Bailout or Not, Women Are Headed for Financial Trouble

Congress is working at a fevered pitch to rush through a massive $700 billion emergency spending measure to bail out the ailing banking industry and protect the economy.

Lawmakers sparred Thursday over the broad outlines of the bill, and congressional leaders hoped an agreement could be reached in time to schedule a vote on final passage before the end of the weekend.

But women are headed for financial trouble whether the bill wins passage or not, women's rights advocates say.

"It's bad news all around for women," said Vicky Lovell, director of employment and work-life programs at the Institute for Women's Policy Research, a think tank in Washington, D.C., that focuses on women's economic issues. "I don't see anybody predicting that there's a way out of this that's going to be good for consumers or taxpayers in general, or for women."

The proposed $700 billion bailout introduced by the administration amounts to about $150 billion more than has been spent to date on the war in Iraq, according to the National Priorities Project, a research organization in Northampton, Mass.

As lawmakers went back and forth over the details of the banking bailout bill, Joan Entmacher, a budget expert at the National Women's Law Center in Washington, D.C., took a dim view of the overall economic prospects for women.

Bleak Forecast

If the bill does not pass, and the economy worsens, women will suffer most because they have less wealth than men and are more vulnerable in economic downturns, she said.

If Congress does clear the bill, its high cost will put a fiscal squeeze on government programs that aid low-income people, most of whom are women, she said.

Under the plan debated Thursday, the federal government would assume $700 billion in bad debts of troubled financial firms to help them keep lending spigots open to individual and business borrowers. These measures are expected to help stem layoffs and deeper losses for retirement accounts tied to credit-hungry financial markets.

The high price of the package will have a similar -- but potentially more profound -- effect on the budget as the war in Iraq and the tax cuts of 2001 and 2003, Entmacher said.

Those big-ticket items prompted lawmakers to rein in government health care programs, she said. More likely to live longer and to live in poverty, women -- especially women of color -- are the main beneficiaries of these programs, Entmacher said.

Women's rights advocates were hoping for the inclusion of two provisions advocated by Democrats earlier this week: helping certain borrowers avoid foreclosure and creating a federal fund to insure money market accounts.

"Because they've been disproportionately affected by predatory lending, this could be especially important to women," Entmacher said.

Despite using credit at rates comparable to men and averaging slightly higher on credit scores -- 682 versus 675 -- women have a disproportionate share of the high-priced "sub-prime" loans, putting them at higher risk of foreclosure, according to a 2006 report by Allen Fishbein, a scholar at the Consumer Federation of America, a think tank and lobby in Washington, D.C. About one-third of female borrowers took on sub-prime mortgages compared to about one-quarter of men.

Money Market Funds

A Democratic proposal circulated earlier this week also included an insurance plan for money market funds -- low-risk, low-interest reservoirs of capital that invest in safe forms of debt. The plan would be modeled on the Federal Deposit Insurance Corporation, which was created in the wake of the Great Depression to insure bank deposits.

That would be especially helpful to women, said Lovell, of the Institute for Women's Policy Research, because women tend to have less personal savings and therefore are more inclined to invest in money market accounts, which have traditionally been viewed as safe havens. Several major money markets have collapsed during the crisis and fears that others could be at risk, however, have spurred the idea of federal insurance.