Need money during coronavirus pandemic? How to avoid loan sharks and debt traps

By Manuela Tobias
Fresno Bee

 

As millions of Americans lose jobs, shifts and other sources of income during the coronavirus health crisis, financial experts worry about loan sharks who stand to profit.

“We saw this during the foreclosure crisis, where people were in distress and scammers took advantage to promise to help people connect to relief for a fee they could not afford,” said Kevin Stein, deputy director of the California Reinvestment Coalition.

In 2018, there were 133 payday lenders in the central San Joaquin Valley, according to California records. But there were nearly 198 ten years prior when the valley began feeling the effects of the 2008 recession and spiking unemployment.

Payday lenders in California can loan up to $300 and charge a maximum of $45 in fees, according to the Department of Business Oversight. The average annual percentage rate for payday loans in the state was 376% last year, which is exponentially greater than the APR for most credit cards.

The payday loan industry says its businesses provide a needed service at an affordable cost. But advocates argue they prey on financially vulnerable families — most payday loan offices in California are located in zip codes with above-average poverty rates.

Almost 187,000 Californians filed initial claims for unemployment insurance last week, according to the U.S. Department of Labor.

By June, private-sector job losses could climb to more than 55,000, or 11% to 12% of employment in the central San Joaquin Valley, according to a Sacramento Bee analysis of a recent Economic Policy Institute study.

“We’re facing one of the worst unemployment crises we’ve ever seen,” said Adam Briones, director of economic equity at the Greenlining Institute in Oakland. “I think it goes without saying that when families are in crisis, those payday lenders are some of the easiest ways to get money quickly. It’s really tough to get out of that debt though.”

If you were recently laid off and need a loan, here’s how to get help without falling into a debt trap.

Go to your bank or credit union first

If you’re struggling to make a payment, contact your lending institution first. Rosa Pereirra, branch manager of Self-Help Federal Credit Union in Fresno, said they have allowed all their members to skip any of their payments in April like they sometimes do during the holidays.

“I would beg the public to call the institution they already owe the payment to because a lot of them get frantic,” Pereirra said. “We’re telling them, take care of yourself, stay home. I can promise you 99% of lenders have a way they can help people skip their payment.”

Banks including Wells Fargo, Citi, Chase and Capital One are encouraging cash-strapped customers to contact them to see what they can work out. Many can offer hardship plans, which could mean lower interest rates or smaller fees.

Briones, from Greenlining, said banks may not offer hardship plans offhand, so clients should do their research first, and ask for what they need. For additional resources, seek out the Department of Housing and Urban Development approved housing counselors or credit counselors from nonprofit organizations.

Regulators are also responding to this pandemic by asking large banks and community development financial institutions to start offering small-dollar loans. Briones said clients should ask their banks for a small loan before resorting to a payday lender.

“Wherever we’ve seen payday lending it does lend itself to predatory lenders. But if it is large national banks making small-dollar loans, at the very least there is a regulatory aspect. There’s a structure there,” he said. “Where we worry the most is non-bank lenders that aren’t regulated at the federal level and have much less accountability than large national lenders.”

If lenders ask for a canceled check, that’s a red flag, according to Pereirra from Self-Help Federal Credit Union.

“Most banks and credit unions are able to make a direct deposit. A lot of predatory lenders go ahead and want to have access to your account. With a check, they have the routing number and account number so they can try to pull it several times.”

Pereirra said small loans typically should run between 2.5% to 10%. If a rate exceeds 20%, she encouraged consumers to reach out to a credit union for refinancing help.

“I just saw one at 480% APR,” Pereirra said. “A lot of times we’re able to pay their high rate loans off.”

The Consumer Financial Protection Bureau has also created multiple guides on navigating loans and debts.

Coronavirus aid package

Trump signed a $2 trillion coronavirus stimulus bill on Friday with significant relief for families and small businesses.

Individuals who filed their 2018 or 2019 taxes can receive a check of up to $1,200, as well as $500 for each child. You can calculate how much you receive here.

For many, advocates argue, that won’t be enough to cover rent or other expenses.

“We’re really concerned because we feel that for an economic recovery package to make an impact, those funds need to be consistent. We think families are going to need 12 to 24 months of payments to make it out of this economic fallout,” Briones said.

For now, that payment is a one-time deal.

