Building wealth and prosperity is a goal for nearly everyone. But not all have the same chance to do so.
Historically home ownership and small business ownership have been two very important routes in the US to build wealth. It is well known that home ownership for minorities, especially Black people was limited by the practice of red-lining – arbitrary lines drawn in red around neighbourhoods where no mortgage loans were made. Or maybe the lines were not so arbitrary as those neighbourhoods were predominantly populated by Black people.
A recent article published by the Portland Business Journal highlights how red-lining also appears in small business lending. As noted “(a) July SBA Office of Advocacy study, which used Federal Reserve data and adjusted for credit risk, showed Black-owned businesses faced “the biggest challenges in obtaining their desired financing.” The study cited nine academic papers that came to the same basic conclusion.” The article also noted “(e)conomic experts say the trends exacerbate racial disparities in wealth generation, homeownership rates, educational attainment and other vital rungs on the American dream’s financial ladder.”
This pattern illustrates just another way in which racism is embedded in the US banking system. And that embedded racism has real consequences for the wealth creation needed by all communities.
