ravaged with blight, poverty, drugs, violence, crime and hopelessness than Detroit, Mich. It didn’t happen overnight but the disaster is just about complete.

I lived five years in Detroit. It was the city where I met the love of my life, beautiful Kay DeBow, a native of Indianapolis. Gone are the days of great night clubs such as My Fair Lady, Lafayette Orleans, etc. There were so many pretty girls and before Kay I tried to love each and every one of them. The city had many challenges during the late 1970s and early 1980s but the people were tough and proud. Just like today, they ignored the ills. But now the ills are too big to ignore.

In 1950, the census reported Detroit had a population of 2 million. Today, there are less than 700,000 residents and that number is dropping as you read this article. This is a testament that many people during this time were miserable and decided to move out to the suburbs or even out of state. There are more than a few ex-Detroiters living in Texas, Georgia and California today. One of its pride and joy was Motown Records and it moved out completely. There are many empty corporate offices and plants now.

It all began to decline in the 1950s as this city became a complete “Union Town.” Cost of labor skyrocketed as unions demanded more and more pay and benefits which often the city could not afford (city, county and school employees). This pushed the pace for tax increases and many residents responded by moving out of the city.

As the more affluent (Whites) left the city limits, the Black vote became more powerful. By 1974, Detroit elected its first Black mayor. Coleman Young was a strong individual with a union background. Not only were people starting to leave but White business began to seek other venues. As the tax base weakened, the demand for higher taxes grew. It became a vicious financial cycle. Meanwhile, Mayor Young changed the city’s charter. All nine city council members became at-large. Consequently, he handpicked his city council members who happened to live in just about the same neighborhood. The people had no immediate representation for their particular neighborhoods – no accountability. Detroit has just nine city council members compared to 28 in Indianapolis.

Corruption became rampant. Even the Chief of Police William L. Hart was sentenced to 15 years in prison for stealing $1.3 million. His deputy, Kenneth Weiner, went in for five years. This epitomizes a deep problem in this city. It is a problem that still exists today. A former city council woman is in jail as you read this.

Then, during the late 1970s came the crack cocaine invasion into our cities. Detroit caught it steroid style. Murders plagued every section of town. But unlike the other cities, the drug problem has not subsided. It and its “first cousin” crime are worse than ever. The city just reported its highest homicide rate in 20 years. Detroit leads the nation in violent crimes for cities with 200,000-plus population.

The city is unable to shake off the ills. As Justice Croise says, “I’m a native Detroiter (born and raised), lifelong Democrat, and I voted for President Obama (twice), so I am well aware how “Republican” my stance on Detroit is, but having been on the inside of City Hall I have the first-hand experience to tell you that waste, fraud, ineptitude, selfishness, and a complete lack of personnel and financial management controls are holes in Detroit’s boat which no amount of bailing can keep afloat….Fundamentally obsolete union contracts… falsely protect underserving workers and processes….usurp the city’s ability to manage operations effectively and efficiently.” (The New American magazine)

Detroit cannot pay its bills and has no credit left. Its bonds are junk status and pretty soon the creditors are going to pounce. Michigan Gov. Rick Snyder has pledged to step in and hire an emergency financial manager to try and right this struggling ship called Detroit. The City Council and civil rights groups are crying foul. How can they when their backs are up against the wall? There is a child of Michigan who is equipped to handle this situation as he has done in the past. Yes, the best thing Gov. Snyder could do is convince Mitt Romney to come in and give Detroit a good scrubbing. This may be the only way to save it.

Harry C. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce®. Website: www.nationalbcc.org. Email: halford@nationalbcc.org.

Ending Violence Against Women

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(NNPA) March is the official month to “discuss” women and it could not arrive too soon. What is sad about both Black History Month (February) and International Women’s Month (March) is that too many of us think that those are the only legitimate times of the year to discuss the issues affecting these respective groups. In either case, attention to the plight of women, in March or any other month, is warranted.

Last year seemed to be the year to attack women. The language of many on the political Right in during election season was so phenomenally backward that in a different context you would have wondered whether it was all an act. Suggesting that there are acceptable and unacceptable forms of rape, for instance, once again puts the burden on women for the violence that they experience.

