When America catches a cold, the Black community gets pneumonia. This unfortunate, recurring truth defines the struggle millions of Black Americans, young and older, face every day. Today, the stakes are even higher as we sit at the intersection of three crises in America — a global pandemic, ever-growing racial tension and an economic downturn that will continue to impact communities of color and low-income communities disproportionately.
We would be wise to use this inflection point in our nation’s history to pause and consider the best ways to correct the economic injustices that have long plagued the economy for the entirety of our country’s existence. Institutional and systemic racism, from overt discrimination to redlining to mass incarceration, has sustained and widened the wealth gap between Black Americans and our counterparts. These systems of inequality not only prevent Black Americans from thriving, they drag down the broader economy. In fact, a 2019 McKinsey & Co. report showed that by closing the racial wealth gap, U.S. GDP could be 4-6% higher by 2028.
We know that income and wealth disparities profoundly impact the quality of life for Black Americans, so a robust and targeted economic agenda is needed to upend the structural racism that has been subsumed into legislative and private sector policies and practices for the better part of two centuries. We need to prioritize resources for Black communities and invest to generate and sustain wealth for the Black Americans who have not been able to participate fully in the American Dream. To economically safeguard and strengthen Black communities, we must open up opportunities and connect people with the resources they need not only to exist, but to thrive. Increased access to capital can revitalize our struggling neighborhoods, create new jobs and support small businesses, thereby protecting local economies and helping neighborhoods offset the ripple effects of the current economic downturn.
Although the reality of our national financial situation is dire, we can leverage this moment and momentum to do better than return to the old economy that left too many people locked out. We can rebuild a stronger, more inclusive and a more resilient economy.
An important step to achieve this outcome is passing legislation to support the backbone of financing to communities of color: community development financial institutions (CDFIs) and minority depository institutions (MDIs). There are various bills moving through the Senate and the House that propose multibillion-dollar, long-term investments to CDFIs and MDIs, which are the community-focused banks dedicated to providing affordable lending to low-income and disadvantaged borrowers. There is stronger bipartisan support for these efforts than we’ve ever seen for legislation that would provide these community-based lenders with the capital, liquidity and operational capacity they need, and that would expand the flow of credit into underserved communities, offering affordable credit for lower-income borrowers and helping small businesses stay afloat and grow. There is harmony among the various bills to allocate direct capital investments, grants and community investment loans to mitigate and offset the paralyzing impact of the COVID-19 crisis on low-income communities and communities of color.
We need a broad spectrum of change-makers, no matter their cultural background or political affiliation, to advocate for the passage of this legislation as a step toward a stronger economy. We are encouraged by the efforts led by Senators Warner, Schumer, Harris and Booker; and in the House by House Financial Services Committee Chair Maxine Waters and Congressman Greg Meeks, among other important bipartisan supporters, including seven Senate Republican cosponsors. From lawmakers to business leaders to community organizers, we all need to work together to pass this monumental legislation.
The impact this investment can have on neighborhoods and small businesses surpasses political ideologies. It’s not about which side of the aisle you’re on or which part of the country you live in; it’s about stepping up to make sure we emerge from this pandemic stronger and fairer than ever. It’s up to the leaders in Congress to use passage of this legislation as a step toward disrupting the status quo and ensuring that every American has an equal opportunity to succeed; something we sadly know is not the case today.
David G. Clunie is the Executive Director of the Black Economic Alliance, a former Managing Director at JPMorgan Chase & Co. and a former Obama appointee at the U.S. Department of the Treasury and the White House.