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Hello, and welcome to On the Margins, a program
produced by the Minnesota Department of Human Rights. My name is Vineeta Sawkar. In the
next half hour, we're going to be talking about the challenges facing people who are
struggling with practical financial issues like buying a home or avoiding foreclosure.
We'll look at the concerns of people trying to finance an education, seniors planning
for retirement, or anyone simply learning to deal with debt at any age. We've brought
together an incredible panel of experts, and we'll talk about what to do and, more importantly,
what not to do. We'll discuss how to recognize and avoid the pitfalls of predatory loans
and other unfair practices. Now let us meet our panel. Commissioner Kevin Lindsey heads
the Minnesota Department of Human Rights, which plays a vital role in administering
the Minnesota Human Rights Act. One form of discrimination that's illegal under the act
is credit discrimination. Additionally, the department is working to reduce disparities
in our state in the areas of education, employment, housing, and other financial issues. Commissioner
Mike Rothman heads the Minnesota Department of Commerce. The commerce department is concerned
with a wide range of business and consumer matters involving banking, real estate, insurance,
energy, and many other areas. It regulates state-chartered banks, credit unions, collection
agencies, mortgage loans, and other types of lending. Ruby Lee is the president of CLUES,
Comunidades Latinas Unidas En Servicio. CLUES provides a range of health and human services
to enhance the quality of life of Minnesota's Latino community and advances equality for
all. One of its services is financial education to help Latino individuals and families overcome
barriers to economic advancement. Maritza Mariani is the associate director of the Neighborhood
Development Alliance, or NeDA. NeDA is a nonprofit community development organization that serves
the Latino population of the seven-county metropolitan region. It offers programs on
foreclosure prevention, programs for first-time home buyers, counseling on credit and consumer
debt, and many other services. Well, let's get started on this. Over the past few years,
the recession has impacted communities of color more than white communities. For example,
there are wide gaps in home ownership between whites and people of color in St. Paul and
Minneapolis, with about 64% of whites owning a home compared to 20% to 30% of people of
color. Commissioner Lindsey, these are startling numbers, and I'm curious to know, the Department
of Human Rights, what kind of role does your department play, making sure that there is
equity out there when it comes to credit, home ownership, and all those other issues?
Thank you for the question. One of the primary roles that the department plays on these issues
is educating the public in making sure that they are aware of sort of what is going on,
educating them so that they know that if there are problems that they're perceiving, they
feel that they're being discriminated, that they have means and access to resources to
address those respective issues, so I really appreciate Commissioner Rothman being here
so that he can talk about some of the work in which his department is doing. Our department
as well as has some ability to bring discrimination cases on behalf of individuals who feel that
they're in that way. But primarily, and why I'm here today and why I'm glad that we have
such a great panel here is to educate individuals about financial literacy. Let's talk to Commissioner
Rothman, then. What is the role of the commerce department? I mean, these are some startling
numbers. What can be done about it, and what has been done about it? Well, the Department
of Commerce not only oversees and regulates a broad sector of the financial industry in
Minnesota--so banks, insurance companies--we also focus very heavily on consumer prevention,
protection, outreach, engagement, and education. So as an administration, in fact, one of the
biggest roles I've seen played out by about ten of us in the cabinet is to enhance financial
capability and financial literacy, and that's from kindergarten through retirement, and
helping educate people, not only about what financial scams are out there but also to
protect themselves and to learn about the financial resources, whether you need to learn
about a banking account, about your credit history, about retirement funding mechanisms,
security stocks, those kinds of things. Every step of the way, it's important for people
to learn about these things. Whether you're on the lower end of the spectrum, of poverty
or wealth building, there's--every step of the ladder of success, and sort of building
success, there's a lot that needs to be done. And I'm glad to be here today. I appreciate
it. We can have more conversation about some of the things that we're doing to help. So
we've talked about the departments--two departments here. We're also talking about some wonderful
organizations that are really helping people. Maritza, talk about what NeDA does and how
your organization is able to help people. Okay. I like to say that NeDA provides a continuum
of housing services in the area of education. It's about educating the community as it relates
to financial literacy. We offer prepurchase counseling, home buyer education workshops,
and we also offer credit and bankruptcy counseling. Okay, some important things for people to
access. Ruby, I want to hear more about CLUES, but I would also--after you talk a little
about CLUES-- hear more of your personal story that gives kind of a face to what we're talking
about here today. Sure, sure. Well, thank you for having us today. Certainly, one of
the areas of work that we have is economic empowerment: helping communities, not only
Latino communities, but a lot of new Americans, a lot of new immigrants to the state of Minnesota
in providing access to self-sufficiency programs that help advance the opportunities to the
economic system in Minnesota and throughout the country. Certainly, we focus on the areas
of prevention, access, and preservation, and I think, in the area of preservation, that's
the area where we probably need most of the work right now. As the commissioner said,
consumer outreach and consumer protection are two key components of this work. Consumer
outreach, we provide bilingual, bicultural services. Not only in Spanish for the Latino
population that we serve, but in many other languages: Somali, Hmong, and several others.