The stimulus also includes $10,000 loans for injury disaster relief through the Small Business Administration to provide paid sick leave to employees, maintain payroll and make rent or mortgage payments. You can apply through SBA.

“This is a historic move on the part of SBA,” said Tara Lynn Gray, Fresno Metro Black Chamber of Commerce president. “You can apply for the loan, not yet have an answer and within three days get $10,000. If you end up not qualifying, they don’t come after you for $10,000. That is unheard of for small businesses. And SBA loans are very difficult for us to get. Most people of color struggle greatly to get those loans.”

The Fresno Metro Black Chamber of Commerce and Downtown Fresno Partnership have listed other resources for small businesses on their websites.

Manuela Tobias is a journalist at The Fresno Bee. This article is part of The California Divide, a collaboration among newsrooms examining income inequity and economic survival in California.

Senate Bill Puts Corporations Ahead of People, Greenlining Institute Says

Covid-19 Crisis Requires Strong, Consistent Support for Workers and Small Businesses, Attention to Communities of Color 

Contact: Bruce Mirken, Greenlining Institute Media Relations Director, 415-846-7758 (cell)

OAKLAND, CALIFORNIA – The Greenlining Institute applauded today’s Senate approval of a Covid-19 relief and stimulus package as a good first step, but said that given the bill’s emphasis on corporations, much more will be needed to support American families, particularly in the communities of color that have been especially hard hit by the pandemic and economic crisis.

“The cash payments to families, expanded unemployment insurance and support for small businesses included in this bill will help to slow the bleeding, but they are just the beginning of what we must do,” said Greenlining Institute President and CEO Debra Gore-Mann. “We need a plan for a just recovery that supports workers and families and recognizes the special challenges in communities of color, where families and small businesses have fewer resources to fall back on. In addition, we also need a long-term plan that addresses structural racism and inequality in our economy. This bill represents just the first step in a journey toward an economy that truly works for all.”

Greenlining urged Congress and the president to consider the following as they plan future steps:

  • Implementation will be critical. The oversight committee that will oversee aid to companies must look like America, with at least three of five members being nonwhite and at least three being women. The inspector general’s and oversight committee’s purview should be expanded to include a review of the small business fund. This oversight should include a report within six months examining how long it has taken for funds to reach small businesses and to what extent those funds have reached businesses owned by people of color.
  • Families need consistent cash payments for the next 12 months. Economists are predicting “an economic tsunami” that will not end in a few weeks or even a few months.
  • Small businesses need an additional recovery package that matches the $500 billion industry funding in the current bill. They also need a pause in debt payments and incentives for landlords to pause commercial rent payments.
  • Homeowners and renters need a 12 month pause in housing payments, along with no foreclosures, evictions, or utility shut-offs during that same period. There should also be a particular focus on immigrants and unhoused populations.
  • Students need their debt wiped clean, which will add $100 billion in economic activity to the economy.
  • Cities need urgent help. The Federal Reserve should ramp up its acquisition of local municipal bonds so that cities have the funds needed to support communities.
  • Nonprofits, especially grassroots organizations providing desperately-needed community services, need a bailout. This economic tidal wave threatens small and medium-sized nonprofits, especially those led by people of color, and they need assistance equivalent to the roughly $60 billion being set aside for airlines.
  • Ensure access to health services. The $130 billion in aid for hospitals should ensure that funds are used to remove barriers to accessing care for low-income people who may lack adequate health coverage.

To learn more about The Greenlining Institute, visit www.greenlining.org.

###

THE GREENLINING INSTITUTE
A Multi-Ethnic Public Policy, Research and Advocacy Institute

www.greenlining.org
@Greenlining

US Workers Need Financial Relief Now

By Lea Ceasrine & Rose Aquilar
KALW

LINK TO AUDIO

On this edition of Your Call, we’re discussing the dire need for economic relief as millions of US workers are being laid off or losing their jobs.

According to SurveyUSA, a staggering 14 million people have been laid off so far. Economists say upcoming job losses will be unprecedented. As we head towards April 1, when bills are due, relief is still nowhere in sight. Why is it taking so long? We’ll get an update on the federal stimulus bill and find out about relief at the state and local levels.

