Racial Disparities in Auto Loans

You may have seen the article the NY Times ran on certain subprime auto loans and how they hurt the poor. Now there is evidence that some lenders are raising the rate on loans to racial minorities.

From Bloomberg: “JPMorgan Chase & Co., the largest U.S. bank, said it’s in talks with the Department of Justice about possible racial disparities in markups that auto dealers charged on loans.

“The discussions focus on ‘potential statistical disparities’ on debts originated by dealers and purchased by the bank, New York-based JPMorgan said Tuesday in an annual regulatory filing. It didn’t specify whether the firm is a target of the probe.

“The Justice Department and U.S. Consumer Financial Protection Bureau have been investigating auto lenders for possible racial discrimination, after finding ‘significant risk’ of unfair pricing, senior officials said in 2013. The CFPB warned that year that large banks may face lawsuits if they buy discriminatory loans made by dealers.” More here.

Nissan went through a lawsuit regarding auto-loan discrimination in 2001, described here, at the NY Times.

For some background information, see two legal research pieces: here and here.

In addition to the concern about racial disparities in lending, the bundling of questionable auto loans into investments may raise red flags given what happened with the bundling of questionable mortgages not that long ago.


Adjunct Professors on Food Stamps

Is it off base to compare the economic situation of adjunct professors to fast food workers? One colleague says, Not if they need food stamps to keep their heads above water. Another says, Not the same.

An article at Capital & Main, by way of Pacific Standard, sparked the discussion.

Ana Beatriz Cholo wrote, “Patti Donze is a California State University-Dominguez Hills sociology lecturer doing everything right to become a tenured college professor. She has advanced degrees from well-respected universities and is teaching a full load of five classes this semester. But her net income is $2,500 a month, just barely enough to buy food and pay rent on a studio apartment in Culver City.

“She has $50,000 in school loan debt—not an extreme amount considering the Juris Doctorate and Ph.D. that she has under her belt, but she said it’s not feasible to pay even the minimum monthly payment and is researching loan forgiveness programs.

“Besides fast-food workers, there is another face of low-wage workers across the country. For many universities and colleges, both public and private, it’s their most embarrassing secret—paying educated professionals minimum wage salaries with no benefits. Adjuncts are paid much less than tenured and full-time faculty and typically do not have union representation. …

“Adrianna Kezar, a professor at the University of Southern California’s Rossier School of Education and co-director of the Delphi Project on the Changing Faculty and Student Success, is an expert on change and leadership in higher education. She believes the unionization movement has been the big catalyst for the recent focus on unfair working conditions for these highly qualified educators.

“ ‘Fifty percent of the faculty in our country make what somebody at McDonald’s makes,’ she said, adding that more and more adjuncts are going on public assistance and needing food stamps to survive.”

More here.


The Only Magazine on New England’s Low-Income Communities

CB-2015-spring-cover-pws-nn-130x150The spring issue of the Boston Fed’s Communities & Banking magazine is out. I hope to discuss these articles more anon, but I wanted to share the table of contents now and give you a chance to click on the ones that interest you most. Please let me know in the comments feature if they are useful to you.

Immigration to Manchester, New Hampshire
by Sally Ward, University of New Hampshire
Immigration, historically important for Manchester’s economy, today means a younger, more diverse population, with the attendant opportunities and challenges.

Call to Action: Trato Justo Immigrant Financial Futures
by Betsy Cavendish and Annette LoVoi, Appleseed
Low-income immigrants who become integrated into the financial system build assets for themselves and become loyal customers for financial institutions.

Walkable and Affordable Communities
by Scott Bricker, America Walks
Lower transportation costs, improved health, and other societal benefits can offset lowered affordability in communities where improved walkability has raised housing values.

Big Data, Small Buildings
by Kennedy Smith Community Land,
Use + Economics Group

The National Trust for Historic Preservation has tapped into big data to explore the relationship between urban livability and clusters of smaller, older, dense buildings.

Measuring the Outcomes of Maine’s College

by Paul Leparulo, State of Maine
A new data system measures how many Maine postsecondary grads have found jobs in the state—and what they are being paid.

Mapping New England: Education Levels of
Recent Immigrants
by Kseniya Benderskaya, Federal Reserve Bank of Boston
Foreign-born individuals who arrived in America after January 1, 2010,
are more likely to have higher levels of educational attainment than those
who entered between 2000 and 2009.

Viewpoint: Reconsidering the Need for
Personal Loans
by Andy Posner, Capital Good Fund
The website includes a short video of the author highlighting the reasons for community development financial institutions to make personal loans as well as loans for business and homeownership.

Cities Visiting Other Cities: A Revitalization Tool
by Bennett Gray Wilson
City-to-city visits can energize urban initiatives, but more study is needed to understand the precise role of past trips in apparent outcomes.

Community Health Centers in Low-Income

by Tom Manning
Community Health Centers—specifically, Federally Qualified Health Centers—offer low-income communities high-quality preventive care and reduce avoidable hospital stays.

New Community College Handbook

The Boston Fed’s Regional & Community Outreach department is proud of its new book Promoting Pathways to Financial Stability: A Resource Handbook on Building Financial Capabilities of Community College Students, led by Sarah Savage. And as part of her work on this initiative, she has just published an article with colleague Erin Graves in the New England Journal of Higher Education.

“Community colleges have traditionally responded to the financial needs of their students by removing or minimizing financial barriers to attending,” the authors write. “Efforts to make community college tuition free fit with this philosophy. But where efforts to minimize or remove financial barriers to attending community college fall short is in empowering students to navigate the next financial crossroads they encounter, to make well-informed financial decisions that will decrease their vulnerability as students and to position them with the tools for achieving financial wellness as they progress through life.

