Progressive Candidates Are Pulling the Democratic Party Left, Whether the Establishment Likes It or Not
Progressive Candidates Are Pulling the Democratic Party Left, Whether the Establishment Likes It or Not
One of the candidates taking on the establishment is Kerri Harris, who is running to unseat Sen. Tom Carper, a Democrat...
One of the candidates taking on the establishment is Kerri Harris, who is running to unseat Sen. Tom Carper, a Democrat from Delaware. Harris, who is a community organizer with the Center for Popular Democracy and an Air Force veteran, has been hammering Senator Carper on his decision to partner with Republicans to dismantle Dodd-Frank -- the law passed in the wake of the financial and housing crisis.
Is 'Audit the Fed' going mainstream?
Is 'Audit the Fed' going mainstream?
Auditing the Federal Reserve, a financial reform long pushed by the libertarian right, just got a boost this week from...
Auditing the Federal Reserve, a financial reform long pushed by the libertarian right, just got a boost this week from an unexpected quarter: A respected Dartmouth economist who issued a new proposal to impose transparency and oversight on the nation’s powerful central bank.
Though largely dismissed by mainstream economists, “Audit the Fed” has become an applause line for central banking skeptics like Sen. Rand Paul, who believe the Federal Reserve wields too much power too secretly. In recent years the idea has spread from right-wing politicians to the conservative mainstream, and even critics on the left: A Senate vote on Paul’s “Audit the Fed” legislation in January garnered 53 votes. Sen. Bernie Sanders (I-Vt.) voted for that bill and has pushed for increased transparency at the Fed to the delight of campaign crowds suspicious that the central bank is rigged in favor of Wall Street.
This week, the Fed Up campaign, a 30-month-old group of labor and community organizations pushing for more openness at the Fed, released its own platform for reforming the Fed’s governance structure, including a new idea for an audit—or "annual review"—that could give the idea more mainstream credibility.
The author is Andrew Levin, an economist now at Dartmouth College who has decades of experience at the Fed and a reputation as a thoughtful observer of the institution. While most financial insiders have long dismissed “Audit the Fed” as an unserious political slogan from people unversed in economics, Levin’s proposal has provoked a more serious reckoning with Fed transparency. And increasingly, economists are coming to the same conclusion: More sunlight might do the central bank some good.
“The Fed is overly sensitive about reviewing its policies,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who has worked at the Fed off-and-on for the past 30 years.
At issue is whether decisions made by the top officials of the Fed should be open to review by the Government Accountability Office (GAO). Technically speaking, the Fed is already audited – it’s subject to the same GAO scrutiny of its operations as any other federal agency. But its most influential decisions, deliberations on monetary policy that attract global attention and can move stock markets dramatically, are conducted in secret by a dozen top Fed officials. Seven of them, known as Fed governors and based in Washington, are nominated by the president and confirmed by the Senate. The remaining five spots are reserved for the presidents of the 12 regional Fed banks on a rotating basis. Collectively known as the Federal Open Market Committee (FOMC), the group generally meets eight times a year, with minutes released three weeks afterwards. Transcripts of those meetings are released on a five-year lag, effectively sealing its deliberations in the short-term.
Because banks ultimately own the regional Fed banks, and have a say in nominating many of their directors, critics say this structure leaves the door open for favoritism to Wall Street, and needs outside scrutiny to ensure it properly balances its dual mandate of stable inflation and full employment. Supporters say the Fed's relative independence is a virtue, and worry its monetary decisions would be worse in the long run if its officials constantly felt Congress breathing down their necks.
The more traditional right-wing “Audit the Fed” legislation would call for a GAO audit of the Fed within 12 months of passage, and thereafter enable any lawmaker or congressional committee to request an audit of the central bank, including the FOMC’s monetary policy decisions, whenever they wanted.
In his new plan, Levin proposes something slightly different: it would require the GAO to conduct a review of all aspects of the Fed, including monetary policy, but make the review annual and determined by GAO staff rather than Congress. “[Paul’s legislation] just seemed like a way to threaten the Fed,” said Levin.
