washingtonpost.com
Personal Finance: Race and the recession

Michelle Singletary
Thursday, February 24, 2011; 9:59 AM

Blacks are not investing at the same rate as whites. That's one of the disparities found in a poll conducted by The Washington Post, the Kaiser Family Foundation and Harvard University.

Only one in four African Americans and one in six Hispanics reported owning stocks, bonds or mutual funds, the poll found. Only 46 percent of blacks and 32 percent of Hispanics said they had an individual retirement account or any similar retirement arrangement.

Compare these findings to what the poll showed about whites' investing habits. Half of whites said they had stocks, bonds or mutual funds, and two in three said they had IRAs, 401(k)s or similar holdings.

As the Post's Michael A. Fletcher reports: "Not only are African Americans and Hispanics less likely than whites to own retirement accounts or investment securities, they also are far less likely to own homes, which remains the largest engine of wealth creation for most Americans."

Alicia H. Munnell, director of the Center for Retirement Research, calls the findings troubling.

"The fact that black and Hispanic workers are less likely to have meaningful [retirement account] balances is a worrisome development. If the retirement age goes from 67 to 69, the practical effect will be bigger reductions for people who claim it at 62. Low-skill workers, who are already paid less, would just get less from the program."

I want to stop right here and ask a question that was recently asked of me. Is it still relevant to compare what blacks and Hispanics have to what whites have? Without the vitriol, let's talk about this. Send your comments to colorofmoney@washpost.com. Put "Race and the Recession" in the subject line.

More information about the poll as well as related stories and multimedia can be found at the Post's Behind the Headlines page.

Here are some highlights of the Post's and its partner's coverage on this topic:

--Post writers Michael A. Fletcher and Jon Cohen report on the hopefulness of minorities even though they were hardest by the recession.

--Theroot.com's Sheree Crute reports on the recession's effect on African American children.

--Watch this video about how many Americans are recovering from their financial woes.

Additionally, I moderated a panel discussion last night on this subject at an event called "Behind the Headlines: A Discussion on Race and the Recession in Metro Washington."

Panelists Rep. Emanuel Cleaver, chairman of the Congressional Black Caucus; Michael A. Fletcher, a Washington Post national economics reporter; Jeff Johnson, a Black Entertainment Television journalist and motivational speaker; Dr. Julianne Malveaux, a noted economist and educator; Jared Bernstein, chief economist and economic adviser to Vice President Biden; Sophia Nelson, a political commentator for Jet magazine and MSNBC;and the Rev. Al Sharpton, president of the National Action Network, came together to discuss the economic state of African Americans.

If you missed the event, this blog provides a recap.

Live Video and Online Text Chat Today

It's time again for my live online money talk with you.

The conversation starts at 11:45 am ET with my live video chat. I'll be answering your questions and welcoming a new member into the Debt Defeaters club.

At noon ET, log on to my online text chat. Today my guests will be the authors of my February Color of Money Book Club picks. Joining me will be:

-- Bethany and Scott Palmer co-authors of "First Comes Love, Then Comes Money: A Couple's Guide to Financial Communication."

-- Hal Edward Runkel author of "ScreamFree Marriage: Calming Down, Growing Up and Getting Closer."

-- Paula Szuchman and Jenny Anderson, co-authors of "Spousonomics: Using Economics to Master Love, Marriage and Dirty Dishes."

CARD Act, One Year Later

It's been a year since the major provisions of the Credit Card Accountability, Responsibility, and Disclosure Act (also known as the Credit CARD Act) took effect. The law, among other provisions, prevents companies from pushing people over their credit limits. Issuers also cannot raise interest rates on existing balances. There are restraints on what companies can charge in late fees.

As the Post's Ylan Q. Mui blogged last week, a new government survey found that card issuers have largely stopped some of their more ugly practices, such as hiking interest rates on customers' existing balances and approving transactions that push people over their credit limit and then charging them fees for going over their limit.

But, unfortunately, as Mui has reported, credit card issuers are finding ways to circumvent the law.

Still, there has been good behavior among bankers.

"Much of the industry has gone farther than the law requires in curbing re-pricing and over-limit fees," said Elizabeth Warren, who is setting up the newly established Consumer Financial Protection Bureau. "Leaders in the industry deserve credit for moving in the right direction."

Here's this week's Color of Money Question: How has the CARD Act helped you in the last year?

Send your responses to colorofmoney@washpost.com and put "CARD Act One Year Later" in the subject line. Please include your full name, city and state.

Backsliding Consumers

Even as many consumers vowed to stop spending and start saving after the devastating effects of the recession, a survey by the Commerce Department found that some may be backsliding on their frugality.

Spending was up and personal savings was down in December, according to the latest data from the Commerce Department. Americans saved $614.1 billion in December, compared with $634.4 billion the prior month. And personal savings as a percentage of disposable income nudged down to 5.3 percent from 5.5 percent in November, CNNMoney.com reported last month.

"The fear of getting fired or not being able to find another job is receding," Lakshman Achuthan, managing director of the Economic Cycle Research Institute told CNNMoney.com.

Kelley Long, a Chicago based financial coach and CPA, says the recovering economy has many consumers returning to their old spending habits.

"People are willing to cut back when they need to, but it is more like they are postponing spending than they are changing it. As soon as there's a good economic report, they are on the next cruise."

Budget Cut Comments

For last week's Color of Money Question, I wanted to know what you thought of President Obama's proposed budget.

Here's what you had to say.

"I believed whole-heartedly in much of President Obama's actions over the past two years," says Lorna M. Gilkey of Alexandria, Va. "However, with the proposed budget being so heavily in favor of hurting blacks, it seems the president has come down with a bad case of 'Reagan-itis.' We need to pray fervently for a cure because Obama needs to recognize he can't stop the rampant Republican hatred of poor people by joining them."

Jim Shaffer of Indianapolis, Ind. says he's willing to deal with any budget cuts.

"We need to face the fact that we're living above our means and need to stop," Shaffer wrote. "With some 84 percent of the budget in entitlements and Department of Defense, someone somewhere is going to take a hit."

"Look, nobody wants their pet thing cut, but where do we start?" asked Emily Butler of Orlando, Fla. "As the president said during his campaign and since, getting the country back on solid ground is going to take all of us sacrificing something. When things were running out of control, no one complained until it finally caught up with our pocketbooks. Now we all need to suck it up and stop being so selfish, and that includes everybody. There's plenty in the budget proposals to help us as African Americans. Let's take off the blinders and take advantage of what's available and stop bemoaning what's not. I don't like what's going on, but I believe our president is trying to do his best to move us into the future so we are not left behind, which is exactly where we will be if everyone refuses to work together to make America strong again."

Jean Westler of Winchester, Va. says Obama's budget proposal is outrageous. "He has become a tool of the Republican party, offering cuts on the backs of those most vulnerable."

Based on your comments and the fierce budget battle we are in, this conversation will be ongoing.

Tia Lewis contributed to this e-letter.

You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

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