CFPB Proposes Prohibiting Inclusion of Medical Debt on Consumer’s Credit Reports
On August 10, 2023, CCLP celebrated our 25th anniversary, bringing friends new and old to the Carriage House at the Governor's Residence.
Katie Wallat, CCLP’s Senior Attorney, provided testimony at the August 11, 2023, meeting of the Medical Services Board.
HB23-1126 provides first-in-the-nation protections for Coloradans with medical debt.
Baradaran Offers A Brief History of the Racial Wealth Gap in America
The gap between the racial haves and have-nots in America has remained stubbornly consistent for the past two centuries. Indeed, the black community owned less than 1 percent of the nation’s total wealth when the Emancipation Proclamation was signed in 1863. Unfortunately — at least in terms of assets –not much has changed ever since.
“To understand why we still sit in a wealth divide, we must understand the history and systems that were created because of racism,” said CCLP Executive Director Tiffani Lennon, in remarks introducing Merhsa Baradaran, Esq., the keynote speaker of the Colorado Center on Law and Policy’s Sixth Annual Pathways from Poverty Breakfast, Oct. 17 at History Colorado Center. Founded in 1998, CCLP is a nonprofit advocacy organization that fights for economic and racial equity by focusing on food, housing and income for all Coloradans.
Baradaran opened her presentation with some daunting recent statistics. She cited 2015 data from the St. Louis Federal Reserve that showed the average net worth for white families with a college degree was $360,000. By contrast, the same metric for black families with a college degree was only $32,000. The data also show that white families without a college degree had an average net worth of $80,000 while black families without a college degree claimed just $9,000.
Historical and structural reasons – including white supremacy – have prevented communities of color from breaking through these systemic barriers. Baradaran’s book, The Color of Money: Black Banks and the Racial Wealth Gap, examines the persistence of the racial wealth gap by focusing on black banks — while challenging the assertion that black communities could ever accumulate wealth without powerful interventions in government policies promoting jobs, homeownership, education, access to capital and other reparations.
A legacy of financial ruin
The sorry saga of black banks in America begins with the Freedman’s Bureau, created by President Abraham Lincoln after the Civil War as a way to help freed slaves transition to capitalism. Unfortunately, all of the components that were supposed to make the transition easier for freed slaves were vetoed by President Andrew Johnson after Lincoln was assassinated, making the Freedman’s Bureau a “glorified piggybank” (in Baradaran’s words) because it lacked the ability to give customers loans to acquire land and make other investments.
The Freedman’s Bank opened 35 branches and accumulated $75 million from 80,000 depositors (about $1.5 billion today). But the bank’s president, a white businessman and politician Henry D. Cooke, invested the money into the railroad speculative market. The market imploded, leaving the freed slaves with only half of their deposits. Though unknown to many white Americans, the bank’s failure continued to have reverberations on the families of the freed slaves for generations to come.
W.E.B. Dubois, an African American sociologist, historian and civil rights activist opined: “Not even 10 additional years of slavery could have done so much to the throttle the thrift of the freedmen as the mismanagement and bankruptcy of the [Freedman’s bank].” Baradaran said the collapse created long-term distrust in banking institutions among African Americans, noting that 60 percent of blacks in the south don’t have a bank account to this day.
New Deal was a bad deal for blacks
During the Great Migration of blacks from the south to the north between 1916 and 1970, African Americans experienced discrimination, poor working conditions and limited access to capital. But the worst was still to come, Baradaran said. Though often held up as a model of “progressive” values, she pointed out that President Franklin D. Roosevelt’s New Deal “made segregation explicit.” The package guaranteed home mortgage loans by the government, removing the banks’ risks in the event that their customers were unable to meet their loan obligations.
“Billions of dollars of private capital come in, banks form across the country to peddle these mortgages and the American suburb is created,” Baradaran said.
The banks made maps tracking where they’d give loans and where they wouldn’t. Baradaran pointed out that the banks singled out low-income and minority neighborhoods.
“Any neighborhood that was deemed ‘racially inharmonious’ – meaning not 100 percent white – was designated a red zone or a yellow zone if it was racially mixed. Any neighborhood that was ‘harmonious” – or white – was designated green. That’s how the lily-white suburb was created,” she said. She pointed out that the GI bill which gave veterans student loans and consumer credit markets operated with similar racially motivated constraints.
Later, Baradaran said these New Deal policies was responsible for the ‘red-lining’ that created communities with significant concentrations of poverty.
“It wasn’t capitalism that created the ghetto, it was New Deal-era subsidies that created those red-line spaces,” she said.
The Civil Rights era and aftermath
With the system so obviously rigged against African Americans, Martin Luther King Jr. instructed the civil rights movement to build their own credit unions and form community banks to boycott financial institutions. “It was really a movement centered on financial exploitation,” Baradaran explained. “If you read or listen to the ‘I Have a Dream’ speech from the lens of economics or banking, you really see a demand for economic justice.
Unfortunately, after making some gains in the early 60s, the civil rights movement suffered a huge backlash by 1966. Indeed, by 1969, MLK, Malcolm X and Robert Kennedy had all been assassinated and LBJ was out of office.
“There was consensus among the black community the civil rights movement either failed or was halted in its tracks,” she said. “All that the civil rights and the voting rights laws did – and I don’t want to undercut them because they were hard to get passed – was just guarantee the rights that were already ensured in the 13th, 14th and 15th amendments [of the constitution]. These were not new rights; these were just the federal government saying, ‘OK, we’re serious this time.’”
Though the concept of reparations for African Americans is considered a “radical” policy proposal by today’s standards, Baradaran points out that President Richard M. Nixon considered such a proposal including one that resembled a “world bank” to build capital in areas with high concentrations of poverty. Ultimately, none of the proposals flew. “[Nixon] was sort of explicitly driven to office by the white backlash… He sort of co-opts the language of the Black Panther movement and says, ‘yes, we want black power.’ What that means is black ownership, black pride, black jobs, black opportunity.” He encouraged constituents to “move past the old civil rights… and to move toward freedom and dignity.”
Though Nixon opposed reparations and did not do much to advance integration, he promoted an “affirmative-action” infrastructure and encouraged corporations to hire more black workers. Though Baradaran said affirmative action was “a good thing,” that led to some black workers gaining financial advancement, she said it was the very least that the administration could have done at the time and characterizes Nixon’s civil rights record as weak.
Fast-forwarding to the 1980s, Baradaran said that President Ronald Reagan’s civil rights agenda essentially amounted to tax cuts.
“His message is that in order to advance civil rights, we need free markets,” she said.
President Bill Clinton essentially doubled down on those policies by recharacterizing “black capitalism” as “community empowerment” and called to reinvent ghettos as “investment zones.” This effort fueled the subprime market and the black community lost 53 percent of its wealth during the Great Recession of 2009. The government’s stimulus package to relieve the recession essentially created more tax cuts for large investment banks to build profitable ventures in the inner cities.
How that’s playing out is painfully evident now in neighborhoods like RiNo (formerly Five Points) in Denver. Once a cultural epicenter of the black community residents are being displaced from the neighborhood because of higher rents associated with economic development.
Wrapping up the presentation, Baradaran encouraged participants to quit repeating the past mistakes that have only widened the wealth equity gaps.
“We have to shed these destructive myths that capitalism will fix what public policy created,” she in closing. “We cannot deflect responsibility of economic inequality onto these communities alone.”
Ending the presentation on a hopeful note, she again quoted Dubois: “The problem with American Democracy is that had not yet been tried.”
“Perhaps it’s time we try,” she said, in summary.
-By Bob Mook