Frank Ahrens, Washington Post, April 14, 2009
American minorities need to “strengthen their financial literacy,” Fed Chairman Ben Bernanke told students and faculty at Atlanta’s historically black Morehouse College in Atlanta today.
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During an expansive Q-and-A session with Morehouse students after his speech, Bernanke was asked about the household wealth gap between whites and blacks in America.
“It’s absolutely right the difference between minority and white wealth is very significant, and part of that is related to income levels where whites have a higher average income,” Bernanke said. “But even if you control for income level, you find minorities have gathered less wealth.”
Part of the cause, Bernanke said, is a lack of “financial education.”
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Too many minorities don’t have bank accounts, he said, and “borrow from payday lenders and cash checks at check-cashing services,” he said, both of which charge high rates for their services.
“They would be better off in the mainstream banking system,” Bernanke said. “So one thing that could help would be to try to strengthen the financial literacy and financial education” of U.S. minorities.
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Original article
(Posted on April 15, 2009)
Comments
Sorry, not a lack of “financial education.” It’s a lack of impulse control and the lack of ability to delay gratification.
I don’t disagree with this. Modest improvement in the financial sophistication of blacks may be obtainable with a better education. I went to a predominantly white highschool, and we received almost no financial education whatsoever. Maybe we didn’t need it as much, but some people may have benefited. And I’m sure more than a few of my classmates are in the midst of problems right now.
But there are reasons why blacks take out pay a day loans that have little to do with education. The most of obvious reason is that they lack any extra cash to save because of foolish spending, drugs abuse, out-of-wedlock children, lack of income, and parents (or a parent) who are in the exact same position as they are. Also, I wonder how many black men avoid checking accounts because of liens and other collection actions. I met a few when I did provided free credit counseling for a school internship—some blacks and latinos had as many as four children they weren’t supporting. And I’ve known older black men with over 20.
That nincompoop Bernanke is proposing to destroy the very infrastructure of the financial system on which black Americans rely. Gone would be the check-cashing services, the payday lenders, the buy here - pay here used car lots, the loan sharks, the numbers rackets, and the cash-is-king drug trade. More than mere economics is at stake here. The very social fabric of the black community could be endangered, the rich tapestry of street crime, vandalism, drug addiction, littering, chronic truancy, all the factors that make the black experience what it is in America. Bernanke is proposing to destroy a complex and essential subculture on which thousands of police officers rely for their jobs. He should go back to worrying about the economy and and let the culture look after itself.
In North Carolina, these pay-day lenders are illegal. You can’t sell your used car before it is inspected either.
It’s very amusing to hear anyone in Washington, D.C. other than Ron Paul talk about “financial literacy”. Not even a dissolute drug addicted welfare mother can deficit spend like a Congressman, or reward imprudent behavior like the head of the Federal Reserve. Here’s my sneak question for “financial literate” Ben Bernanke: What does the Constitution say about what form of money we must have?
Teaching self discipline of any kind to blacks is like teaching pigs to fly. I guess some whites really love the feeling of banging their heads against a wall trying to “teach” these people. Or maybe they just like spending the taxpayer’s money on their “programs.”
He is confusing correlation with causation. Blacks are not “financially illiterate”, they are financially foolish. The PayDay shops do not make blacks poor. They exist precisely because blacks choose to handle their money so poorly. You should see the junk the black guys I work with spend their money on. ‘Pimped-up’ cars,, $2000.00 rims, $300 dollar running shoes, etc. I would never waste my money on the stuff they splurge on.
I realize that this may be considered a radical idea, but just suppose there were businesses called ‘Banks’ on every high street. Wouldn’t people get curious, find out what they did simply by asking around, then use the services. Who would need formal ‘financial education’? This seems such a good thing to do, I think I’ll start one. Name ideas anyone??
