‘Too Big to Fail’ Banks: Glimmers of Hope

The Huffington Post
by Preeti Vissa

Last December I wrote about a bank merger deal that could create yet another “too big to fail” bank from the smoking embers of two of the very banks that helped blow up our economy in 2008: OneWest Bank (formerly IndyMac) and CIT Bank. While I’m baffled that this merger is still pending, I’m happy to report a bit of good news.

The federal officials who must approve the merger have listened to the pleas of community groups and consumer advocates that they not rush this deal through. Groups like the California Reinvestment Coalition and The Greenlining Institute (where I work) strongly urged the feds to hold a public hearing to ensure full vetting of the deal’s impact on the communities these companies serve — or fail to serve, as is more often the case. The Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency have agreed to hold a joint public hearing on the impact of the merger this Thursday, Feb. 26 in Los Angeles, including testimony from individuals and community organizations.

All of the reasons I laid out for being skeptical of this merger still hold. Both banks have a sketchy past: OneWest emerged from the ashes of the failed IndyMac, one of the largest bank failures in American history. CIT experienced one of the largest bankruptcies on record, and did so after taking $2.3 billion in federal bailout money and breaking its promise to help small businesses. Executives of both banks dismiss this history as if it never happened.

In addition, bank officials have failed to address the needs of the communities the new supersized bank would serve (including an initial refusal to make meaningful commitments to low-income communities under the Community Reinvestment Act), acting instead as a bank for the top 1 percent. OneWest does almost no purchasing from minority-owned businesses, and CEO Joseph Otting has responded to legitimate questions with crude attempts to strong-arm community groups into supporting the deal.

Now the people will get to speak to the regulators. Live. In person. Face to face. Because opportunities like this are rare, it’s important for people who want a fair and responsive banking system to show up in numbers.

Of course, no one can predict what the Fed and the OCC will eventually do, but even if they approve the merger, they could attach conditions that would benefit consumers, particularly those not part of the 1 percent. But whatever action officials finally take, the very fact that this hearing is happening is a small win for the people.

Why? For one thing, it will create a public record. All the comments — from the public and community advocates as well as from the banks and their supporters — will be public and available online, creating an invaluable resource for all who want to keep the new institution honest as it moves forward.

Just as importantly, it helps establish that these sorts of bank megamergers shouldn’t be easy or quick. Banks should know that they’ll have to go through a thorough examination at which the communities they serve will have a real voice, and they should be ready to address those concerns or face time-consuming, expensive delays.

Strikingly, rather than address those concerns, Otting tried to head off a hearing by generating a blitz of form-letter emails to regulators, claiming that “there is no need for a public hearing” and that the “merger will retain and create new jobs in California.” That he didn’t get away with it is a good thing all by itself. Hopefully, Otting will be able to explain what jobs will be created, other than the few multimillion-dollar-compensated executive positions CIT will move to the state.

If you will be in Los Angeles Feb. 26, I urge you to attend. The hearing will be held from 8 a.m. to 4 p.m. at the Los Angeles Branch of the Federal Reserve Bank of San Francisco, located at 950 South Grand Avenue in downtown Los Angeles. If you can’t make it for the whole day, opponents of the merger will hold a rally outside the building starting at 12:15 p.m. And by all means join the conversation online by using the hashtag #StopOneWestCIT. My colleagues will be posting updates on Twitter @Greenlining.

“Too Big to Fail” Also Applies to Health Care

Huffington Post
By Orson Aguilar

We hear a lot about “too-big-to-fail” banks, and rightly so. It’s time to bring that same discussion to health insurance.

Most Americans first learned about too-big-to-fail when financial industry recklessness crashed our economy, causing an avalanche of foreclosures and throwing millions out of work. With health care now making up 17 percent of U.S. gross domestic product and affecting literally every one of us, it’s time to worry about concentration in the health insurance marketplace.

