Report: Hispanics still face wealth gap
Many don't have any bank accounts
THE ASSOCIATED PRESS
Friday, December 16, 2005


KANSAS CITY, Mo.

Hispanics may be the largest minority in the United States, but almost half of that population - almost 20 million people - haven't opened a basic bank account, according to the Federal Deposit Insurance Corp.

New financial-education efforts targeting Hispanics have created mounds of brochures but have not explained to families why they should establish a credit history or how to avoid predatory lenders, according to a report released yesterday by the National Council of La Raza, a nonprofit civil-rights and advocacy organization in Washington.

"How can we bring Latinos into the middle class?" asked Beatriz Ibarra, the report's author. "The linchpin of the strategy should be investing in counseling programs on the ground."

In May, President Bush introduced an initiative that called on government agencies and selected Hispanic organizations to promote financial literacy among Hispanics. Two years ago, the U.S. Treasury started a similar effort to step up financial planning and education for all Americans. The FDIC offers free financial-education programs in Spanish in 14 regions across the country.

Elizabeth Kelderhouse, a community-affairs officer for the FDIC in Kansas City, said that an internal survey shows more than half a million people have attended the MoneySmart courses and have gone on to open 100,000 bank accounts.

The report released by La Raza points to structural barriers in financial institutions, noting that lenders have little incentive to sign on low-income clients. The report calls on Congress to pass several pending bills that would direct money to a community network of financial-planning advisers. It also recommends creating an income-tax credit that would cover the cost of financial-counseling services.

One-time banking fairs won't do much to create a new class of mortgage-ready home buyers, either, said Ian Bautista, the president and chief executive of El Centro Inc., a nonprofit group in Kansas City that partners with the FDIC to offer Spanish-language courses on everything from opening a savings account to buying a home.

A report last year by the Pew Hispanic Center, a Washington research group, found that the average net worth of Hispanic households nationwide was about $8,000. For Anglo households, it was almost $89,000.

"When customers want to buy a house, banks require a credit-card history, or a history of bank or car loans," said Shane Cuevas, a loan officer at the National Bank of Kansas City. "So people who don't have that are going to end up getting loans from someone on the corner. They'll believe the guy who's going to come to the door and say, "I speak Spanish, and I can close today."'

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