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Forbes
24-06-2025
- Business
- Forbes
The Credit Gap: Reimagine Credit-Building For Marginalized Communities
Kevin Cohee, Chairman & CEO, OneUnited Bank, an award-winning CDFI and America's largest Black owned bank. Credit is often seen as a simple numerical score—a summary of financial responsibility. For millions of Americans, however, access to credit remains a complex barrier to opportunity and economic inclusion. Across the nation, many marginalized and underserved communities find themselves locked out of the traditional credit system, a reality with roots in history and consequences that still ripple today. Marginalized groups in the credit landscape are broader than often assumed. They include not only racial and ethnic minorities but also immigrants of many backgrounds, women, rural residents and low-income workers. Despite their diversity, these groups share common threads of systemic exclusion from traditional financial services, contributing to persistent inequities in wealth and opportunity. A History Of Barriers To Credit Access The challenges faced by these communities in establishing and accessing credit are not recent phenomena. They are the product of decades, and sometimes centuries, of exclusionary practices. During the 20th century, redlining—a discriminatory practice institutionalized in the 1930s by the Home Owners' Loan Corporation—systematically denied mortgage lending in communities of color, regardless of individual financial qualifications. These entrenched racial wealth gaps persist today. Similarly, immigrant populations, despite contributing substantially to the economy, often arrive without recognized credit histories, encountering hurdles in establishing financial credibility in their new country. Until the Equal Credit Opportunity Act was passed in 1974, women in the United States could be denied credit cards, loans or mortgages unless they had a male cosigner, regardless of income or financial independence. Meanwhile, rural Americans were frequently left out as financial institutions concentrated services in urban areas, limiting access to credit-building opportunities. Low-wage workers, despite stable earnings, often lacked the assets or formal financial histories that traditional credit models prioritize. Each of these historical realities created systemic disadvantages that continue to impact the ability of millions to fully participate in today's economy. When Alternatives Hurt: The Reality Of Predatory Lending Faced with systemic exclusion from mainstream financial services, many underserved consumers have turned to alternative lending options—often to their detriment. Payday loans are a particularly stark example. Marketed as short-term solutions for urgent cash needs, these loans can carry annual percentage rates (APRs) around 400%, according to the Consumer Financial Protection Bureau. For individuals with few other options, payday loans can rapidly spiral into cycles of debt, where borrowers repeatedly renew loans and pay far more in fees than they initially borrowed. Similarly, other "alternative credit" products—such as fee-laden rent-to-own programs or high-cost subprime credit cards—often promise quick access to credit but ultimately deepen financial distress rather than helping individuals build sustainable credit profiles. Predatory financial services prey on the very vulnerabilities created by systemic exclusion, exacerbating the financial fragility of marginalized communities rather than alleviating it. The Promise Of CDFIs In Expanding Access In contrast, Community Development Financial Institutions (CDFIs)—like my own bank—offer a model for inclusive credit expansion. Supported by the U.S. Department of the Treasury and other mission-driven investors, CDFIs specialize in providing responsible, affordable lending to individuals and businesses in underserved markets. Unlike traditional banks that may prioritize established credit profiles and significant assets, CDFIs often evaluate borrowers based on alternative criteria, offering personal attention, customized credit-building programs and lower-interest loans. They play a vital role in restoring trust where mainstream institutions have historically failed and offer a practical bridge to broader financial inclusion. Why Inclusive Credit Access Matters Expanding credit access isn't just a moral imperative—it's an economic one. When marginalized individuals can access fair and affordable credit: • Homeownership rates rise, strengthening families and neighborhoods. • Small businesses flourish, creating local jobs and revitalizing communities. • Education becomes more attainable, leading to a stronger and more skilled workforce. • Emergency preparedness improves, reducing societal burdens related to financial crises. Inclusive credit-building is, fundamentally, an investment in America's shared prosperity. Strengthening the financial footing of all communities enhances resilience and dynamism across the entire economy. Reimagining The Path Forward: Solutions And Approaches True change demands innovative, inclusive solutions that address historic inequities while building sustainable credit opportunities. To that end, the following strategies offer a path forward: Expand alternative data use: Encourage credit bureaus to include on-time rent, utility and mobile phone bill payments as part of credit scoring models, making visible the responsible financial behavior of millions. Promote accessible credit-builder products: Develop affordable credit-builder loans and secured credit cards with transparent terms, designed specifically for consumers new to credit or seeking recovery from past financial hardships. Support employer-sponsored financial wellness programs: Create opportunities for employers to offer small-dollar loans, emergency savings programs, and financial education that can help employees improve their credit standing. Invest more in CDFIs and mission-led lenders: Increase public and private investment in CDFIs to expand their reach into rural, immigrant and low-income communities nationwide. Enhance community-based credit education: Partner with local organizations to provide culturally relevant, accessible financial education tailored to the realities and needs of diverse communities. Modernize credit scoring methodologies: Advocate for more flexible and equitable underwriting practices that consider broader measures of financial behavior beyond traditional FICO models. Protect against predatory lending: Strengthen regulatory oversight and consumer protection laws to curb abusive lending practices that target vulnerable borrowers. Creating A New Path To Credit Equity Reimagining credit building for marginalized communities is not a small task, but it is a critical one. It is time to acknowledge that the barriers preventing equitable credit access have been built into our financial system for far too long, and now, it's time to dismantle them. By investing in inclusive innovation, empowering underserved communities to thrive and ensuring financial access for all, we will not only open doors to opportunity but also unlock the full potential of our nation. Let's build a financial system where credit is a bridge to opportunity, not a wall that keeps millions locked out. Together, we can create a future where economic success is within reach for every American. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Yahoo
25-04-2025
- Business
- Yahoo
The price of segregation: Who pays and who profits in Phoenix?