His proposal would also call for seven-year term limits for Fed officials and reform the process that the regional Fed bank presidents are selected. Though he recoiled against terming the GAO review an “audit,” his proposal would give the GAO new powers to examine different aspects of the Fed, as it does with other agencies in the federal government. Instead of called by Congress, it would be annual and determined by agency staff. “From one year to the next, it might focus on some aspects of the Fed's operations. One year, maybe it would focus on monetary policy strategy and communications,” Levin said. “Another year, maybe it wouldn't spend much time on that.” The results would be publicly available.
Narayana Kocherlakota, the former president of the Minneapolis Federal Reserve, expressed support for the idea of regularly scheduled GAO audits of the Fed’s monetary policy. He didn't take a position on earlier audit proposals, but echoed Levin’s concern that allowing lawmakers to request a GAO audit “would be very bad and would lead us down a bad path where essentially Congress was running monetary policy.”
The Federal Reserve declined to comment on Levin’s plan. But Fed Chair Janet Yellen and other Fed officials have aggressively attacked prior proposals to increase oversight over the FOMC’s deliberations. In January, before the Senate voted on Paul’s legislation, Yellen sent a letter to Majority Leader Mitch McConnell and Minority Leader Harry Reid opposing the bill. “These reviews could only serve to create public doubt about the conduct and independence of monetary policy,” she wrote.
“All of that criticism does apply to my proposal,” Levin said after reading those lines from Yellen’s letter. But he argued that such oversight is necessary in a democracy. He added, “After all, the Congress is the Fed’s boss.”
Levin enters this debate with considerable experience. He spent two decades as an economist for the Fed and then was a special adviser to then-Chairman Ben Bernanke and then-Vice Chair Yellen from 2010 to 2012. He also advised many other central banks, including the European Central Bank, the Bank of Canada and the Bank of Japan. Those policy bona fides mean he’s being taken seriously even by people who have dismissed previous “Audit the Fed” proposals.
“Levin knows a lot about the internal workings [of the Fed] that I don’t,” said Jared Bernstein, the former top economist to Vice President Joe Biden and a frequent critic of “Audit the Fed” proposals. “He’s not coming at this from the perspective of some radical protester.”
The underlying question is whether an annual review by GAO—not one triggered by individual lawmakers or committees—will cause the Fed to be influenced by politics in its monetary policy decisions. To some extent, that already happens. The Fed, like every institution, faces criticism from an array of politicians, outside economists, and pundits. “Independence is not as black and white as many people make it seem,” said Kocherlakota.
Finding the right balance between giving the Fed room to make independent policy and holding it accountable is a constant challenge—one that extends beyond “Audit the Fed" proposals. Sanders, for instance, has proposed that FOMC transcripts be released within six months, instead of the current five years.
Few serious Fed watchers, however, have spent much time developing detailed ideas for increased Fed transparency. “I felt like there was a vacuum in the discourse,” Levin explained.
Levin’s reforms are unlikely to become law anytime soon: Lobbying efforts around such a change would be fierce, and groups like the Fed Up campaign are likely to be heavily out-spent by Wall Street banks skeptical of changes intended to reduce their influence over Fed decisions. The Federal Reserve would likely oppose the reforms as well.
By DANNY VINIK
Source
The Fed should rethink how its conducts monetary policy
The Fed should rethink how its conducts monetary policy
There is a growing sentiment that the Federal Reserve needs to change the principles by which it manages our economy. ...
There is a growing sentiment that the Federal Reserve needs to change the principles by which it manages our economy. Federal Reserve officials are saying it. Community organizations, labor unions, and think tanksare saying it. And on Friday, 20 of the country's most prominent economists released a joint letter saying it.
Read the full article here.
Regional Feds' head-hunting under scrutiny over insider bias, delays
Efforts to fill top positions at some U.S. Federal Reserve regional branches are casting a spotlight on a decades-old...
