Rebuilding Wealth Lost During Great Recession
By Charlene Crowell
February, Black History Month, is usually a time when communities and organizations honor the achievements of our forefathers. But this year, the Center for Responsible Lending (CRL) and key allies chose February to convene a symposium that addressed communities of color and consumer financial services. Co-convening organizations with CRL were the Joint Center for Political and Economic Studies and the National Consumers League.
Held February 6 at the Washington-D.C. offices of the Joint Center, the day-long event brought together policymakers, lawmakers, civil rights leaders and consumer advocates to address predatory lending practices in mortgages, auto finance and more. Participants included U.S. Senator Elizabeth Warren (D-Mass.), U.S. Representative Keith Ellison (D-Minn.), Edith Ramirez, Chairwoman of the Federal Trade Commission, and FTC Commissioner Mignon Clyburn.
“The wealth losses caused by the Great Recession will likely persist for years if not decades for many families,” observed Julia Gordon, a symposium presenter and Director of Housing Finance and Policy for the Center for American Progress.
“For consumers of color, the road to recovery will be even steeper and harder due to a range of bad practices that targeted these consumers and continued discrimination in the lending context,” continued Gordon. “To enable families and communities of color to rebuild wealth, it’s essential to offer equitable access to safe and sustainable credit, while also remaining vigilant against any form of predatory lending.”
Another symposium speaker, Dedrick Muhammad, Senior Director of the NAACP Economic Department, recently wrote about the civil rights organization’s concerns about wealth inequality in its January newsletter.
“Closing this wealth and income gap is as much a practical issue as it is a moral one: the U.S. economy can’t thrive when it lacks a solid middle class”, wrote Muhammad in the January 2014 edition of The Angle, the NAACP newsletter. “Americans have begun engaging in economic justice fights at both state and local levels, some which successfully lead to 13 states raising their minimum wage this year.”
Independent research by CRL determined that the typical household has just $100 left each month after paying for basic expenses and debt payments. After controlling for inflation, the typical household had less annual income at the end of 2010 than it did at the beginning of 2000. Moreover, as worker productivity increased, the workplace has seldom rewarded them with higher pay.
More recently, new research from the Standard Center on Poverty and Inequality similarly found that between 1982 and 2006, the average real income for Black households rose by only 28 percent, while the same measure for White households grew 42 percent. Additional findings revealed that:
The Great Recession hit Black households more severely because a higher share of assets were invested in their homes; and The nation’s middle class of all races lost more net worth from the decline in home prices than the top 20 percent of income earners lost from the stock market plunge.
The mortgage panel discussion included the National Council of La Raza, the National Urban League, National Community Reinvestment Coalition and the Center for American Progress. A second panel, dedicated to auto finances abuses, added voices from the League of United Latin American Citizens and a discussion of a new CRL report that found consumers of color still report paying higher interest rates on dealer-financed car loans than other consumers.
“Considering growing racial disparities in employment, homeownership and wealth, CRL and its partners strongly believed the event was necessary to draw attention to the disturbing economic trends that are causing harm in communities”, said Ken Edwards, CRL’s Vice President for Federal Affairs. “We convened the symposium; now we must utilize that insightful dialogue to push for progressive changes going forward.”
Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached atCharlene.crowell@