On Tuesday, July 29, 2014, HOPE CEO Bill Bynum testified before the Joint Economic Committee in the U.S. Congress. During the hearing, titled “"Increasing Economic Opportunity for African Americans: Local Initiatives that Are Making a Difference", Mr. Bynum called on Congress to level the playing field by investing in proven solutions that give people – particularly African Americans – the tools to save and build wealth.
The testimony began with an acknowledgement that much work remains in the region around issues of economic justice. Specifically:
- One out of four persistently impoverished counties (counties with poverty rates exceeding 20% for three decades in a row) is located in the Mid South. In Mississippi, over half of the state’s persistently impoverished counties have African American populations above 50%;
- The Mid South is home to the highest rates of unbanked and underbanked households in the country – rates that are particularly disparate among African Americans;
- African Americans living in the Mid South experience the highest rates of high cost home lending in the country;
- Wealth disparities contribute significantly to a lack of access to capital to start and expand small businesses among minority populations;
- The region has over 1,000 bank deserts – communities with fewer than two bank branches.
Access to a financial institution to open a checking account, to take out a mortgage or to borrow money to start a small business remain essential for moving the region’s people ahead – particularly in communities of color. Research has shown that when low-income individuals have a relationship with a depository, they are more likely to own assets. Research has also shown that when a depository is located in a low-income or rural community, residents are more likely to have access to mortgages and small business loans.
Amid this backdrop, HOPE called on Congress to invest in high capacity CDFIs with a track record of connecting minority populations to affordable financial services through:
- Targeted federal investments in persistent poverty areas;
- Strengthening the Community Reinvestment Act to support community development institutions that provide financial services to bank deserts;
- Support for federal consumer regulations that protect individuals from getting caught in loans that they cannot afford to repay.
HOPE concluded its remarks by emphasizing the critical importance of locally owned financial institutions to the successful implementation of the policy recommendations.
To read a full copy of the testimony, click here.