Several banks have announced initiatives totaling billions of dollars that are aimed at addressing racial inequalities, but observers say the programs need to be carefully tailored. Harvey Yancey, the owner of H2DesignBuild, a developer in Washington, D.C., said that as a Black person in the industry, he was keenly aware of its homogeneity. Credits: Sarah Silbiger for […]
by Lamell McMorris, Washington Informer: The COVID-19 pandemic, as well as the recent attack on the U.S. Capitol in which domestic terrorists with Confederate flags and white nationalist symbols, has shaken America to its core. This is the moment to confront America’s racist past and present. Though we are not denying America’s achievement as the first constitutional[…]
Although many officials have called for a new normal for millions of small businesses and communities that need something new instead of the same exclusionary practices that kept blacks locked out of access to credit. In Black America especially, the ‘old normal’ never delivered equitable access to wealth-building opportunities as those that well-served served much of white America. Instead, a lengthy history of public policies designed to create and sustain a burgeoning middle class systemically excluded Blacks and other people of color.
By Charlene Crowell
Over the past year, the COVID-19 pandemic has imposed dual crises. Over 542,000 Americans lives were lost and continue to increase. At the same time, the rippling effects of a massive economic downturn has caused the nation to lose 9.5 million jobs – more losses than even those of the Great Recession, finds the University of New Hampshire’s Carsey School of Public Policy.
Now, while federal lawmakers seek to understand how best to bring the nation out of health and financial crises, many advocates are calling for a new normal: intentional inclusion of all who have been shut out, knocked down and underserved. Recent testimony before Capitol Hill committees focused on different issues but led to the same conclusion: the time for change is now.
For example, comments during a February confirmation hearing for Adewale Adeyemo, nominated by President Biden to become Deputy Treasury Secretary, the nominee said, “Until we contain the pandemic, economic policy must remain focused on providing relief to those harmed by the public health crisis, especially those disproportionately impacted: low-income communities and communities of color. The pandemic has exacerbated inequality, strained families, and exposed disparities in opportunity throughout our country that existed long before COVID-19. Without additional relief, this hardship will become even more acute and will inflict long-lasting pain on countless Americans.”
At press time, the Senate was set to act on the Adeyemo nomination. If confirmed, he would become the agency’s point-person to implement the executive order requiring all federal offices to submit diversity and inclusion plans to the office of Management and Budget. In the interim, Treasury Secretary Janet Yellen, as reported by the New York Times, announced plans to invest $9 billion into Community Development Financial Institutions and Minority Depository Institutions as they look to step up lending and create a new normal.
Concurrently, the U.S. House of Representatives’ Financial Services Committee has convened multiple hearings that featured expert witness testimony echoing the calls of Mr. Adeyemo.
On March 10 the full committee held a hearing entitled, Justice for All: Achieving Racial Equity Through Fair Access to Housing and Financial Services.
Rep. Maxine Waters, a California Congresswoman and committee chair’s opening remarks set the tone of the forum.
“Today we are here to discuss steps that this Committee can take to create justice and achieve racial equity through access to fair housing and financial services…. And no matter where you are—and who you are–in America or around the world, institutional racism based on skin color creates barriers that impact social and economic outcomes,” noted Ms. Waters.
Testifying on behalf of the Center for Responsible Lending, Nikitra Bailey, Executive Vice President recounted the legacy of federal housing policies whose sum created today’s financial inequities and a need to establish a new normal.
A 1933 federal housing program, the Home Owners Loan Corporation (HOLC), supported redlining through its underwriting guidelines. As a result, Black and other communities of color, were denied access to mainstream financing. During the first 35 years of this program, only 2 percent of FHA insured mortgage loans went to Black and other homebuyers of color.
Similarly, the 1944 GI Bill, continued the same systemic discrimination. In Mississippi, for example, the 3,329 VA -approved mortgages included two Black servicemembers.
Fast forward to more recent times, by the early 2000s, half of all mortgages made to Black and Latino families during the run-up to the foreclosure crisis were unsustainable subprime loans — despite these consumers having credit records that qualified for cheaper, safer and more responsible loans.
“Because of these lending practices,” testified Bailey, “Black and Latino families lost over $1 trillion dollars in wealth during the crisis. Moreover, Black homeownership has been the slowest to recover from the Great Recession. In fact, there would be 770,000 more Black homeowners if the homeownership rate recovered to its pre-crisis level in 2000… The racial wealth gap contributes to the fact that in the 46 largest housing markets in the country, a median income Black household could only afford 25 percent of homes on the market last year in comparison to the 57 percent that a median income white household could afford.32 It will require focused and bold action to reverse these inequities.”