Americans watched intently last week as Congress worked diligently, with pressure from constituents, to come to an agreement on how to address the financial crisis.
Last Monday morning, after news of non-passage in the House of a $700-billion bail out hit Wall Street, the Dow plummeted 777 points, the largest drop in history. However, by Tuesday early afternoon, things changed dramatically as the market rebounded as the Senate took up the bill. The $700-billion bailout package passed the Senate 74-25 Wednesday evening.
U.S. Rep. Keith Ellison (D-MN) said his colleagues who voted no may have because they “don’t like Wall Street and they think Wall Street will benefit. But what they don’t realize,” he said “is that people’s pensions and other investments are being impacted.”
Ellison said he voted “yes” on the bailout package because he was concerned about the broad impact a no vote would have on ordinary citizens. “It’d be tougher for the average guy to get a car loan, a mortgage and this will impact small businesses that may need to get lines of credit to make payroll. The terms for getting loans are getting harder and harder,” he said.
Ellison addressed comments made by Republican Rep. Michelle Bachman (MN-6) who in a Senate hearing earlier this month blamed former President Bill Clinton, Black Americans and other people of color for the financial crisis. Bachman referenced an article, “How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable,” written by Terry Jones which criticized the Community Reinvestment Act (CRA) for pushing “Fannie and Freddie to aggressively lend to minority communities.” According to Jones, Clinton was misguided to push “homeownership as a way to open the door for Blacks and other minorities to enter the middle class.”
Ellison said: “It is a pernicious and scurrilous lie to suggest that this crisis is the fault of people of color. Let’s deal with the facts. The Community Reinvestment Act applies to banks that are regulated. The sub-prime mortgages originated from banks that were not regulated.”
Thursday morning, press time, Ellison said that he was prepared to deliver a second “yes” vote on the Senate bail out bill, which, he said was essentially the same bill that didn’t pass in the house. “This has been framed as a Wall Street bailout, but everything is connected. What happens on Wall Street hits Main Street,” he said.
The financial crisis, said Dr. Bruce Corrie, Dean, Concordia College of Business and Organization Leadership, may have double impact on communities of color. He said: “It boils down to net worth of an individual. If an individual’s or a community’s net worth was already low –as it is for African Americans, Hispanic, Latino and other communities of color then they will be impacted even greater.
Corrie said this crisis could further widen the economic disparity gap. One of the things affected, he said “is entrepreneurship. People who started a business based on home equity may feel the impact when attempting to access capital. When attempting to apply for loans, they’ll be scrutinized even further.”
“In a community with low net worth, there is less cushion to weather a storm,” said Corrie. “Some people have savings to draw on, but there are those who don’t –there is no personal safety net. This pressure will be felt when having to purchase gas and in heating costs.”