Nov. 7, 2023

(TriceEdneyWire.com) - For the first time since the Consumer Financial Protection Bureau (CFPB) began collecting credit card data, the nation’s related debt reached an all-time high of $1 trillion in 2022. Newresearch released in late October examines how and why this debt grew, but also how emerging trends in card usage affect the day-to-day lives of consumers.  

While companies charged consumers more than $105 billion in interest and more than $25 billion in fees, average credit card balances per cardholder returned to about $5,300, about the same as before the pandemic. At the same time, more cardholders are being charged late fees, falling behind on payments, and facing higher costs on growing debt.  

Today nearly one in 10 consumers is caught in what CFPB terms ‘persistent debt’, charged more in interest and fees than they pay toward the principal owed, a pattern that makes each passing month’s charges increasingly harder to avoid. Average credit card minimum payments on revolving credit accounts now reach over $100 per month and are also a contributing factor to rising late fees and overall debt. 

"With credit card debt crossing the trillion- dollar mark, we will be working to prevent bait-and-switch tactics when it comes to rewards and to increase refinancing activity so consumers can get lower rates,” said CFPB Director Rohit Chopra.  

Increased indebtedness also translated into record industry profits, now higher than those reached in pre-pandemic years. Two key factors, according to the report, significantly contributed to industry profitability: an average APR margin of 15.4 percentage points above the prime rate in 2022, and only 10 credit card companies dominating the marketplace.  

Although the nation has nearly 4,000 credit card issuers, four-fifths – 80 percent – of the card activity was with one of the firms in the top10.  

The highest credit card APRs are, as with other consumer financial products, among consumers who carry high credit card balances, missed payment(s), or delinquent accounts, and have subprime credit ratings, scores of less than 670 in a range of 300- 850.  Consumers who have filed bankruptcies can also expect that action to affect their credit scores for seven years thereafter.  

A 2019 report by Experian, one of the nation’s three credit card bureaus, found that more than a third of consumers – 34.8 percent – were classified as subprime. Millennials comprised the largest number of subprime borrowers.   

According to Experian, “Prime consumers tend to have more mortgages and credit card accounts, while subprime consumers have more student loans and personal loans…Subprime consumers have twice as many personal loan accounts as prime consumers on average. That said, their average balance is less than half of prime consumers’ average balance.” 

CFPB’s new credit card report found that many cardholders with subprime scores paid 30 to 40 cents in interest and fees per dollar borrowed each year. Further, consumers using reward cards that earn bonus points for frequent usage, earned just 27 percent of rewards at major credit card companies, but paid 94 percent of total interest and fees for carrying debt from month to month.   

Last year, and for the first time since 2015, CFPB found a spike in over-limit transactions. According to the report, “Recent changes in incidence are also driven by accounts with subprime scores. Over-limit transactions tend to be more common among lower-score cardholders since these cardholders typically have lower credit limits and higher credit utilization than higher-score cardholders, making it more likely that even a modest purchase might exceed their credit limit.” 

Along with high profits, CFPB’s new report documents a growing consumer shift toward digital communications, websites and mobile apps now used by nearly 80 percent of cardholders to manage card usage and make payments. Among consumers ages 25 and younger, 95 percent used mobile apps for card transactions.    

Consistent with consumer practices, credit card companies and debt collectors are now relying more on text messaging and email to contact borrowers about past-due balances, in addition to phone calls or postal mail.  

In separate and independent findings, the New York Federal Reserve’s Liberty Street blog also noted changing credit card practices earlier this year.  

“[T]here were 18.3 million borrowers behind on a credit card at the end of 2022 compared to 15.8 million at the end of 2019. Instead, the evidence suggests that higher prices and higher interest rates are the more likely culprits driving delinquencies… [O]n a person-level, this financial distress is real, and the delinquent marks will impact their access to credit for years to come.”  

Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at CharleneThis email address is being protected from spambots. You need JavaScript enabled to view it..  

