(NPR) — When Clyde Jackson’s wife took a $6 hourly pay cut several years ago, it was the beginning of his rapid descent from two-time homeowner to renter in an apartment complex in the working-class Washington, D.C., suburb of Greenbelt, Md.  Jackson, 51, is an African-American father of three who works for a local government sanitation agency. In December, he lost a three-bedroom brick home to foreclosure. He purchased the house for $245,000 in 2004.  He has separated from his wife and now lives in a two-bedroom apartment. Jackson had to downsize so much that his 16-year-old son and 18-year-old daughter — both from a prior relationship — were forced to share a room.  ”That was the biggest hurt of all,” Jackson says. “When you build up something, and then all of the sudden you lose it. Yeah, it takes a toll on you.”

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(Huffington Post) — After more than a century of delivering financial resources to underserved communities, black-owned banks are struggling to remain relevant — and solvent — in an economic environment full of pitfalls.  Their traditional customer base — lower and middle class blacks, small business owners and churches — has been disproportionately affected by high unemployment, leaving customers with less money to deposit and, in turn, leaving many of these smaller financial institutions with less capital to reinvest in their communities. As customers have fallen on hard times or fallen behind in their loan repayments or mortgages, home foreclosures have become a nagging issue, hamstringing banks’ portfolios with toxic loans. Meanwhile, many customers with big savings and healthy checking accounts opt for the flexibility of larger banks, which offer more branches and a wider variety of services.  ”This minority bank community is really catching hell,” said Michael Grant, the president of theNational Banker’s Association, an 84-year-old trade group that represents minority-owned banks. “They have survived everything, including world wars and Jim Crow, but this has been one of the most difficult periods of all.”

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By Alexis Garrett Stodghill

Whites now outpace all minority groups in America in terms of wealth accumulation according to a new study to be released on July 26 by the Pew Research Center. The wealth disparity between white Americans versus blacks, Asians and Latinos is larger than it has ever been since this data was first collected in 1984. White households now have 20 times the wealth of black families, and 18 times the wealth of Latinos. These rates are twice what they were before the recession hit and wiped out the housing equity of many of minorities in the foreclosure crisis. In 2005 Asian families had more assets than whites with an average of $168,103, but by 2009 that sum fell 54% to $78,066.

While African-Americans saw their wealth decline by 53%, and Latinos saw a 66% dip during the same period, whites faced losses of only 16%. Experts agree that the median net worth of white families was preserved despite the crash of the housing market because they are more likely to own stocks, bonds and a diverse array of holdings. By contrast, before the recession 59% of black wealth was contained in housing equity, along with two-thirds of the assets of Latinos. When the foreclosure crisis caused millions to lose homes, blacks and Latinos fell far behind whites in terms of average wealth — and now face the largest gap between the groups in recorded history. The Washington Post reports:

“White households have been more diversified — they are more likely to own stocks and bonds,” Kochhar said.

As a result, when the housing market collapsed, the effect fell heavier on black and Hispanic households, according to the report. Between 2005 and 2009, the median net worth of black families fell to $5,677 from $12,124, and that of Hispanic families fell to $6,325 from $18,359. In the same period, the median net worth of white households dropped to $113,149 from $134,992.

Household wealth is the sum of assets, including houses, cars and banking accounts, minus debts, including mortgages, auto loans and credit cards.

Researchers who study the economics of households by ethnic groups said that although the gap in incomes between whites and blacks has narrowed over decades, the wealth gap has been more persistent.

This is an important point, because it is wealth that can be passed down between generations, not income. Part of the reason that African-Americans had home equity as the greatest percentage of our median net worth is that often our homes were the sole assets possessed by black families. Much like stocks and bonds, they can be preserved and passed down through the years. But unlike stocks, homes can be paid off a little at a time by an entire household of workers for years.

The effects of slavery and Jim Crow segregation made the accumulation of non-housing assets, and their passing down, more difficult for African-Americans — but at least it was possible. This method of wealth accumulation and passing down became our mainstay. Even though times have changed, this way of thinking is not something we have grown out of as a group.

We are paying for this failure to evolve economically now. When the recession hit and incomes were lost — incomes that helped blacks pay for refinanced mortgages on inherited homes — our community did not have the diversified portfolio of assets that could have helped us weather the storm. We are at a point now in our collective development when stock investment is affordable, but it is clear that not enough blacks have taken this leap, and this is our responsibility.

Yet another critical factor is at play in the sudden sharp drop in black and Latino wealth being studied. This report seems to ignore the well-documented fact that blacks and Latinos were disproportionately targeted for highly destructive sub-prime mortgages. These groups were steered into these loans even if the credit rating of an applicant qualified him or her for a much better deal. While it is not the ultimate responsibility of the lender to ensure that a mortgage applicant is being treated fairly, the race-based exploitation that fueled the stripping of black and Latino wealth through the foreclosure crisis deserves mention.