Guests: 

Adam Briones, director of economic equity at The Greenlining Institute

Steven Greenhouse, former New York Times labor reporter and author of Beaten Down, Worked Up: The Past, Present, and Future of American Labor

The FCC Wants to Shut Out the Public – Again

by Paul Goodman
The Progressive

President Donald Trump is not a big fan of open government. He likes to implement policies without having to deal with annoying inconveniences, like input from the public.

For example, if you were chair of the Federal Communications Commission, and you wanted to spend your time handing out favors to huge phone and internet providers like AT&T, T-Mobile and Comcast, having to consider public input would be quite a nuisance. That’s what is happening right now, on an issue that affects nearly everyone.

The current FCC chair, Ajit Pai, is a former Verizon lobbyist who has repeatedly disregarded the public interest in enacting rules that hike corporate profits at the expense of low-income consumers and consumers of color. He’s still doing that on net neutrality.

In 2015, the FCC implemented net neutrality rules that prohibited providers from blocking online content or creating “fast lanes” and “slow lanes” on the internet — rules that were supported by 83% of voters, including 75% of Republicans. But phone and internet providers hated those rules, and one of the first actions Pai took after his becoming FCC chair in 2017 was to eliminate them.

Pai pointedly ignored comments from the public unless they contained “serious legal arguments.” He refused to consider more than 50,000 consumer complaints about net neutrality violations, and disregarded that more than a million anti-net-neutrality comments were fraudulent. In the end, an industry-sponsored study found that 98.5% of the unique public comments filed at the FCC supported net neutrality rules — but Pai eliminated them anyway.

Now he’s at it again.

A court recently held that Pai’s legal reasoning for getting rid of net neutrality meant that the FCC could not regulate internet-based 911 services, provide subsidies for internet service for low-income households, or control how internet providers installed their wires and cables on telephone poles. The court kicked the proceeding back to the FCC to address these regulations, which requires another opportunity for the public to comment.

Pai has set the shortest possible comment deadline of March 30, 2020 — once again demonstrating that he’s not interested in public input.

One of the cornerstones of our democracy, enshrined in the First Amendment, is the right to petition the government for redress — that is, to make our opinions known to policymakers. This principle permeates every level of policy-making in this country, from the right to public trials, to open meeting laws, to the right to access public records.

Chairman Pai is thumbing his nose at the principle and thinks he can disregard public input. Let’s prove him wrong — go to www.fcc.gov/ecfs/filings/express and let the FCC know that the public will be heard.

In ‘Alice Street,’ Oakland Artist-Activists Build Power By Bridging Communities

By Sam Lefebvre
KQED

Throughout last year, the steel and concrete frame of a new building in downtown Oakland grew to obscure a sprawling mural. Protesters with picket signs disappeared from view, along with dancers, drummers and martial arts practitioners, leaving the faces of centerpieces Malonga Casquelourd and Ruth Beckford, pillars of the city’s black performing arts tradition. To passersby today the entire artwork is imperceptible behind an incoming housing development.

Alice Street, a forthcoming documentary by Spencer Wilkinson, shows how the Universal Language mural’s creation and erasure alike catalyzed a multiracial anti-gentrification coalition with significant, ongoing effects on real estate development and city planning in downtown Oakland. Set in just a few city blocks, it’s a story about intractable loss as well as collective refusal, depicting artists’ role in grassroots activism that builds power by bridging communities.

Wilkinson, 44, an Oakland filmmaker whose first feature, One Voice (2018), focused on the Oakland Interfaith Gospel Choir, did not anticipate filming for five years when he started chronicling the mural’s design as part of a work-trade deal in 2014. Now he’s submitting the 70-minute Alice Street documentary to film festivals and arranging screenings in other cities grappling with gentrification. Wilkinson expects to announce more Bay Area screenings in the coming months.

Alice Street begins with Destiny Muhammad reciting a poem at the corner of 14th and Alice streets in downtown Oakland to subtle, vaguely religious music by Micah Berek. “An intersection of traditions, ancient rhythms, culture keepers and urban oracles,” she says. A montage shows the neighborhood’s cultural diversity and changing built environment. The credits roll, framed by cranes. Imposed on aerial footage of the low-slung flatlands are sharply rising housing costs.

