As President Obama was winning reelection, I and colleagues from The Greenlining Institute and community groups representing Obama's winning coalition were on our way to Washington, D.C. for our annual meetings with top financial regulators. We came away with a strong and generally encouraging sense that it's a new day in Washington, but also that very large challenges remain.
We arrived at an important time, as political leaders of both parties were being reminded of the growing power of voters of color even as they began wrestling with the so-called "fiscal cliff." We came with a simple message: Until Americans of color are able to achieve the American Dream of financial stability and growth, our nation will not reach the level of economic vitality and progress that Americans of all colors so desperately need. And to get there, a lot of work is needed.
At the Federal Reserve Board we met with Fed Chair Ben Bernanke as well as Governors Jeremy Stein and Sarah Bloom-Raskin. Other meetings (we did an awful lot of shuttling back and forth in taxicabs) included leaders of the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and Federal Housing Finance Administration, along with Consumer Financial Protection Bureau Director Richard Cordray.
The physical settings can be a bit intimidating, but the people, powerful as they are, are human. They laugh and make jokes. And they seem to genuinely value hearing from those of us with a connection to how their policies play out for real people in real communities. These are folks who inevitably spend a lot of time in their own silos within the larger bubble that is the DC Beltway, and the smart ones know how insulated that world is.
While electoral politics isn't something these financial regulators like to talk about, the post-election environment creates a chance for a fresh start. These officials now know what sort of political environment they'll need to navigate, and there is an opportunity to re-energize.
That is good, because the news we brought them wasn't all happy by any means. Our communities are still struggling with high unemployment, shrinking paths to the middle class and the ongoing wreckage of a foreclosure crisis whose pace may have slowed, but which is far from being over.
To give one example: I've written before about the Independent Foreclosure Review, one of several ongoing programs to provide relief to homeowners who were harmed by mishandled foreclosures. The idea is to give homeowners who were victims of abusive or simply mistaken practices a chance to have an independent examiner review the situation and determine whether they deserve compensation.
All signs are that plenty of people were wronged -- for example, foreclosed upon even as they were making payments on a loan modification -- and deserve recompense. But the IFR can only work if people know about it, and outreach efforts thus far have been a flop.
In a June report, the Government Accountability Office found multiple problems. The GAO noted, for example, "Conducting readability tests or using focus groups are generally considered best practices for consumer outreach, but regulators and servicers did not undertake these activities." After-the-fact review of outreach materials found that they "may be too complex to be widely understood." Other failures included insufficient attention to limited-English borrowers and inadequate use of community groups to reach out and explain the program to their constituents.
While the GAO did a good job laying out many of the IFR's weaknesses, reading them in a dry government report is not the same as sitting across the table from the very community groups that could have helped but were left out of the loop. And while the Fed and the OCC responded to the GAO report by taking important actions to improve their outreach, some critical improvements only came two and a half months before the Dec. 31 application deadline. The stepped-up efforts, though commendable, simply can't get the job done in time.
We proposed two rather obvious steps to solve the problem. The simplest would be to automatically enroll all 4.4 million potentially eligible borrowers who have been identified. Failing that, they should extend the deadline and allow for rolling applications to continue for as long as is needed.
What's needed in Washington -- and not just in regard to the IFR -- is a sense of urgency. Regulators and political leaders need to understand that the housing crisis is not over, that people are still suffering, that ideological attacks on agencies seeking to protect consumers are needless and destructive, and that Americans are looking to them to build an economy with opportunity -- and fairness -- for all.
And the politicians pondering how to harness the growing power of voters of color should understand that kinder rhetoric and less draconian immigration policies -- important as those things are -- are not enough. A "fiscal cliff" deal that cuts Medicare while preserving tax cuts for the wealthiest and corporate loopholes won't fly with our communities.
Our economy won't take flight the way all of us need until Americans of color are able to achieve the American Dream of financial stability and growth. Rather than the ideological gridlock that has become the beltway standard, we need our leaders to use this post-election moment to hit the ground running with real reforms that connect to people.
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