Financial Institutions Could Play Role in Shrinking Wealth Gap
Monday, August 14, 2023
The United States' wealth gap is a persistent and complex issue. Financial institutions could help chip away at it.
The top 10% of income earners own 69% of the wealth, while the lowest 50% have less than 3%.
President and CEO of Verity Credit Union in Seattle Tonita Webb said the issue is even greater between Black and white Americans.
Black people have a long history of being denied loans from banks and other financial institutions. Webb said the first step is for these institutions to understand what communities need.
"Listening to communities to figure out where their roadblocks are, where they have run into challenges," said Webb, "and be able to work at changing the system based off the feedback and co-create solutions together."
Webb said financially underserved communities have lacked the ability to grow generational wealth, which increases the country's wealth gap over time.
She said institutions could also change the way credit scores are calculated.
Credit scores like FICO are used to determine someone's eligibility for a loan. But Webb said Verity Credit Union has been using an Artificial Intelligence program for the last year to calculate it in a different way.
"It takes into consideration reputation," said Webb, "how long you've been at a job, how you pay your rent on time, and other things that FICO doesn't necessarily capture."
Webb said using this new system, her credit union has seen an increase in lending to people who were previously denied.
She said financial institutions can also shrink the wealth gap by increasing homeownership. Programs that require little or no down payment and assist with interest rates can get more families into homes.
Webb said all of this is personal for her because she came from an underserved community.
"I want to change that for underserved communities," said Webb, "and be able to put families in the position to leave something for their kids to build upon, and that is what we're missing."
get more stories like this via email
A bill in Congress with a Connecticut House sponsor aims to reduce child labor in the United States. Called the "Children Harmed in Life-Threatening …
As the opioid crisis continues, more New Hampshire grandparents are seeking financial help to raise their grandchildren. Already struggling with the …
As of Jan. 1, insulin will become a lot more affordable for many Nebraskans, and those who have come to rely on telehealth visits are more likely to …
Some state and local lawmakers are on a long list calling on New York Gov. Kathy Hochul to require big oil companies to help offset the costs of …
Utilities and government agencies in the U.S. are carrying out plans to transition to cleaner electricity sources. To avoid being left behind…
Health and Wellness
November has been Diabetes Awareness Month - but heading into the holidays, people who are diabetic know they can't lose their focus on keeping it in …
Conservation groups are celebrating a long-fought battle to protect the dwindling population of wolverine in the Northwest and northern Rockies…
As world leaders gather in Dubai for the international conference on climate change, the City of Long Beach is acting on multiple fronts to help the …