The film shortly settles on aerosol artist Desi Mundo and studio painter Pancho Pescador of the Community Rejuvenation Project embarking on their largest mural yet: Four walls around a parking lot at Alice and 14th streets. For inspiration, they look directly across the street to the Malonga Casquelourd Center for the Arts, a historic city-owned hub of Afro-diasporic drumming and dance, and also to the Chinatown senior apartments and community center Hotel Oakland.

The story has no single conflict or antagonist. The challenge at first appears to be the muralists’ desire to represent two communities to which they’re admitted outsiders, and the project’s most outspoken opponent is an elderly white woman who objects to its exclusion of white people. As soon as the mural is designed and painted to the satisfaction of most neighborhood stakeholders, though, a housing development proposal threatens to render it totally invisible.

“People in the Bay Area are starting to see the benefits of Oakland,” says Maria Poncel of Bay Development, explaining to Mundo and Pescador that the mural will continue to exist behind the planned 16-story tower. “We’re going through sort of a second renaissance.” It’s one of several awkward remarks from developers, property owners and elected officials (has Mayor Libby Schaaf retired “secret sauce”?) that Wilkinson seems to highlight for their evident shallowness.

Halfway through the documentary, then, the mural intended to celebrate cultures at risk of displacement itself confronts disappearance, multiplying its symbolic potency. And the Malonga-Hotel Oakland bloc strengthened through the mural’s development acquires political power that Wilkinson—using interviews and historical flashbacks about racist city planning practices and housing discrimination in Oakland—casts in a longer lineage of racial solidarity.

The goal of the new coalition isn’t immediately evident in the documentary. Theo Williams, leader of Malonga tenant SambaFunk, says at a meeting that he doesn’t necessarily oppose the development, yet no one in the film persuasively argues on its behalf. Complicating the narrative are new problems: Noise complaints resurface concerns about intolerant new neighbors to the Malonga, and the activists crash a city planning process, demanding meaningful representation.

Unsurprisingly for grassroots activism, it’s a dizzying cycle of setback and success. A subplot about Jerry Brown’s early 2000s attempt as Oakland mayor to shutter what was then the Alice Arts Center is a welcome rejoinder to recent hagiography, but it creates some narrative whiplash. Still, the story regains focus when the coalition formally appeals the building’s planning commission approval in order to negotiate a community benefits agreement with the developer.

The coalition secured funds for the Malonga and for a replacement mural (now being designed for the wall of the Greenlining Institute nearby). It also modeled a strategy since used by the coalition to extract concessions from developers worth an estimated $20 million, organizer Eric Arnold says in the film—including 90 affordable homes. With this tactic the same activists recently won a raft of benefits for arts groups in the Kaiser Convention Center redevelopment.

“Resilience” is too often a buzzword that serves to normalize communities’ capacity to withstand abuse, especially from the mouths of powerful people in media and politics. It’s also too flat for the dynamic artist-activists shown in Alice Street, who dance in the streets and navigate city bureaucracy with equal verve. “And then we marched over to the planning office,” recalls Arnold of one decisive action. “It was probably the first time they’ve heard music inside of that office.”

Inevitably some of the story lines in Alice Street go unresolved. The cultural stabilization strategies in the Downtown Oakland Specific Plan published last year derive partly from activism shown in the film, but supporters are disappointed with what little officials have done to enact them. Likewise, tenants of the city-owned Malonga continue to feel chronically neglected, with Williams of SambaFunk recently telling KQED its problems haven’t changed since 1998.

Still, the documentary also captures a heartening generational shift. Standout interviewees Beckford and Michael Lange, the actor and director, died before the film’s completion, but Alice Street shows their commitment to Oakland’s cultural life enduring in Lailan Sandra Huen, Anyka Barber, Casquelourd’s son Kiazi Malonga and others. Wilkinson, meanwhile, is developing educational curriculum to promote the community benefits agreement model beyond Oakland.

It probably doesn’t feel like a silver lining to the muralists, but the four walls of Universal Language haven’t been buffed or repainted. The artwork remains. Recently on Broadway, demolition exposed some mid-20th century advertisements on the side of a building, relics of a barely-recognizable city. It suggests the possibility that Universal Language could daylight again in the lifetime of Oakland’s current residents. The question is who among us will be here to see.

