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Black Families Could Face More Hurdles to Homeownership Under New Fed Bank Proposal

Increasing the levels of capital for banks will make it harder for Black families from obtaining a mortgage.

Homeownership rates may be above average in New York state when conpaed to the rest of the United States, but when you take a closer look, the only counties that had homeownership rates lower than the state average in 2020 were in Queens, Brooklyn, Manhattan and the Bronx. This is where more than 40% of the state's population resides, and it also makes up the bulk of the state's diversity.     

Growing up in Brooklyn, I knew early on the challenge of finding a house after seeing my family work hard to reach the security of homeownership. However, all those years later, the dream of homeownership continues to be a struggle and building generational wealth in my community does not happen in a vacuum. That’s why we need common sense policies that build up Black and brown communities. 

But one policy proposal that is being considered by the Federal Reserve– requiring higher levels of capital for banks– will do just the opposite.

Further increasing capital requirements means banks will have to be more risk averse than they already are, making it even more difficult for low-income families and those from underserved communities to obtain a mortgage. 

The new proposal would hurt my community’s chances of securing a loan to purchase a home. Homeownership has always been the standard way to accumulate wealth in this country. Now, far too many families, disproportionately families of color, are priced out of the path to wealth under the strain of the affordability crisis. 

The repercussions wouldn't stop there. As a small business owner, I know how important bank loans can be to simply keep a business afloat. If finalized, this rule would make it so banks would be less likely to loan to small businesses as opposed to larger companies who they would consider a safer bet. Here in Brooklyn, our small businesses provide community value and resources far beyond that of a mega-corporation. 

We cannot accept a rule that will stunt our communities’ economic growth, especially one as unnecessary as this. According to the Urban Institute, the new rule would “disproportionately disadvantage low- and moderate-income (LMI) borrowers and communities, as well as Black and Hispanic borrowers.” This rule is a step backwards in the effort to bridge the gap in our nation's deep racial, socioeconomic disparity. 

There is simply no justification for a proposal with so many potential negative consequences. Banks in the U.S. are already well-capitalized, so enacting these higher standards solves a non-existent problem. Banks have already tripled their capital in the last 15 years, and annual stress tests prove the resiliency of our banking system.

The Federal Reserve and leaders in Washington have done an excellent job managing our economy through the pandemic and inflation, but enacting the proposed capital requirements for banks would be a mistake. I ask our Senate Majority Leader Chuck Schumer and Democratic Leader Hakeem Jeffries to voice their opposition to this proposal and work towards policies to close the wealth gap, encourage homeownership and bolster our small businesses. 

Hon. Renee Collymore is a Brooklyn resident, business owner and the Democratic Liaison of the 57th Assembly District.