President Joseph Biden

Maya Wiley, president, Leadership Conference on Civil and Human Rights

Damon Hewitt, LCCR president

Former President Barack Obama

(TriceEdneyWire.com) - President Joe Biden is receiving wide applause among Black leadership for his executive order that attempts to assure that artificial intelligence (AI) remains within boundaries that respect civil rights and adhere to principles of democracy. But the question remains whether the executive order goes far enough to protect Black people - particular from abusive law enforcement.

“We believe in the potential for AI to be a powerful tool to help advance our vision of opportunity and prosperity for Black and Brown people. But we cannot let the tools of the future reinforce the mistakes of the past. Guardrails must be implemented now to ensure that this emerging technology centers equity at every step of development and implementation,” said Damon Hewitt, president and executive director of the Lawyers’ Committee for Civil Rights Under Law (LCCR), in a statement issued following Biden’s signing of the executive order. “This executive order is a critical step to help guard against algorithmic bias and discrimination.  It can be the beginning of a pathway to a future where AI empowers instead of oppresses.”

Hewitt says the executive order prepares the federal government “to prevent and address bias and discrimination in new technologies; but more action is needed to fully address harmful AI used by law enforcement.”

Tech experts have pointed out that abusive AI tactics have been racially biased, especially against Black people.

An article titled, “Racial Discrimination in Face Recognition Technology,” written by Harvard University biotech consultant, Alex Najibi, points out that face recognition technology, a form of AI often used by police departments and in airport screening, as well as employment and housing decisions, has been known to involve “significant racial bias, particularly against Black Americans.”

Najibi adds, “Even if accurate, face recognition empowers a law enforcement system with a long history of racist and anti-activist surveillance and can widen pre-existing inequalities.”

He writes that “despite widespread adoption, face recognition was recently banned for use by police and local agencies in several cities, including Boston and San Francisco” because face recognition “is the least accurate” of all recognition technologies such as fingerprinting.

While applauding the Administration on its initial steps to direct agencies to determine how AI is used in criminal justice, the LCCR says Biden’s executive order does not go far enough to actually address “harmful uses of AI by law enforcement agencies, such as the discriminatory use of facial recognition technologies.”

President Barack Obama, who also released a statement, pointed out that he asked his staff seven years ago to study “how artificial intelligence could play a growing role in the future of the United States.”

He pointed out additional problems that could occur, including national security threats.

“We don’t want anyone with an internet connection to be able to create a new strain of smallpox, access nuclear codes, or attack our critical infrastructure. And we have to make sure this technology doesn’t fall into the hands of people who want to use it to turbocharge things like cybercrime and fraud,” Obama states.

He credited organizations such as the Leadership Conference on Civil and Human Rights and Upturn to the Alignment Research Center for “tackling these questions, and making sure more people feel like their concerns are being heard and addressed.”

The Leadership Conference, led by Maya Wiley, president, wrote a letter to Biden and Vice President Kamala Harris on August 4, urging the Administration to focus Biden’s executive order on “protecting the American public from the current and potential harms of this technology— including threats to people’s rights, civil liberties, opportunities, jobs, economic well-being, and access to critical resources and services.” That letter was co-signed by LCCR, the NAACP, and the Center for American Progress among others.

The Executive Order directs the following requirements for organizations using AI:

• Require that developers of the most powerful AI systems share their safety test results and other critical information with the U.S. government. 
• Develop standards, tools, and tests to help ensure that AI systems are safe, secure, and trustworthy. 
• Protect against the risks of using AI to engineer dangerous biological materials by developing strong new standards for biological synthesis screening.
• Protect Americans from AI-enabled fraud and deception by establishing standards and best practices for detecting AI-generated content and authenticating official content.
• Establish an advanced cybersecurity program to develop AI tools to find and fix vulnerabilities in critical software.
• Order the development of a National Security Memorandum that directs further actions on AI and security.

The focus of the executive order is primarily to assure a fair and safe future while using AI, Biden says. But the LCCR insists the order needs more work and vows to continue working with the Administration to that end.

Hewitt concluded, “To make that future a reality, civil rights-focused protections must apply to every aspect of our lives touched by AI technology, including the harmful use of AI by law enforcement. We look forward to working with the Biden Administration on how we can address the full scope of this challenge and fully leverage the opportunity before us.” 

