The Joint Center for Political and Economic Studies convened a group of economic, community, and political leaders Monday to confront the persistent wealth gap between blacks and whites. The statistics cited by these experts were dire. Before the economy took a nosedive, the overall poverty rate was 12.5% nationally, but that figure has almost doubled for African Americans at 24.5%. And while the national unemployment rate is 9.4%, but for African Americans, it is much higher at approximately 15%. As William Darity, Jr., a professor of public studies and economics at Duke University, pointed out, many people have attributed the huge income and wealth gap between blacks and whites to a lack of financial literacy, particularly with respect to savings decisions. That, he said was Federal Reserve Chairman Ben Bernanke's explanation when he spoke at Morehouse this year. "It's noteworthy that Bernanke said nothing about the lack of access to inherited wealth where inheritances and other intergenerational transfers constitute the most transparent form of non-merit or unmerited resources in our society,†said Darity. He said that Bernanke's perspective reflects a highly popular, but incorrect, blame-the-victim view that the black/white economic gap is due to a fundamental deficiency in black behavior that can be remedied through increased financial literacy. Part of the problem is that blacks and other people of color have always trailed whites in terms of wages and income. But, Darity argues, the real answer lies in differential access to inherited assets and in vivo (living) transfers, as happens when parents pay for their children's college expenses, assist them with the purchase of a new home or set up trusts for grandchildren. "Racial differences in intergenerational assets are the key to understanding the gross inequality between blacks and whites and net worth. Most wealth acquisition today takes place by a shift in assets from the older generation to the younger generation. Groups that have less wealth to bestow upon their offspring yield the next generation with less wealth,†said Darity. Given the nation's diminishing appetite to apply race-based criteria to close gaps, he suggests the public provision of a substantial trust fund for newborns to families that are poor, and which would not be accessible until a child has reached the age of 18. One could even place stipulations on these funds, such as they must be used to pay for higher education. Darrick Hamilton, an assistant professor at the New School for Management and Urban Policy, discussed business wealth creation for blacks. He noted that the typical white household is nearly five times more likely than black households to own a business asset, although homeownership represents the greatest source of wealth for most households. Hamilton pointed to a findings by recent Ph.D graduate Tamara Nopper, that since 1989, the total share of Small Business Administration (SBA) loans as well as the level of lending to black borrowers has declined dramatically because of a movement to instead create targets for women and all minority groups. She also found that the use of banks via the agency's guaranteed lending programs has also contributed to this decline. Both Nopper and Hamilton propose that the SBA return to a policy of direct lending with specific black business targets that are in line with black population representation. Avis Jones-DeWeever, director of the National Council of Negro Women's Research, Public Policy and Information Center, pointed to the fragility of the black middle class. "It is important to note that much of the black middle class that we have today are fairly newcomers to this status. Most are either their first or second generation within this status,†she said. And because many black middle class families must often stretch their incomes to accommodate extended family members, they have less disposable income to invest in potential wealth-building opportunities. Jones-DeWeever also observed a new green economy may be "the next potential dot-com-like boom. "The scary part is, that as it stands today, African Americans are not positioned to substantially take part in that potential economic boon,†she said, pointing to research that shows that African Americans are severely underrepresented at only 5% in terms of potential green employment targeted by the Recovery Act. The bursting housing bubble hasn't been an equal opportunity crisis, noted James Carr, CEO of the National Community Reinvestment Coalition. As a result, millions of middle class African American and Latino households, who have fewer savings and less ability to survive lengthy bouts of unemployment, could fall out of the middle class before the economy recovers. This is exacerbated by the fact that they were disproportionately targeted for deceptive mortgages. Carr proposed a three-fold response to the problem that includes limiting damage to home prices caused by unavoidable foreclosures; channeling economic recovery funding into communities disproportionately targeted for unfair and reckless lending; and passing anti-predatory lending legislation and an enhanced Community Reinvestment Act to protect consumers from future fraudulent practices and abuses. "Government action should not be limited to ending predatory lending, but should also include providing focused attention on helping communities rebuild,†said Carr. "Prioritizing areas hardest hit by widespread unemployment and mounting foreclosures would more directly help stabilize the housing market and steady falling home prices that continue to undermine the strength of U.S. financial institutions.†Further Reading: Wealth For Life Principles 1. I Will Live Within My Means 2. I Will Maximize My Income Potential Through Education and Training 3. I Will Effectively Manage My Budget, Credit, Debt, and Tax Obligations 4. I Will Save At Least 10% of My Income 5. I Will Use Homeownership as a Foundation For Building Wealth 6. I Will Devise An Investment Plan For My Retirement Needs And Childrens' Education 7. I Will Ensure That My Entire Family Adheres To Sensible Money Management Principles 8. I Will Support the Creation and Growth of Minority-Owned Businesses 9. I Will Guarantee My Wealth Is Passed On To Future Generations Through Proper Insurance And Estate Planning 10. I Will Strengthen My Community Through Philanthropy