Many have sounded alarm bells over the fact that the five biggest U.S. banks nowcontrol nearly half the market. In comparison, America’s four largest health insurerscontrolled 83 percent of the market as of 2014. (This includes the Blue Cross/Blue Shield Association, whose affiliates are technically separate but have exclusive, non-overlapping market territories and thus don’t compete with one another).

Health insurers probably can’t crash our economy, but they can impact it greatly, and the decisions they make truly have life or death consequences.

I’ve been thinking about this lately because state insurance regulators here in California are considering whether to allow several of our state’s major health insurers to merge. Anthem, California’s second largest health insurer, is poised to spend $54 billion to acquire rival Cigna, the state’s sixth largest health insurer; while Aetna, the third largest health insurer in the state, is set to absorb Humana, California’s fifth largest health insurer, to the tune of $37 billion. Nationally, these four companies rank third, fourth, fifth, and seventh in size. This would significantly reduce competition in California, where the market is already heavily concentrated in just a few firms.

Like other fields, lack of competition in health insurance is generally bad for consumers. As The Commonwealth Fund reported last year, “several studies document lower insurance premiums in areas with more insurers,” while insurance mergers tend to lead to higher premiums.

As an advocate for communities of color, I worry about these impacts, and I also worry about the specific effect on diverse communities in a state where people of color make up about 62 percent of the population.

In California and nationwide, communities of color have specific health challenges. Among other things, they disproportionately lack health insurance (despite improvements under the Affordable Care Act) and are more likely than whites to suffer from chronic health issues, often related to air pollution (that increases rates of asthma) or other environmental conditions.

This makes it important for health insurers to recognize the importance of diversity in order to be able to serve this diverse population. Aetna, for example, has a weak record, with people of color making up just 14 percent of the company’s executive positions and 15 percent of its board of directors. Communities of color are also underrepresented in Aetna’s rank-and-file staff. Additionally, Aetna rarely contracts with minority-owned suppliers, contributing little to our state’s diverse business economy.

Because of America’s ongoing racial wealth gap, we’re particularly concerned about the effect of health insurance mergers on affordability – though of course premium increases affect individuals and employers of all backgrounds. Companies looking to merge typically tout how combining will create efficiency and save costs, but – as noted above – these efficiencies seem to benefit stockholders and executives much more than consumers. We’ve thereforeproposed that, if Aetna and Humana are allowed to merge, they should put their money where their mouth is by pledging a five-year freeze on premium increases. If they’re so sure they can save money by merging, the people and small business owners who struggle to pay the cost of health coverage should benefit.

Keeping premium hikes under control benefits taxpayers, too, since under the Affordable Care Act federal tax dollars provide subsidies to help low-income families buy insurance.

I could go on citing specific questions about these mergers, but the issue of health insurer consolidation is bigger than any one merger or any particular constituency that a given merger might impact. Health coverage isn’t a luxury; it’s a necessity. And as a nation we’ve chosen (in large part due to lobbying pressure from big insurers) to base our system of paying for health care on private insurance rather than a government-run single-payer plan. The least we can expect government to do is to ensure that we don’t put Americans at risk because a small handful of too-big-to-fail insurance giants have free reign to take advantage of us all.

14th Annual Economic Summit Roundup

picture-8-193x109We celebrated our 14th Annual Greenlining Economic Development Summit in Los Angeles. Once again we brought together the leading community advocates, corporate leaders and government officials in the country to discuss “win-win” opportunities and solutions on issues related to minority economic empowerment.

Fulfilling The Promise: April 21, 2007

KEYNOTE SPEAKERS:

Sheila Bair, Chairwoman FDIC Introduced by George Dean

Janet Yellen, President Federal Reserve Bank of San Francisco Introduced by Cynthia Amador

Charles Prince, Chairman & CEO Citigroup, Inc.

Richard K. Davis, President & Chief Executive Officer U.S. Bancorp Continue reading “14th Annual Economic Summit Roundup”

150 Years After the Civil War, Race Still Haunts Us

The Bellingham Herald
By Orson Aguilar

One hundred and fifty years ago, on April 12, 1861, the first shots of the Civil War were fired. A century and a half later, the issue of race still haunts us.