Efforts to fill top positions at some U.S. Federal Reserve regional branches are casting a spotlight on a decades-old process that critics say is opaque, favors insiders, and is ripe for reform.
Patrick Harker took the reins as president of the Philadelphia Fed this week, in an appointment that attracted scrutiny because he served on the committee of directors that interviewed other prospective candidates for the job he ultimately took.
The Dallas Fed has been without a permanent president for more than three months as that search process stretches well into its eighth month. And the Fed's Minneapolis branch abruptly announced the departure of its leader, Narayana Kocherlakota, more than a year before he was due to go, with no replacement named to date.
The delays and reliance on Fed employees in picking regional Fed presidents can only embolden Republican Senator Richard Shelby to push harder for a makeover of the central bank's structure, which has changed little in its 101 years.
A bill passed in May by the Senate Banking Committee that Shelby chairs would strip the New York Fed's board of its power to appoint its presidents. And it could go further, given the bill would form a committee to consider a wholesale overhaul of the Fed's structure of 12 districts, which has not changed through the decades of shifting U.S. populations and an evolving economy.
The bill is part of a broader conservative effort to expose the central bank to more oversight, and some analysts saw the Philadelphia Fed's choice as reinforcing the view that the Fed needs to open up more to outsiders.
Nine of 11 current regional presidents came from within the Fed, a proportion that has edged up over time. Twenty years ago, seven of 12 were insiders.
"The process seems to create a diverse set of candidates in which the insider is almost always accepted," said Aaron Klein, director of a financial regulatory reform effort at the Bipartisan Policy Center.
Since it was created in 1913, the central bank's decentralized structure was meant to check the power of Washington, where seven Fed governors with permanent votes on policy are appointed by the White House and approved by the Senate.
The 12 Fed presidents who are picked by their regional boards usually vote on policy every two or three years, and they tend to hold more diverse views.
Former Richmond Fed President Alfred Broaddus told Reuters the regional Fed chiefs have more freedom "to do and say things that may not be politically popular" because they are not politically appointed. "On the other hand, there is the question of legitimacy since they are appointed by local boards who are not elected."
"TONE DEAF"
Two-thirds of regional Fed directors are selected by local bankers, while the rest are appointed by the Fed's Board of Governors in Washington.
Critics question how well those regional boards - mostly made of the heads of corporations and industry groups meant to represent the public - fulfill their mission.
Last year, a non-profit group representing labor unions and community leaders organized by the Center for Popular Democracy, urged the Fed's Philadelphia and Dallas branches to make the selection of their presidents more transparent and to include a member of the public in the effort.
Philadelphia's Fed in particular proved "tone deaf" in its head-hunting effort, said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.
Harker was a Philadelphia Fed director when the board started looking to replace president Charles Plosser, who left on March 1, and he was among the six directors who interviewed more than a dozen short-listed candidates for the job, according to the Philadelphia Fed.
But on Feb. 18, Harker floated his own name, recused himself from the process and a week later his colleagues on the board unanimously appointed him as the new president.
While the selection follows Fed guidelines and was approved by its Board of Governors, it raised questions of transparency and fairness.
"The Philadelphia Fed's search process might have made perfect sense in a corporate environment, but is obviously problematic for an official institution," said Crandall.
The board's chair and vice chair, Swathmore Group founder James Nevels and Michael Angelakis of Comcast Corp, respectively, declined to comment, as did Harker.
Peter Conti-Brown, an academic fellow at Stanford Law School's Rock Center for Corporate Governance, and an expert witness at a Senate Banking Committee hearing this year, proposed to let the Fed Board appoint and fire regional Fed presidents or at least have a say in the selection process.
In the past, reform proposals for the 12 regional Fed banks have focused on decreasing or increasing their number and their governance.
Changes to the way the regional Fed bosses are chosen could strengthen the influence of lawmakers at the expense of regional interests.
