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Oct. 9, 2022, 2:02 p.m. EDT

Treasury Secretary Janet Yellen says U.S. economy ‘has failed to live up to the nation’s promise of equal opportunity for all’

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By Emma Ockerman

The Biden administration announced a slew of new efforts to further racial economic equity during the annual Freedman’s Bank Forum in Washington, D.C. Tuesday.The forum, acknowledging the history of the former Freedman’s Savings Bank that maintained accounts for formerly enslaved people before its ultimate collapse in 1874 , served as an opportunity for government and business leaders to address a widening racial-wealth gap. And Treasury Secretary Janet Yellen, who described racial equity as being at the forefront of the administration’s agenda, said that in the years since, “our economy has failed to live up to the nation’s promise of equal opportunity for all.”

Recent efforts to tackle that failure and invest in overlooked communities have included the implementation of the American Rescue Plan, as well as the passage of the CHIPS and Science Act, the bipartisan infrastructure law, and the Inflation Reduction Act, Yellen said. Data released by the Office of Evaluation Sciences Tuesday on the federal government’s two rounds of pandemic rental assistance, for example, showed Black renters were “strongly overrepresented” among those who benefitted from the program. 

“We’re trying to invest in communities that have often been ignored or overlooked,” Yellen said. “Our economic blueprint supports our strong belief that tapping the potential of all communities is not just the morally right thing to do, it’s a promising strategy for inclusive economic growth as well.”

Yellen — who also shut down speculation that she could soon leave the Treasury Department — went on to highlight the expanded child-tax credit under the American Rescue Plan, which provided families with monthly checks worth $250 to $300 per child before ending last December, as another example. Some experts have credited the program with temporarily slashing child poverty , and public-policy professors at the University of Michigan said in a recent brief that the payments “reduced families’ overall number of material hardships and, in particular, their food insecurity.” (The brief examined families with very low incomes.) 

“Tens of millions of families received very substantial funding that it’s estimated reduced the child poverty rate by almost 30%, and very substantially, by a third, the number of adults who were living with children in households that had food insufficiency,” Yellen said. 

But, now that the child tax credit has ended, and now that some rental assistance programs have been exhausted , some communities of color may have a less optimistic picture of the U.S. economy. The rising cost of living has hit Black, Latino, and Native American households particularly hard, and, adding to a troubling racial homeownership gap, the number of Black families who can afford to buy a home has plunged in the past year thanks to increasing mortgage rates

Still, administration officials said Tuesday that they’re moving forward with new programs that could ensure a more equitable future, too. 

A newly formed 25-member Treasury Advisory Committee on Racial Equity , chaired by Columbia University professor and former Philadelphia mayor Michael Nutter, will provide expertise and make recommendations on matters including financial inclusion, access to capital, and more. 

Vice President Kamala Harris also revealed that members of the Economic Opportunity Coalition, a joint effort of the federal government and private-sector giants like Bank of America /zigman2/quotes/200894270/composite BAC +0.43% and Google /zigman2/quotes/202490156/lastsale GOOGL +5.31% , have committed $1 billion to community banks that serve rural communities and communities of color. (Bank of America announced Tuesday that it alone would double its existing low-cost deposits in minority-owned financial institutions, adding $100 million in deposits.)

“Together, we here know we have the ability and the responsibility — and the duty, dare I say — to realize the vision of Freedman’s Bank,” Harris said. “And that is what we have gathered here to do.” 

A White House fact sheet Tuesday further said the government’s Office of Management and Budget would issue a memorandum to federal agencies to set goals for increasing government contracts among “small, disadvantaged businesses,” while the Minority Business Development Agency would announce $100 million in grants to provide technical assistance grants to help “underserved entrepreneurs.”

Department of Housing and Urban Development Secretary Marcia Fudge, who also spoke at the Freedman’s Bank Forum Tuesday, additionally said HUD will additionally solicit feedback on the barriers to originating small-balance mortgages.

Many homes in majority-Black cities like Detroit and Memphis could sell for below $100,000, but it’s difficult to get a mortgage for that low of an amount, according to Local Housing Solutions , a housing-policy platform that’s managed by the Housing Solutions Lab at the NYU Furman Center.

“We know that people who live in less expensive or rural areas often find it difficult to get a mortgage for a lower-priced home,” Fudge said.

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