Twenty years ago, when I started my career, I was one of the very few professionals of color at the Federal Reserve Bank of New York. I rarely ever saw people of color when I met with foreign exchange traders and analysts at numerous Wall Street banks. I focused on my work and certainly never thought to talk about any issues related to racism in the United States and in the economy specifically. Much has changed in the financial sector and in America, since I began my financial career at the New York Fed. Yet so much remains to be done to solve the deep and damaging racial wealth gap in our country.
Unexpectedly, I found myself very moved when watching a Federal Reserve sponsored event, Racism and the Economy. This seven-part series, launched today, is an unprecedented conversation led by the Atlanta, Boston, and Minneapolis districts of the Federal Reserve. Just in the first part of the series, Federal Reserve Presidents Raphael Bostic (Atlanta), Neel Kashkari (Minneapolis) and Eric Rosengren (Boston) and their guests confronted the history and present state of racism and the American economy, the role of the Federal Reserve in these issues, and also explored public and private sector solutions that can benefit everyone in our country.
Angela Glover Blackwell, Founder of PolicyLink, who was the keynote speaker, made so many important points that I really encourage everyone to watch this event’s recording when it becomes available. “What Covid has done,” Blackwell said, “is to force Americans to look at inequality in wealth and especially in health. Americans are seeing the interconnectedness of what happens in Black, Latinx & indigenous communities and the health and well-being of America.” She explained that” people of color are the first to lose their jobs and the last to get them back…. they are being left behind….they are not valued…racism is baked everywhere in America…in our education systems, health, the economy.” Importantly, she said that “to talk about Black people does not mean to ignore others. The goal has to be anti-racism. In racism, banks have been complicit; they were underwriters of slavery. Plantation owners borrowed from banks; banks repossessed slaves when plantation owners defaulted.”
Blackwell proposed that there should be federal bank accounts. “We have deep, toxic inequality that is racialized. We have to think in big ways. There are people who have no access to bank accounts. Why should anyone wait five days to cash their paychecks? What about having federal accounts? People of color often have terrible credit scores, because of their poverty. Without access to credit, it is impossible to go forward. How can we allow credit to be racialized? We need to federalize credit scores.”
She also stated that “banks are complicit in racism today. We need to think of how banks can repair the harm. I know reparations can make some defensive, but you bankers have allowed those degradations to continue today. How do you have repair plans now? This is urgent.” Addressing all Americans, she said “Push yourself. Never before have we had a nation that is so ready to end racism. People are ready to do something different. We have to have a north star, otherwise we will only think small.”
Data, from an eye opening analysis conducted by consultants at McKinsey and Company in 2019, show that closing the racial wealth gap in the United States could add in the range of 4-6% to overall U.S. GDP by 2028. Along with the words of today’s Federal Reserve event speakers’, this data shows that racism should matter to all Americans, not only to people of color.
Bostic closed the first event in this series by saying that “we need to be owning our history and acknowledging the arc of our history. We want to be part of the solution.” He also candidly said that I “have been discouraged that people do not know about our interest in this problem…we are willing to be made uncomfortable…and we want to be part of the solution.’
His closing echoed important themes that he wrote about this summer in A Moral and Economic Imperative to End Racism, in which he advocates that the Federal Reserve has an important role to play in reducing racial inequities and in bringing about a more inclusive economy. “Through our monetary policy decisions, our role as a supervisor and regulator of banks, our support of the payments system, and our commitment to community and economic development, the Federal Reserve acts to create a foundation upon which businesses, families, and communities can thrive. Our success means that businesses can grow faster and hire more workers and that more innovation can be supported, which would mean more opportunities for African Americans and others who have not been as attached to the economy.”
Citibank, Closing the Racial Inequality Gaps: The Economic Cost of Black Inequality in the US
Kinder Institute for Urban Research, Rice University, Racism is Hurting the Economic Well-Being of the US and its Workforce- Including White Workers.
International Monetary Fund, The Economic Cost of Racism.
McKinsey and Company, The Economic Impact of Closing the Racial Wealth Gap.