Back then, most everyone understood that America’s bloodiest war – more than 623,000 dead – had its roots in race. But race is not a subject Americans like to think about anymore. At every turn, prominent voices try to pretend that since we’ve achieved a colorblind society, we can forget all that old unpleasantness.

Continue reading “150 Years After the Civil War, Race Still Haunts Us”

2011: The Main Action Won’t Be in Congress

huffingtonpost.com
By Preeti Vissa

The punditocracy is anxiously war-gaming the expected battles between the Obama Administration and Congress. But while there will be plenty of strong rhetoric and political theatrics on Capitol Hill, much of the real action will occur elsewhere, in administrative and regulatory processes that typically occur offstage.

Continue reading “2011: The Main Action Won’t Be in Congress”

9 Major Opportunities for Electric Buses & Trucks

Meeting of the Minds
By Joel Espino

When most people think of electric vehicles, we think of cars, like Teslas, Chevy Bolts and Nissan Leafs. But trucks and buses are going electric, too, and the impact on both our air and our economy could be huge.

In 2016, we at The Greenlining Institute joined forces with The Union of Concerned Scientists to analyze the growing electric truck and bus industry, producing the report “Delivering Opportunity: How Electric Buses and Trucks Can Create Jobs and Improve Public Health in California.” While we focused on California, where electric buses and trucks are taking off rapidly, what we found has major implications for the whole country. Especially at a time when many transit agencies across the country are committing to 100 percent electric, many states are increasing their efforts to get more electric cars, trucks, and buses on the road, and The Green New Deal is generating buzz and conversation on climate change.

Here are nine things we found.

1. Transportation is the largest contributor to global warming in California and nationwide.

Including carbon pollution from refining petroleum products, transportation accounts for more than 50 percent of global warming emissions in California, and the transportation sector recently overtook power plants as the largest contributor to climate change nationwide.

2. Trucks and buses form a major part of our air pollution problem.

Heavy-duty vehicles are the single largest source of smog-forming pollution in California. They also emit more particulate matter than all of the state’s power plants. And they make up seven percent of the state’s global warming emissions—an amount projected to increase as freight shipments grow.

3. Air pollution from transportation discriminates, hitting poor communities of color the hardest.

Poor communities suffer disproportionately from exposure to traffic-related pollution because they are more likely than wealthier neighborhoods to be near busy roads and highways. Breathing lung-damaging exhaust from vehicles on a daily basis leads to higher rates of pollution-related diseases such as cancer and heart attacks. Race matters, too: even for people in the same socioeconomic class, people of color are more likely than whites to be exposed to pollution from cars, trucks and buses.

In fact, a recent Union of Concerned Scientists analysis that quantified pollution from on-road sources reinforces this finding.

4. Electric trucks and buses are cleaner than diesel and natural gas vehicles.

Electric vehicles have zero tailpipe emissions, meaning you won’t have to gulp pollution while waiting for the bus or walking down the street. In terms of global warming emissions, smog forming emissions, and particulate matter; electric vehicles powered by clean electricity have the lowest emissions compared to any other vehicle technology, including natural gas. The clean air benefit continues even when you look at “life cycle” emissions from electricity generation and hydrogen production.

And these clean vehicles will only get cleaner: California will get at least half of its electricity from renewable resources by 2030, has virtually no coal power in the state, and will end contracts for coal power imported from other states by 2025. California also requires that at least 33 percent of hydrogen must be produced using renewable energy, a standard the state already exceeds. Bottom line: We’re blazing a path toward clean power that other states can follow.

5. Electric trucks and buses are far more energy efficient.

Depending on the type of vehicle, electric trucks and buses are up to four times more efficient than diesel and natural gas vehicles. This means that for the same amount of energy used to power a vehicle, the electric vehicle will travel up to four times as far. This can lead to significant savings in fuel costs.

