The Nation: US Bank, Fair Lending and the Job Gap

This Week in Poverty: Banks Got Nowhere to Run To, Baby
Greg Kaufmann | April 12, 2013
Last year, US Bank held its annual shareholders meeting in Minneapolis, Minnesota, home of its corporate headquarters. The event was dominated by shareholders
and proxies who are members of Minnesotans for a Fair Economy [1], an alliance of community, faith, and labor organizations working for a more equitable economy.

“Our members asked CEO Richard Davis direct questions about issues like principal reductions and foreclosures, and payday lending,” said Eric Fought, communications director of the organization. “We were really effective in holding them accountable, so this year they looked for another solution—to hide from us.”

On Tuesday, April 16, US Bank officers will jet from their hometown to hold this year’s meeting in Boise, Idaho [2]. If the bankers are hoping for a better reception in this reddest of states, or that activists will take a pass on the long distance travel required to get there, then Martha and the Vandellas have a word of advice: Got nowhere to run to, baby. Nowhere to hide.

More than 100 members of the Idaho Community Action Network [3] (ICAN)—who are mostly rural, working poor and seniors—will travel to take direct, non-violent action both inside and outside of the meeting. More than half of these individuals will be driving 3 to 7 hours to reach the venue. Their allies from Minnesotans for a Fair Economy will be there to greet them, along with workers from SEIU Local 503 [4]—the largest union in Oregon with 54,000 members.

“People are so excited that Minneapolis and Oregon are coming to support this effort,” said ICAN executive director Terri Sterling. “It helps our membership, it helps motivate them.”

Among the issues on the agenda: a call for US Bank to pay its fair share in taxes; write-down mortgages to help stem the foreclosure and underwater mortgage crisis; and end payday loans with exorbitant interest rates. These issues are of concern, of course, not only to the activists from these three states, but also to people across the country.

“Almost anywhere the banks go in the country—they will find out as they try to hide away at their meetings—there will be a set of groups agreeing that the role of banks in the economy and politics of the country is damaging,” said labor organizer Stephen Lerner, who created the Justice for Janitors campaign and is now working on Wall Street accountability campaigns.

Sterling says that even in a state like Idaho she hasn’t “found one person—red, blue, or tea party—that likes big banks.”

Idaho has the highest share of minimum wage workers [5] in the country, and for every job opening that pays a living wage for a family of three, there are 32 job seekers [6]. According to LeeAnn Hall, executive director of the Alliance for a Just Society [7], a national coalition of eight state-based community organizations (including ICAN), 4,400 families lost their homes to foreclosure in 2012. Today, 22 percent of all mortgage holders in the state are “underwater,” owning more on their mortgages than their homes are worth. In Canyon County, where approximately 12 percent of Idaho’s population resides, 66 percent [8] of homeowners are underwater—one of the highest rates in the nation.

“Our members are doing multiple jobs to make ends meet, and often times not making ends meet,” said Hall. “As a result they are losing their homes, or using payday loans to stretch and meet their family obligations—to their detriment.”

US Bank calls its payday loan product a “checking account advance,” and it has an annual percentage rate (APR) of up to 365 percent [9]. It also helps finance some of the largest payday loan companies in the country, including Advance America, Cash America, and EZ Corp. These “easy money” businesses cluster around low-income communities and communities of color.

Sterling spoke about ICAN member Miranda Davis who was disabled at 19 but as a single mother of two kids still “works to make ends meet.” When her car broke down, she used her utility money to repair it so she could commute to work—and then she took out a $300 payday loan to cover her utility bill. She was only able to pay back the $75 per month interest, and eventually needed another $300 loan.

“She’s now paying nearly $200 per month in interest alone,” said Sterling. “She can work as hard as she can and she won’t ever make enough money to pay off those loans.”

ICAN and Minnesotans for a Fair Economy have been pushing for a 36 percent cap in their states—the same one mandated by the federal government for members of the military and their families. Arizona, Montana, and Oregon have also adopted a 36 percent cap on all payday loans.

