Business

Poor Communities Lose Billions to Predatory Lenders

Published

10 years ago

January 27, 2015

Oakland Post

Payday lenders and pawn shops are more common in poor neighborhoods (Wikimedia Commons)

By Freddie Allen
NNPA Senior Washington Correspondent

WASHINGTON (NNPA) – Predatory lenders continue to target poor, Black and Latino communities, siphoning off $103 billion in fees and interests every year, and the rest of us are paying for it, according to a recent report by United for a Fair Economy.

“This is more money lost in poor communities than the United States spends on domestic food aid annually,” the report said. “We as a society end up subsidizing that lost income (an average of $3,029 per affected household) through a social safety net that is already underfunded and overcapacity.”

In “State of the Dream 2015: Underbanked and Overcharged,” United for a Fair Economy (UFE), an independent research group that advocates for economic equality across race, gender and class lines, chronicled the disparities that continue to plague the banking industry.

Mike Leyba, the communications director at UFE and co-author of the report said that systemic economic exclusion, largely based on race, has existed for hundreds of years in the United States.

The free labor of kidnapped and enslaved Africans enabled White male land owners and the financial institutions that supported them to accumulate massive amounts of wealth over hundreds of years.

Following the Civil War, Jim Crow laws and “The Black Codes,” continued to deprive freed African slaves of economic opportunities for decades.

After World War II, the GI Bill provided White male veterans a pathway to college, professional careers and a boost into the middle class, a bridge that was closed to Black veterans who also fought and spilled blood overseas. Later, the Federal Housing Administration blocked Black families from moving into suburban neighborhoods, built with and partially funded by government subsidies.

“More than a quarter of all White families shifted from renting to owning in the twenty years following WWII,” stated the report. “Despite laws to the contrary, Black people were excluded from buying homes in White neighborhoods and were forced instead to live in urban ghettos.”

According to the UFE report, less than 1 percent of all mortgages from 1930 to 1960 were issued to Black people.

By 2013, the median wealth held by White families ($141,900), dwarfed the median wealth ($11,000) of Black families.

“As an estimated 80 percent of assets come from transfers from prior generations, the history of the financial situations of prior generations is a primary cause of the racial wealth gap,” stated the report.

Leyba said that economic exclusion, largely based on race still exists, but it’s much harder to pinpoint.

“It may not be legalized or sanctioned by the federal government,” said Leyba. “But it still exists.”

Economic exclusion continues to plague the banking sector, leaving 93 million Americans “unbanked” or “underbanked.”

“The unbanked are people that do not have any type of consumer checking account, and are outside the entire banking system,” the report explained. “The underbanked are people that have a checking account, but also rely on Alternate Financial Service Providers.”

According to the report more than 20 percent (20.5 percent) of Black households were unbanked in 2013, compared to 3.6 percent of White households.

Forty percent of Black households were full-banked compared to 75.4 percent of White households.

Alternate Financial Service Providers or AFSPs include payday loans, auto title loans, rent-to-own shops, subprime credit cards, high-interest rate installment loans, check cashing, prepaid reloadable debit cards, and money orders, the report said.

Researchers found that people shun traditional banks in favor of AFSPs for a number of reasons. Fifty-eight percent said that they didn’t have enough money to meet minimum balance requirements to keep an account open, while others (17 percent) said that past credit problems made it difficult for them to open new accounts.

In recent years, following the housing crisis banks, Chevy Chase Bank, Wells Fargo and Bank of America paid out multi-million dollar settlements in mortgage lending discrimination lawsuits involving Black and Latino borrowers.

But even if Black customers were able to meet the minimum requirements, had good credit and confidence in banks, the contraction and consolidation in the financial sector following the Great Recession have placed traditional banks out of reach for millions of Americans.

AFSPs moved in to fill that void.

“Payday lenders are nearly eight times as concentrated in neighborhoods with the largest shares of Blacks and Latinos compared to White neighborhoods, draining nearly $247 million in fees per year from these communities,” the report said. “Even after controlling for income and a variety of other factors, payday lenders are 2.4 times more concentrated in Black and Latino communities.”

As local bank branches fade away, Leyba said, community businesses dry up.