For now, delays in appointments of new chiefs force regional banks to send relatively unknown deputies to debate monetary policy at meetings in Washington, as Dallas and Philadelphia did last month when the Fed considered raising interest rates for the first time in nearly a decade.
The Minneapolis Fed still has time to find a new president before Kocherlakota steps down at year end.
"For now the Fed criticism is just noise, mostly from Republicans," said Greg Valliere, chief political strategist at Potomac Research Group. "But once the Fed begins to raise interest rates ... then the left will weigh in as well."
(Additional reporting Ann Saphir in San Francisco; Editing by Tomasz Janowski)
Source: Reuters
New Layers of Dirt on Charter Schools
New Layers of Dirt on Charter Schools
The commentary you find at BuzzFlash and Truthout can only be published because of readers like you. Click here to join...
The commentary you find at BuzzFlash and Truthout can only be published because of readers like you. Click here to join the thousands of people who have donated so far.
An earlier review identified the "Three Big Sins of Charter Schools": fraud, a lack of transparency, and the exclusion of unwanted students. The evidence against charters continues to grow. Yet except for its reporting on a few egregious examples of charter malfeasance and failure, the mainstream media continues to echo the sentiments of privatization-loving billionaires who believe their wealth somehow equates to educational wisdom.
The Wall Street Journal, in its misinformed way, says that the turnaround of public schools requires "increasing options for parents, from magnet to charter schools." Wrong. As the NAACP affirms, our nation needs "free, high-quality, fully and equitably-funded public education for all children." For all children, not just a select few.
The NAACP has called for a moratorium on charter schools. And Diane Ravitch makes a crucial point: "Would [corporate reformers] still be able to call themselves leaders of the civil rights issue of our time if the NAACP disagreed with their aggressive efforts to privatize public schools?"
Here are the four big sins of charter schools, updated by a surge of new evidence:
1. Starve the Beast
Corporate-controlled spokesgroups ALEC, US Chamber of Commerce, and Americans for Prosperity are drooling over school privatization and automated classrooms, with a formula described by The Nation: "Use standardized tests to declare dozens of poor schools 'persistently failing'; put these under the control of a special unelected authority; and then have that authority replace the public schools with charters." But as aptly expressed by Jeff Bryant, "As a public school loses a percentage of its students to charters, the school can’t simply cut fixed costs for things like transportation and physical plant proportionally...So instead, the school cuts a program or support service."
It's an insidious and ongoing process, aided and abetted by business-friendly mainstream media outlets, to convince Americans that "every family for itself" is better than the mutual support and cooperation of a public school system.
2. Cream and Segregate and Discard
Urban charter schools primarily enroll low-income minority students. That seems admirable upon first reflection, but selective admissions of the best students from ANY community will make an individual school look good, leading to the belief that the concept will work on a larger scale. Success is much harder to achieve if a school accommodates special needs and English-learner students.
Numerous sources reveal the high degree of segregation in charter schools -- white or black, and by income and special need.
As expressed in the report "Failing the Test," "School choice is just that — except that charter schools are doing the choosing instead of communities."
It gets worse. Prominent New York charter network Success Academy has been accused of "counseling out" students who are low-performing or disruptive or otherwise difficult to teach. Even worse are charters that shut down, stranding hundreds of students, while their business operators can just move on to their next project. Nearly 2,500 charter schools closed their doors from 2001 to 2013, leaving over a quarter of a million kids temporarily without a school.
3. Scream 'Public' to Get Tax Money, Plead 'Private' to Hide Salary Data
Charter schools are increasingly run by private companies, or by private trusts. The National Labor Relations Board affirms that charters are private, not public.
As private entities, they are unregulated and lacking in transparency, and, as concluded by the Center for Media and Democracy, they have become a "black hole" into which the federal government has dumped an outrageous $3.7 billion over two decades with little accountability to the public.