These pieces are very important. It's--the bilingual opportunity, you know, being able
to speak to people in the language of origin so that they fully understand the systems,
but also the bicultural piece, I think, is key. As I share my story-- I immigrated to
Minnesota over 30 years ago, and when I came, I had a lot of privilege. I spoke English.
I was married to an American. I had a job with the State of Minnesota. I had access
to-- and I was educated. I had access to many things. Yet when I came to my own time to
purchase a home and I applied, I was told that I couldn't. And I could not believe why
I couldn't do this. And the reason why is because I did not have credit. I had not built
credit in this country. Therefore, I was nonexistent. In my culture back in Guatemala where I'm
from and at home, I was taught not to owe money to anybody, and that was part of my
cultural belief. If I don't owe money, that's my credit history. I have clean history. Right.
And that was not so. It's a cultural shift. It's a very different system in which somebody
that comes, like me, from another country has to learn what the system is. And literally,
I had to owe money in order to build that credit. So at CLUES, we provide innovative
approaches, innovative services that allow people to not only build a credit score but
have access to capital. And I think that's another huge barrier to building assets and
promote economic independence. So hearing your personal story is just fascinating. I
think many people may not realize. I think right off the bat, they think language barrier,
but there is a cultural issue, too, for many communities of color. Commissioner Lindsey,
how do we address that? And these are cultures that are steeped in so much tradition. How
do you address that as a department? Well, first off, we do that by having these types
of round tables and discussions. There--especially within the Twin Cities, there are so many
diverse individuals from around the world, and that we kind of take it for granted, unfortunately,
within the state of Minnesota and as Americans that everybody understands money the same
way that we do, and that's just simply not the case. So there are many cultures, as relates
to borrowing, which is antithetical to their approach and sort of understanding. So we
may have to come to a different way of sort of how we transact and do business. So, for
example, there are very--several African communities in which the same conversation is going on
with your story, is that, that would have been viewed as a negative, but obviously,
here in the United States, in order to cultivate wealth in a way, you almost have so show that
you're able to repay something in which you borrowed, and that doesn't necessarily mean
that these things can't be overcome, but it may need for us to change the paradigm on
how we think about someone who is credit-worthy. It's an interesting issue, and I think it
would be pretty controversial as well in some circles. How do you change--shift people's
thinking to address all this? Well, it's a variety of things, and I think it starts with
children. It starts with our schools making sure that young children understand as they
grow up financial literacy about money, about, you know, bank accounts. I remember when I
was a kid, my school had--or sponsored, you know, a little bit of a bank account so you
could learn about money and how to do that. At the department, we're focusing on not just
kids but also folks that are in the younger ages in the job market to understand these
issues about credit scores, the importance of maintaining good-quality credit. Then there
are folks who are in difficult credit situations where great organizations can help people.