“What we’re seeing with more large corporate banks taking over those local branches, it makes it so that there is very little incentive for them to invest in that local area,” explained Leyba. Especially, when the large corporate banks can get a much higher yield from other financial products, he added.

UFE researchers suggested that the United States follow other industrialized nations such as France, Germany, Japan, China, Brazil, India, and New Zealand by offering more banking services through local post offices, which have a much larger foothold in urban and rural communities than banks.

The report said that nearly 40 percent of post offices are in zip codes “without a single bank,” and about 20 percent are in zip codes with just one bank.

“In addition to handling money orders, transfers, and debit cards, postal window clerks have experience cashing checks, processing refunds, renting post office boxes, preparing bank deposits, and maintaining business accounts,” the report said.

The report also recommended reforming the Community Reinvestment Act (CRA), modernizing payment technology to keep pace with the new realities of banking and adopting national standards to cap the interest rates on payday loans.

Leyba said that lending circles that provide small community-based loans, have also been successful in emerging markets.

“We know that not everyone will find their way into the banking system, as there is no way to make that happen either through policy solutions or innovations in products,” stated the report. “What policy makers and advocates can do, though, is look for ways to attract, retain and encourage people to begin to build assets, build a favorable credit history and ultimately begin down the path of wealth creation.”

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Oakland Post: Week of October 30 – November 5, 2024

The printed Weekly Edition of the Oakland Post: Week of October 30 – November 5, 2024

Published

22 hours ago

November 1, 2024

Oakland Post

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Business

Chevron Reports Progress in Flaring, Emissions at Community Town Hall

At the first in a series of community town halls on Oct. 16, Chevron Richmond reported a reduction in year-over-year flaring incidents, both in number and duration, and detailed new technologies and processes that will further drive down emissions and heighten community awareness about operations. Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Published

5 days ago

October 28, 2024

Oakland Post

Community member Kathleen Sullivan speaks at the Chevron town hall. Photo courtesy Richmond Standard.

By Mike Aldax

The Richmond Standard

Chevron employees also answered questions from the community and listened to concerns at the town hall, which was hosted by Ceres Policy Research and held at CoBiz in downtown Richmond.

Similar town halls will be held twice per year over the next five years as part of a settlement agreement with the Bay Area Air Quality Management District (BAAQMD).

The goal is to increase transparency about flaring and increase opportunities for the community to get answers to their questions about potential impacts to the community.

A key output is the creation of a Community Action Plan, or CAP. The CAP aims to create a two-way dialogue between Chevron and neighbors around flaring and environmental compliance.

“Chevron’s focus in this process is one of learning and engagement,” said Brian Hubinger, public affairs manager at Chevron Richmond. “We felt the most efficient way was to bring together a broad selection of community members rather than just think about what it would take to comply with the settlement agreement.”

The first town hall drew a few dozen members of the community, including Chevron employees, representatives of fence-line neighborhoods and members of local environmental organizations.

During the event, Chevron employees reported that 19 BAAQMD-reportable flaring incidents occurred at the refinery from October 2022 to September 2023 with a total duration of 270 hours. During the same period this year, 18 flaring incidents occurred with a total duration of 159 hours, marking a 41% decrease in duration.

Further gains are expected with the implementation of Flare IQ, set to be installed this year and next on all of the refinery’s flaring systems. Flare IQ is described as a supercomputer with an algorithm that gathers data from operations and enables employees to address potential issues before they occur.

Chevron also reported a 40% decrease in particulate matter emissions since the completion of the refinery modernization project in 2018.

In addition, flare gas volume related to Chevron’s new hydrogen plant project, built as part of the modernization project, decreased by 85% since 2019. The hydrogen plant has also reportedly made the refinery 20% more efficient.

“We’re really proud about that,” said Kris Battleson, manager of health, safety and environment at Chevon Richmond.

Neighborhood council leaders joined the president of the local NAACP in lauding the effort toward transparency and accountability. Among them was Vernon Whitmore, president of the Sante Fe Neighborhood Council and member of the 15-person CAP committee.