For People of Color, Gentrification is More a Curse than a Blessing

By Stacy M. Brown
BlackPressUSA

From a dowdy provincial city in the 1980s, Philadelphia has become a world-class urban center through gentrification – primarily through landmark architecture that now sets the city center and University City, apart.

“Over 50, and retirees, are moving back from the suburbs where they raised their children into Center City and the Italian Market where I have lived since 1980,” stated Dr. Margaret J. King, the director of The Center for Cultural Studies & Analysis in Philadelphia.

“Of course, gentrification brings money into the city, while it also drives up home prices – some houses have multiplied their asking prices 15 times over 40 years,” King noted.

“Housing is being restored and renovated, making more of the city habitable and in fact desirable. Now the suburbs have flipped into a working-class magnet as well as a market for Millennials who can’t afford center-city prices yet,” King stated.

Gentrification isn’t just an issue in Philadelphia – not by a long shot.

According to a March 2019 study by the National Community Reinvestment Coalition (NCRC), more than 135,000 Black and Hispanics around the nation were displaced between 2000 and 2012.

Gentrification and displacement of long-time residents were most intense from 2000 to 2013 in the nation’s biggest cities, and rare in most other places, according to the study.

During those years, gentrification was concentrated in larger cities with vibrant economies but also appeared in smaller cities where it often impacted areas with the most amenities near central business districts.

In Washington, D.C., 20,000 Black residents were displaced, and in Portland, Oregon, 13 percent of the Black community was displaced over the more than decade period that was studied.

Seven cities accounted for nearly half of the gentrification nationally: New York City, Los Angeles, Washington, D.C., Philadelphia, Baltimore, San Diego, and Chicago.

Washington, D.C., was the most gentrified city by percentage of eligible neighborhoods that experienced gentrification; New York City was the most gentrified by sheer volume, study authors noted.

According to the Merriam-Webster Dictionary, gentrification is defined as the process of repairing and rebuilding homes and businesses in a deteriorating area, such as an urban neighborhood, accompanied by an influx of middle-class or affluent people and that often results in the displacement of earlier, usually poorer residents.

“Gentrification is rich people deciding they want a specific neighborhood as their own, and they get municipal backing, pay some money, and get all of the poor people out of there,” stated Mark Love, a New York realtor.

Neighborhoods were considered to be eligible to gentrify if, in 2000, they were in the lower 40 percent of home values and family incomes in that metropolitan area.

During the study, researchers found that most low- to moderate-income neighborhoods did not gentrify or revitalize.

Instead, they remained impoverished, untouched by investments and building booms that occurred in major cities, and vulnerable to future gentrification and displacement.

“When a neighborhood gentrifies, the cost of living increases, and it’s harder for low-income families to find housing, and that’s one of the biggest downsides,” stated Melanie Musson, a writer for ExpertInsuranceReviews.com.

“In a city like Philadelphia, neighborhoods are part of your identity. If you grow up in a neighborhood, you often want to remain living there your whole life because it’s who you are,” Musson stated.

“Unfortunately, sometimes, after several generations living in the same zip code, the newest generation has to find housing elsewhere because it’s too expensive to live where their home has always been,” she said.

Bruce Mirken, the media relations director for the nonprofit public, policy, and advocacy organization, The Greenlining Institute, said he lives in San Francisco and works in Oakland – two cities that are ground zero for the gentrification crisis in California.

“We see the most obvious results among the very low-income, who increasingly cannot keep a roof over their heads, leading to a growing homeless population,” Mirken stated.

“And homelessness in California has a distinct racial dynamic, tracing back through a long history of redlining and discrimination: Black Californians represent about six and a half percent of our state’s population, but about 40 percent of its homeless,” he noted.

In New York, where many residents are still growing accustomed to the decades-long gentrification of Harlem, the Bronx has forever been known as the city’s most urban borough. That’s quickly changing due to gentrification.

In November 2019, officials announced a $950 million, 4.3 acre, multi-tower, and mixed-use development along the Mott Haven waterfront. More than 1,300 high-end apartments are among the upgrades that are certain to price many long-time residents out of the area.

Mychal Johnson, a co-founding member of South Bronx Unite, told The Bronx Times that gentrification isn’t good for economically oppressed communities of color.

“It seems like the community board, and Borough president isn’t looking out for the community,” Johnson stated.

