African-American households have lost wealth in the last decade, and now stand on the edge of widepread insolvency. The lack of assets is most evident among single parent households headed by African-American women.

The new data, culled from the 2007 edition of the Federal Reserve’s Survey of Consumer Finances, reveals how inequalities in wealth between white and black households have grown since 2004.

African-American women that are the sole head of households have a median net worth (MNW) of five ($5) dollars during their prime earning years – ages 36 to 49. The same subset of single white women have a MNW of more than $42,000.

The stress implied by living under these kind of budget constraints would be incredible. It means that not only can a parent not afford to miss a day of work or pay for a repair, she can’t even afford to hire a babysitter for one hour without going into debt. Back to the unbanked, this also underscores why she can’t afford even one overdraft charge.

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If we had a vibrant economy where delinquincies were receding and employment was roaring back (NOT!), it would make sense that banks would take on a little more risk.  The evidence is clear, though.  We have  recovery in share prices, but the budgets of households are not back where they were. Credit card charge-offs are up, and unemployment is still high.

That is why it seems odd that some of our largest banks have decided to offer a new payday-loan product.  US Bank, Wells Fargo, and Fifth Third are three banks that are rolling out short-term loan programs where APRs exceed 120 percent.

Did I mention that each of these banks was given a huge TARP investment? True, US Bank and Wells have already repaid their TARP funds, and Fifth Third indicates that it intends to do the same in the next quarter.

I think the appearance of these new products reveals how this credit crisis is hurting middle America. Consumers don’t want to use loan products like payday loan-priced advances on their next paycheck.  They would prefer to use credit cards (interest rates of as much as 29 percent) or a line of credit (perhaps 12 percent.) These new payday products cost at least 120 percent. People aren’t dumb. They are taking this bad deal only because banks aren’t offering something more reasonable.

Let’s review the new payday products.

Fifth Third’s Access Now: “when you need money but you don’t have time to wait.” The cost is simple – $1 for every $10 advanced.  Funds are repaid with the next direct deposit. If your (more…)

News out today shows that our schools are more income-segregated than ever before.  This national trend is only a broader reflection of the same forces that have fostered Wake County, North Carolina’s recent decision to favor “neighborhood schools.”

North Carolina is one of the states with the lowest share of elite schools.  By the measure that drove this study, there were less than 3 percent of students on free-or-reduced lunch in only six schools in North Carolina.  Perhaps that is factored by our states ongoing battle to reverse its high share of poor families, but it also reflects well on decision-making that has avoided narrow zoning to separate elites from the rest of the community.

The location of affordable housing is driven by land-use planning.  My review of some of the schools where elite private-public schools (PPS) have been created suggests that they are most often in white suburbs with very high incomes. Those districts exist even when a larger MSA is well-off.  Certainly, Boston and San Francisco harbor plenty of wealth.  That is why it is so bad that so many of their schools act as filters of opportunity.

The study did not release specific data for any MSA in North Carolina. I’ll offer a more narrow example for Alameda County, California. The largest city in Alameda County is Oakland. Oakland is poor and heavily minority. Its schools are well-known for their efforts to deal with the challenges of poverty.  While Oakland struggles, the community of Piedmont has developed its own “private” school system.  Fewer than 3 percent of its young people live in poverty, compared to more than 28 percent in Oakland.  Median household income in Piedmont is $134,000.  In Oakland, it is just a shade over $40,000.

Without a systematic effort to shape the housing stock in Piedmont, that outcome could not occur.  Only nine percent of households in Piedmont rent, and most rents are greater than $1,500 per month.  There are only 69 multifamily units in the entire city!