Illustration via Getty Images White homeowners gain millions, while Black and Brown communities pay with their lives. Once promoted as 'the winter playground of the Southwest,' Phoenix remains a city deeply shaped by segregation, where privilege dictates who gets to stand their ground and who is displaced — who is protected and who is left behind. Phoenix is the ninth-most gentrified city in the country, but 'urban revitalization' is nothing more than redlining with a fresh coat of paint — another way of systematically displacing Black and Brown residents. It's a modern-day Jim Crow tactic, cleverly disguised as progress. The Fair Housing Act of 1968 was enacted to end these discriminatory practices, yet, much like the de facto segregation of Jim Crow, gentrification still dictates who can remain and who is forced out of their community. Today, instead of train tracks, highways and light rail lines carve through neighborhoods, while real estate deals and 'best neighborhood' websites help reinforce segregation under the guise of personal preference. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX In 1935, the Home Owners' Loan Corporation (HOLC) drafted residential security maps, which gave us the term 'redlining.' They became blueprints for discrimination, rating neighborhoods from 'A' (most desirable) to 'D' (too risky for investment). As a result, the Federal Housing Administration (FHA) used redlining maps to decide who deserved a loan and which communities would be denied the chance to build wealth. Redlining maps ensured neighborhoods of color were locked out of home loans, funneling money into the suburbs while excluding and disinvesting in Black and Brown communities. Between 2012 and 2016, residential properties within a half-mile of public transit nationally saw a 4%-24% higher median sale price, while commercial properties in four of seven regions experienced a 5%-42% increase in median price per square foot — a trend that continues today. Take south Phoenix's 85042 ZIP code, which includes the latest extension of the light rail, where median home values have risen from $210,000 in 2012 to $465,000 today. Families near public transportation can save $2,500–$4,400 annually, with one in four needing only one car. However, even though light rail was pitched as a way to help improve life for the Black and Brown people who have called that part of Phoenix home for generations, rising home prices are driving them from the area. Politicians, urban planners, and real estate companies often use diversity, equity, and inclusion (DEI) rhetoric while simultaneously displacing communities based on race, class, and power. This isn't just about property values — it's about who is allowed to belong and who is pushed out. If you've lived in Phoenix long enough, you've heard the narratives. On one side of South Mountain sits Ahwatukee, derisively nicknamed 'All White Tukee,' which is seen as a privileged safe haven, while the south Phoenix redlined neighborhoods on the other side of the mountain that have long been populated by mostly Black and Brown people — neighborhoods recently bisected by the Loop 202 expansion — are described as violent, crime-ridden and struggling. 'All White Tukee' is not just a nickname: It is a reflection of systemic inequity sewn into the city's foundation. The Arizona Supreme Court recently awarded Ahwatukee homeowners in the Foothill Reserves $12 million in damages, including an additional $6 million for seizing common areas in the community. This comes after a long battle over claims that the controversial Loop 202 construction devalued their properties and impacted their health with increased noise, pollution, and visual obstructions. The judgment acknowledged not just financial loss but also emotional distress due to the increased health risks. Meanwhile, Black and Brown communities in South Phoenix, forced to live in redlined, high-risk areas like 'sacrifice zones,' which causes not only health risks but causes property values to plunge facing an onslaught of injustices with no compensation. 'Separate but equal' was ruled constitutional in the 1896 case Plessy v. Ferguson, cementing segregation into law. The U.S. Supreme Court claimed segregation was legal as long as facilities were 'equal' — but in reality, they never were. Black residents were shut out of white neighborhoods unless they took on predatory loans they could never hope to repay. Even though Brown v. Board of Education in 1954 struck down 'separate but equal' in schools, the damage was already done. Generations of Black families had been denied access to quality education and locked out of homeownership, expanding the racial wealth gap and limiting social mobility. Every day, I am struck by the great migration unfolding in South Phoenix. This is not a movement driven by choice or opportunity. Instead, generations of Black and Brown residents are being forced out by rising home values, increasing property taxes and the systematic closure of schools in historically minoritized neighborhoods. This isn't a new phenomenon but a rebrand of segregation and exclusion, rooted in Jim Crow laws that once labeled South Phoenix as 'hazardous,' a designation that justified confining Black and Brown communities. White banks and developers deemed it too risky for investment, while the city allowed industrial facilities like landfills, stockyards and rendering plants into these neighborhoods, banning