Unfortunately, there are some organizations that make it harder. At the Department of
Commerce, we regulate them to stop those people from further preying on other folks. And I
think it's making sure that we reach out. As part of the Department of Commerce's outreach
and education efforts, we are going out to communities of color, out to folks who are
immigrants and the vulnerable, to try to get these resources where we can to educate people
more about money, about our financial system, and those things that they need to do to successfully
be a part of our sort of the American dream, whether it's home ownership or a job or how
to save money. Commissioner, I just have to ask you real quickly. You mentioned starting
the education at kindergarten. As a parent, what would you say to your kindergartner?
How would you even start this conversation? I'm just curious. Well, actually, we at the
Department of Commerce, we've been sponsoring Financial Literacy Month with Commissioner
Lindsey and all the state agencies as well as other organizations like Jumpstart. We
have put out, in fact, a contest to kids throughout Minnesota to learn about financial literacy.
What does it mean to save? What do you need to do to open a bank account? What does it
mean to have money? And what do you want? And it comes down to this: when you grow up,
what is your dream? What do you want to be? What do you want to do? And in order to get
there, what are the things you need-- is a good education. All right, you need to start
saving money. And how do you start saving money? It's some basic skills about banking,
about having a bank account, saving, and the difference between--we teach the difference
between a need versus a want, and how you can stay on a stable financial course, you
know, whether you're in kindergarten all the way throughout your life to retirement. I
love that idea. I think that's really an important part, because when we take a look at sort
of retirement savings from most Americans, most Americans who are on the precipice of
retiring do not have enough money in their savings. Sometimes when I go into respective
schools, I give individuals a very short lesson on retirement savings, and I ask them, "I
want you to imagine one person that invests $1,000 every year when they're 20, 21, 22,
all the way up to the age of 30. $1,000 into the savings account, and then they don't put
any more money in. And then I want you to imagine their friend starts saving, but they
start saving when they're 31 years old, and they put in $1,000 every year until they're
65. Which of the two friends do you think has more money at the age of 65, assuming
that the compounding of interest is the same for the two accounts?" It's the friend that
started when he was 20 and didn't put any more money in. And that's real hard for people
to sort of envision, that the time value of money is important. And that has a profound
impact when you start talking about the choices and the ability of individuals to sustain
and pay for their future health care and their housing and all the choices that they want
to make over the course of their lifetime, as opposed to potentially being dependent
on governmental services. First I want to ask Maritza this. NeDA, you know, you're actually
talking to these people and helping counsel and encourage them and teach them. How do
you go about doing that, and what are the big barriers you think that people have to
some of these things we've been talking about. Well, I think some of the barriers--or the
biggest barrier right now that families are facing is the credit barrier. I mean, with
the foreclosure crisis, a lot of clients are starting over, trying to reestablish or rebuild
their credit, so we work with them extensively on credit building, and we work with other
organizations who have credit-builder programs that they can participate in over a 12-month
period or a 2-year period in order to reestablish credit. Go ahead. And I was gonna say, our
financial literacy workshops are also a 12-hour workshop. And again, that just kind of emphasizes
the need for the educational component. So we talk about credit, establishing credit,
creating a family budget, sticking to that family budget as much as possible, and, you
know, long-term stabilities as far as investments. And Ruby talked about cultural barriers, some
of those issues, and I'm sure you recognize that as well. 72% of the clients who come
through NeDA are Latino, Spanish-speaking families, so we've taken a different approach
to financial literacy. A lot of times, people have to start with very basic information.
Sometimes it's about, you know, teaching people how to open a checking account and maintaining
a checking account or using a debit card and being very careful with that debit card because
of the charges that can be added to that if you use it too often. I mean, it's very basic
information, but it's information that people need. Go ahead, Commissioner Rothman. You
were going to add something. Well, I was just gonna say, just building on what folks are
saying, is that it's very important to get as much financial literacy and education to
as many people as possible, whether that's kindergarten, whether you're in your teens.