NEWS ANALYSIS

(TriceEdneyWire.com) - Many are rejoicing that Republicans finally got around to electing a speaker, thus breaking the logjam that began when Trump acolyte Matt Goetz (R-FL) introduced legislation to eliminate Kevin McCarthy (R-CA).  In selecting Louisiana's Mike Johnson, Republicans chose a self-avowed "evangelical Southern Christian" (read racist segregationist) who is anti-choice, anti-gay rights (and marriage), and anti-education.  Johnson is an affable segregationist who has made few enemies in his scant four terms in Congress.

 The media keeps describing him as "unknown." Still, while he is a Congressman who does not stand out in a crowd, he is hardly unknown to the Republican inner circle who followed his lead when he opposed counting the electoral votes that chose President Joe Biden.  House Republicans didn't just vote for an affable unknown; they voted for a segregationist election denier who is in close touch with the former President.  So, those who say they want a post-Trump Republican Party are not telling the truth.  These Republicans want a House speaker who is Trump without the vitriol but a segregationist nonetheless.  They are so eager to have this election denier at their helm because many of them are closet election deniers.  And in embracing this election denier, they are rejecting the Constitution and the role of law in our politics. 

They want to win at any cost, even if it means that they embrace segregation.  I'm not surprised!  These are the people who want to go back to the "good old days" when Black people stayed in our place, women remained in the kitchen, gay folks were invisible, and abortion was unheard of.  Are there any moderate Republicans?  Are there any unafraid of the despotic former President? 

Congressman Johnson's career has been marked by his assertive willingness to take away the rights of others, all done with the smile that contributes to his reputation for friendliness.  So, he would impose a national ban on abortion.  He would disallow gay people from having sex in their own homes.  He describes gay marriage as "deviant," but he does it with a smile.  He doesn't raise his voice or shake his fist.  He simply works to take away other people's rights.

Johnson’s views on women and abortion are especially troubling.  He says women need to have more children, and outlawing abortion will make that happen.  For him, I suppose, women are nothing more than breed cows designed to populate the labor force whether we want to or not.  He adheres to the "great replacement theory" that Democrats are encouraging immigration to replace "American" voters with immigrants.  He has referred to nonexistent "open borders" in his speeches, following the Trump playbook of inciting resistance against immigrant people.

Johnson has never been a fiery rhetorician.  For the most part, he stays behind the scenes.  And he knows that, as a speaker, he can't spout off extremist positions.  So, when asked about marriage equality, Mike Johnson says it is the law of the land, and he will do nothing to attempt to reverse it.  Roe v. Wade was also the law of the land.  Then came Dobbs, with the three most recent Supreme Court Justices – Gorsuch, Kavanaugh, and Comey-Barrett all swore under oath that they would "uphold the law of the land" and would not nullify Roe.  But they did it in the Dobbs case when they got an opening.  I will not be surprised if, given new Congressional conservative leadership, they support the same thing in this Supreme Court.

 There are many regressive legislative possibilities on the table for a segregationist like Mike Johnson.  He has already indicated that he will proceed with a Biden impeachment inquiry.  He is likely to support anything that undermines affirmative action both in higher education and in the workplace, with the encouragement of deep pockets racists.  Alarmingly, Johnson has been described by Alex Johnson, Executive Director of Social Security Works, as "an enemy of Social Security."  If the House Speaker had his way, he would raise the retirement age, lower the cost of living increases, and privatize Social Security.  And Republican legislators would likely go along with it, even though they represent Social Security recipients, to embrace a Trump-driven segregationist agenda.

 Some describe Mike Johnson’s rise to the speakership as the accidental elevation of a relative unknown.  I say it was planned.  Look at his record.  Look at his statements.  And understand that the fight for economic and social justice is “on” with the segregationist leader in the House.

Dr. Julianne Malveaux is an economist and author.  She can be reached at juliannemalveaux.com

I-Stock Photo Credit: SDI Productions

(TriceEdneyWire.com) - A recent study has outlined a disturbing trend across the nation: Increasing retirement woes among Black people, coming from several angles that indicate some could choose to work longer or seek more palatable options for savings and income.

