SPRINGFIELD — In Illinois and around the country, an increasing number of universities, investigators and researchers are turning up evidence of systemic racism in the financial sector that has plagued Black Americans for decades
In June, a report from Chicago radio station WBEZ-FM and the nonprofit news organization City Bureau found that for every dollar banks loaned in a white Chicago neighborhood, they only invested 12 cents in Black neighborhoods. A 2019 Duke University study estimates Black Chicagoans lost between $3 to $4 billion in the 1950s and ’60s due to predatory housing contracts.
A 2013 Pew report shows that nationally, African Americans lost 53 percent of their wealth between 2005 and 2009 due to the collapse of the housing market.
On Thursday, the Illinois Senate Executive and Commerce and Economic Development committees held a joint hearing on racial equity in lending and homeownership. The hearing was the latest in an ongoing series of hearings prompted by the Illinois Legislative Black Caucus agenda to end systemic racism.
“The time is long overdue for Black households to be met with policies that uplift them and provide them with access to better credit and lending opportunities,” state Sen. Mattie Hunter, a Chicago Democrat who chairs the Executive Committee, said. “It’s imperative that we work to close the wealth gap and level the playing field.”
Officials from various state agencies, banking executives, community advocacy groups and researchers all appeared before lawmakers as part of a four-hour hearing that delved into the evidence and ongoing practice of systemic racism in Illinois’ financial institutions, and what solutions the state government can pursue in partnership with private firms to end it.
“What we want to see is a lending market where race is not the largest predictor of approval for a home loan. We ultimately want to see a lending market where these disparities do not occur,” state Sen. Jacqueline Collins, a Chicago Democrat and chair of the Senate Financial Institutions Committee, said. “We need an end to this cycle of disinvestment, which is at the very root of generational poverty here in Chicago and throughout the state and the country.”
Chasse Rehwinkel, acting director of banking for the Illinois Department of Financial and Professional Regulation, testified that being able to build assets, such as property or businesses, is “key to intergenerational wealth creation. Without adequate access to lending, it is impossible for communities to develop long-lasting economic growth.” Rehwinkel said African Americans have historically been and continue to be systematically excluded from this process of wealth creation.
Rehwinkel told lawmakers that African Americans in Chicago were nearly three times more likely to have mortgage applications denied than white applicants.
In 2017, according to Rehwinkel, 30.3 percent of mortgage loan applications by African Americans and 22 percent of applications submitted by Latino households were denied in the city.
Referencing WBEZ’s report, Rehwinkel explained that Lincoln Park, a primarily white neighborhood in Chicago, received 13 percent greater loan investments from banks than every majority Black neighborhood in the city combined.
“This is a large disparity,” Rehwinkel said. “It is only the tip of a larger systematic issue. Our economic system, for better or worse, is built on the extension of credit and the repayment of debt.”
According to Rehwinkel, the problem is nationwide. A 2017 report from the Federal Reserve to Congress found that nationally, Black business owners had their applications for credit denied twice as often as white business owners. A 2019 Federal Reserve report on access to credit found that 45 percent of borrowers who were Black and applied for any type of credit in the prior year were denied, compared to 18 percent of white borrowers.
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