Can financial reform close racial wealth gap?
OPINION - Financial reform is important, but without addressing the racial and social biases we are only touching the tip of the iceberg...
Today, the Senate is expected to vote on the financial reform bill. If it passes, it will introduce the nation to a package of sweeping regulations that will offer more consumer protection and industry supervision than has been provided in decades. However, for many people in crisis, the question is whether these reforms will be enough to address the deeply entrenched racial wealth gap that influences almost every aspect of development in communities of color.
The “racial wealth gap” captures the ongoing racial disparities that color asset building and wealth creation in America across a spectrum of economic activities—including in business development, savings and investments, social insurance, wages and employment, and homeownership. For example, according to the Insight Center for Community Economic Development:
People of color comprise 31.8 percent of the U.S. population, but only 17.1 percent of the non-public business firms; with a quarter of these privately-owned firms concentrated in low-growth industries.
42 percent of whites own an IRA or Keogh compared to just 7 percent of African-Americans and 8 percent of Latinos who own such accounts.
African-Americans are 23.3 and Latinos are 28.3 percentage points less likely than all families to have direct or indirect holdings of publicly traded stock.
More than 75 percent of older Latinos and almost 80 percent of African Americans rely on Social Security for more than half of their total income, and without Social Security, the poverty rate would more than double for disabled workers of color.
While the nation is experiencing an unemployment rate at 9.5 percent, for African Americans, the rate of unemployment is 15.4 percent, with racial discrimination and other structural barriers leading to a segregation of occupational opportunity and wage disparity.
Though the financial reform legislation is expected to affect several aspects of what was at the root of the nation’s economic decline, the impact of the new regulations on closing the racial wealth gap will be negligible, unless they are coupled with greater institutional accountability to the enforcement of fair lending and credit practices and a commitment to prevent exploitative practices that suck wealth from poor communities and communities of color.
Financial reform is important, but without addressing the racial and social biases that affect access to quality education and housing, health care and the environment, we are only touching the tip of the iceberg. Our collective recovery depends on our ability to develop holistic, multi-systemic approaches to dismantle inequality. Financial reform alone will not secure this promise of our American democracy, but it is a step in the right direction.
