"Poor People Are a Better Credit Risk Than Rich People"
It sounds counterintuitive, but according to Martin Eakes, co-founder and CEO of the Self-Help Credit Union, poor people are a better credit risk than rich people. Eakes spoke on a panel about “inclusive capitalism” at the Aspen Ideas Festival. A study from the Urban Institute shows women are better than men at paying their mortgages. And single women borrowers are more likely to own homes in low-income neighborhoods and be people of color, according to Marketplace. Eakes works with poor families across the country, helping them start businesses and buy homes. Since he started his organization in North Carolina in 1980, he says he’s made $8 to $10 billion dollars of loans, largely to African American single mothers. In the first 11 years of operation, his organization made $100 million dollars of home loans to the poor, and he had zero losses. “If you get a decent and fair loan to buy and own a home, poor people will do really good with that.” He’s angry about what he sees in Washington DC, where the poor are sometimes blamed for the recession. In fact, he says, 95 percent of the loans made by subprime mortgage lenders were made to people who already owned their homes, not new homeowners.
Watch the session Deep Dive: Why Inclusive Capitalism is Critical to Our Economic Success below.
By Marci Krivonen, Associate Editor/Producer, Public Programs