4. Engage in "Fraud, Waste, Abuse, and Mismanagement"
That's how the Center for Popular Democracy describes charter performance in 2015, during which the schools wasted an estimated $1.4 billion of taxpayer money. The fraud is far-reaching, with examples from around the country:
The Department of Education audited 33 charter schools and concluded: "We determined that charter school relationships with CMOs (charter management organizations) posed a significant risk to Department program objectives."
In California, charter performance is so poor that even the National Association of Charter Authorizers is calling on the state to better control the authorization of such schools. At present, there are almost no restrictions on opening a charter school, and existing schools are restrictive in their enrollment policies.
Because of charters, Michigan cities have lost nearly half (46.5%) of their revenue over the past 10 years. Detroit, which is surpassed only by New Orleans in the number of charter students, half of the charter schools perform only as well as, or worse than, traditional public schools. A federal study found an "unreasonably high" number of charters among the lowest-rated public schools in the state.
In Louisiana, according to the Center for Popular Democracy, "charter schools have experienced millions in known losses from fraud and financial mismanagement so far, which is likely just the tip of the iceberg."
According to PR Watch, Florida "has one of the worst records in the nation when it comes to fraud and lack of charter school oversight." Texas has an unknown number of charters housed in churches. Nine charters in Washington remain open despite being declared unconstitutional by the state's Supreme Court.
Ohio might be worst of all. Since the 2006-07 school year, 37 percent of the state's charter schools receiving federal grants have either closed or never opened. An Ohio newspaper reported, "No sector – not local governments, school districts, court systems, public universities or hospitals – misspends tax dollars like charter schools in Ohio."
The Big Picture
Despite student selection advantages, charter schools generally perform no better than public schools, according to the most recent CREDO study and as summarized by the nonpartisan Spencer Foundation and Public Agenda: "There is very little evidence that charter and traditional public schools differ meaningfully in their average impact on students' standardized test performance." As for technology-based schools, the National Alliance for Public Charter Schools admits that "The well-documented, disturbingly low performance by too many full-time virtual charter public schools should serve as a call to action to state leaders and authorizers across the country."
Charter schools have turned our children into the products of businesspeople. Americans need to know how important it is to get the profit motive out of education, and to provide ALL our children the same educational opportunities.
By Paul Buchheit
Source
No sanctuary cities in Florida? That’s not as settled as Andrew Gillum claims
No sanctuary cities in Florida? That’s not as settled as Andrew Gillum claims
It’s difficult to speak in absolutes when discussing sanctuary cities, because as Gillum said, there is no formal...
It’s difficult to speak in absolutes when discussing sanctuary cities, because as Gillum said, there is no formal definition. The term can be used to make either negative or positive arguments about local policies, said Francesca Menes, Florida state coordinator for Local Progress, a national network of local elected officials working on social issues, including immigration protection.
Read the full article here.
Por qué la ciudad de Nueva York es una ciudad santuario modelo
Por qué la ciudad de Nueva York es una ciudad santuario modelo
Tras meses esperanza de que Donald Trump daría marcha atrás respecto a sus promesas de campaña contra los inmigrantes,...
Tras meses esperanza de que Donald Trump daría marcha atrás respecto a sus promesas de campaña contra los inmigrantes, lo opuesto ha sucedido. En las primeras semanas después de asumir el mando, Trump les ha declarado la guerra a los inmigrantes y ha prometido construir un muro en la frontera, aumentar las deportaciones y no dejar entrar a refugiados.
Su programa de gobierno va en contra de todo lo que este país valora y todo lo que la ciudad de New York siempre ha defendido. El compromiso de nuestra ciudad con los inmigrantes es el núcleo de nuestra identidad. Respetamos a los inmigrantes, apoyamos sus aspiraciones y trabajamos arduamente para que sean parte de la esencia de esta ciudad.
