Conferences & Events

November 16, 2021

Transcript

Esther George: I'm Esther George, president and CEO of the Federal Reserve Bank of Kansas City. It is my pleasure to welcome you to the 10th installment in this Federal Reserve-sponsored series on racism and the economy. Thanks to the leadership of my colleagues in Minneapolis, Boston, and Atlanta, the Fed launched this series last year as a forum for highlighting issues of race and inequality in our economy, with the aim of identifying potential solutions to these issues, and in doing so, to broaden economic opportunity. Previous sessions have focused on opportunities for more equitable economic outcomes in areas like employment, education, the wealth divide, entrepreneurship, and housing. Even the economics profession itself. You can find reports from these sessions, along with presentation materials and videos, at the event website.

Our discussion today, in my view, may be one of the most important since we began hosting these events last year. Access to financial services for all of us can be the key to funding in education, operating a business, or buying a home. Being able to save and to borrow money on fair and equitable terms is very much at the heart of financial security and the catalyst for prosperity and higher living standards. For its part, the Federal Reserve plays an important role in ensuring fair and equitable access to credit through its regulatory and supervisory roles. As the nation's central bank, the Federal Reserve also provides payment services to depository institutions, ensuring that the public benefits from an efficient, safe, and broadly accessible payment system.

To that end, we are currently involved in modernizing the way we pay for things with a development of a new instant payment infrastructure that we call FedNow. We think we'll have broad benefits for the economy, including the potential to provide an avenue for greater access to the financial system. As we'll discuss in today's session, there exist roadblocks to accessing financial services in this country. The [Federal Deposit Insurance Corporation] FDIC has estimated that nearly five and a half percent of US households remain unbanked and that percentage more than doubles for Black and Hispanic households. Among those millions of people, the reasons for not having a bank account can vary by individual, but they include things like distrust of banks, unpredictable fees, and sometimes inconvenient locations or hours. Today, we'll talk about those disparities and we'll also consider important efforts to improve access to necessary financial services.

You'll hear recognized industry leaders from financial institutions, consumer protection organizations, research and policy institutions, and academia, who will explore ways that we can fully support consumers and those that provide financial services to ultimately help facilitate an economy that works for everyone. At the conclusion of today's program, I'll be joined by my colleagues from the Richmond and Atlanta Reserve Banks to reflect on what we've heard and to discuss our thoughts on the Federal Reserve's role in addressing these issues. With that, it is my pleasure to turn to our moderator for today's program, Nancy Farghalli, the executive producer of Marketplace. Nancy, the virtual floor is yours to introduce our first panel.

Nancy Farghalli: Thank you, President George. We have a lot to get to in the next two hours and we want to have you be part of the conversation, so please use the Twitter hashtag #RacismandtheEconomy, or you can send us an email at racismandtheeconomy@bos.frb.org. As President George said, this is the 10th event in the Racism in the Economy series, an event focused on structural racism in the financial services industry. It is at the heart of what the Federal Reserve does as a regulator and as part of their dual mandate of maximum employment and stable prices. Whenever you hear a story about the wealth gap, the gap in home ownership, the income gap, what you're really talking about is financial services.

How we save, how we spend money, how we access loans and mortgages, how we build businesses, how we build inheritance. I'm really pleased to be the moderator of this event. Our first panel will focus on the big picture idea and some of the themes that I think you're going to hear over the next two hours. I want to introduce our panelists; they're going to give a few remarks and then we'll join a group conversation. Our first panelist is Bill Bynum; he is the CEO of Hope Credit Union and Hope Enterprises. Welcome, Bill.

Bill Bynum: Good morning.

Farghalli: I wanted to start with you. As we think about the frame of this session and this panel, you have had a long career in this industry. I was hoping you could share a story about your grandmother and the garage she used to take you to as a kid.

Bynum: Thanks, Nancy. One of the reasons this work is so important to me is that my family and so many friends have lived the challenges faced by the people that we serve at HOPE. In the small town that I grew up, so many Black families did their banking at the credit union located in the vice principal's garage because they were not welcome at the local bank. My grandmother took me there and would make deposits and withdrawals and actually paid for the suit that I wore to college. At least we had that.

If you fast forward 50 years, it wasn't until 2015, in honor of her 100th birthday, a woman named Ms. Fanny Dotson, in the small Delta town of Itta Bena, felt welcomed and respected enough to open her first bank account with the money she got on her 100th birthday after we took over the only bank branch in that town that had been shuttered by the bank that had previously been there. It should not take a century for a woman of color in the Mississippi Delta, or anywhere in this country, to feel respected and treated with dignity enough to take advantage of a basic financial tool that so many take for granted.

Farghalli: Thank you, Bill. I want to now introduce our second panelist in this session, Dr. Camille Busette. She is a senior fellow at the Brookings Institution and director of the Race Prosperity Initiative there. Dr. Camille Busette, you have had a long career in this as well. You have worked at the World Bank; you have worked for government agencies, and I was wondering if you could help us first define a term that President George said, unbanked and underbanked. What does that actually mean? What do you think the Federal Reserve's role should be in this space?

Camille Busette: Great. Thank you, Nancy, for that introduction. I am thrilled to be joining my fellow luminaries here, Bill and Terri, for this 10th installation of this series, which I think is absolutely amazing that the Federal Reserve Banks are doing this. Let me just chat a little bit about unbanked and underbanked and I'll give you a little bit of a story of my own. I'm a first-generation American, my family are immigrants, and so we utilized the banking system for necessary stuff, but savings was always done basically under the mattress. There was just cash that was just held, largely because where my family came from they didn't really trust the banking system. Coming to the United States and experiencing a lot of discrimination, they also didn't trust the banking system.

