American Banker: Banks are wrong to oppose CFPB data collection for small-business loans

American Banker, April 13, 2022, Banks are wrong to oppose CFPB data collection for small-business loans

Along with home purchase loans, small-business loans are one of the most important private-sector tools available to strengthen local economies. Banking industry leaders who promised to help combat the economic pain and material indignities that define life for most communities of color should be ecstatic about improving racial equity in business lending — and in discovering where it’s missing or needs improvement.

Instead, lobbyists for lenders are trying to protect a broken status quo. If they succeed it will be far harder to heal the racial economic wounds in our society. Those wounds are deep.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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