The economic upheaval of the coronavirus pandemic could cause damage that will reverberate long after the virus has been contained and a vaccine has been found. Black families haven’t fully recovered from the financial crash in 2008 in terms of homeownership and net worth—despite the general economic recovery. So today, as the government calls upon all Americans to make social and economic sacrifices for the common good, Congress must consider the specific challenges facing marginalized and under-resourced communities.
WHY IT IS IMPORTANT
As people across America are losing their jobs, most of the expenses these jobs supported continue on. Very few American workers have the resources to pay their bills without receiving wages. We cannot let people fall into debt or destroy their financial futures as a result of this crisis. Housing is the largest expense facing most Americans, as the prices of rent and housing accelerate at a rate that far exceeds the slow growth of wages. Policymakers must ensure people do not lose their homes as a result of this pandemic and the stringent isolation measures it has required, that money for essential items like food, medicine, and supplies is available; that utilities and other vital services necessary for individuals and families that are asked to remain in their homes are maintained, and that families are not penalized through negative credit reporting throughout the immediate economic crisis and beyond as it will take time for finances to rebound.
WHAT SHOULD POLICY MAKERS DO?
To avert catastrophe and reduce the harm of COVID-19, the NAACP recommends the following:
Provide Consumer Protections: Debt Collection
- Suspend all current and pending debt collection efforts. With rampant job losses, the ability to manage payment of existing debt is greatly diminished. Alleviating this economic pressure would allow needed time for financial reorganization.
- Release garnishments. Individuals need access to their full paycheck, including employer payments, as well as retirement and Social Security payments.
- Cancel student loan debt. Cancel all monthly interest that accrues on existing student loans and suspend all existing repayment plans for 2020. If the economic ramifications extend beyond the current year, student loan repayment must remain dormant.
- Increase protections against predatory lending. Ensure loan agreements for small businesses and individuals do not contain language that will inflate interest rates after a certain date or accelerate repayment dates. This must especially be the case for individuals who seek personal loans to assist financially during this time of shut down.
Provide Consumer Protections: Rent and Mortgages
- Institute moratoriums. Moratoriums on foreclosures, evictions, negative credit reporting, and utility suspension are necessary during this time of economic crisis.
- Suspend evictions. Maintaining housing during this period of economic downturn is crucial for family and community stability. Thus, all evictions in process, including for tax liens and utility payments should be immediately suspended. Federal policies to provide families with emergency housing assistance through an expansion of eligibility requirements in the Section 8 program should be considered to include rent and utility payments, and payment of arrearages.
- Require loan forbearances for those affected by the pandemic, waiving interest, fees and adding payments to the end of loans. There must not be any penalties, fees or negative reporting regarding outstanding loans. The ability to repay loans is not an option, as income decreases due to the economic realities imposed on people. Extending the repayment dates to add at the end of loans is not an acceptable solution, as it will still be a financial burden. As companies, including financial institutions, receive federal assistance they must waive this payment period entirely.
- Extend existing forbearances to allow homeowners to rebuild savings. During this time of economic crisis, families with savings are having to use those dollars to support their needs. As a result, individual savings accounts are being depleted, and those with retirement accounts have seen their earned gains wiped away. By extending mortgage forbearances, people will have a real option to recoup some of the financial hits imposed on them as they struggle to move forward.
Employ an Ethical Framework for Economic Bailouts
- Place restrictions on bailout companies. Stock buybacks benefit shareholders and company executives, at least in the short term, while leaving out workers who do not have the financial cushion to weather this economic storm. As the country heads toward a recession, we cannot invest public funds in creating private profits for a few shareholders at the cost of workers. Prohibit engaging in stock buybacks.
- Compensate all affected employees. Employees should receive money for time served from companies receiving a bailout. If a company must suspend operations during this crisis or must reduce its workforce, and seeks and receives federal funding, then money should be earmarked to compensate all affected employees as well.
- Ensure investors are paid during this period. There must be some return on investment so that investors can realize some gains. While the return may be less, due to the steep stock market changes, investors will need some assurance of payment/increase.