The Board of Supervisors voted this week to establish a Center for Financial Empowerment in a bid to help lift tens of thousands of families out of debt.
Fifteen percent of Los Angeles County residents live below the government-designated poverty line. Nearly half are “liquid asset poor,” meaning they don’t have enough money saved to live above the poverty level for three months if they lose a job or have a financial emergency, according to county officials.
Supervisors Sheila Kuehl and Hilda Solis championed the center.
“Twenty-eight percent of county households don’t have a bank account and often rely on check-cashing stores and payday lenders with high interest rates that drain low-income residents’ meager savings,” Kuehl said. “The county needs to help low-income county residents build household wealth.”
Understanding what resources are available is part of the problem, Kuehl said, citing estimates that low- to moderate-income county residents fail to claim more than $370 million in Federal Earned Income Tax Credit funds every year.
Solis noted racial disparities in wealth.
“Our new Center for Financial Empowerment is about equity and the opportunity to create financial assets for our communities. Researchers estimate that the typical U.S.-born Mexican or African American family holds just 1 percent of the wealth of a typical White family in Los Angeles,” Solis said.
The center is set to open in September at a yet-to-be-determined office of the county Department of Consumer and Business Affairs. The first year of operations will be funded with $570,000 from the DCBA and a private grant from Citi Community Development.
“Nearly half of all households in L.A. County are walking a financial tightrope each and every day—and in communities of color, the problem is even more severe,” said Bob Annibale, global director of Citi Community Development and Inclusive Finance.
“This Center for Financial Empowerment … will enable financially vulnerable Angelenos to get banked, build their credit, get free access to valuable tax credits like the EITC and achieve a more secure financial future for themselves and their families,” Annibale said.
The center will initially coordinate and promote existing services such as free tax preparation and access to benefits.
“Without sufficient assets, our families are easily thrown off track by accidents, unexpected expenses, and the smallest mistakes,” Solis said. “The Center for Financial Empowerment will be able to help tens of thousands of low-income L.A. households take a step up on the ladder of American economic mobility by helping them build household wealth and resilience.”