Rep. Al Green (D-Texas) is already well-known for his outlandish statements.
It looks like last week, he took a break from his one-man campaign to impeach President Trump – something even Speaker Pelosi has rejected – to attack an African-American entrepreneur for being racist because said entrepreneur refused to toe the leftist line with regard to non-bank, non-credit card loans.
The exchange between Rep. Green and Robert Sherrill, CEO of Imperial Cleaning Systems, came during a House Financial Services Committee hearing designed to give panel Democrats, led by Rep. Maxine Waters, an opportunity to demonize the short-term lending industry.
Sherrill testified in defense of short-term lenders, telling Rep. Green and the Committee his up-by-the-bootstraps story of rising from convicted drug dealer to entrepreneur and CEO. He told of how, because of his drug conviction, he was unable to open a bank account or secure financing as he tried to start his own business.
In a sane world, Democrats would have applauded Mr. Sherrill and used his story to highlight how overcriminalization is reinforcing the cycle of crime and poverty in America’s urban neighborhoods.
Rep. Green, however, had different ideas and seized the moment to instead suggest Mr. Sherrill was a racist for suggesting that if leftists were to kill off short-term lenders, some poor people– specifically and narrowly people like Mr. Sherrill— could be left with no choice but to go “back to the streets” in search of money.
“My family don’t have no money so if it wasn’t for me getting a payday loan I would have gone back to the streets,” Sherrill told the Committee.
Green jumped on this comment, trying to shame Sherrill for his past crimes and accusing him of spreading racist stereotypes.
“Mr. Sherrill, how many felonies did you have,” Green asked, trying to shame Sherrill into silence.
“I changed my life, sir,” Sherrill said, fighting back. “I got a governor’s pardon. The Governor of Tennessee pardoned me.”
“What you have done, sir, is shameful,” Green scolded Sherrill. “[Your testimony] is designed to say to white people that black people who don’t get payday loans are likely to engage in criminal conduct.”
Green apparently lives in a world where poverty and overcriminalization of drug offenses doesn’t contribute to criminal activity. The truth is, in most of America, this is a very real cycle that traps far too many Americans and it is far from racist to point it out. In fact, criminal justice reform campaigners might argue that obscuring facts about links between limited access to the financial system and recidivism enablesinstitutional racism that serves to trap disadvantaged Americans– white, black and of every other race and ethnicity– in a cycle where they have few options for “going straight” and enabling them to achieve success as honest, hardworking individuals in licit industries.
Green didn’t limit his attacks to Mr. Sherill however. After scolding the entrepreneur for refusing to adhere to leftist talking points, Green then accused the entire short-term lending industry of racism– and committing actual felonies.
“These lenders locate in black communities, they charge black communities more for their loans than they do in other communities,” Green shouted.
Let’s set aside that short-term lenders do not have the resources available to differentiate interest rates between different groups of lenders other than perhaps based on amount actually borrowed– they deal in quick turnaround, high volume, small loans where the underwriting process simply cannot replicate that of a bank where differences in borrowers’ personal situations could theoretically be taken into account, and unsurprisingly it is not short-term, small-dollar lenders but rather banks that have been the primary targets of allegations of racial bias in lending by Democrats.
The fact is, industry representatives say that charging African-American borrowers higher interest rates than whites is a felony. If Rep. Green has proof of such felonies being committed, you would think he would have reported them to the Consumer Financial Protection Bureau and/or law enforcement and convictions would have been secured. But it does not appear either that reports of felonies alleged by Rep. Green have been made, or that convictions have been secured. Rep. Green may not like their business model, but suggesting short-term, small-dollar lenders routinely engage in felonies seems like a stretch, even by Congressman Impeachment’s standards.
It’s also worth noting that Rep. Green may be wrong on the policy, too.
A recent natural experiment in New York, for instance, showed that withdrawing access to certain high-rate credit products led to an 8 percent rise in personal bankruptcies, particularly among households on low incomes. This result should not come as a surprise, as these products are commonly used to consolidate debts and provide household liquidity, which reduces the likelihood of bankruptcy.
Further, a New York Federal Reserve study examining two states that prohibit payday lending, Georgia and North Carolina, found that households in those states bounced more checks, filed more complaints about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at much higher rates than states that had not prohibited payday lending.
Another study, from Adair Morse at University of California, Berkeley, found that payday loans improved household financial well-being during natural disasters, concluding that small dollar loans are welfare-enhancing and that “a move to ban payday lending is ill advised.”
One would hope that Rep. Green doesn’t think it’s racist to provide customers with a service that at least mayavoid bankruptcy, fees for bounced checks, and improve finances during natural disasters. But who really knows what’s going on here.