by Maia Monell
Why is 1974 my favorite year? Aside from the leather fringe phenom, 1974 is when women were finally able to access credit. Meet the Equal Credit Opportunity Act of 1974 (ECOA).
ECOA made it illegal for lenders to discriminate against potential borrowers on the basis of sex and marital status. Until this initial stab at credit equality, lenders could discount a married woman’s income, especially if she was “of childbearing years.” Moreover, single women were all but shut out of banking all together. Intuitions thought they were too ‘risky’ to lend to.
Shortly after the law was passed in 1974, Congress amended the act in 1976. It was extended to make it illegal to discriminate on the basis of race, color, age, religion, or national origin.
If you’ve been following my journaling through wealth gaps in the US, you’ll realize that this glorified law didn’t quite pack the weighted punch it should’ve. This is especially true with those who continue to be left out of fair lending practices – mainly people of color.
Fair Credit & Gaps
So, how does the denial of fair credit contribute to wealth gaps in our society? It’s simple. When women aren’t treated equally by financial institutions, we are unable to acquire fair dollar loans to pursue wealth-generating opportunities. These opportunities include mortgages to purchase homes (how 80% of the population grows wealth) and build businesses (women receive just 7% of venture funds for their startups). Moreover, with many businesses requiring credit checks from employees to mitigate risk,’ women who have historically lower scores are penalized before even signing their employment contracts.
Women are the unfortunate example of how financial discrimination impedes social and economic equality for an entire population – let alone multiple generations. While we may have the ability to open bank accounts, credit accounts and apply for loans in 2021, the fact that we’re living through a recession largely impacting solely female breadwinners is evidence that when denied access for long enough, building parity is seldom a reality within one generation. Frankly, I’d be surprised to see it in my own Millennial lifetime.
The Road Ahead for Women and Money
I’ll use myself as an example. From the time I can remember, I held myself to an untrue fact, that I was terrible at math. This falsity stuck with me through my formative years, passing on degrees in the sciences and turning to my predominantly male advisors to approve opportunities.
When did I change my beliefs? The day my cofounder told me it was only 50 years ago that women were granted access to equal (if not yet fair) financial services. Of course I didn’t believe in my aptitude. My own brilliant, formidable, and brave mother was unable to apply for her own mortgage, business loan, or bank account without a man to prove she was a creditworthy, contributing member of society who could balance her own checkbook. Her generation was forced out of financial conversations; They were denied entry for long enough to not just impact her financial journey, but to affect how capable I felt I was of navigating my own financial roadmap.
So on this International Women’s Day, I’ll be sitting down with Mom. We do this every month to discuss our financial goals, how close we are to meeting them, and what we hope the outcomes of our efforts will be. I invite you all to do the same with the women in your lives who stood at the Capitol, with fists and signs raised high, demanding a future for their daughters far different, far better, far fairer than the lives they were forced to live.
Women’s History: From Grit to Financial Resilience