“The way we were able to talk openly and freely with Chevron – honestly, bluntly and frankly – while developing this program was very good,” Whitmore said. “And it was something that was well-needed at this time.”

Still, residents are skeptical, including Kathleen Sullivan, a longtime community advocate who also serves on the CAP committee. But she added, “you can’t complain about something and not be involved in the solution.”

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Bay Area

S.F. Mayor London Breed Meets with Black Businesswomen Supporting Her Campaign

San Francisco Mayor London Breed met with 50 supporters at Cafe 22 in San Francisco’s Union Square hosted by cafe owner LaRonda “Sug” Smith, who is also president of the Enterprising Women Networking SF Chapter of the American Business Women’s Association. Wearing a royal blue pantsuit, Breed happily greeted the group of seniors, business owners, and longtime community members.

Published

5 days ago

October 28, 2024

Oakland Post

San Francisco Mayor London Breed addresses her supporters at a Meet and Greet at Cafe 22 on Mason Street in Union Square. Photo By Carla Thomas.

By Carla Thomas

Wearing a royal blue pantsuit, Breed happily greeted the group of seniors, business owners, and longtime community members.

The mayor stated that the race is a close one competing with wealthy opponents, however she feels confident in her track record of accomplishments, qualifications and being a native San Franciscan.

“My opponents may have the money, but I’ve got the people,” she said .

In response to COVID-19’s impact on Black-owned and serving businesses, in 2020 Mayor Breed launched the African American Revolving Loan Fund, providing zero-interest loans of up to $50,000.

In 2022, Mayor Breed ensured the loans nade to 51 businesses were forgiven. Through her ‘Opportunities for All’ initiative she ensured all 13- 24-year-olds have access to paid internships and a career pathway. Since its launch in 2018, the program has made over 10,000 placements. Ninety-five percent were people of color and 23% were African American.

In 2022, Mayor Breed launched the Black 2 San Francisco initiative hosting HBCU, Historically Black Colleges and Universities for summer programming, a part of her downtown economic recovery and revitalization efforts.

Launched in partnership with the San Francisco Department of Public Health and Expecting Justice, Breed provided a monthly income of $600-$1000 to expecting mothers of color to reduce the economic stress that leads to racial birth disparities.

The program was the first of its kind in the nation and will expand from 150 recipients to 425. Breed helped fund a new small business hub at the City’s African American Arts and Cultural District.

In 2021, Mayor Breed proclaimed Juneteenth as an official City holiday, celebrating the Black community’s resilience and emergence from slavery.

Mayor Breed also reinvested $60 million of City funds annually to assist the City’s Black community in breaking a cycle of poverty.

Business training assisted 350 entrepreneurs,

Over 50 businesses entered or renewed leases,
1,000 residents completed workforce training,
Over 50 families and seniors secured mortgages and 6,000 households were provided nutritional support.
1,000 hours of mental health support and 38,000 young people were provided support
Nearly 1,000 youth recieved literacy and mentorship support, and nearly 40 educators were supported.

“A people that are 5% of the population, should not be 40% of the homeless population or condemned to poverty,” said Breed. “It’s not all about the numbers, but the overall disparity.”

Breed says she understands the plight of the underserved and is a mayor for all people but the data shows the African community left behind.

“When you uplift a community, you uplift the City and we invested in the Latino communities and in the Stop Asian Hate movement with resources to address those challenges,” said Breed. “Because ultimately, as mayor, it is my job to serve and protect all of the City.” “I’ve helped over 20,000 exit homelessness and increased our shelter capacity by 70%.”

The attacks Mayor Breed has experienced recently have reminded her that being a Black woman, you have to work twice as hard and yet be unfairly and overly scrutinized. However, Breed says she will continue to fight to lead San Francisco for another term.

“Mayor London Breed is for our people and all people in this city,” said LaRonda Smith who was awarded a proclamation from the mayor’s office. “This city is her community, she cares and has supported so many communities, organizations, and small businesses to prove it.” The event also served a celebration of Cafe 22’s three years in business at 325 Mason St. in San Francisco.

Attendees included business owners Del Seymour of Code Tenderloin, Velma Landers and Idella Hill of the ABWA, and Julianne Banks.