Financial system is still separate and unequal, study finds – Next City
Financial system is still separate and unequal, says study
An upcoming study of Houston-area lenders reveals that traditional banks predominantly feature whites in their marketing and advertising materials, while payday lenders predominantly feature Blacks and Latinos in their materials. the LA Times reported this week.
As the LA Times notes, the research doesn’t really break new ground.
Data has been around for years, showing both that payday loan borrowers are disproportionately low-income and disproportionately black and Latino, and that payday lenders tend to geographically target advertising and storefront locations in neighborhoods with a high concentration of African-American, Hispanic and low-income households.
Researchers told the LA Times they expected more black and Latino faces in mainstream bank marketing materials, especially now – after a year of uprisings since the murder of George Floyd and Breonna Taylor at the hands of police officers as well as a pandemic that has exposed and exacerbated long-standing racial disparities.
The new findings, which will be published next month in the Emory Law Journal, come on the heels of Illinois joining 16 other states as well as the District of Columbia. instituting an interest rate cap not exceeding 36% on payday loans. Nebraska joined this list of states last November.
The Illinois limit also applies to auto title lending. The average APR for an auto title loan in Illinois is 197%, according to statistics from the Illinois Department of Financial and Professional Regulation, while the average payday loan rate is 297%.
The Woodstock Institute, a Chicago banking watchdog group that helped shape Illinois law, found that in Chicago, communities of color zip codes make up 47% of the city’s population. , but 72% of the city’s payday loans. Chicagoans were 13 times more likely to have a payday loan if they lived in the predominantly black neighborhood of Austin compared to the predominantly white Lincoln Park.
Finally, the Consumer Financial Protection Bureau, which was largely hijacked and muzzled under the Trump administration, has started to have a new director appointed by Biden. He began to roll back the Trump-era rules on debt collection that consumer advocates threatened to harm consumers, and issued signals that he would revert to his pre-Trump positions on debt collection. low amount loans such as payday loans.
Frankly, some franchisors don’t care
A A report released by the office of U.S. Senator Catherine Cortez Masto of Nevada slams the franchise industry for poor worker pay and other shoddy labor practices, calls on franchisors to chain contractors with exaggerated promises , burdening them with debts and other liabilities before going bankrupt themselves.
In 2019, the Economic Policy Subcommittee of the Senate Banking, Housing and Urban Affairs Committee held a hearing on economic mobility and heard from a witness who described troubling practices affecting businesses operated as franchises – practices consistent with what the Senator and her staff had heard. from the local Nevada press. Following that hearing, the Senator asked her staff to produce the new report, which includes a menu of legislative, regulatory and business reforms that Congress must consider.
According to the report, as of February 2020, 8.67 million people worked for 785,316 franchises across the country – more than the number of people working in construction and roughly equal to the number of employees in financial services.
Many franchisees finance their locations with loans guaranteed by the Small Business Administration. The new report suggests that the SBA should require franchise companies to disclose actual historical income data and store closing information to potential franchise owners, who would be required to repay the loan. He also suggests that the SBA publish loan performance information by franchise brand and refuse to guarantee any loan to a franchise if the underlying franchise agreement includes known predatory terms such as compulsory arbitration clauses, de non-disparagement and non-disclosure, or membership bans. associations. The report also suggests that franchise brands with high default rates should lose access to government guaranteed loans.
Earlier this year I reported on a new franchise model that attempts to rebalance the risks of starting a new franchise site, including an internal funding mechanism so that new franchise owners do not need external debt or debt. personal wealth to open a new site. I also spoke with author Marcia Chatelain, whose new book, “Franchise: The Golden Arches in Black America,” released last year, documents the complicated history of franchises and black communities – or what she calls “the hidden story of the intertwined relationship between the struggle for civil rights and the expansion of the fast food industry.”
Widen the not-so-broadband
How is your internet service? For about 1.5 million New Yorkers, the answer is that they don’t have one, neither at home nor via mobile networks.
In the rest of the country, things are just as bleak, if not worse.
For years, some cities have considered funding their own municipal broadband networks and Internet service providers. It is seen as a way to help level the playing field for low-income households and small businesses and even revitalize regional economies. There are some noted successes, like Chattanooga. In Cleveland, a foundational institutions model has created a successful nonprofit broadband Internet service provider.
Some of the biggest proponents of the power of municipal broadband are, in fact, giant Internet service companies. They are so threatened by the potential of municipal service providers to eat away at their bottom line that they have successfully lobbied in many states to impose barriers or outright bans on municipality-owned broadband Internet services.
But some recent good news – states are starting to backtrack. The number of states with municipal broadband restrictions has grown from 22 to 18 in the past year, according to BroadbandNow, which tracks broadband access across the country.
The battle for the digital future is only intensifying. Elon Musk recently began rolling out its ‘Starlink’ satellite Internet service, with 10,000 registered users in its first six months – mostly in rural areas with limited terrestrial broadband access so far.
Justice by the sea
A black family bought land in Los Angeles County in 1912 for $ 1,225. The Ku Klux Klan drove them from this land in 1924, and the property was eventually ceded to the county. Today that land is in Manhattan Beach and is worth $ 75 million. But now the county has made an agreement to transfer the land to this family, WJLB radio in Detroit reports.
Oscar is Next City’s senior business correspondent. He previously served as Editor-in-Chief of Next City from 2018 to 2019, and Fellow of Next City Equitable Cities from 2015 to 2016. Since 2011, Oscar has covered funding for community development, community banking, impact investing, economic development, housing and more for media such as Shelterforce, B Magazine, Impact Alpha and Fast Company.