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Opinion Obama Worse than George Bush “Challenging People to Shape a Better Future Now” B ERNIE F OSTER Founder/Publisher B OBBIE D ORE F OSTER Executive Editor J ERRY F OSTER Advertising Manager L ISA L OVING News Editor H ELEN S ILVIS Multimedia Editor D AVID K IDD Graphic Designer M ONICA J. F OSTER Seattle Office Coordinator J ULIE K EEFE S USAN F RIED Photographers The Skanner Newspaper, established in October 1975, is a weekly publica- tion, published each Wednesday by IMM Publications Inc., 415 N. Killingsworth St., P.O. Box 5455, Portland, OR 97228. Telephone (503) 285-5555. W hen I interviewed Marie Johns, then the outgoing deputy secretary of the Small Business Administration, a year ago, she said the SBA does not separate figures by race, though it hopes to do so at some point. Technically, she was correct in saying the SBA does not separate agency-wide figures by race. But the SBA’s 8 (a) program figures can be broken down by race and that’s where she was being disin- genuous. I specifically asked her twice about the status of Black businesses under Obama and twice she was less than forthcom- ing. Now, I know why: The Obama administration’s record of guaran- teeing loans to Black businesses is worse than it was under George W. Bush. Yes, that was documented recently by the Wall Street Jour- nal in its analysis of data for the fiscal year that ended Sept. 30. “Black borrowers received 1.7 percent of the $23.09 billion in total SBA loans. The percentage is down sharply from 8.2 percent of overall SBA loan volume in fiscal 2008. By number of loans, black- owned small businesses got 2.3 percent of the federal agency’s roughly 54,000 loans last year, down from 11 percent in 2008,” the newspaper reported. Major banks are encouraged to make SBA loans to small busi- nesses for up to $5 million, with the federal agency agreeing to cover as much as 85 percent of any loss. Financial institutions share responsibility for the drop in loans to African Americans. they are recovering at a faster rate than Blacks. T HE C URRY “This is the fallout from the R EPORT recession and housing bust,” J. Patrick Kelley, a deputy associate administrator of the SBA, told George E. the Wall Street Journal. “The bor- Curry rowers hardest hit…are the last to see a recovery come to them.” According to the SBA Office of Advocacy, Black business owners According to the Wall Street made up 49.9 percent of all minor- Journal, Bank of America made ity owners in 2012. Asians made 1,400 SBA loans in fiscal 2007. up 29.6 percent and Hispanics For the latest fiscal year, however, 10.3 percent. Overall, Blacks own that figure fell to just 247 borrow- 14.6 percent of U.S. businesses ers. But the total loan amounts and women own 36 percent. When it comes to Black busi- remain relatively unchanged, reaching $40.2 million in 2007 to nesses, there is good news and bad ‘Black borrowers received 1.7 percent of the $23.09 billion in total SBA loans.’ $40.7 million for the last fiscal year. That’s part of a larger trend by banks coming out of a recession to favor larger deals over smaller ones. According to the SBA, their average loan is $426,796, more than double the average of $192,919 in 2005. That’s prob- lematic for African Americans because 80 percent of the loans to fund Black business are for $150,000 or less. The housing market decline has also had an adverse impact on African Americans. Of course, everyone acknowl- edges that the Great Recession was a drag on business, both big and small. Other ethnic groups had a hard time obtaining business loans in a depressed economy, but news. A Census Bureau press release, dated Feb. 8, 2011 stated: “From 2002 to 2007, the number of black-owned businesses increased by 60.5 percent to 1.9 million, more than triple the national rate of 18.0 percent, according to the U.S. Census Bureau’s Survey of Business Owners. Over the same period, receipts generated by black-owned businesses increased 55.1 percent to $137.5 billion. “’Black-owned businesses con- tinued to be one of the fastest growing segments of our econo- my, showing rapid growth in both the number of businesses and total sales during this time period,’ said Census Bureau Deputy Director Thomas Mesenbourg.” Now the bad news: Of the 1.9 million Black-owned businesses, 1.8 million had no paid employees in 2007. Because 82 percent of business startups, both large and small, require capital beyond the owners’ personal assets, access to capital remains a major concern. “Minority small business own- ers are disproportionately denied credit when they apply for it even after controlling for other vari- ables such as business credit scores, personal wealth, and rev- enues. These findings hold true particularly for black and Hispan- ic business owners,” according to an issue brief by the SBA. The variation of home owner- ship can also be a factor. “Home ownership may provide an important catalyst to small business growth, but it may also serve as a barrier to entry for prospective entrepreneurs,” the SBA said. “For instance, business growth can