Como tal, la ciudad de Nueva York se considera desde hace mucho tiempo una “ciudad santuario”, donde las agencias locales de la ley se rehúsan a ser forzadas a cumplir políticas de inmigración del gobierno federal que perjudican a sus comunidades. Dichas políticas están en vigor desde hace varias décadas. Incluso Rudy Giuliani, cuando fue alcalde, defendió ardientemente las leyes que prohibían que los empleadores de la ciudad de Nueva York reportaran la situación inmigratoria de los neoyorquinos inmigrantes.
Cientos de ciudades, estados y condados siguen políticas similares. Entre ellos se encuentran algunas de las más grandes ciudades del país, como también pueblitos al interior de los estados donde ganó Trump. Las razones son las mismas: las políticas de santuario mantienen a las ciudades más seguras y prósperas al no forzar a los inmigrantes a la clandestinidad y permitirles aportar y llevar vidas plenas.
En años recientes, la ciudad de Nueva York ha ido incluso más lejos. Por medio del trabajo de muchas organizaciones de defensa, incluidas Make the Road New York y el Center for Popular Democracy, los líderes municipales han puesto en vigor una serie de programas que ayudan a los inmigrantes a tener una vida más segura y próspera, y que benefician a la ciudad de muchas maneras.
Por ejemplo, en el año 2014, el alcalde De Blasio dio inicio a IDNYC, el más extenso programa municipal de identificación en el país. Permite que los inmigrantes indocumentados abran cuentas de banco y tengan acceso a servicios sociales necesarios. Tiene un alcance de más de 850,000 personas y se ha hecho popular con una gran variedad de neoyorquinos, entre ellos muchos que no son inmigrantes (como yo).
La ciudad también ofrece excelente acceso lingüístico a los neoyorquinos que aún se encuentran en el proceso de aprender inglés, lo que incluye vitales servicios de interpretación y traducción en todas las agencias de la ciudad para los residentes que necesitan acceso a valiosos servicios municipales.
Para los residentes que enfrentan la traumática posibilidad de deportación y separación de sus familiares, la ciudad también ha creado un innovador programa a fin de proporcionar a los neoyorquinos en procesos migratorios acceso a abogados que tienen mucha experiencia en la defensa contra la deportación. Los clientes del programa tienen probabilidades aproximadamente 1,000 por ciento más altas de ganar sus casos de inmigración que quienes no tienen representación legal.
Con estas medidas, a la ciudad de Nueva York realmente ha elevado el estándar para otras ciudades en todo el país. Y ha sido beneficioso para toda la ciudad. Hoy en día, nuestra economía se encuentra en auge, la tasa de criminalidad es la más baja de la historia, y un nivel récord de turistas de todo el mundo vienen en masa. La protección de nuestros inmigrantes solo ha tenido consecuencias positivas para la ciudad de New York.
Seguiremos esforzándonos por lograr medidas de política que faciliten que los inmigrantes trabajen y vivan en la ciudad de Nueva York, y haremos todo lo posible para alentar a otras ciudades a que sigan nuestro ejemplo. A juzgar por el número de ciudades que se están pronunciando y declarándose santuarios tras los crueles e insensatos decretos ejecutivos de Trump, parece que el ejemplo de Nueva York ya está surtiendo efecto.
By Andrew Friedman
Source
Report: Hedge funds that ‘killed’ Toys ‘R’ Us ‘prey’ on Puerto Rico
Report: Hedge funds that ‘killed’ Toys ‘R’ Us ‘prey’ on Puerto Rico
Some of the hedge funds that are speculating on Puerto Rico debt also forced Toys R Us to shut down, according to a...
Some of the hedge funds that are speculating on Puerto Rico debt also forced Toys R Us to shut down, according to a report released by Hedge Clippers, which advocates for income equality by targeting hedge and private equity funds, in partnership with the Center for Popular Democracy, a nonprofit that advocates for workers rights.
Read the full article here.
Texas Matters: Unemployment Still A Problem For Texas Minority Communities
Texas Public Radio - March 6, 2015, by David Martin Davies - The U.S. Labor Department reports that the latest national...