them from white neighborhoods. Today, Black Americans are approximately 1.5 times more likely to be exposed to pollutants than white Americans due to living near industrial parks, highways and pollution sources, bearing the brunt of environmental racism. Meanwhile, wealthier, predominantly white communities remain protected from these toxic burdens. This stark inequality exposes the systemic neglect of Black and Brown communities, where the cost of industrial development is paid in poor health and a diminished quality of life. Though redlining is illegal, its impact remains embedded in housing policies and urban planning. Much like de facto Jim Crow laws, modern policies and regulations, like exclusionary zoning regulations, still force Black and Brown communities into areas plagued by environmental hazards, underfunded schools and economic disinvestment. Though redlining is illegal, its impact remains embedded in housing policies and urban planning. Exclusionary zoning are regulations that restrict the amount and type of housing that property owners are allowed to construct on their land. One example in Phoenix is the R1-6 zoning code, which restricts housing density by mandating that only single-family homes can be built on lots of at least 6,000 square-feet. This limits the construction of multi-family or affordable housing, making it difficult to provide denser, more affordable options and effectively excluding lower-income residents from certain neighborhoods. Gated communities, a specific type of development, often utilize exclusionary zoning practices to restrict access and create a sense of exclusivity and safety. This can reinforce social and economic segregation, leading to a concentration of wealth and resources in certain areas, while others face disinvestment and limited opportunities. Highways, like Interstates 10 and 17, have long been weapons of gentrification, disrupting and displacing communities of color. The two intersect when highways and gentrification collide with neighborhood revitalization — just as historically disinvested communities begin to thrive on their own, the city steps in, claiming to support them, but instead destabilizing the ecosystem. This pattern echoes past attempts to dismantle Black progress, from Reconstruction to the Black Power Movement. Robert Moses, the powerful New York City urban planner in the early 20th century, exemplified this strategy. He used highways as tools of segregation, intentionally designing roadways that cut through Black and low-income neighborhoods, displacing thousands of residents. His projects, like the Cross-Bronx Expressway, not only destroyed communities but also isolated them from access to wealthier, predominantly white areas. Moses' use of infrastructure to reinforce racial and economic divides serves as a historical parallel to current practices of gentrification and urban displacement. Where vibrant urban farming by Black and Brown communities was revitalizing the area, the city disguised exploitation as progress. Just as freed slaves in the post-Civil War era were granted land to cultivate, only to have it stolen through sharecropping, the city designates these once-neglected, 'hazardous' spaces as valuable only after they begin to thrive — then swiftly takes them away. White residents, with greater access to generational wealth thanks to redlining, can afford rising property taxes and home values, while Black and Brown residents in South Phoenix struggle to keep up with the increased rent and mortgage. Developers, motivated by profit, inflate costs due to rising impact fees, driving up rents and mortgages. Areas like Ahwatukee and Laveen have the lowest impact fees at $15,000, while Scottsdale and North Phoenix face the highest at $37,000. Despite these systemic barriers, some communities fought to defy segregation. One of the first neighborhoods to be demolished, the Golden Gate Barrio, was a historically Mexican American community in South Phoenix that had begun breaking racial barriers. Located where Sky Harbor Airport now stands, it was one of the few places in Phoenix where integration was taking root. But this progress was cut short when the neighborhood was displaced under the guise of airport expansion. As families were forced to relocate, Mexican Americans integrated into other neighborhoods throughout South Phoenix, reshaping the area's cultural landscape. This displacement serves as yet another example of how 'progress' in Phoenix has often come at the expense of minoritized communities. Phoenix's segregation wasn't an accident. It was deliberately designed, reinforced through policy, and sustained by economic and environmental inequality. The language of discrimination may have changed, but its impact remains. The question is: Will we allow history to keep repeating itself, or will we demand justice for the communities that continue to pay the price for Phoenix's progress? SUPPORT: YOU MAKE OUR WORK POSSIBLE
Forbes
21-04-2025
- Politics
- Forbes
Crossing The Line: Why Climate Justice Can't Wait