“Empowerment work that helps students manage their financial lives can be described as building their ‘financial capabilities.’ The intention of this work is to teach students effective money management, savings and planning techniques but also to provide opportunities to apply what students learn, which is critical to developing positive financial habits. More commonly referenced ‘financial literacy’ remains relevant but is more often associated with knowledge transfer and skill development than application and behavior change. Empowerment work is intended to build students’ capacity.”

Read more here.


Low-Income Communities Talk to a Bank

One of the few times that low-income people and nonprofits get a chance to influence banks directly is during a merger hearing. That is part of the reason that the Office of the Comptroller of the Currency and the Federal Reserve opened up CIT-OneWest deliberations to the public.

Michael Corkery reports for the NY Times, “The deal seemed all but done when the CIT Group, a lender to small and midsize businesses, announced in July that it was acquiring OneWest, a regional bank in California.

“But federal banking regulators put the $3.4 billion merger through an unusual test on [last] Thursday. They invited members of the public to share their opinions about the deal in a rare open hearing in Los Angeles.

“The Federal Reserve and the Office of Comptroller of the Currency set aside at least eight hours to hear testimony from more than 100 people, including homeowners, members of the clergy, small-business owners and advocates for the poor. The banks’ chief executives also testified.

“The public hearing, held at one of the Fed’s offices in Los Angeles, was set after a variety of groups raised concerns, particularly about OneWest’s foreclosure practices and the strength of its efforts to invest in low-income neighborhoods as required by the Community Reinvestment Act.

“Many of the speakers wanted the Fed and the Comptroller of the Currency to pressure the bank executives to do more to help financially struggling and minority neighborhoods before the deal obtains regulatory approval. Regulators have not provided any timetable for making a decision.”

More here.


Tackling the Issue of Over-Incarceration

Carl Hulse wrote at the New York Times this week about an unusual coalition bent on changing the prison system in the United States.

“Usually bitter adversaries, Koch Industries and the Center for American Progress have found at least one thing they can agree on: The nation’s criminal justice system is broken. [They] are coming together to back a new organization called the Coalition for Public Safety. The coalition plans a multimillion-dollar campaign on behalf of emerging proposals to reduce prison populations, overhaul sentencing, reduce recidivism and take on similar initiatives. Other groups from both the left and right — the American Civil Liberties Union, Americans for Tax Reform, the Tea Party-oriented FreedomWorks — are also part of the coalition, reflecting its unusually bipartisan approach. …

“Organizers of the advocacy campaign, which is to be announced on Thursday, consider it to be the largest national effort focused on the strained prison and justice system. They also view the coalition as a way to show lawmakers in gridlocked Washington that factions with widely divergent views can find ways to work together and arrive at consensus policy solutions.” More here.

Meanwhile, not far from the Boston Fed, another group interested in changing the current prison system is putting on a production based on the words of ex-offenders who find the deck is stacked against them when they are released.

Mary Driscoll’s nonprofit On with Living and Learning (OWLL) and the Fort Point Theatre Channel are presenting “Hidden Faces of Courage” and a staged reading of “A Lot on Our Minds,” March 19-28, 820 Mass Ave, Cambridge.

Mary writes, “In 2013, On With Living and Learning (OWLL) premiered Hidden Faces of Courage, with full houses every night for this workshop production. Now OWLL in collaboration with Fort Point Theatre Channel presents a remixed and reimagined Hidden Faces of Courage, preceded by a staged reading of A Lot On Our Minds, reflections from youth about their experiences …

“Both plays combine monologues, spirituals, and rap to portray the struggles of a group …  reentering their communities from prison and the effects on the youth living in the shadow of their incarceration.”


Pawtucket Mourns Loss of Baseball Team

Boston-based WCVB got in touch with the mayor of Pawtucket, Rhode Island, to ask his reaction to the loss of the beloved PawSox baseball team.

“A group of investors headlined by Red Sox president Larry Lucchino announced Monday they had purchased the Pawtucket Red Sox and would relocate the team to Rhode Island’s capital. Lucchino and several Rhode Island businessmen purchased the Triple-A baseball club for an undisclosed price from the widow of its longtime owner.

“Investor James Skeffington confirmed the new owners are planning to move the team to Providence by spring 2017 and are eying land along the Providence River for a new ballpark. … Skeffington said he would like to rename the team the Rhode Island Red Sox but nothing has been decided yet. …

“Pawtucket Mayor Donald Grebian said there is both an economic and psychological impact to the departure, but said the city has not done an economic analysis.

” ‘The hard thing is, as a Pawtucket person, I went to the stadium with my grandparents and parents, and now I enjoy it with my kids,’ Grebien said.” More from WCVB, here.

The blog CoffeeblackRI also weighed in on the proposal to build a stadium on open space previously considered for a park: “Ask yourself who in RI makes steel or aluminum, who makes the seats, the brick, the popcorn, or any of the products associated with the construction and operation of a ballpark. … After you do that, aside from labor how big is the economic impact from construction really?

“And there is one more important economic piece.  From a statewide perspective the baseball stadium and team relo is not an economic plus. Why?  We already have a triple AAA baseball team in the state. Its economic impact is not additive statewide.  It will have a small positive impact on Providence and a small negative impact on Pawtucket – but statewide it’s likely a push with some small upside if attendance significantly increases and more people from out-of-state come and generate room nights.  Maybe.

“So the right way to think about the forthcoming economic impact study is the net economic value added to RI statewide not the gross number in Providence which is what will be reported.

“As a public service we’ve provided links to some stories about the economics of ball parks:


More at coffeeblack, here. Always nice to see a Fed study highlighted.