bridge the wealth gap between minorities and non- minorities across geneder. Among existing businesses, home owner- ship significantly decreases the probability of loan denials and can be critical to such growth.” According to Census data, 78.2 percent of business owners owned homes in 2012. Research shows that 72.6 percent of Whites own homes, 58.7 percent of Asians, 47.2 percent of Hispanics and 43.8 percent of Blacks. Clearly, a number of factors con- tribute to whether Blacks own their own businesses. The SBA must play of stronger role in open- ing the doors for Blacks, not just “minorities.” E-mail: info@theskanner.com World Wide Web site: http://www.theskanner.com Fax: (503) 285-2900 The Skanner is a member of the National Newspaper Pub lishers Associ- ation and West Coast Black Pub lishers Association. All photos submitted become the property of The Skanner. We are not re - spon sible for lost or damaged photos either solicited or unsolicited. © 2014 The Skanner. ALL RIGHTS RE SERVED. REPRODUCTION IN WHOLE OR IN PART WITHOUT PERMISSION PROHIBITED. To see The Skanner News on your smart phone go to theskannermobile.com or scan this QR code with your app. • • • • • • • • Local news Opinions Jobs, Bids Sports Entertainment Music reviews Bulletin board RSS feeds Senate Bill Might Evict Affordable Housing I n an unconventional move, legislation designed to reshape the nation’s $10 trillion hous- ing finance market was released on Sunday, March 16. Since then, reactions to proposed broad changes have ranged from strong support to ‘wait-and-see, and out- right opposition. According to the bill’s authors, Senators Tim Johnson, Chair of Senate Banking Committee and Mike Crapo, the committee’s Ranking Member, the rare week- end release was the result of months of effort to accommodate varied input to secure bipartisan support and move the proposal forward in time for a full Senate vote by November. In a news release, Johnson said, “This proposal includes an explic- it guarantee in order to add stability to the economy, keep costs reasonable for borrowers and renters, and ensure fair access to the secondary market for all lenders.” Crapo said, “There is broad sup- port to fix our flawed housing system, and today’s actions are a strong step toward ending the sta- tus quo.” But just how much support there is for the 442-page legislation really depends on who is speaking. “Housing finance reform was Page 2 The Portland and Seattle Skanner March 26, 2014 NNPA C OLUMNIST Charlene Crowell too important to rush a committee deal on, and in my view, it’s also too important to rush a markup on,” said Senator Elizabeth War- ren, also a member of the Senate Banking Committee. “We should have a full, open discussion before Calhoun, president of the Center for Responsible Lending (CRL) said, “It’s a radical surgery pro- posal; it’s somewhere between a complete tear-down and an extreme gut rehab. The question is does that get us to a better place? And middle and moderate income families might be less served with this approach. The new model could make it harder and more expensive for a lot of people to get mortgages.” CRL research shows that the average family would need 14 years to save enough money for a 5 percent down payment. For ‘The new model could make it harder and more expensive for a lot of people to get mortgages.’ we decide to set out on a new path, and that means members of the Banking Committee should have real time to dig in and consult with people before a markup.” While the Senate Banking Com- mittee deliberates on the proposed legislation, organizations that researched the housing crisis and others representing consumers affected by it are speaking up. In a recent radio interview, Mike Black families, the number of required years would double to 28 for the same 5 percent and 17 years of saving for the average Latino family. Further, home down payment savings do not take into account closing costs, which typically are an added 3 percent of the cost of the mortgage or mortgage insur- ance that is required for homes purchased with less than a 20 per- cent down payment. In CRL’s view, there is no wisdom in requir- ing these homeownership delays when so many families have suc- cessfully paid mortgages made with low down payments such as FHA loans. Despite these findings, the John- son-Crapo legislation would still require mandatory down pay- ments: 3.5 percent for first-time borrowers and 5.0 percent for all others. The legislation would also eliminate affordable housing goals for Fannie Mae and Freddie Mac, two government-sponsored enter- prises (GSEs). The bill would phase out both GSEs and replace them with a new agency. Instead of affordable housing goals, mar- ket-based incentives would be developed to promote business in underserved areas for both home- ownership and rental properties. As CRL’s Calhoun has said, “With a fragile housing market, it does raise questions about whether this is the time to shake the whole thing up.” Charlene Crowell is a communi- cations manager with the Center for Responsible Lending. Read the rest online at www.theskanner.com
