Financial Literacy = Economic Empowerment

Marc Morial
President and CEO
National Urban League

"In these times of economic uncertainty, it is more important than ever that every citizen have the basic financial knowledge needed to make wise money decisions, avoid predatory lending schemes and plan for the future. This is especially true for African Americans, many of whom still face tremendous obstacles on the road to financial self-sufficiency." That was the message I delivered to the House Financial Services Committee during my testimony on April 15th.

The Committee, chaired by Congressman Barney Frank, invited me to offer ideas on ways to improve the financial literacy of the American people. To begin with, I reminded the Committee that financial literacy is at the core of the National Urban League's mission of economic empowerment for African Americans. The Urban League's financial literacy programs serve more than 25,000 clients a year. Our research shows that people who are equipped with basic financial knowledge are better able to manage household finances and save for the future.

The need is clear. African Americans' economic standing is 57 percent that of mainstream America. Blacks hold nearly five times more installment debt than whites and more than three times more debt overall. And because more than 50 percent of Blacks mortgage holders received sub-prime loans compared with only 18 percent of whites, the current sub-prime mortgage meltdown is having a disproportionately negative affect on African American homeowners.

We also know that consumers who do not have a relationship with a mainstream financial institution often pay higher transaction fees to the legal loan sharks in our communities like check cashing operations that charge up to three times as much as banks for basic services. Many of these places offer predatory lending services, like payday loans, with exorbitant fees. This must stop.

Also, housing counseling must be a part of any financial literacy education initiative. This year alone, more than 15,000 families will receive one-on-one counseling through Urban League Affiliates to help them become either homeowners or mortgage-ready. That is why I called upon Congress to expand housing counseling services through community-based organizations like the National Urban League. And we continue to urge adoption of our Homebuyer's Bill of Rights which asserts, among other proposals, that every homebuyer in America should have the right to save for homeownership tax free.

Join me as we continue to press on and urge our lawmakers to expand housing counseling services through community-based organizations like the National Urban League.

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