“If they’re gonna set up a bank in my community, then by golly they should provide me with a short-term, fair lending product that’s less than 36 percent,” said Sterling.

While payday loans and overdraft fees are trapping low-income people in cycles of debt, foreclosures are draining wealth from entire communities.

Activists will speak at the US Bank shareholders meeting about their own experiences with unnecessary, unfair, and too often illegal foreclosures. Fought said that last year there was a “success” when homeowner Monique White approached CEO Davis after the shareholders meeting, told him her story, and was then able to get a modification to remain in her home.

But with more than 141,000 foreclosures [10] in the state since 2008, 100,000 homeowners still underwater, lost home value of over $20 billion, and a cost to local governments of $1.5 billion to maintain vacant, bank-owned properties—Fought says these individual successes are hardly enough.

“We want broad solutions,” said Fought. “We know principal reductions to fair market value can solve this. We want to continue to dialogue with US Bank, but it’s been two years now—it’s time to make the solutions a reality.”

Hall said that reducing mortgages to fair market value would save Idaho families over $290 million annually in mortgage payments—money that would be spent in the community and create jobs.

“US Bank is draining resources out of families’ pockets and Idaho’s economy as a whole,” said Hall.

SEIU Local 503 is currently at the bargaining table trying to bring some of those lost resources back to Oregon. Democratic Governor John Kitzhaber is pressing for cuts in the pension fund to make up for resources that vanished in the economic meltdown. But the union estimates that Wall Street lost as much as $300 million through fraud and unethical behavior, and that they should be targeted for investigation and repayment, rather than retirees paying for Wall Street’s misdeeds. The state has $150 million to $180 million in pending lawsuits against some of these firms but the union says “that’s just the tip of the iceberg [11].”

Fought said that it is critical that US Bank paying its fair share of revenues in Minnesota as well—that a decade of “cuts only” budgets under former Governor Tim Pawlenty (current CEO of the Financial Services Roundtable) was “devastating for people.” He noted, for example, that the state has been forced to borrow money from school funding to pay for other bills. Meanwhile, US Bank actively lobbies for tax breaks and loopholes through the Minnesota Business Partnership.

“We need to ensure that we have adequate funding for education, health care, and other human services, and because US Bank is based here, they have a unique responsibility,” said Fought. “The fact is if we want to be effective in our work for a better economy we have to look at the larger problem here—these banks are really destroying communities.”

The action in Boise is part of a broader and diverse movement that is renewing the focus on big banks and irresponsible corporate neighbors that prevent a more equitable economy. A week later, activists will be in Salt Lake City, where Wells Fargo will do its best to hide after holding its shareholder meeting last year in San Francisco. Bank of America and JPMorgan shareholder meetings are just around the corner too. You can get involved here [12].

“There is a wonderful alignment developing between unions, community groups, and groups focused on Wall Street accountability,” said Lerner. “Instead of having many separate fights on issues—on how to fund local government and public services, how to keep people in their homes, how to address money in politics—people are seeing that they are all connected because it’s the same giant banks at the center of so many crises.”

The President’s Budget: Important Poverty Initiatives Face Uphill Battle
Guest post by Deborah Weinstein

There are certain facts of life reflected by the FY 2014 Obama budget proposal: first, anything really worth having is going to be hard to get; and, the regrettable corollary—some things you don’t want are a lot closer to reality.

There are new and even historic anti-poverty proposals in this budget. But the better they are, the more they fall into the “hard to get” category. On the other hand, Social Security cuts in the form of smaller cost-of-living adjustments could far more easily become real.

Still, it is a President’s duty to incorporate proposals in his budget that would increase shared prosperity, even if some may take years to achieve. President Obama includes thoughtful plans to reduce poverty: targeting job development in the poorest communities; preserving tax credits and food assistance for low-income families; carrying forward health insurance expansions, and promoting the healthy development of children from infancy on.