We were out at a high school. The Minnesota Department of Education has just come out
with a standard for--to help financial literacy components in education in Minnesota throughout
our schools. And then for students who are going from high school into college, making
sure they manage and understand debt so that they don't get over their heads in debt, and
come out with a good-paying job to be able to pay off that debt, to build on your retirement
assets, and then, of course, for those people that are retiring right now, we're at a--
this is the baby boom generation that's retiring. The folks in retirement age right now own
70% of the nation's wealth, and as they retire, we're going to have this turnover in all the
money in the United States, and we need to protect the seniors, and we need to educate
seniors on how to maintain their finances as people get to live longer. It's all of
the above, in a way, so that we can all help survive and maintain this throughout life.
And that's a significant issue which Commissioner Rothman is touching upon. So the projections
right now of individuals who are over the age of 85 in the United States is 5.4 million
people. In 20 years, the projection is, that'll be 19.5 million people, so it will triple
the number of individuals who are over the age of 85. So when we were thinking about
sort of retirement, 401(k), and Social Security programs, we were not, as a society, thinking
that 19 million people would be over the age of 85. So what does that now mean for financial
planning for those individuals? And making sure that they may hear exotic particular
programs like reverse mortgages. Right. And making sure that they're properly educated
and potentially having an opportunity maybe to discuss and find out information from the
Department of Commerce and others as it relates to whether that makes sense for them. Ruby,
go ahead. Yeah, if I can add, you know, in addition to education and awareness, I think
it's really important to look at policies that promote asset building and economic prosperity.
These are important opportunities that we can target to some of the most vulnerable,
low-income communities. At CLUES, for example, we provide financial management counseling,
one-on-one financial coaching, we provide prepurchase homeowner counseling and foreclosure
prevention. Last year alone, we provided services that included the one-on-one counseling but
also actually going to the lender and working with our families. About 100 families in 2012
alone were prevented from losing their home. We have free tax services where, just last
year alone, we served about 500 people, and community volunteers were the ones that helped
people fill out their tax forms. $1.5 million were returned to low-income people in poverty
communities who now have access to some financial opportunity to build their assets. So targeted
outreach, targeted policies that promote this kind of asset building is critically important,
in addition to, you know, preventing, certainly, all the predatory lending and all the other
issues. But I think, for the system and for this culture to create that asset-building
opportunity, it's really, really important. Immigration reform, it's an opportunity that's
coming up, primarily, you know, for many new immigrant communities, who, if you think about
it in terms of numbers, across the country, we have over 12 million people who may be
eligible for access to immigration systems. If we think about, in Minnesota alone, the
opportunities that we will have to build this integration system, an economic integration
system, people that then will come out of the shadows, will be buying homes, will be
buying cars, will be buying, you know, a lot of consumer products, programs, or pieces
that they will be able to have access to. You know, how do we get ahead of that, and
how do we then build beyond awareness, the access opportunities, and the targeted outreach?
Maritza and Ruby, I'd love to just pose these questions to you. The success stories you
both talked about, that the people that you're helping, can you give us more of a face to
it? I mean, they come from such a tough situation, and you're able to see them through it, through
these types of programs. That's got to feel good, and that's got to give you hope for
expanding programs like this as you mentioned. It really does. And I'll speak quickly so
Maritza has a chance to add. One innovative approach that we're doing--and this is really
relevant to not only Latinos but a lot of African and Asian communities. Back home,
for centuries, they've been using the system of lending circles, and lending circles is
an opportunity where a group of ten friends or ten family members put in--let's assume--$100
each at the table. Over a ten-month period, this is $1,000, so the first month, the first
person gets--you know, I get $1,000, so I have access to capital. And then the next
person the next month will get the $1,000, so you continue to pay your $100, but the
great opportunity about this is that we're taking it one notch up, and we're reporting
that system to the credit bureau, so that's also being reported to help build credit for
new immigrants. Nice. So that's a way of tailoring that and still building the credit, which
is a great way to do it. Exactly. Providing access to capital, which is a barrier right
now, providing credit-building opportunities, and people that are doing this system also
are required to participate in financial education programs, and that financial education is
linked to asset-building opportunities. Maritza. One of my favorite stories at NeDA is a client
who came through our prepurchase counseling program who was interested in owning a home.