6. Electric truck and bus technology is here and ready to clean the air today.

This isn’t a pie-in-the-sky future dream. Battery-powered electric trucks and buses have ranges over 100 miles. One company recently announced a transit bus with a 350-mile range. Fuel cell trucks and buses have long had ranges over 200 miles. While these vehicles may cost more to purchase, reduced fuel and maintenance costs mean the total cost of ownership of electric trucks and buses is becoming competitive with traditional technologies. Electric trucks and buses can accelerate and climb hills as well or better than diesel and natural gas vehicles. They’re quieter, too.

7. The heavy-duty EV industry is creating good jobs.

Some of the leading electric bus and truck manufacturers in California pay assemblers $13-$20 per hour for entry level jobs, which is considerably above typical pay for assembly jobs in California. These jobs can also lead workers into higher-skilled, well-paid occupations. When we asked representatives of heavy-duty EV companies what jobs were likely to grow the most if demand for heavy-duty EVs increases, they unanimously identified assembler positions. Increased investment in this technology should spur growth of good, well-paying jobs—especially if unions and community benefits agreements like the one BYD struck are in the mix.

8. This industry can be a great source of jobs for underserved communities—if workers get the training and skills they need.

Leading electric bus and truck companies in California typically require one to three years of related experience for assemblers, a higher standard than assembly jobs in general manufacturing. Jobs in EV manufacturing, charging and maintenance require significant electrical skills. These requirements can be barriers to employment for people from low-income communities. But good, readily accessible training programs can overcome this barrier and make sure those most in need of good jobs will get a fair shot.

9. It will take conscious effort to bring workers from marginalized communities into the electric truck and bus workforce.

We don’t currently have enough training programs accessible to those who need them. Manufacturers can help fix this by partnering with workforce training organizations and community colleges to establish pathways for training and certifying workers from these communities and placing them in quality jobs. This emerging industry needs effective, equitable workplace policies, programs, and practices to ensure opportunity for all.

You may not hear much about electric trucks and buses, but they’re here and growing. We have to put the policies and actions in place now so that we can leverage the clean air and economic benefits of this technology to fight environmental injustice and give an economic boost to people most in need.

The proposed Green New Deal has already begun to stimulate new discussions of the role of transportation in fighting climate change and strengthening communities. Electrification of trucks and buses should be part of plans going forward to fight climate change, clean our air and – with help from the right policies — bring new opportunities to underserved communities.

A "Separate But Equal" Internet?

Huff Post
by:Preeti Vissa

The phrase “knowledge is power” dates back to at least the seventeenth century, and it’s as true today as it was then. But today, technology has become the essential portal to information, and information technology has potential to be a great social and economic equalizer — but only if we preserve today’s open Internet.

That is not by any means a sure thing.

Continue reading “A "Separate But Equal" Internet?”

A $1.9 Trillion Christmas Present

Huffington Post
By Preeti Vissa

How would you feel if Santa left $1.9 trillion in your Christmas stocking?

Don’t worry — I wouldn’t know how to spend that much money either. But a $1.9 trillion boost to our economy could do amazing things, and it could actually happen. The catch is that it won’t come from Santa. We have to do it ourselves.

The good news is that we can, although it won’t be easy.

That’s the message from a new study funded by the W.K. Kellogg Foundation and conducted by the Altarum Institute. Altarum researchers found that racial inequity costs the U.S. economy massively, and that eliminating this inequity would boost our gross domestic product by $1.9 trillion.

Altarum found that, after adjusting for age and sex, per capita earnings for people of color in the U.S. are now 30 percent below those of non-Hispanic whites. I’ll let the researchers lay out the full economic implications of that finding:

We found that, if the average incomes of minorities were raised to the average incomes of whites, total U.S. earnings would increase by 12%, representing nearly $1 trillion today. By closing the earnings gap through higher productivity, gross domestic product (GDP) would increase by a comparable percentage, for an increase of $1.9 trillion today. The earnings gain would translate into $180 billion in additional corporate profits, $290 billion in additional federal tax revenues, and a potential reduction in the federal deficit of $350 billion, or 2.3% of GDP.