What’s historic in the President’s budget plan? His commitment to improving education for children from birth to five. “Preschool for All” – a $75 billion, 10-year proposal—would ensure that every low- and moderate-income four-year-old has access to a pre-kindergarten education. The money would come from an increase in the tobacco tax. The budget also allocates $1.4 billion next year for Early Head Start and child care partnerships that would increase high-quality early learning programs for infants and toddlers through age three.

The President’s budget attempts a comprehensive approach—using resources from multiple government agencies—to attack both the causes and toxic by-products of poverty. It would create 20 Promise Zones, coordinating housing, education, anti-violence and other economic development initiatives. It would more than triple funds for The Choice Neighborhoods Initiative to improve distressed HUD-assisted housing in very poor communities. It increases Homelessness Assistance Grants by about $350 million, not counting the extra across-the-board cuts now being made. The current sequestration cuts that could end rental housing vouchers for 140,000 low-income families [13] would be reversed.

The President’s $12.5 billion Pathways Back to Work proposal would provide summer and year-round jobs and training for low-income youth and subsidized jobs and training for the long-term unemployed. There are initiatives to improve high schools and to invest in community colleges. The budget would stop cuts in food stamps scheduled to start in November.

While the last deficit reduction deal made the Bush tax cuts permanent for all but the richest 1 percent, improvements in the low-income tax credits enacted in 2009 were only extended for five years. The Obama budget makes the current levels permanent for the Child Tax Credit, Earned Income Tax Credit and the American Opportunity Tax Credit—lifting more than 9 million low-wage workers and their children above the poverty line and creating greater opportunity for low- and middle-income students to attend college.

Then there’s the bad news.

The budget slashes the Community Services Block Grant to $350 million (down from $682 million this year). These funds support community action agencies nationwide, which administer Head Start, home energy assistance, emergency food and local economic development and other anti-poverty initiatives. These agencies leverage private dollars and coordinate services—exactly the kind of efficiencies the Administration is counting on. The budget also cuts the Low Income Home Energy Assistance Program (LIHEAP) by more than $500 million. And by shrinking the annual inflation adjustment (the “chained CPI” proposal), the Administration reduces not only Social Security benefits but also over time the value of the Earned Income Tax Credit.

The President’s budget does include protections to reduce the impact of this lower adjustment for inflation. Social Security beneficiaries over age 76 and people receiving disability benefits for long periods will eventually receive an increase in their benefits to mitigate their loss. While the lowest-income people may in the end receive higher benefits than under current law, they will experience years of losses before their benefits catch up. (And some won’t live to see those gains.) The Administration’s proposal exempts low-income programs like food stamps/SNAP, Supplemental Security Income, and Pell Grants from the “chained CPI” reductions, although there is concern [14] that if cuts can be applied to a popular program like Social Security, these low-income programs will remain vulnerable.

While the job creation and economic development proposals are well designed, the scope is not adequate to meet the needs of the current weak economy. The President stated that his budget shows it is possible to reduce the deficit and invest in economic growth at the same time. But the Senate budget, with more revenue and more Pentagon savings, demonstrates this possibility more clearly.

What can make the anti-poverty and job creation provisions less of a long shot? Those who care about making investments in our people have to speak out loudly about the damage from the budget cuts now in effect, and vigorously support the expansions. A groundswell of public support is now pressing Congress to pass immigration reform and prevent gun violence. We need to see that same kind of tenacity, determination, and outcry for shared prosperity too

Deborah Weinstein is the executive director of the Coalition for Human Needs, a Washington, DC–based alliance of national organizations working together to promote public policies that address the needs of low-income people and other vulnerable populations.

Get involved

99% Power Week of Action, April 22-28 [12]


Congressional Briefing: Exploring Child and Family Homelessness Across 50 States: The American Almanac of Family Homelessness (Tuesday, April 16, 9:30 -10:30 AM, 2168 Rayburn House Office Building, Washington, DC). Over one-third of people who use shelters annually are families with children. In 2011, more than 500,000 parents and their children turned to shelters. While federal funding for programs targeting chronically homeless single adults has increased over the past decade—and the results have been positive—families haven’t received a similar commitment and family homelessness has increased. The Almanac—written by the Institute for Children, Poverty, & Homelessness (ICPH)— provides a comprehensive state-by-state analysis on family homelessness statistics, policies, and programming. ICPH will offer this briefing and talk about proven programs and investments that can help family homelessness. RSVP here [15].

