Loan Discrimination?
Reading Leslie Eaton & Ron Nixon's piece in this morning's New York Times is not for the short tempered watching the post-Katrina Gulf Coast recovery go from bad to worse:
Hundreds of thousands of Gulf Coast families, hoping to rebuild their homes after the hurricanes using low-interest government loans, are facing high rejection rates and widespread delays at the federal agency that administers the disaster loan program.
The Small Business Administration, which runs the federal government's main disaster recovery program for both businesses and homeowners, has processed only a third of the 276,000 home loan applications it has received.
And it has rejected 82 percent of those it has reviewed, a higher percentage than in most previous disasters, saying that many would-be borrowers did not have incomes high enough, or credit ratings good enough, to qualify. The rejections came even though the Federal Emergency Management Agency has referred more than two million people, many of them with low incomes, to the S.B.A. to get the loans.
FEMA's lack of compassion and inability to distribute critical and accurate information to victimized families is expected, as the Bush Administration seems generally removed from the realities of our overall foreign policy and domestic situation. Let's not even go into how absolutely cruel it is for the President and federal government officials to make empty and misleading promises; suits are sure to follow. But, the SBA's conduct shouldn't surprise those who are familiar with it's political crony in charge, SBA Administrator Hector Barretto, as The New Republic reported in this disturbing article titled "Welcome to the Hackocracy" on 10.6.05:
His Los Angeles firm, Barreto Insurance & Financial Services Company, had only ten employees. Alas, now that he is in charge of a bigger operation--the Small Business Administration (SBA) has over 3,000 employees, a budget of about $600 million, and a portfolio of loans totaling $45 billion--Barreto is struggling. Last year, the SBA failed to notify Congress that it needed additional funding for its largest and most popular loan program and was forced to temporarily shutter it because, as Barreto's spokesperson explained, it was "out of money." Meanwhile, the SBA was doing such a poor job managing the $5 billion in loans the government set aside to help small businesses recover from September 11 that, according to an Associated Press investigation, the vast majority of the money went to businesses not affected by the terrorist attacks--including a South Dakota country radio station, a Utah dog boutique, and more than 100 Dunkin' Donuts and Subway sandwich shops.
In September of 2005, the Senate Small Business Committee, prompted by complaints from Gulf Coast small-business owners, held hearings on the SBA's response to Hurricane Katrina. Barreto pledged that his agency would approve Katrina-related loans in days, not months, but a SBA deputy conceded in late September that, out of 12,000 loan applications from small businesses affected by the hurricane, the SBA had so far approved only 76.
Of course, the overwhelming majority of those rejected are African American, easily leading many to view the entire situation in the Gulf Coast as both depressing and suspect. And there are reports that many residents, particularly those from low-income, working class and Black neighborhoods in New Orleans, are being priced out and victimized by rental property price gouging. A 2 bedroom apartment that once was $500 - $800 is now $1000 - $1600. Hence, both city and state legislators are considering rent control policies.
The fact that high-income, stable and wealthy and predominantly White neighborhoods in New Orleans are qualifying for loans over poor, low-income and working class Black neighborhoods
reflects a larger, national problem of racial profiling in loan disbursements, credit analysis and urban gentrification. Clearly, the face of New Orleans is changing. Housing trends will push such change to the extreme as Black residents - the traditional majority in the Big Easy - will be effectively priced out.
But, this situation also presents an opportunity to address the larger issue of asset building and ownership in "minority" communities, not only in the stricken Gulf Region but nationally. Ultimately, neither FEMA or the SBA is responsible for an individual's lack of credit and solid financial literacy. We agree the federal government's performance in this situation is woefully falling short and accountability is warranted. But, we also urge a greater focus and aggressive campaigns on educating our community about personal finances and how money works.
Hundreds of thousands of Gulf Coast families, hoping to rebuild their homes after the hurricanes using low-interest government loans, are facing high rejection rates and widespread delays at the federal agency that administers the disaster loan program.
The Small Business Administration, which runs the federal government's main disaster recovery program for both businesses and homeowners, has processed only a third of the 276,000 home loan applications it has received.
And it has rejected 82 percent of those it has reviewed, a higher percentage than in most previous disasters, saying that many would-be borrowers did not have incomes high enough, or credit ratings good enough, to qualify. The rejections came even though the Federal Emergency Management Agency has referred more than two million people, many of them with low incomes, to the S.B.A. to get the loans.
FEMA's lack of compassion and inability to distribute critical and accurate information to victimized families is expected, as the Bush Administration seems generally removed from the realities of our overall foreign policy and domestic situation. Let's not even go into how absolutely cruel it is for the President and federal government officials to make empty and misleading promises; suits are sure to follow. But, the SBA's conduct shouldn't surprise those who are familiar with it's political crony in charge, SBA Administrator Hector Barretto, as The New Republic reported in this disturbing article titled "Welcome to the Hackocracy" on 10.6.05:
His Los Angeles firm, Barreto Insurance & Financial Services Company, had only ten employees. Alas, now that he is in charge of a bigger operation--the Small Business Administration (SBA) has over 3,000 employees, a budget of about $600 million, and a portfolio of loans totaling $45 billion--Barreto is struggling. Last year, the SBA failed to notify Congress that it needed additional funding for its largest and most popular loan program and was forced to temporarily shutter it because, as Barreto's spokesperson explained, it was "out of money." Meanwhile, the SBA was doing such a poor job managing the $5 billion in loans the government set aside to help small businesses recover from September 11 that, according to an Associated Press investigation, the vast majority of the money went to businesses not affected by the terrorist attacks--including a South Dakota country radio station, a Utah dog boutique, and more than 100 Dunkin' Donuts and Subway sandwich shops.
In September of 2005, the Senate Small Business Committee, prompted by complaints from Gulf Coast small-business owners, held hearings on the SBA's response to Hurricane Katrina. Barreto pledged that his agency would approve Katrina-related loans in days, not months, but a SBA deputy conceded in late September that, out of 12,000 loan applications from small businesses affected by the hurricane, the SBA had so far approved only 76.
Of course, the overwhelming majority of those rejected are African American, easily leading many to view the entire situation in the Gulf Coast as both depressing and suspect. And there are reports that many residents, particularly those from low-income, working class and Black neighborhoods in New Orleans, are being priced out and victimized by rental property price gouging. A 2 bedroom apartment that once was $500 - $800 is now $1000 - $1600. Hence, both city and state legislators are considering rent control policies.
The fact that high-income, stable and wealthy and predominantly White neighborhoods in New Orleans are qualifying for loans over poor, low-income and working class Black neighborhoods
reflects a larger, national problem of racial profiling in loan disbursements, credit analysis and urban gentrification. Clearly, the face of New Orleans is changing. Housing trends will push such change to the extreme as Black residents - the traditional majority in the Big Easy - will be effectively priced out.
But, this situation also presents an opportunity to address the larger issue of asset building and ownership in "minority" communities, not only in the stricken Gulf Region but nationally. Ultimately, neither FEMA or the SBA is responsible for an individual's lack of credit and solid financial literacy. We agree the federal government's performance in this situation is woefully falling short and accountability is warranted. But, we also urge a greater focus and aggressive campaigns on educating our community about personal finances and how money works.
posted by BPblogger at 6:56 AM
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