Is Wake County near that situation? Certainly there is no Piedmont within its borders.  Yet, it seems all too likely that the County has enough Piedmont-style school zones to bring about some of those same results. I counted 25 census tracts in Wake (in 2000, summary file 3) where less than 3 percent of the residents aged 5 to 17 lived in poverty. In those tracts, there were only 241 school-age children in 2000, compared to more than 10,500 living above the poverty line.  Back in 2000, Wake had about 111,000 school-age students.  Roughly 9.7 percent of them lived in a census tract with fewer than 3 percent of school-age children in poverty. Race is worth mentioning, too: those low-poverty districts have, on average, less than one-third of their share of African-American residents compared to the County as a whole.

Granted, school districts are much larger than census tracts.  Still, elementary schools can sometimes draw from a handful of census tracts.  Some of those tracts overlap. The possibility seems very real that Wake would quickly fall into a new regime where there were a handful of elite schools for the very wealthy.

Affordable Housing is a Determinant of Income Segregation

The Thomas Fordham Institute has published a report entitled America’s Private Public Schools that tracks where public decision-making has led to public schools with few or no poor students. Their indictment is compounded by the perspective of its authors.  Fordham is a conservative research group. Their concern is coincidental to the outcries of groups like the NAACP or Wake parents with a compassionate interest in diversity. Their prescription for this problem is more charter schools, rather than reform through traditional public school systems.

Fordham concluded that New Jersey was the worst offender for income-segregation. That is interesting, as New Jersey was the site for the seminal affordable housing case.  In Southern Burlington County N.A.A.C.P. v. Mount Laurel Township, the NAACP argued that zoning rules conspired to keep affordable housing outside of the municipal boundaries of Mt. Laurel township, thereby excluding low-and-moderate (LMI) residents from obtaining housing in that community. The decision created a new standard for  implementing the goals of affordable housing. Eight years (more…)

NetSpend, a retail marketer and distributor of prepaid debit cards, offers an incredible 5 percent APY on the savings accounts attached to their debit cards.  Those cards, marketed on behalf of MetaBank and Inter National Bank, come with FDIC insurance. The savings accounts are available for customers that get a NetSpend prepaid card. Those cards feature a pay account, but they can be linked to a savings account. Some accounts can also get a line of credit linked to their account as well.

I was so excited by it that I had to call and see how I could get in on this deal. I called Inter National Bank. NetSpend’s website indicates that INB has their savings accounts. After four transfers, I was routed through to Jona, a representative of NetSpend.

I told her a few basic details about my needs. Just for clarity, let me say that I am not actually a Colombian trafficker with scores of private bankers.  Here’s roughly how our conversation went:

Me: “I’m interested in making regular transfers of up to $10,000 onto an account. My private banker is not sure about this, so I need to make sure that I can give him all of the details.”

I’ll paraphrase for Jona. She told me that I’d have to sign up for a NetSpend Card first. There a bunch to choose from, but they all have the same basic features.  She even helped me to work through their web page to the terms and disclosures. I had to go to “sign in and register” for an account to see those fees.  There are fees to use the spend (more…)

When I read the first chapter of Green Metropolis, I was worried that my fears about this book might be confirmed. After all, the blurb says that the author is going to reveal how New York City is more sustainable than Snowmass, Colorado or Burlington, Vermont. Hmm, I thought, there’s not much to that. People in NYC don’t drive cars, they live on top and side-by-side of each other (so they share heating costs), and they have great transit. Why should any readers find it surprising that NYC is so sustainable?

What Would Jane Think?

I remember sitting in a hotel near the campus of Sprint, on about 110th St and Metcalf in Kansas City, Missouri (a national epicenter of sprawl!) and telling my sister (an environmental advocate) that it is not enough to write about how NYC serves as an ideal for sustainability. You can’t turn KC into Greenwich Village, right? In other words, I came to Green Metropolis as a skeptic.

I didn’t want to hear more about how it worked 100 years ago in NYC.  I wanted to hear how policy could make it work in the future.  I wanted to hear about how we could make Johnson County, Kansas or Fulton County, Georgia more sustainable.

Moreover, I thought, why is David Owen singing the praises of NYC, when he moved from there to rural Northwestern Connecticut? Owen must have known that, because (more…)