The US government will invest nearly $9 billion to increase lending to racial minorities and poorer individuals, the Treasury Department announced Tuesday.

"We know that the communities hurt most by Covid-19 have often been communities of color, and Treasury has implemented relief legislation with equity in mind," Treasury Secretary Janet Yellen said in a statement.

The funding announced by Yellen and Vice President Kamala Harris will be allocated through the Emergency Capital Investment Program and be directed to 186 banks and credit unions in 36 states, Guam and the District of Columbia, the Treasury said.

Of the total $8.7 billion investment, $3.1 billion will go to institutions controlled by minorities, the release said.

"In America today, deep racial disparities continue to hold people back from achieving all they can," Harris said at an event announcing the funding in Washington, pointing to gaps in wealth and home ownership between American racial groups.

"When every community reaches its full potential, so, too, does America," Harris said.

US Vice President Kamala Harris (left) speaks alongside Treasury Secretary Janet Yellen (right) at the 2021 Freedman's Bank Forum in Washington on December 14, 2021
US Vice President Kamala Harris (left) speaks alongside Treasury Secretary Janet Yellen (right) at the 2021 Freedman's Bank Forum in Washington on December 14, 2021 AFP / ROBERTO SCHMIDT

The move is the latest by President Joe Biden's administration to expand financial access as a way of addressing inequality in the world's largest economy.

As of 2019, the average white family has five times the wealth of the typical Hispanic family and eight times that of the average Black family, according to the Federal Reserve.

Millions of Americans who lost their jobs to the Covid-19 pandemic have returned to work this year, but those gains haven't been felt equally.

As of November, unemployment for white Americans was 3.7 percent, lower than the 4.2 percent overall rate. But for Black Americans, it was 6.7 percent, for Hispanics 5.2 percent and for Asians 3.8 percent, according to Labor Department data.

The government last June allocated nearly $1.3 billion to community development financial institutions, which offer banking services to poorer or underserved communities.

The funding for the latest investment comes from federal pandemic response programs.