Demonstrators advocating for climate policies. getty On a hot summer afternoon in a neighborhood just east of a city skyline with hardly any trees or green spaces, a mother tapes plastic over her drafty windows. Her utility bill has doubled, and her child's asthma has worsened since the construction site nearby started kicking up dust. The playground down the block sits in the shadow of a smokestack. The air smells different here. And as storms come more often now – louder, wetter, more violent – her roof still leaks. Over 110 million Americans live in low-income and disadvantaged communities like the one described above. Half of all Black, Latino, and Native, Indigenous people live in areas designated as Justice40 communities – places that are supposed to be at the front of the line for climate and infrastructure investments. Yet nearly 37 million Americans still live in what's called 'energy poverty,' forced to choose between goods, medicine, and keeping the lights on. And as climate disasters become more frequent and more intense – the same communities suffer the most. Not because of bad luck, but because of bad policy. There are neighborhoods in this country where the damage was mapped before a single brick was laid. Back in the 1930s, the red lines drawn by the Home Owners' Loan Corporation didn't just restrict credit—they marked entire Black communities as places not worth protecting. As a result, banks refused to lend and permits were granted to polluters, causing disinvestment and exposure to toxic conditions. Highways tore through homes. Landfills and zoning loopholes arrived where mortgages never did. Infrastructure didn't come to connect or uplift; it came to contain. And over time, the damage settled not just into the soil, but into the lungs, into the bodies, into the futures of families who had no say, but paid the price all the same. And while the redlining maps may no longer hang in city planning offices, their blueprint for exclusion persists. You can see it in the decisions being made today. We saw it clearly when the Environmental Protection Agency froze $20 billion from the Greenhouse Gas Reduction Fund (GGRF), money that had already been committed through the Inflation Reduction Act. This wasn't hypothetical funding. It was real capital, awarded to real organizations, many of them rooted in underserved communities that have survived generations of extraction and neglect. And just as these communities were ready to lead – not just recover – the rug was pulled out. The freeze came cloaked in familiar language: 'legal review,' 'pause,' and 'reassessment.' Bureaucratic jargon wrapped in talk of rooting out 'waste, fraud, and abuse.' But we've seen how that kind of language is too often weaponized. It rarely slows down corporate tax breaks or defense spending. Instead, it affects justice-focused programs meant for disadvantaged communities who have waited far too long for promises to be fulfilled. But we've learned to hear what isn't said. This wasn't a delay in policy. It was redlining by another name. Just weeks earlier, before the freeze, the administration quietly abandoned a landmark environmental justice case in Louisiana's Cancer Alley, a corridor lined with petrochemical plants, where some of the nation's highest cancer rates live alongside some of its deepest poverty. That lawsuit had signaled something different. A break from the past. A rare acknowledgment that what happened there wasn't just unfortunate, but also unjust. With no explanation or accountability, the case was quietly abandoned. What's happening here is not a coincidence. It's a pattern. And the cost is enormous. The result? Thousands of low-income families will continue to live in homes that leak warmth in winter and trap heat in summer. Utility bills will keep draining household budgets. Community lenders who stood ready to deploy capital will be forced to halt or scale back. Black families in cities such as Jackson, Montgomery, and Cleveland where persistent poverty rates are high will bear the burden of delayed climate justice efforts. The investor in Manhattan won't. The GGRF was historic not because of its size, but because of where it was going. These funds weren't being funneled through Wall Street or legacy institutions. They were going to BIPOC-led community lenders who serve neighborhoods that had been excluded from the last century of clean energy transition investments. For once, the people who suffered the harm were being resourced to lead the solutions. And that's what made it vulnerable. We live in a time when programs that center equity and community are branded as 'woke.' When redistributing resources to the people who need them most is framed as political overreach. The backlash is swift, and it is selective. No one paused tax breaks for oil companies. No one froze subsidies for agribusiness. But when the dollars were finally headed to underserved communities with a plan, the process was suddenly too fast. We are witnessing a new form of environmental redlining - lines no longer drawn in red ink, but with withheld funds and policy freezes. The lines haven't disappeared. They've just gone quiet. And they still fall along the same streets. But it' s not too late. The EPA must cease its attack on GGRF, respect the intent of Congress, and let the people who have always been left out lead the way forward. These dollars are not charity. They were a long-overdue correction. Because real climate justice doesn't cherry pick who gets relief. It doesn't stop at headlines, and it certainly doesn't leave the most vulnerable behind – again. We can't clean the air while still deciding who deserves to breathe it. And we can't fix our future by using the same tools that built inequality into our past. The lines were drawn long ago. The question now is: Will we finally cross them?
