Shirley Sherrod should have been a household name long before this week's media frenzy -- but for reasons most of the country knows little about.
For decades, Ms. Sherrod has been fighting for economic justice and access to property for those who have been left out of the system. Starting back in the 1960s, she and her family were at the center of an effort that assembled nearly 6,000 acres of land in the south for farmers who had lost control of their land. Inspired by the Jewish National Fund and other groups that held land in trust, New Communities, Inc., fused the civil rights movement with ideas about economic justice into an ambitious plan to provide ownership stability for large numbers of small farmers.
But the land was ultimately lost again, as government officials withheld access to credit that was necessary to save their effort. Such discriminatory practices were ultimately successfully challenged in a class action lawsuit documenting decades of USDA wrongdoing.
In the full video that was manipulated to portray her as a racist, Ms. Sherrod instead advocates for economic justice for all. She puts the economic tidal wave that has affected so many of those in the lower middle end of the economic spectrum into a framework that moves past race. Her approach is timely, given current debates over where to target efforts to boost the economy.
Credit is the lifeblood of any economy. Those who get access to credit on fair and reasonable terms tends to prosper. Those who get credit on predatory terms fall further behind.
The legacy of treatment of African-American farmers in the south is one of denial of credit, leading to dependence on predatory credit, and finally the loss of lands on a huge scale. Though well-documented, though admitted by the United States, these farmers still cannot get their compensation appropriated.
In Chicago of the 1950s and 1960s, as in many parts of the country, the United States Federal Housing Administration determined that minority neighborhoods were inherently bad risks. Middle class homebuyers who had saved substantial down payments, and whose income was sufficient to make monthly mortgage payments, nevertheless still could not get a mortgage where the FHA had redlined a neighborhood. With normal credit options constrained, many buyers paid more for a house than it was worth, turning to contract sale arrangements where a single missed payment meant the loss of years of savings.
And in the subprime flood of bad loans into hundreds of communities that surged between 2000 and 2006, those who had trouble accessing normal credit channels again became prey to the peddlers of dangerous loans. Certainly some borrowers were on the make for a fast deal with cheap money. But many subprime borrowers were fully qualified for safer, fixed rate prime loans, yet were not being served by our regular banking system.
Time and again, middle-income and lower-income Americans have been unable to get credit on consumer-oriented, fair terms. Home loans, farm loans, credit cards and access to property ownership are far easier to obtain for those who do not have to overcome the misperceptions of those who often control access to credit. And when average families then need to turn to bad credit products, whole segments of the population are set back and lose gains toward building wealth.
As Elizabeth Warren wrote so cogently when calling three years ago for a Consumer Financial Products Safety Commission:
Indeed, the pain imposed by a dangerous credit product is even more insidious than that inflicted by a malfunctioning kitchen appliance. If toasters are dangerous, they may burn down the homes of rich people or poor people, college graduates or high-school dropouts. But credit products are not nearly so egalitarian. Wealthy families can ignore the tricks and traps associated with credit card debt, secure in the knowledge that they won't need to turn to credit to get through a rough patch. Their savings will protect them from medical expenses that exceed their insurance coverage or the effects of an unexpected car repair; credit cards are little more than a matter of convenience. Working- and middle-class families are far less insulated. For the family who lives closer to the economic margin, a credit card with an interest rate that unexpectedly escalates to 29.99 percent or misplaced trust in a broker who recommends a high-priced mortgage can push a family into a downward economic spiral from which it may never recover.
Many will take away from the Shirley Sherrod media incident merely that fact checking is vital when information is so easy to manipulate.
But there are more important lessons to be learned. The productive economic energies of average Americans are too often smothered in a morass of bad credit products, traps for the unwary, and terms that make it hard to build wealth. Passing a financial reform bill, promulgating a new set of credit card regulations, or revamping the housing financing market, are not enough.
We need teeth in their enforcement, and a concerted effort to level the playing field between consumers and their sources of credit. If we fail to do so, no one should be surprised to see more and more of the middle class fall economically behind, unable to recover alongside the financial sector's recovery.
David Abromowitz is a Senior Fellow at the Center for American Progress, www.Americanprogress.org.
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