Saturday, January 22 2022

The study confirms that the financial system is still separate and unequal

An upcoming study of lenders in the Houston area shows that mainstream banks use mostly whites in marketing and promotional materials, while payday lenders use mostly blacks and Latinos in their materials. reported the LA Times this week.

As the LA Times notes, research is not breaking new ground.

data has been around for years This shows that payday loan borrowers are disproportionately low-income and disproportionately black and Latinos, and that payday lenders tend to geographically target advertisements and window displays in neighborhoods with a high concentration of African-American, Hispanic, and low-income households.

Researchers told the LA Times that they are now expecting more black and Latin American faces in mainstream banks’ marketing materials in particular – after a year of rioting since the police murder of George Floyd and Breonna Taylor, as well as a pandemic that has been highlighted and exacerbated the long-standing racial differences.

The new results, which will be published in the Emory Law Journal next month, follow Illinois’ merger with 16 other states and the District of Columbia in Introduce an interest rate cap of no more than 36 percent for payday loans. Nebraska has joined that list of states only last November.

The Illinois limit also applies to auto title loans. The average annual percentage rate on an Illinois auto title loan is 197 percent, while the average payday loan rate is 297 percent, according to statistics from the Illinois Department of Financial and Professional Regulation.

The Woodstock Institute, a Chicago bank oversight group that helped draft Illinois law, found that Chicago zip codes in colored communities make up 47 percent of the city’s population but have 72 percent of the city’s payday loans. Chicagoans were 13 times more likely to have a payday loan if they lived in the predominantly black Austin neighborhood compared to the predominantly white Lincoln Park.

Eventually, the Consumer Financial Protection Bureau, largely disfigured and silenced under the Trump administration, has started recruiting again under a new director appointed by Biden. It has begun take back the Trump-era rules on debt collection which consumer advocates say could harm consumers and has sent out signals that it will Return to pre-Trump positions on small dollar lending such as payday loans.

In all fairness, some franchisors just don’t give a shit

A report Dismissed from office of U.S. Senator Catherine Cortez Masto of Nevada, beats up the franchise industry for poor labor compensation and other shoddy labor practices, and calls on franchisors to trap entrepreneurs with exaggerated promises to cover them with debt and other liabilities before they themselves go bankrupt.

In 2019, the Senate Economic Policy Subcommittee on Banking, Housing and Urban Development held a hearing on economic mobility and heard from a witness who described worrying practices affecting franchised businesses – practices that are consistent with what the The Senator and her aides had heard from the local Nevada press. Following that hearing, the Senator instructed her staff to prepare the new report, which included a number of legislative, regulatory and business reforms that Congress should consider.

According to the report, 8.67 million people were working at up to 785,316 franchise locations across the country as of February 2020 – more than the number of people working in construction and roughly equal to the number of those employed in the financial services sector.

Many franchisees finance their locations through loans guaranteed by the Small Business Administration. The new report suggests that the SBA should encourage franchisees to disclose actual historical sales data and keep closing information to potential franchisees who would be required to repay the loan. It also suggests that the SBA should publish credit performance information by franchise brand and refuse to guarantee a loan to a franchise if the underlying franchise agreement contains known predatory terms such as mandatory arbitration, disparagement and nondisclosure clauses, or membership bans. The report also suggests that franchise brands with high defaults should lose access to government-guaranteed credit.

Earlier this year I did reports on a new franchise model which seeks to offset the risks of starting a new franchise location, including an internal funding mechanism so that new franchisees don’t need external debt or personal wealth to open a new location. I also spoke to author Marcia Chatelain, whose new book, Franchise: The Golden Arches in Black America, published last year, documents the intricate history of franchises and black communities – or what they “the hidden.” History of the intertwined relationship “calls between the struggle for civil rights and the expansion of the fast food industry.”

Expansion of the not so wide bandwidth

How is your internet service? For an estimated 1.5 million New Yorkers The answer is they don’t have one, either at home or over cellular networks.

The rest of the country looks similar, if not worse.

Some cities have been looking into financing their own municipal broadband networks and Internet service providers for years. It is seen as a way to improve the playing field for low-income households and small businesses, and even revitalize the regional economy. There are some well-known achievements, like Chattanooga. In Cleveland, an anchor institution-driven model created a successful one non-profit broadband internet provider.

Some of the biggest believers in municipal broadband power are actually huge Internet service providers. So threatened by the potential for municipal service providers to consume their profits that they have successfully campaigned in many states to introduce barriers or outright bans on city broadband Internet services.

But some good news lately – states are starting to push back. The number of states with municipal broadband restrictions decreased from 22 to 18 over the past year. according to BroadbandNowtracking broadband access across the country.

The fight for the digital future is heating up right now. Elon Musk recently started rolling out its satellite Internet service, Starlink. with 10,000 registered users in the first six months – mostly in rural areas with previously limited land-based broadband access.

Justice on the Beach
A black family bought land in Los Angeles County for $ 1,225 in 1912. The Ku Klux Klan chased them off this land in 1924, and the property was eventually turned over to the county. Today this land is located in Manhattan Beach and is said to be worth $ 75 million. But now the county has reached an agreement to return the land to this family. WJLB Radio in Detroit reports.

Oscar is Next City’s senior business correspondent. He was previously editor of Next City from 2018 to 2019 and Next City Equitable Cities Fellow from 2015 to 2016. Since 2011 Oscar has dealt with community development finance, community banking, impact investing, economic development, housing and more for media such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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