Once the counselor did the assessment with him, it turned out that he was also interested
in farming, but he thought he had to buy the land and the farm separately. After, you know,
a lot of conversation, we explained to him that he could buy the land and the house together
and do his farming. So he didn't have a bank account, so we were starting from step one.
We had to help him, you know, refer him to a credit union--is what he chose--to open
a bank account. And this was over a two-, maybe three-year process. Eventually, he came
back after he had opened his bank account, two years later, and said, "Okay, I think
I'm ready for home ownership." He went through our financial literacy workshops, he went
through our home buyer education program, he met with a lender, he got prequalified,
met with a realtor, finally found the home that he wanted. Flash forward four years,
and last year, we were able to eat from his farm. I mean, we had great produce, great
broccoli, great potatoes. I mean, it was just wonderful. Every two weeks or three weeks,
he would come back to the office and, you know, just bring us some supplies, and he's
doing great. I mean, he is just one of our-- one of the clients that we're just most proud
of because he went through the entire process, and he didn't just go at it on his own. He
kept coming back to his counselor over a four-year period to ask her, "Is it okay for me to do
this? Is it okay for me to do that?" You know, before he went ahead and did things. Isn't
that fantastic? Yeah. That has got to feel good. And he also sells produce to, you know,
big chain stores, which is great. Wow, that's phenomenal. He's doing really good. It's so
interesting because you hear these cultural examples. Commissioner Rothman, do you think
that there's a sense-- there's an education of the minority communities, but do you think
that maybe creditors and banks should have a little bit of an education too? Well, I
think the challenge is for all of us. These are great examples. We can go from sort of
financial education and literacy, but I think the challenge for us now-- and these are terrific
stories-- and that's for lenders; it's for insurance companies; it's for securities organizations;
it's for all of us to step up and say, "Now we need to focus on, how can people learn
about asset building? What can we do to help in terms of financial education? So can we
have sponsors, partners with organizations and with our schools and target it and do
it in a meaningful way so that it actually can get to these individual success stories
that lead to community success stories and then all of us to be a better community overall
in Minnesota? And I think that's the challenge, and that's what we should be focusing on this
year and as we move forward. Absolutely. Well said. It is very well said. Part of wealth
creation through the financial literacy workshops is also the FAIN program or IDA program, Individual
Development Accounts, where clients can actually put money into savings, and it's matched so
that they can have enough money to put down for a down payment on a home or a start-up
of a small business or continuing education. So more monies into programs like that, I
think, are incredible for our community. Can make a difference. And that would mean more
collaboration. Absolutely. We're there to provide the service. Absolutely, you do a
lot of great work. This is such a fabulous discussion, but we've come to a point now
where, Commissioner Lindsay, there's so many wonderful points that have been brought up
here, and a lot of hope for the future, the good things that are happening. How would
you like to wrap up the discussion? Well, on that particular point, I think that connection
and so that we better understand financial literacy, asset building, and also see the
value in everyone within their respective community. There is no doubt that the Twin
Cities is dramatically changing demographically. In less than 20 years, 40% of the working-age
adults will be people of color, and probably in another decade, more than half of individuals
will be people of color. How well can we understand each other and asset building will be key
to the economic viability of the region going forward. Okay. Well, thank you so much to
this very distinguished panel-- what a great discussion-- for sharing your time and your
views with us today: Commissioner Kevin Lindsey, Commissioner Mike Rothman, Maritza Mariani,
Ruby Lee, and to you for watching. What an incredible--hope you got educated, because
there's some great things brought up here today. We'll see you the next time forOn The
Margins. [dynamic music]