For the NCRC study, Shekinah Mitchell, the Neighborhood Partnerships Manager for the Virginia Local Initiatives Support Corporation, noted that, as the former capital of the Confederacy, Richmond’s history is steeped in racial oppression, inequality, and injustice.

Mitchell noted that, in 2016, Richmond had similar numbers of Black and White residents. From 2000 to 2016, the Black population decreased by seven percent, while the White population increased by 35 percent.

In 2000, Blacks were 57 percent of the population, and whites were 38 percent. In 2016, Blacks represented 47 percent and Whites were 46 percent of the population.

“This shift has come to the East End like a racialized wave crashing onto the shores of the neighborhood in currents of physical, cultural, and economic displacement. The Black community is drowning as we watch our land and culture swallowed up, block by block with no reprieve in sight,” Mitchell wrote in the report.

“Gentrification in the East End of Richmond is manifesting as a process of re-segregation,” she stated. “In Richmond, gentrification is colonization.”

In Portland, Oregon, an essay that accompanied the NCRC study noted that city as the “Whitest city of its size in the United States.”

The city’s White population currently stands at 77.4 percent while Blacks make up just 5.7 percent.

“Take a group of people who have been systematically denied wealth-building opportunities for generations, add low, stagnating incomes, throw in a subprime mortgage disaster, spiraling housing costs and wholesale community displacement, and you have a recipe for a severe economic backslide,” Cheryl Chandler-Roberts, executive director of Portland’s African American Alliance for Homeownership, said in the report.

“There is no African American community in Portland at this point,” Chandler-Roberts stated.

“It’s a scattered community.”

Banking is Changing. Its Lack of Diversity Must Change, Too, and Congress Can Help

By Rawan Elhalaby
CommonDreams

In Nicetown, a North Philadelphia neighborhood that was redlined in the 1930s, banks and mortgage brokers largely stay away. Lenders have been particularly stingy when it comes to home improvement loans. CREDIT: SARAH BLESENER FOR REVEAL NEWS

The financial industry is evolving quickly, but unfortunately it has remained static in one major way: Its leadership looks nothing like America.

That’s bad for communities of color, who will be the American majority in roughly 20 years, but it’s also bad for our whole economy.

At The Greenlining Institute, we regularly look at board and workforce diversity in agencies and private institutions across multiple sectors of the economy, including banks. In 2019, we studied the boards of directors of the ten largest banks operating in California, where we are based, and found that on average, people of color made up 30 percent of bank board composition, despite making up over 67 percent of California’s population.

Gender diversity was equally lacking, with women making up only 29 percent of bank board members. None of the 10 huge banks that we studied had more than 36 percent women board members.

These executive boards are the top decision-makers in financial institutions and drive the policies that ultimately impact our communities. Boards are accountable for the actions and behaviors of their institutions. They set the direction those institutions will go.

And those institutions often still don’t go in directions that help communities of color. My organization’s name, The Greenlining Institute, came from our founding purpose as the answer to redlining, the longstanding practice of denying loans and investment to communities of color. While long illegal, recent investigations by the investigative news organization Reveal found that redlining has not gone away; it persists in more subtle but still destructive forms.

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On an annual basis, we request data from national institutions that operate in California. We track and rank banks on indicators that impact communities of color.

We consider transparency to be critical because data gives the public a full picture of the diversity and inclusion — or lack of it — within financial institutions, helping to keep them accountable to communities of color and inform data-driven policymaking.

Unfortunately, we regularly experience difficulty in obtaining such data, making it much harder to produce fair and thorough research and hold banks accountable. We believe that such data should be disclosed voluntarily by financial institutions, but Congress has a role to play as well.

We’re concerned about regulatory barriers that prevent banks from effectively serving low and moderate-income communities and communities of color by preventing banks from collecting and disclosing race data to the public. We urge lawmakers to look to existing regulations that require government agencies and private institutions to disclose data on diversity and inclusion practices.

Section 342 of the Dodd Frank Act created Offices of Minority and Women Inclusion in eight agencies. These OMWIs have worked to build up a robust infrastructure that includes internal assessments, crafting strategic plans, and increase diversity in their large agencies. This represents a good beginning, but we need more transparency from the banking industry itself. And we definitely need to look at the largely unregulated Fintech industry, which appears to be even less representative of our country’s diversity than conventional banking.

