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.”
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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
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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.
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