Category Archives: ACORN

Source: Newsday

Community Reinvestment Still Matters, Why Gut it More?

New Orleans       Newsday, the big Long Island, New York newspaper, reported on a three-year investigation of real estate practices in this suburb that is well-known as one of the whitest suburbs in America.   Using a classic tactic to determine such racial discrimination, they sent out 100 teams of black and white testers in order to compare how racial differences might have led to disparate advice and steering into or away from white neighborhoods.  They found that real estate agents treated people of color unequally 40% of the time compared with white people.  In what may have seemed a throwaway comment, Newsday thought that their investigation should have been unnecessary, as another paper commented, because the work should have been done by the government or nonprofits.  Hats off to Newsday for doing the work, but shock and awe that they did not realize that no one in government is really guarding against racial discrimination in real estate, and nonprofits are drastically underfunded by HUD in the current administration on the issues of fair housing.

Case in point is the steady drive to eviscerate the Community Reinvestment Act (CRA) yet again, this time led by the Office of the Comptroller of the Currency.  Remember that the CRA since 1977 has been one of the few bulwarks against not only discrimination in housing lending based on race and ethnicity, but the only real incentive for banks to assure that they are investing and approving loans in lower income communities.

The Federal Reserve Bank is the overseer of CRA and its individual bank ratings.  The Federal Deposit Insurance Corporation (FDIC) is also a CRA player. For some spurious excuse, likely rooted in bad faith and worse politics, after years of meetings to find a path where all three agencies agreed, the OCC has broken ranks and is trying to move alone to rewrite CRA rules.  Nothing good will come of this.

According to the Wall Street Journal, the negotiations broke down over the critical issue of whether CRA activity should be measured by the number of loans made, advocated by the Federal Reserve, or the dollar amount of CRA lending in an area, which is the OCC’s position.  None of these regulators are heroes in this story, but the OCC’s position is especially suspect.  One can look at the way developers have manipulated CDBG funding in Detroit’s downtown census tracks or the way developers and rich investors are pulling trucks up for cash delivery to distort the enterprise zones, ostensibly for lower income areas, created in the Trump tax giveaway.  Dollars would presume real investment, even though not to the real CRA targets.

Additionally, OCC seems to want to use a metric that looked at lending ratios compared to bank deposits from families in lower income areas.  The last forty years have seen most banks shutter branches as part of their business model in our communities, while the number of payday lenders and check cashing outlets have exploded in lower income areas to fill the vacuum.  How could this be a realistic metric?

Hopefully, the OCC’s political game will run into some serious resistance.  In that sense we are lucky that the other agencies have not signed on.  The real problem, whether in Long Island or wherever you might live, is that discrimination of all kinds is still rife in low-and-moderate communities everywhere in the United States, and CRA is one of the few tools that still works, when it is allowed to do so.  We definitely ought to be doing some work to revise CRA, like forcing more financial institutions under its requirements and lassoing in all of the on-line, Quicken and Zillow types as well, but the OCC’s political play needs to be taken off the table ASAP.

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2020 State Minimum Wages

Raising Minimum Wages, Good So Far

New Orleans       While much of the country is stuck at the level of the federal minimum wage, there are enough states and cities that have nudged the numbers up that economists and others are starting to be able to tell with certainty whether the competing claims are correct.  Opponents argue that raising wages above plantation level reduces the number of jobs.  Proponents, and I’m in that number, have claimed that the benefits of increasing wages, lowering inequality, and putting more money into local economies, wildly offsets any small job loss, if in fact, any jobs at all are lost.

Arindrajit Dube, an economist at the University of Massachusetts at Amherst, did a study of state minimum wage increases in California, Oregon, Washington, Colorado, Massachusetts, and New York.  These states had bumped up the numbers in recent years to at least $10.50 per hour through 2018.  The impact would have been directly felt by 20% of the workforce, not counting the multiplier impact of increases for other workers in order to prevent compression of wages causing non-minimum wage workers to feel crimped and resentful of the increases.  Professor Dube found that the job losses were minimal, although not painless.  He found that some businesses raised prices, others improved production methodology, and some actually absorbed the increases by reducing their profit margins.

All of this is good news for our case.  Additional studies in New York State, as well as reporting by the New York Times, seem to confirm that even in the border counties between New York, with an escalating minimum wage now, and Pennsylvania still stuck at $7.25, there were minimal adverse impacts for workers on job losses.  Obviously, it helps that the economy has been good and unemployment low, making this an ideal time, economically, to push wages up from the bottom.

In the days of ACORN’s living wage campaigns, we have gone back and forth over the years with Professor David Neumark, an economist at the University of California at Irvine, who has long studied minimum wage impacts on workers.  He cautions that the results in these relatively higher wage states might not translate in the South “where low-wage workers aren’t evenly distributed across industries and ‘you have fewer and fewer avenues of adjustment.’”  Since there’s absolutely no immediate danger of Southern states getting the raise wages religion for workers, it will be awhile before we have to struggle with this problem.  Meanwhile we are forced to live through the galloping gap between lower wage and higher wage states that is occurring with no action on the federal minimum wage, meant to cope with this problem.

Now, if only the reason that wages weren’t rising was based on the facts, rather than stone cold ideology, we would be in good shape.

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