Ultimately, America’s economy cannot prosper if communities of color don’t prosper. A more diverse financial sector can help make that happen.

Our work is licensed under a Creative Commons Attribution-Share Alike 3.0 License. Feel free to republish and share widely.

Bloomberg once blamed end of ‘redlining’ for 2008 collapse

By BRIAN SLODYSKO
The Associated Press

 

WASHINGTON (AP) — At the height of the 2008 economic collapse, then-New York Mayor Michael Bloomberg said the elimination of a discriminatory housing practice known as “redlining” was responsible for instigating the meltdown.

“It all started back when there was a lot of pressure on banks to make loans to everyone,” Bloomberg, now a Democratic presidential candidate, said at a forum that was hosted by Georgetown University in September 2008. “Redlining, if you remember, was the term where banks took whole neighborhoods and said, ‘People in these neighborhoods are poor, they’re not going to be able to pay off their mortgages, tell your salesmen don’t go into those areas.’”

He continued: “And then Congress got involved — local elected officials, as well — and said, ‘Oh that’s not fair, these people should be able to get credit.’ And once you started pushing in that direction, banks started making more and more loans where the credit of the person buying the house wasn’t as good as you would like.”

Bloomberg, a billionaire who built a media and financial services empire before turning to electoral politics, was correct that the financial crisis was triggered in part by banks extending loans to borrowers who were ill-suited to repay them. But by attributing the meltdown to the elimination of redlining, a practice used by banks to discriminate against minority borrowers, Bloomberg appears to be blaming policies intended to bring equality to the housing market.

The term redlining comes from the “red lines” those in the financial industry would draw on a map to denote areas deemed ineligible for credit, frequently based on race.

“It’s been well documented that the 2008 crash was caused by unethical, predatory lending that deliberately targeted communities of color,” said Debra Gore-Mann, president and CEO of the Greenlining Institute, a nonprofit that works for racial and economic justice. “People of color were sold trick loans with exploding interest rates designed to push them into foreclosure. Our communities of color and low income communities were the victims of the crash, not the cause.”

Campaign spokesman Stu Loeser said that Bloomberg “attacked predatory lending” as mayor and, if elected president, has a plan to “help a million more Black families buy a house, and counteract the effects of redlining and the subprime mortgage crisis.”

The campaign also pointed to efforts by Bloomberg’s private philanthropy to help other cities craft policies that will help reduce evictions. He promised in a January speech to do a version of the very thing he criticized in 2008: Ask lenders to update their credit-scoring models, “because millions of black households don’t have a credit score which is needed to get a mortgage.”

After this story was published, Loeser added: “He’s saying that something bad – the financial crisis – followed something good, which is the fight against redlining that he was part of as Mayor.”

Bloomberg’s 2008 remarks stand in contrast with the decades-long positions some of his rivals have held.

Massachusetts Sen. Elizabeth Warren’s work as a professor and attorney has been devoted to the study of bankruptcy and the disastrous impact it has on the financial well-being of families. As a young Delaware senator, Joe Biden held hearings on unfair lending practices and sponsored legislation to ban discrimination in lending and crack down on industry figures who did.

On Thursday, Warren criticized Bloomberg for suggesting the end of redlining caused the crash.

“Out-of-control greed by Wall Street and big banks, and the corruption that lets them control our government, caused the crash,” she tweeted.

“I’m surprised that someone running for the Democratic nomination thinks the economy would be better off if we just let banks be more overtly racist,” she said. “We need to confront the shameful legacy of discrimination, not lie about it like Mike Bloomberg.”

Bloomberg’s redlining remarks are the latest instance of his past comments by him that have resurfaced in recent days that make him appear racially insensitive.

On Tuesday, an audio recording ricocheted around social media of Bloomberg defending the police department’s use of the controversial “stop-and-frisk” tactic during a 2015 appearance at the Aspen Institute.

Full Coverage: Election 2020

Under the program, New York City police officers made it a routine practice to stop and search multitudes of mostly black and Hispanic men to see if they were carrying weapons.

Although he has since apologized for his support for the policy, in the recording Bloomberg said that “95%” of murders and murder victims are young male minorities and that “you can just take the description, Xerox it and pass it out to all the cops.” To combat crime, he said, “put a lot of cops where the crime is, which means in minority neighborhoods.”

