June 16, 2009

How to Close the Racial Wealth Gap?

Posted by Nina Jacinto at 12:27PM

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This morning I sat in on a webinar hosted by The Media Consortium and Insight Center's Closing the Racial Wealth Gap Initiative (InsightCCED). The briefing aimed to summarize the ways in which black, Latino and Native American communities have been affected by disproportionate rates of foreclosure and predatory lending. Speakers urged journalists in particular to investigate the racial angle of the economic downturn in order to encourage policy changes and assist in the closing of the racial wealth gap.

Michael E. Roberts, President of the First Nations Development Institute, spoke about the research done to expose the prevalence of predatory lending among Native American communities (PDF). With an increase in predatory lending practices, there has been less income going to impoverished households and less money circulating throughout the first nations. Research refutes the myth that generous wealth opportunities have been created by the Indian gaming industry. Only 225 of the 561 federally recognized tribes have gaming contracts, with only the top 20 operations making up over half of the total portion of Indian gaming revenue (PDF). Combined with the fact that non-Native Americans hold three-fourths of the jobs creating by the gaming industry, tribes continue to struggle with the highest rates of poverty, unemployment and inadequate healthcare than any other ethnic group in the United States. Roberts noted that further research and investigative reporting must be done to evaluate and prevent against future predatory lending.

Dr. Avis A. Jones-DeWeever, director of the Research, Public Policy and Information Center at the National Council of Negro Women (NCNW) discussed a new study released by her organization in collaboration with the National Community Reinvestment Coalition (NCRC). The report, which investigates race and gender disparities among mortgage lending practices, found that in over 84 percent of the metropolitan areas studied, black women were twice as likely to receive high cost loans than their middle and upper income white female counterparts (PDF). Rankings were created to show the worst disparities for communities based on race and gender: black women fared worst in North Carolina whereas Latinas faced the highest disparities in the D.C area. Dr. Jones-DeWeever recommended a strengthening of the Community Reinvestment Act, which was passed in 1977 to reduce discriminatory credit and lending practices in low income areas, and remarked that banks must be held accountable for their discrimination and should provide data on race and gender in relation to their lending practices.

Janis Bowdler, Deputy Director for the National Council of La Raza (NCLR), also stressed the urgency of holding banks accountable, by passing the Predatory Lending Bill, which has failed twice in the Senate in the past. With Latino borrowers almost four times as likely to receive high cost loans compared to whites, individuals are unable to support themselves or their extended families, and are unable to build savings after applying for credit (PDF). The nonprofit lenders and credit unions who aim to serve low-income and immigrant communities, Bowdler said, have been "beat out in the marketplace" because of other banks' high returning toxic mortgages.

The speakers all called for in-depth investigation of how low income communities of color are losing their opportunities for gaining wealth and supporting their families. There needs to be an emphasis on funding for training communities of color so that they can competitively pursue green jobs and regulations must be created and enforced to discourage predatory lending practices. It seems that there also needs to be more work done to investigate other low income communities: Asian Pacific Islander and Middle Eastern American groups are often ignored from the conversation on racial wealth and predatory lending. Finally, instead of blaming the victims of the foreclosure crisis for poor spending or living outside their means, journalists have a duty to expose the consequences of racial inequities and further report on the individuals who have suffered from predatory lending.