By Marcurius Byrd
Executive Committeeman, Richland County Democratic Party
South Carolinians know the value of homeownership. With the cost of living and goods and services seemingly pricier than ever, we know that a home is an investment that lasts a lifetime, and so many families here in the Palmetto State are proud of their homes, the hard work that went into securing a place for their families to live, and the payoff that lasts for generations to come. Another thing we are proud of here in South Carolina is that we are the leading state in Black homeownership rates.
But it wasn’t easy to get there.
Years and years of discriminatory lending practices and racial divides have led to modern disparities in homeownership and in access to financial services that help families reach that goal. This is something we are working hard to mend in South Carolina and states across the country are doing the same. Unfortunately, a new proposal being considered by the Federal Reserve threatens to put a damper on the success we have made.
This proposal would require banks to hold more capital which could have unintended consequences for our community. If banks are forced into holding higher capital, they will be less willing to provide mortgages to eager buyers who have lower down payments. In fact, this rule could push banks to only grant loans to people who are able to place 20 percent down payments, when, according to an estimate by the Center for Responsible Lending, it would take 14 years for Black renter households at the median income to acquire enough funds to afford a 5 percent down payment. This proposed rule would effectively make homeownership impossible for far too many Americans and is not something we can sit back and accept.
Homeownership provides far more than just financial stability. Purchasing a home allows families to put down roots, grow along with their communities and contribute to their local economy. With the housing market getting worse seemingly every second, we need to be doing what we can to ensure families are not locked out of this important milestone.
Families rely on obtaining a mortgage from banks to be able to pay off their investment over time. If banks have to practice stricter lending standards, we will see an unfortunate drop off in homeownership rates, and as patterns of economic disparities remain true, it will be Black families who bear the brunt of the impact.
The real salt in the wound here is that this rule is entirely uncalled for. Our banks already hold enough capital to keep our economy safe. After 2008, federal regulators implemented policies that enacted annual checks on capital levels to make sure they can withstand any forthcoming stress, and every year they prove to be sufficient.
I’m looking to our leaders in Washington to stand up and advocate against this rule to increase capital requirements on banks. We’ve come too far to only be faced with an unnecessary rule that will only set our communities and our state back.