Money can’t buy everything, but it sure improves your bargaining position.
Those fortunate enough to have savings, home equity, steady work or, better yet, all three might lose sight of how tough it can be to access funds necessary to get ahead.
Income inequality is growing. But another gap is also worth paying attention to — the imbalance in savings, assets and access to capital. That’s the fuel that allows renters to become homeowners and laborers to become businesspeople.
This have-and-have-not issue was the centerpiece of the most recent Come Together event, sponsored by The Dallas Morning News. Thursday night at Adamson High School in north Oak Cliff, Mayor Mike Rawlings, Dallas Federal Reserve President Richard Fisher, syndicated columnist Michelle Singletary and other experts spoke to a 500-plus audience about ways to help build access to capital.
Telling the poor to get a job is no solution to a problem so complex. In Texas, 28 percent of people live in asset poverty and can’t support themselves three months without income. In Dallas, the number rises to 39 percent.
Without assets and savings, the danger of falling into inescapable poverty is that much more acute.
How do we address this?
Three strong ideas emerged: Get banks into low-income communities and help residents to trust them. Build a culture of entrepreneurship through investment that eases capital flow. Ensure that basic financial literacy is taught in schools.
People in southern Dallas need more banks, and they need to trust banks as a place to put their money. One story told Thursday involved a woman who saved $10,000 over 10 years to start a business. When the time came to pay her startup costs, she pulled the money out of her boot.
That’s an inspiring tale of hard work, but it’s not the best way to do business.
As Fisher noted, the federal government should review regulations that strangle bankers’ flexibility in lending decisions. Many of those regulations were necessary after an asset bubble nearly tanked the economy. But a review is in order. For instance, giving banks leeway to consider, case by case, “character loans” for those with few assets but great potential might be a start.
Easier access to loans, in turn, is a first step to building the entrepreneurship that underserved communities need. Leveraged capital is key to how the wealthy accumulated their riches. Scaling those opportunities to poor communities is crucial.
Other experts on the stage Thursday were Dr. Susan McElroy, associate professor of economics and education policy at University of Texas at Dallas; Mike Casey, chairman of the Grand Bank of Texas; and John Martinez, president of the Regional Hispanic Contractors Association.
The panelists noted that residents, as well as financial institutions, have work to do: Everyone must understand the basics of money. That includes the value of saving, the risk and reward of borrowing, and the way interest works. Those are lessons that need to start early, both in the home and in the schools.
Thursday night’s discussion produced good advice. Now we all have a stake in acting on it.
