For African Americans and other minorities financial reform is particularly important, advocates, lawmakers and officials said.
“For starters, they’ve been disproportionately hurt by the current system, which has allowed this ‘go-go’ mentality of ‘anything goes,’” said Kathleen Day, spokeswoman for the nonprofit, Center for Responsible Lending. “And as we can see, unfairly targeting specific groups isn’t good for anybody … it isn’t good for the whole United States.”
It’s a fact that the Obama administration acknowledged recently as part of its efforts to pass Wall Street reform. In a recent call with Black press reporters, White House economic advisor Cecilia Rouse said Blacks and Hispanics were targeted by financial institutions to receive subprime and other predatory mortgage loans, which precipitated the ongoing economic crisis.
Blacks were three times more likely than other groups to receive subprime home loans, and 57 percent of all loans taken by African Americans in 2006 are at risk of foreclosure.
As a deterrent to a similar meltdown of the U.S. financial system, President Obama wants to limit the size of banks – so the concept of “too big to fail” and another taxpayer bailout becomes unviable – and the risks they can take. He also wants banks to make their dealings transparent, close loopholes that allow institutions to engage in risky practices and allow shareholders to vote on the salaries/bonuses of executives.
“If we don’t change what led to the crisis, we doom ourselves to repeat it,” Rouse said in support of the legislation. She added, “Opposing reform would leave consumers vulnerable to the worse of industry practices and taxpayers on the hook if a crisis like this ever happens again.”
But those stakes and overwhelming public support for financial reform were not enough to bar Senate Republicans from blocking the measure on Capitol Hill this week, prompting civil rights groups to vow renewed efforts to push the legislation through.
“The civil rights community will continue to work to ensure that the will of the people is not defeated by corporate lobbyists and campaign contributions,” said Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights, in a statement. “We will continue to work for the interests of Main Street and working families until President Obama signs real financial reform into law.”
Rep. Maxine Waters, D-Calif., said she was not surprised by the partisan vote, however – it was meant to open negotiations – and says she is confident the measure will advance.
Of greater concern to her, said the House Financial Services Committee member, is the survival of two provisions specifically geared to protect minorities.
The House passed Waters’ amendment that would ensure minorities were part of the proposed Consumer Financial Protection Bureau’s oversight board.
Of particular importance to African-American consumers, the Bureau would, among other things:
– Ensure big banks and credit card companies provide clear information to consumers.
– Enforce fair lending laws that protect minorities from discrimination.
– Oversee alternative financial services such as check cashiers, payday lenders, etc. so consumers could avoid hidden and usurious fees.
– Offer financial literacy education to African Americans.
Congresswoman Waters also hopes the Senate bill retains her idea of instituting an Office of Minority Affairs within all federal financial agencies to ensure marginalized communities aren’t overlooked in the decision-making process.
“The subprime meltdown and the economic crisis were caused by the greedy financial institutions – the loan initiators – who targeted minority communities and poor communities. … And when you look at all the agencies that deal with monetary policy … none of them really focused in on the most vulnerable who were hurt by these policies,” the Black lawmaker said. “They just didn’t care… . The harm that was done to minorities was just not addressed by these agencies.”
Waters said while some senators, particularly Sen. Robert Menendez, D-N.J., have promised to “protect” the measure; White House support is less certain.
Rouse, the administration advisor, sidestepped a question about the White House’s position during the press call, prompting scathing commentary from a Black finance professor, who participated in the teleconference.
Writing on MSNBC’s “The Grio,” Syracruse University professor Boyce Watkins said the stance was another example of Obama’s “trickle-down” or “rising tide lifts all boats” philosophy as it relates to helping Blacks.
“As I listened to Dr. Rouse dodge the poignant question about Rep. Maxine Waters’ interest in establishing an Office of Minority Affairs, I started to feel that the Ph.D. was feeding us just a little BS,” Watkins wrote. He also said that Obama’s approach “doesn’t work for those who’ve been marginalized from the economic mainstream of America. In other words, our ships can’t rise, because some of these ships are not in the economic water.”
Waters said she remains optimistic of White House backing, however, based on initial conversations.