Texas Public Radio - March 6, 2015, by David Martin Davies - The U.S. Labor Department reports that the latest national unemployment rate is 5-point-5 percent. That’s good news for the economy overall and the sluggish recovery. But if you are still one of those without a job then the unemployment rate is 100%. But for minority communities the recovery has yet to arrive. A coalition of community and labor groups in Texas is calling for the Federal Reserve to focus on full employment and higher wages for blacks, Latinos, native peoples and others in poor neighborhoods who have been left out of the recovery. Connie Razza is the Director of Strategic Research at the Center for Popular Democracy.
Listen to the clip here.
Payday lenders must be stopped from preying on the poor: Guest commentary
Payday lenders must be stopped from preying on the poor: Guest commentary
Payday lending has come under attack in recent years for exploiting low-income borrowers and trapping them in a cycle...
Payday lending has come under attack in recent years for exploiting low-income borrowers and trapping them in a cycle of debt. The problem has grown to such an extent that last month, the Consumer Financial Protection Bureau proposed new rules to rein in the most egregious abuses by payday lenders.
Yet payday lenders are not alone in profiting from the struggles of low-income communities with deceptive loans that, all too often, send people into crushing debt. In fact, such targeting has grown common among industries ranging from student loan providers to mortgage lenders.
For decades, redlining denied black people and other communities of color access to mortgages, bank accounts and other important services. Today, black and brown women are similarly being “pinklined” with lending schemes that deny them the opportunity for a better life.
A recent report underlines the toll these practices have taken on women of color. Among other alarming statistics, the report shows that 6 out of 10 payday loan customers are women, that black women were 256 percent more likely than their white male counterparts to receive a subprime loan, and that women of color are stuck paying off student debt for far longer than men. It also shows that aggressive lending practices from payday lending to subprime mortgages have grown dramatically in recent years.
In Los Angeles, debt is a dark cloud looming over the lives of thousands of low-income women all over the city.
Barbara took over the mortgage for her family’s home in South Central Los Angeles in 1988. She had a good job working for Hughes Aircraft until she was injured on the job in 1999 and took an early retirement. To better care for an aging mother living with her, she took out a subprime loan for a bathroom renovation.
The interest rate on the new loan steadily climbed, until she could barely afford to make monthly payments. She took out credit cards just to stay afloat, burying her under an even higher mountain of debt. To survive, she asked her brother to move in, while her son also helped out with the bills.
Numerous studies have shown that borrowers with strong credit — especially black women and Latinas — were steered toward subprime loans even when they could qualify for those with lower rates.
Women of color pay a massive price for such recklessness. The stress of dealing with debt hurts women in a variety of ways.
Alexandra, a former military officer, lost her partner, the father to her daughter, after a protracted struggle with ballooning subprime loan payments. The credit card debt she needed to take out as a result threatened her health, leaving her with hair loss, neck pain and sleep deprivation. She eventually needed to file for bankruptcy to settle the debt.
Women of color are vulnerable to dubious lenders because structural racism and sexism already puts far too many women in economically vulnerable positions. The low-wage workforce is dominated by women, and the gender pay gap is significantly worse for women of color. Many women of color are forced to take out loans just to survive or to try to improve their desperate situations.
Predatory lending practices, and other corporate practices that deny communities opportunities and exploit the most economically vulnerable, have been allowed to proliferate for far too long. The Consumer Financial Protection Bureau began taking action on payday and car title loans last month, but more needs to be done.
Regulators must ensure all lending takes into account the borrower’s ability to repay, and that lenders do not disproportionately target and attempt to profit off of the least protected.
The payday lending rules acted on last month are a step in the right direction but don’t go nearly far enough. We have a lot of work ahead of us to ensure black and Latina women are not exploited by the 21st century version of redlining.
Marbre Stahly-Butts is deputy director of Racial Justice at the Center for Popular Democracy, of which Alliance of Californians for Community Empowerment is an affiliate.
By Marbre Stahly-Butts
Source
5 days ago
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