This issue of violence against women needs much greater attention and we must realize that it is not only a domestic issue. A very good friend of mine had to flee her country of origin because of the physical and emotional abuse she was experiencing from her husband, knowing that her community would never believe that someone of the stature of her husband would be capable of such crimes. More to the point, she knew that her community would somehow conclude that she, rather than her husband, was the source of the problem.

Stories over the past year about assaults on women in Egypt have made any sane person’s skin crawl. But we should recognize that such assaults—rape and molestation of politically active women—are not new. There is a long history of rape and other forms of violence being used—domestically and internationally—as a means to subjugate politically active women, and those women who dare to speak out on social, economic and political issues, and not necessarily just on women-related issues.

This year’s Billion Rising protests were aimed at bringing international attention to the matter of violence against women. The consciousness and concerns raised by this and other such efforts needs to be sustained throughout the rest of the year. Real attention needs to be focused on young men so that they understand that violence against women is totally unacceptable. A different sort of attention needs to be focused on women such that those who experience violence do not internalize this experience, blaming themselves. But the attention must also go to other women who, because of the male supremacist societies in which we live, will on occasion close their eyes and ears to the pain of victimized women, in the worst case joining in the chorus of putting the blame on women.

March 2013 is just the right moment to raise popular attention to violence against women. We have to shift the impulses, particularly of men, such that violence against women is not met with silence, nor met with excuses, but is met with support to women and condemnation of all perpetrators of violence.

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.

Car-title loans: $3.6 billion in Interest Paid on $1.6 Billion in Loans

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(NNPA) In today’s struggling economy, many consumers find themselves short on cash. When consumers seek a credit remedy, one particular lender is likely to bring more problems than solutions: companies that make car title loans.

According to new joint research report by the Consumer Federation of America (CFA) and the Center for Responsible Lending (CRL), the average car-title loan of $951 winds up costing the typical borrower $2,142 in interest. Nationwide, 7,730 car-title lenders in 21 states reap $3.6 billion in interest on loans valued at only $1.6 billion.

The car-title loan uses a borrower’s personal vehicle as collateral and additionally charges triple-digit interest rates, like those of payday loans. And similar to payday loans, the typical car-title loan requires full repayment in just one month. When borrowers cannot afford to pay in full, they are forced to renew their loan by paying additional interest and fees. The report found that a typical customer renews their loan eight times.

The report also found anecdotal instances in which car-title lender marketing practices have lured consumers by advertising 25 percent interest per month for a two-week loan. The actual rate of interest, however, equates to 300 percent annual percentage rate (APR). And it’s not as though 300 percent APR is an offsetting risk to the lender: Car-title loans are usually made for only a fraction of the vehicle’s market value – approximately 26 percent.

When borrowers can no longer keep up with interest payments, cars are repossessed and yet another fee is added to the borrower’s debt. On average, these repossession fees run in the range of $350-$400 or about half of the borrower’s remaining loan balance. The report found that one in six consumers was charged expensive repossession fees.

It’s easy to sum up the central problems with car-title loans. As the authors write in the report, these loans “carry inherently unsuitable terms that cause already vulnerable borrowers to pay more in fees than they receive in credit while putting one of their most important assets at risk.”

If you’re thinking that there ought to be a law against this obviously predatory product, be sure to tell your state legislators. Most states with car-title loan laws either have no interest rate caps, or authorize triple digit interest.

Tracking how these loans affect consumers is one thing; financial reforms are quite another. In this regard, the CFA-CRL report calls for public policy actions at the state and federal levels.

For example, the federal Consumer Financial Protection Bureau could enact protections addressing loan terms and underwriting. States, on the other hand, could adopt rate caps of 36 percent on these loans.

Other policy recommendations include:

Changing loan terms to equal monthly payments that would enable borrowers to gradually pay down their debt;

Require written notice prior to borrowers and the right to redeem the vehicle before lenders repossess or sell the car; and

In the event of a vehicle sale, return to the borrower any surplus between a new sales price and the remaining amount of money owed.

In 2006, similar consumer protections were enacted to protect the military and their families. If President George W. Bush and Congress could agree to cap small loans at 36 percent annually for this consumer sector, it seems reasonable that the rest of us should be given the same protections.

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

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