Either people aren’t feeling on-track to retire, they’re worried about outliving whatever savings they are able to accrue or their jobs don’t offer fair retirement plans for people of color. These being common fears in the Black community, some just breeze over the thought of retirement as a pipe dream.

“Black and Hispanic workers have significantly less access to employer-sponsored retirement plans than do white counterparts, exacerbating economic inequity and hampering the ability of people of color to build financial security later in life, according to researchers,” AARP reports. “Among private sector employees ages 18 to 64, more than 53 percent of African Americans and about 64 percent of Latinos do not have access to a workplace retirement plan, compared with about 42 percent for white workers and 45 percent for Asian Americans, a July 2022 report from the AARP Public Policy Institute found.”

According to the latest U.S. Census data, more than 55.8 million adults are older than 65. That is nearly 17 percent of America’s population that is “retirement age.” Yet only half of Americans even have access to retirement plans. And although we know well what the gender gap is, what isn’t talked about enough is the retirement gap. Generally, studies on savings show that the average Black family has lower savings than the disparity between the average U.S. family. It’s unsurprising, then, that 54% of Black Americans don’t have enough savings to retire – whether it be from system inequalities or otherwise.

All studies and reports on retirement are saying the same thing: People are worried aboutoutliving their retirement savings. The retirement crisis is hitting all of the country, but as usual, disproportionately impacting Black and other racial minority communities. Nearly 40 percent of independent savers, specifically, aren’t feeling on-track to retire. Independent savers are individuals who do not have access to a retirement plan through their employers. Many in the Black and Latino communities fall under the independent saver category. Therefore, for many in these communities, retirement planning gets put on the backburner as more urgent expenses and matters arise.

But there are now new financial tools that every person can use to begin retirement savings. Recently, the financial industry recognized this issue and started to rollout new products that will open up access to professionally managed retirement vehicles at a lower cost and without the need for a workplace-based retirement plan.  

For example, BlackRock recently launched the industry’s only suite of target date ETFs (Exchange-traded Funds), which is a new investment tool aimed at curbing the growing number of people who do not have any retirement savings plans, or access to such. Investors that choose this new product will be able to easily select a fund closest to their target retirement date and make regular contributions as their own finances allow. This allows for recurring deposits, but also allows for more choice. Meaning if life happens and an unexpected expense comes up – which will certainly happen – and there’s nothing left over for the month to invest, that’s okay. However, this investment is professionally managed and is taken care of to make sure it’s stable as retirement nears. 

According to BlackRock’s Read on Retirement report, 47 percent of independent savers lean on cash to build their retirement, creating a missed opportunity for potential investment growth which is important to achieving retirement goals. These new ETF funds allow for savers that might typically rely on stashing cash to instead put that into these ETF funds that will invest in a broad portfolio and turn out even more money.

Such strategies are often in line with initiatives such as Rev. Jesse Jackson’s Wall Street Project, which encourages the financial industry to open up and reach out to communities that may not necessarily be aware of alternatives to their personal savings that they may need from day to day.

“If Corporate America could see the vast potential within our underserved minority communities, would Wall Street provide access to opportunities for economic growth and stability?” Rev. Jackson asks in a statement.

All of these retirement tools are built off of the idea that in order to encourage more retirement saving, we need to make it as easy as possible for people to build their nest egg. Retirement tools like these are for the people that don’t have workplace retirement plans, those looking to complement their existing 401(k), or people that just want to boost their confidence in their retirement potential.

Most Americans are nervous; even stressed about retirement, savings, and finances in general. This is especially true for the Black community. These products may be the first of many from Wall Street aimed at further providing transformational solutions to the retirement burdens many have been feeling over the years.

For equitable economic contributions to family and to American society regardless of race or age, retirement savings and income must become straightforward and possible for everyone.

“The road to shared economic security travels through two-way trade, where all are included, and none are left in the margins of the marketplace,” Rev. Jackson states. “Industry by industry, the quantifiable gaps in opportunity and in access to capital for people of color-owned businesses define our agenda.”