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Here's a dirty little secret: While there's a wealth gap in general, it is a gaping maw when it comes to minorities and the rest of the world.
The median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009.
These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009.
Unsurprisingly, it's a combination of Bush era policies and the recession, which caused higher rates of unemployment working in tandem with plummeting home values in Hispanic and black neighborhoods.
As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009, the typical Hispanic household had $6,325 in wealth and the typical white household had $113,149.
Moreover, about a third of black (35%) and Hispanic (31%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 29% for blacks, 23% for Hispanics and 11% for whites.
It's the "why" that's concerning. Plummeting home values took a far higher toll on minorities. Jack and Jill Politics:
What the study makes clear is that the wealth of most black folks and Hispanics is in their homes, whereas the wealth of whites is much more diversified in stocks and other things. So when the value of a black or Hispanic family’s home goes through the floor, that pretty much wipes us out financially because we have nothing else to fall back on. Now add to that a bit of history, referring of course to all those vicious subprime loans that screwed so many families who wound up losing their homes to what was essentially a Wall Street invention.
Minorities are also subject to exploitive financial schemes, like payday lending and ridiculous car loans. Colorlines reports:
But that’s still more symptom than root cause. Black and Latino families are also far more likely to live in places crawling with expensive, deceptive consumer lending of all sorts, from car loans to refinance mortgages. They are more likely to turn to that lending because they make less money and because they already hold less wealth to cushion themselves in tough times. It’s an ugly cycle: inequality across the economy creates demand for predatory credit to bridge the gap, which in turn worsens inequality.
Is it any wonder Republicans are taking aim at any regulation of the financial industry, given how they've benefitted from it? It certainly casts a shiny light on their efforts to gut the CFPB.
Sidenote: TheGrio has an article with ideas for how minorities can take control of their finances and fight back on their own. And as long as I'm linking it, I'd like to give a big congratulations to my friend Joy-Ann Reid of The Reid Report for being hired as The Grio's managing editor, which will also involve appearances as an analyst on MSNBC. Congratulations!