Pulitzer Prize-winning reporter David Cay Johnston on Income Growth, 1966-2011

“In 2011, the average income of the bottom 90 percent was just $59 more than in 1966 in real terms, depicted here as one inch. This graphic shows the comparable income growth of those within the top 10 percent.”


Clips and other resources (compiled with James Cersonsky)

“Working Families Flexibility Act undermines 40-hour workweek [17],” Eileen Appelbaum

“Charles Lane Beats Up on the Disabled, Again [18],” Dean Baker

“WSJ Finds the Real Cause of Weak Recovery: Disabled Workers [19],” Dean Baker

“California’s Retirement Program: Imperfect, But a Potential Boon for Women and Low-Income Workers [20],” Sheila Bapat

“Fifty years ago: A basketball title and a school boycott for Chicago [21],” Steve Bogira

“Melissa Harris-Perry’s ‘Uncontroversial Comment’ About Children [22],” KJ Dell’Antonia

“Even with Exemptions, Chained CPI Proposal Will End Up Hurting Low-Income People [14],” Shawn Fremstad

“Reduce Poverty to Improve Overall Health [23],” Carly Hood

“Family Complexity and Poverty [24],” Institute for Research on Poverty

“As Boston Ends Desegregation Busing, Students Face New Inequities [25],” Allison Kilkenny

“Two Americas, Then and Now [26],” John Light

“Earned Income Tax Credit Promotes Work, Encourages Children’s Success at School, Research Finds [27],” Chuck Marr, Jimmy Charite and Chye-Ching Huang

“Why caring for children is not just a parent’s job [28],” Melissa Harris-Perry

“Poverty in Today’s America [29],” [SLIDESHOW] Moyers & Company

“Homeless in High Tech’s Shadow [30],” [VIDEO] Moyers & Company

“The Absence of Native American Power [31],” [VIDEO] Moyers & Company

“Speak Your Piece: Hospital Death Rates [32],” Wayne Myers

“The State of Homelessness in America 2013 [33],” National Alliance to End Homelessness

“Appeal for common sense in paid-prep ruling [34],” National Community Tax Coalition

“Paid-prep rules encounter a bump in the road [35],” National Community Tax Coalition

“Closing the Wage Gap is Crucial for Women of Color and Their Families [36],” National Women’s Law Center

“How the Wage Gap Hurts Women and Families [37],” National Women’s Law Center

“The Wage Gap, State by State [38],” National Women’s Law Center

“Going to Bed Hungry [39],” Theresa Riley

“States at Work: Progressive State Policies to Rebuild the Middle Class [40],” Karla Walter, Tom Hucker, and David Madland, with Nick Bunker and David Sanchez

“Top 5 Myths About Chained-CPI, Debunked [41],” George Zornick

Studies/Briefs (summaries written by James Cersonsky)

“Encouraging Savings for Low- and Moderate-Income Individuals [42],” Gilda Azurdia, Stephen Freedman, Gayle Hamilton and Caroline Schultz, MDRC. The goal of SaveUSA is for lower-income tax filers to deposit a portion of their tax refunds, from the Earned Income Tax Credit and other sources, into savings accounts that can later be used for unexpected expenses—and take the place of high-interest credit lines like payday loans and credit cards. Through the program, participants have at least $200 of their tax refund put into a special savings account, and keep a certain amount of that deposit in the account for a year. Those who follow through receive a 50 percent savings match, up to $500. Can a program like SaveUSA encourage longer-term saving habits and ultimately improve people’s financial health? While the evidence is still unfolding, there are glimpses of success. In a randomized trial across 17 sites offering SaveUSA, for example, those who were placed in a non-SaveUSA control group were far less likely to deposit tax refunds into savings products. Moreover, among those in the SaveUSA group who did open an account, nearly three-quarters qualified for the savings match.

