Virtual Hearing - Access Denied: Challenges for Women- and Minority-Owned... (EventID=110872)

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Connect with the House Financial Services Committee Get tdshe latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/FinancialDems/ Follow us on Twitter: https://twitter.com/FSCDems ___________________________________ On Thursday, July 9, 2020, from 12:00 p.m. (ET) Subcommittee on Diversity and Inclusion Chair Beatty and Ranking Member Wagner will host a virtual hearing entitled, “Access Denied: Challenges for Women- and Minority-Owned Businesses Accessing Capital and Financial Services During the Pandemic." - - - - - - - - Witnesses for this one-panel hearing will be: • Carmen Castillo, Chairwoman of the Board of Directors, U.S. Hispanic Chamber of Commerce • Ron Busby Sr., President and CEO of the U.S. Black Chambers, Inc. • Jenell Ross, President, Bob Ross Auto Group • Karen Kerrigan, President and CEO, SBE Council Background According to the United States Census Bureau’s Annual Business Survey, women and minorities own approximately 1.1 million and 1 million businesses, respectively. These minority- and women-owned business enterprises (MWBEs) employ approximately 8.7 million workers and generate more than $1 trillion in economic output annually. MWBEs also face unique and disparate barriers to market entry, including but not limited to, limited access to capital and persistent discrimination when compared to majority-owned firms. For example, 2020 Brookings Institution analysis showed that “highly-rated businesses in Black-majority neighborhoods earn less revenue than businesses with similar ratings outside of Black neighborhoods, translating to a national annual revenue loss as high as $3.9 billion.” These challenges are often exacerbated during periods of market disruption, such as the 2008 Great Recession and the current COVID-19 pandemic. Impacts of COVID-19 on the Women- and Minority-Owned Business Community According to the Centers for Disease Control, “long-standing systemic health and social inequities have put some members of racial and ethnic minority groups at increased risk of getting COVID-19 or experiencing severe illness.” Due in part to these longstanding inequities, rates of hospitalizations and death for African Americans and Latinos as a result of COVID-19 are five and four times higher, respectively, than similar rates for Whites in the United States. Data shows that minorities and MWBEs are also facing more difficult economic circumstances than others as a result of the COVID-19 pandemic. In April 2020, the Federal Reserve Bank of New York reported that MWBEs were not only more likely to show signs of limited financial health, but also twice as likely to be classified as “at risk” or “distressed” than their non-minority counterparts. Further, nearly 60% of “at risk” and “distressed” business owners leveraged personal funds to respond to a two-month revenue loss because of the COVID-19 pandemic. As a result of disproportionately lower wages and wealth inequalities, women and minorities also have fewer liquid assets (those that can be quickly turned into cash) for emergencies and less disposable income for savings and investments than white households. In 2017, Prosperity Now and the Institute for Policy Studies reported that 51 percent of households of color have fewer liquid assets compared to 28 percent of white households. Women, especially Black women and Latinas, are more likely to face poverty than men, according to a September 2018 article by the America Association of Retired Persons (AARP). The pandemic has also led a number of MWBEs to close permanently. According to a February 2020 study by the National Bureau of Economic Research, the drop in minority business owners was the largest on record, with 41% of Black owned businesses experiencing a 41 percent drop, while Latinx- and Asianowned businesses falling by 32 percent and 26 percent, respectively, from February to April 2020. Women-owned businesses have faced similar pandemic challenges. According to a recent survey of Black and Latinx women business owners, 70% reported that COVID-19 has caused a decrease or loss of revenue, and 90% reported that they are currently unable to pay themselves a sustainable income.” Systemic Racism and Biases Against MWBE’s Systemic racism and biases against MWBEs continue to impede their ability to access capital and bank funding, and to compete on a level playing field in the marketplace. In his June 16, 2020 testimony before the Senate Banking Committee, Board of Governors of the Federal Reserve System (Federal Reserve or Fed) Chairman Jay Powell similarly acknowledged that “structural discrimination exists in the United States economy and impedes the economic success of communities of color, and is a key to understanding why black wealth is one tenth of that of white communities.” The Federal Reserve's 2017 congressional report on... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406616