Despite this clear cause, researchers seem puzzled about the wealth gap, in noting that while incomes have become more equal, overall disparities in asset accumulation persist. When speaking to The Washington Post about this issue, an expert from the Institute on Assets and Social Policy at Brandeis University said: “We know that the income gap is not as large; it has gotten smaller. But the wealth gap is stubbornly high.”

Stubborn? Well, here’s an idea.

It would help if corporations did not target people of color for mortgages that are likely to destroy what little wealth blacks and Latinos have, because it’s clear based on basic numbers crunching that they won’t be able to afford them. That’s a start.

At the same time, people of color need to learn how to use more financial tools intelligently as a means of protection from the devious mechanizations of companies motivated by nothing but greed. The fact that blacks and Latinos were seen as easy prey for the sub-prime mortgages that destroyed their wealth is in part the repsonsibility of these groups. Financial education and empowering action are the only solutions to rebuild wealth and prevent similar losses in the future.

But the huge wealth gap generated between whites and minorities due to massive losses of housing equity is hardly a mystery. It was almost predictable given the sub-prime mortgages blacks and Latinos were led to, like poisoned water. This staggering wealth chasm could have been predicted, as easily as it could have been prevented by ethical loan officers.

The dwindling wealth of black families is very real. Marketwatch highlighted this issue recently pointing out that the recession has hit black families harder than other racial groups. Median household income for blacks fell 7.2% from 2007 to 2009, as compared to 4.2% decline for whites or the 4.9% drop in Hispanics’ income, according to the Census Bureau.  In addition, the Marketwatch report points out that “the typical black family had about three times as much wealth in 1983 than it did in 2009 — $6,300 in inflation-adjusted terms in 1983 compared with just $2,200 in 2009.”

Why is it that, with more opportunities and with the technology revolution, has our wealth dwindled?Part of the reason is that Blacks didn’t take advantage of the home ownership. After peaking near 50% in 2004, the ownership rate for blacks fell to 47% by the time the bubble burst in 2006, according to the Census Bureau. Couple that with the fact that those who did own their homes were most susceptible to sub-prime mortgage loans and predatory lending.  The lack of wealth puts each generation in a deficit of sorts. With children of these families having to take out bigger student loans than their counterparts, they graduate with more pressure and more debt that they will hope to reconcile by the time they have kids.

But it’s not all bleak, depending on how you look at it. ABC news released its own report, asserting that the number of black-owned businesses in the U.S. increased by 60.5% to 1.9 million between 2002 and 2007, more than triple the national rate according to U.S. Census data released Tuesday. The number of businesses across the country increased by 18% in the same amount of time.How is it that we own more businesses but cannot claim more wealth? The business activity may be there but we can’t assess how well those businesses are being run.

To read more, check out Marketwatch

by Alexander Cain

Under Obama’s tax plan, couples making more than $250,000 and individuals making more than $200,000 a year are considered to be in the highest income bracket. This group makes up just 2.5% of the American population, but many within this small population don’t consider themselves well off.  It leaves many people wondering at what point do Americans consider themselves rich.

As reported in The Los Angeles Times report, the answer might be surprising. There are a wide variety of answers, but there is a common trend between all of the answers: the more money you currently make, the more money it takes for you to be considered ‘rich’. The report cited a survey showing that Americans, on average, believe an income of $122,000 is enough to be rich. However, this number can change depending on location and income level. Those living in metropolitan areas such as Los Angeles and New York consider $250,000 to be a more appropriate number for being considered rich, but it essentially depends on who you talk to. Christian, an independent contractor from Atlanta who once earned more than $250,000, didn’t consider a family who earned 250,000 to be rich. This is a stark contrast from many homeless individuals living in large cities where they consider middle class to be rich. Arnold Cantu who resides next to the Hollywood Freeway simply responded, “About $20.”

While economists only evaluated differences among different economic and living backgrounds, what would be interesting are the perceived concepts among different racial and ethnic groups. For African-Americans, one would expect the number to actually be higher than the $122,000. I would cite a higher income level for a variety of reasons.

As African-Americans, we aren’t exposed to as many higher income level individuals as other ethnic groups. For the 2.5% of Americans who qualify under the highest income tax bracket, only about 12.2 percent of this percentage are African-Americans according to a U.S. census report.

Jay-Z, the Oprah, and the Obamas are who constitute our ideals of wealth rather than the small to mid-size unknown black business owners who aren’t well known but continue to drive their businesses.  African Americans are facing a different mindset than those of the other racial groups. With the heavy influence of hip-hop culture in the African American community, our viewpoint of wealth  is heightened, as compared to other cultural groups, because the idea of rich is often associated with material items rather than actual income level.

While the idea of being ‘rich’ is a simple one, it is actually a concept with many different ideas and viewpoints. Depending on your income level your idea of ‘rich’ might be different. The more income you currently have, the more additional income it will take to consider yourself ‘rich’. For African-Americans who are still facing the tough income disparities, it will likely take a higher level of income to compensate for our tougher challenges.