Projecting farther out into the future (when Americans of color will move closer to being the new American majority), closing the earnings gap would increase U.S. GDP by 16 percent, a staggering $5 trillion per year.

The good news is that this income gap, and the accompanying racial wealth gap, did not happen by accident. They resulted from deliberate choices our society made and in many cases continues to make. We can close the wealth and earnings gaps if we make different choices.

As I said, this won’t be easy, and it’s not simple. Altarum’s report focuses on a web of intersecting, interlocking factors that I can’t help but oversimplify a bit in the space I have here. The essential point is that policies to close our racial wealth and income gaps not only don’t take anything away from anyone, they will lift the whole economy.

The study points out a number of areas where policy choices have led to inequity that better policies can change. One obvious one that I’ve discussed before is homeownership. The researchers note that in 2012, 74 percent of white families owned their own homes, compared to 57 percent of Asian/Pacific Islander families, 51 percent of Native American families, 46 percent of Latino families and 44 percent of African American families.

This difference is a major driver of the racial wealth gap. It can be traced directly to discriminatory policies that once were quite extreme (from African Americans being excluded from the 1862 Homestead Act because they weren’t considered citizens to the FHA officially promoting redlining and discriminatory lending in the 1930s and ’40s) to the more under-the-table housing discrimination that occurs today. The researchers point to a 2012 study that found continuing discrimination against Asians, blacks and Latinos seeking to rent or buy, as well as the well-documented marketing of predatory subprime loans in communities of color during the housing bubble.

Those policies promoted residential segregation, which continues today with severe negative impacts on health, education, and many other essentials for economic success. Some efforts to address these issues — such as creation of the Consumer Financial Protection Bureau to curb predatory practices — have been undertaken, but the authors note that more can and should be done.

There are many other factors that more sensible policies could change, far more than I can list here. But another that has to be mentioned is the criminal justice system. Having a criminal record can hobble your chances for getting a good job that pays a living wage.

African American and Latino males have massively higher incarceration rates than whites, and the difference cannot be explained by the rates of crimes committed by different groups. For example, official surveys consistently show African Americans using illicit drugs at the same or lower rates than whites, yet the researchers note that African American youth are a staggering ten times more likely to be arrested for drug offenses than white youth.

Please read the full study to learn the specifics that space does not allow me to list here. But the bottom line is really quite simple: Racial inequity didn’t just happen; it was a result of deliberate choices. We can reduce and eventually end this inequity by making different choices.

And in a nation where people of color are projected to be the majority by 2043, we literally can’t afford to continue on the wasteful and unfair path we’ve been on.

A Decade After Katrina, Can Philanthropy Make Black Lives Matter?

The Chronicle of Philanthropy
By Nat Chioke Williams

On Saturday, people from around the world will commemorate the 10 years since Hurricane Katrina struck New Orleans. Although many people will tout the city’s recovery, few people in black working-class neighborhoods will be celebrating. After all, they have been mostly left behind.

But that is hardly the only poignant and painful reminder of the inequities facing blacks in America and how far the nation still must go to end them.

On August 4, we celebrated the 50th anniversary of the Voting Rights Act, the crowning achievement of the civil-rights movement, which was recently gutted by the Supreme Court.

Five days later, we recognized the one-year anniversary of the killing of Michael Brown in Ferguson, Mo., an attack that launched what is commonly known as the Black Lives Matter movement — a movement to assert the sanctity of black life, even as it is fueled by a wave of black deaths at the hands of police.

But the question for the country — and especially for all of us in philanthropy — is not, Do black lives matter?, but rather, How can we make black lives matter and provide the best opportunities for the black community to thrive? And can philanthropy help ensure we don’t squander the advances that the broader movement has made in the past year?

The answer to this question is complex, but it ultimately boils down to power.

To make black lives matter more, philanthropy needs to do all it can to ensure that the black community builds the social, institutional, and political power it needs to directly challenge and dismantle the policies and systems that enable structural racism.

The success to date of the Black Lives Matter movement is most visible in the ways it has changed how the public thinks about race, racism, and policing.