“Taking Aim at Gun Violence [43],” Rhonda Bryant, CLASP. Between 2000 and 2010, 53,850 black men were shot to death across the country. This report maps patterns of violence onto what is too often dissociated from it: poverty, and specifically, concentrated poverty. Though most poor people in the US are white, whites are far less likely to live in neighborhoods of concentrated poverty than blacks. The lack of accessible employment for blacks living in these conditions tightens the knot: only 12 percent of black male teens are employed, less than half the rate of while male teens. How to think about tackling poverty—and violence? The report fleshes out a number of ideas: targeting investment in areas of concentrated poverty; strengthening social welfare service delivery in these neighborhoods; creating better pathways to employment; reengaging young people who have dropped out of school; and providing resources for healing from trauma and adversity.

“A TANF Misery Index [44],” Legal Momentum. Only a fraction of families at or below poverty receive assistance from the Temporary Assistance for Needy Families (TANF) program. The “misery index” calculates how well—or poorly—TANF is doing at reducing poverty. The index is calculated as the sum of (a) the percent of poor families not receiving TANF and (b) the percent gap between received benefits and the poverty level. The totals run from 0 (all poor families receive benefits and benefits are equal to, or exceed, the poverty line) to 200 (no poor families receive benefits). The numbers aren’t pretty: since 1996, when TANF replaced the Aid to Families with Dependent Children program, the national index has gone up every year (with the exception of 2011, when it was the same as 2010). In 1996, it was 93; in 2011, 145. The numbers have varied widely by state, with California at the lowest (109) and Arkansas at highest (180).

Vital statistics

US poverty (less than $17,916 for a family of three): 46.2 million people, 15.1 percent.

Children in poverty: 16.1 million, 22 percent [45] of all children, including 39 percent of African-American children and 34 percent of Latino children. Poorest age group in country.

Deep poverty (less than $11,510 for a family of four): 20.4 million people, 1 in 15 Americans, including more than 15 million women and children.

People who would have been in poverty if not for Social Security, 2011: 67.6 million [46] (program kept 21.4 million people out of poverty).

People in the US experiencing poverty by age 65: Roughly half [47].

Gender gap, 2011: Women 34 percent [48] more likely to be poor than men.

Gender gap, 2010: Women 29 percent [48] more likely to be poor than men.

Twice the poverty level (less than $46,042 for a family of four): 106 million people, more than 1 in 3 Americans.

Jobs in the US paying less than $34,000 a year: 50 percent [49].

Jobs in the US paying below the poverty line for a family of four, less than $23,000 annually: 25 percent [49].

Poverty-level wages, 2011: 28 percent [50] of workers.

Low-income families that were working in 2011: More than 70 percent [51].

Families receiving cash assistance, 1996: 68 [52] for every 100 families living in poverty.

Families receiving cash assistance, 2010: 27 [52] for every 100 families living in poverty.

Impact of public policy, 2010: without government assistance, poverty would have been twice as high [53]—nearly 30 percent of population.

Percentage of entitlement benefits going to elderly, disabled, or working households: over 90 percent [54].

Food stamp recipients with no other cash income: 6.5 million [55] people.

Number of homeless children in US public schools: 1,065,794 [56].

Annual cost of child poverty nationwide: $550 billion [57].

Quote of the week

“If you want to move anything in Washington, DC, you first have to create an excitement and a level of energy anywhere but Washington DC. Then maybe Washington will follow, but it will never happen because you started in DC.”
—Stephen Lerner, Wall Street accountability organizer and longtime DC resident

James Cersonsky wrote the “Studies/Briefs” and co-wrote the “Clips and other resources” sections in this blog.

This Week in Poverty posts here on Friday mornings, and again on Sundays at Moyers & Company [58]. You can e-mail me at [59] and follow me on Twitter [60].

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