Bloomberg’s resurfaced comments about redlining come as he’s in the midst of a two-day tour of the South that in part is focused on building relationships with black voters who are the backbone of the Democratic Party. On Thursday, he plans to launch “Mike for Black America”

Speaking to reporters in Tennessee on Wednesday, he refused to directly apologize for the 2015 comments. In response to repeated questions, he said, “I don’t think those words reflect how I led the most diverse city in the nation.”

“I apologized for the practice and the pain that it caused,” he said Wednesday. “It was five years ago. And, you know, it’s just not the way that I think, and it doesn’t reflect what I do every day.”

Introducing Bloomberg at an event in Chattanooga, Tennessee, Dr. Elenora Woods, president of the city’s NAACP chapter, said he would be a tireless fighter for economic justice for black Americans.

“Look, I know what racism looks like. I know what it looks like, and that’s not Mike Bloomberg,” she said.

House subcommittee scrutinizes diversity at biggest banks

By Meghan McCarty Carino
MarketPlace

Has Wall Street really become more diverse since the 2008 recession? Spencer Platt/Getty Images

The banking industry is coming under scrutiny on Capitol Hill Wednesday. A House Financial Services subcommittee is holding a hearing on diversity, or lack thereof, at the biggest banks in the country.

After the 2008 financial crisis and the reforms that followed with the Dodd-Frank Act, banks were supposed to become more accountable to the public, and part of that was by becoming more diverse.

“Because when people that are representative of our nation actually are in these positions, then communities of color get served better,” said Rawan Elhalaby, who was set to testify at the hearing on behalf of the Greenlining Institute, a nonprofit focused on economic justice.

She pointed to predatory lending that disproportionately hurt borrowers of color in the run-up to the Great Recession. Since then, she said, the industry has paid lip service to diversity and inclusion, “but we’re not seeing the data to really back that up.”

While Dodd-Frank reforms require monitoring of diversity at the biggest banks, it’s not clear how much has changed.

“Indeed, progress has been slow. It’s been glacial,” said Ronald Parker, president and CEO of the National Association of Securities Professionals, which advocates on behalf of women and minorities in the financial sector.

Parker points to a report by the House Diversity and Inclusion subcommittee last year that showed banks’ senior leadership and boards of directors are still mostly white and male, while not one of the biggest banks is led by a woman or person of color.

Greenlining Institute to Push for Bank Diversity at House Hearing Feb. 12

House Financial Services Subcommittee to Consider Diversity & Inclusion at Large Banks  

Contact:
Bruce Mirken, Greenlining Institute Media Relations Director, 510-926-4022; 415-846-7758 (cell), brucem@greenlining.org
Rawan Elhalaby, Greenlining Institute Senior Economic Equity Program Manager, 619-339-7955 (cell), rawane@greenlining.org

WASHINGTON – At a rare congressional hearing on diversity and inclusion (or in, many cases, the lack thereof) at America’s largest banks, Rawan Elhalaby of The Greenlining Institute will present her recent research on bank boards of directors, call for greater transparency, and argue for more aggressive efforts to promote diversity in the financial sector.

“Banks and other financial institutions often claim to make diversity and inclusion a high priority, but when you look behind the buzzwords, you often find far too little real progress, “said Elhalaby, author of Greenlining’s October 2019 report, 2019 Bank Board Diversity.

WHAT: House Committee on Financial Services, Subcommittee on Diversity and Inclusion Hearing, “A Review of Diversity and Inclusion at America’s Large Banks

WHO: Rawan Elhalaby, Senior Economic Equity Program Manager, The Greenlining Institute; Kenneth Bentsen, President and Chief Executive Officer, Securities Industry and Financial Markets Association Diversity and Inclusion Council; Dr. Naomi Mercer, Senior Vice President, Diversity, Equity and Inclusion, American Bankers Association; Subha Barry, President, Working Mother Media; members of the committee

WHERE: 2128 Rayburn House Office Building

WHEN: Wednesday, February 12, 10 a.m.

Elhalaby will be available for media interviews after the hearing.

To learn more about The Greenlining Institute, visit www.greenlining.org.

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THE GREENLINING INSTITUTE
A Multi-Ethnic Public Policy, Research and Advocacy Institute

www.greenlining.org
@Greenlining