It has used social media, traditional media, strategic communications, street protests, and other activities to become part of the public conversation — and it has become a strong counter to those who deny that racism is embedded in the policies and structures of our society. There now exists a unique opportunity to win policy changes to help ensure greater police accountability and to examine and address racial discrimination across many aspects of black life.

But this movement is at risk if it doesn’t get the money it needs to build institutions that can capitalize on this social power. For far too many decades, black-led social-change organizations have received too little in donations to grow into the strong influencers on the American way life that they must be.

Research from the Greenlining Institute has found that minority-led organizations get less money from foundations than white-led organizations. And anecdotal evidence suggests that this pattern is as bad, if not worse, for social-change organizations led by blacks.

Much of the work being done to propel Black Lives Matter forward has been carried out by newly created groups with limited funds and borrowed or volunteer staff, as well as older black-led social-justice groups that are already strapped for money. Philanthropy can help make the most of this moment by ensuring that black-led social-change groups are well supported.

Some grant makers, like the North Star Fund, the Liberty Hill Fund, Resource Generation, and others, have explicitly dedicated resources to support black-led grass-roots groups organizing to push for greater police accountability and other changes that will reduce violence and improve safety. Similarly, the Hill-Snowdon Foundation recently launched the Making Black Lives Matter Initiative, a three-year project that seeks to build the kind of long-term institutional and political power that the black community needs to achieve real racial justice.
Our focus on black-led organizing groups is an essential piece of building the organizations, leaders, and activists who will not just do the work today, but will lead future efforts to push for changes that will allow all black Americans to thrive.

We are dedicating $900,000 in new funds over the next three years for grants to support black-led organizing, as well as leadership development for black organizers and in-person meetings at which black social-change leaders can strategize on next steps.

This investment is significant for our foundation and represents almost a one-percent increase in our payout for 2015 and a 20-percent increase in our grants budget over the next three years. Hill-Snowdon’s trustees believe this opportunity demonstrates exactly why foundations have endowments: so they can seize on historic moments like this.

But it’s not enough for each foundation to demonstrate the courage to spend more. We must also join forces with other philanthropies to better coordinate and align our grant making for racial justice for the black community

That’s why we are working with the Association of Black Foundation Executives to create a network of grant makers to coordinate our grant-making efforts and maximize our impact on a range of racial justice issues affecting blacks. We invite our colleagues to join us.

Philanthropy needs to do more to make black lives matter in this historic moment. This includes:

Understanding and acknowledging how structural racism limits the possibilities of those in the black community and defines many of the social, institutional, political, economic, and cultural norms of American society. This understanding will make it clear why it’s imperative to focus on changing structures — and especially to focus on ways of ensuring that blacks gain the power they need to push for substantive and lasting change.
Making a commitment to make black lives matter by adopting a racial-equity lens for grant making in black communities. Grant makers should pay attention to race while analyzing programs, seeking solutions, and defining success.
Ending the funding inequities for black-led groups, especially black-led social-change and racial-justice organizations. Some of the imbalance in grant making may stem from unconscious bias. Imbalance also may result from a Catch-22 situation: Foundations want to support high-performing organizations, but that is a tough standard to meet when black-led nonprofits have received just crumbs from the grant-making table.
The nation is at a pivotal crossroads in its centuries-long struggle to confront and eradicate structural racism. The shocking events and subsequent organizing in the past year have helped lift up the veil to expose the pernicious and persistent impact of structural racism. Philanthropy’s challenge is to not look away, but to look deeper, and to act with courage and conviction. We must cultivate a commitment to making black lives matter, so that the black community and, indeed, the entire nation can thrive.

A Foreclosure Moratorium Should Be Just the Start

huffingtonpost.com
By Preeti Vissa

The good news is that recent revelations about foreclosures being finalized based on improper documentation — legal filings often not even read by the bank officials who signed hundreds or thousands of them at a time — have spurred outrage nationwide that could lead to action. The bad news is that it’s unclear whether that action will be enough.

Continue reading “A Foreclosure Moratorium Should Be Just the Start”