I got to see firsthand two parts to operating financially. In that case, we were underbanked meaning, we utilized some services but some services we did not utilize. The ones we really needed, particularly for savings and investment and that sort of thing. Unbanked refers to just not having any accounts at formal financial institutions. I think now, in this day and age, it's kind of interesting to think about banked and unbanked, particularly because there are so many fintechs and there are so many providers of digital money. That gives it yet another wrinkle but generally when we think about banked and unbanked, we think about people who are not formally part of the formal financial system.

Farghalli: Our next panelist that I would like to introduce, but before I do that, we will have about 12 minutes for questions. Again, we want to include the questions that come from the audience. You can use the hashtag #RacismandtheEconomy on Twitter, or you can email us at racismandtheeconomy@bos.frb.org. I'd like to introduce Dr. Terri Friedline, she is an associate professor of social work at the University of Michigan.

Terri Friedline: Thank you, Nancy. Good to be with you all today.

Farghalli: One of the things I wanted to ask you, just to bring the conversation to this moment, the history of now, is about one of the things that happened to you about a year ago. You were doing some research on banking to begin with and the [Paycheck Protection Program] PPP loan program started. You were able to get some on-the-ground, real research about how those loans were distributed. Can you describe what you learned as part of that research?

Friedline: Absolutely. I'm glad to share about this work; I want to give kudos to one of my colleagues, Anna Wood, we're working on this together. At the beginning of the pandemic, we're interviewing folks in banking and got to see, in real time, capture the ways that the banks were responding. A couple of things about the pandemic stand out to us. One, that we don't live in a fully healthy society with the infrastructure to support us in everyday living, let alone in an emergency. We learned that not everyone has access to high-speed, reliable internet to quickly make that transition. We realized that we couldn't send cash relief quickly to individuals and the people who needed it most, disproportionately poor White people and people who are poor and Black and Brown. We couldn't send that cash quickly.

We also learned that we sent relief to small businesses so quickly. There was such a rush to send out money through the Paycheck Protection Program that the federal government skipped or overlooked providing guidance for how these private institutions should distribute these public funds. In that research, what we were seeing in real time were bankers rushing, absolutely as fast as they could, to use their existing rails, their existing customer service setup and positions, to get funds out quickly. Which ended up serving their traditional customer base and advantaging White-owned businesses and funneling those public funds to private White ownership and excluding Black- and minority-owned businesses. In the research we saw that happening in real time, and of course there are a number of good reports by the Federal Reserve in Cleveland and show how the Paycheck Protection Program produced these racially disparate impacts.

Farghalli: I wanted to ask all three of you a question and a definition. We're probably going to hear the term access quite a bit over the next two hours, and I don't know if we use the word in the same way that all of you use the word. I'm hoping that all of you can define it. When we talk about access in this place, what are we actually talking about?

Bynum: Nancy for me, and the comments that both Camille and Terri made are very real in the communities. For the people that we serve at HOPE who disproportionately lack access, [it's] the ability to walk into a bank, and open an account, and apply for a loan, and have a reasonable likelihood that they'll be approved based on the information that they present. I talked about the woman, Ms. Dotson in Itta Bena, Mississippi. Similarly, we converted a bank branch in Moorhead, Mississippi. We found that the local people could not open a checking account or apply for loan at that branch. They had to go many miles away in order to apply, so they were significantly disadvantaged compared to people in other parts of the country. It happens that in Moorhead 82 percent of the residents are Black. I can't imagine another community in the country with a population that's 82 percent White where a bank would have the audacity not to allow people to apply for a simple car loan. Nearly half the people that we serve at HOPE either never had a bank account or rely heavily on high-cost, often predatory, lenders.

The impact is even more pervasive when you move beyond basic banking accounts to products that help people build wealth through home and business ownership. Here in Mississippi, where we are based—we work across Alabama, Louisiana, Arkansas, and Tennessee, but here in Mississippi—the mortgage denial rate for Black residents making over $150,000 is higher than the denial rate for Whites earning $40,000—150,000, 40,000, and if you're Black you're more likely to get denied for a loan. According to [Home Mortgage Disclosure Act] HMDA data, here in Mississippi, where the population's almost 40 percent Black, only 17 percent of mortgages made by Mississippi lenders are made to Black applicants. There's a significant gap in access to affordable mortgage lending. Conversely, 86 percent of HOPE's mortgages are made to people of color, so it can be done if you're intentional about serving that community.

Similarly, with Terri's point with regard to businesses, over the past 20 months we've seen the disastrous effects of relying on traditional banks to finance Black businesses, and how that played out during the Paycheck Protection Program. We've heard story after story of Black sole proprietors that were being denied or even ignored by large banks where they already had longstanding accounts, even major banks that are regulated by the Fed, turned down. Barbers, churches, nonprofits, critical sources of jobs and life-supporting services in Black communities, even a historically Black college that has played a prominent role in the Civil Rights movement, and today graduates more doctors and lawyers than any school in the state, could not find a PPP loan until they came to HOPE or to another minority depository or community development financial institution. Racism is all too pervasive in today's economy, arguably nowhere more than in the banking system.

Busette: I'm just going to just jump in for a second and just build on what Bill has mentioned there. I want to talk a little bit about access to credit and expand upon what he was saying there. When we talk about racism in the economy, it shows up incredibly strongly, not only in the basic access like opening accounts, but in access to credit. Not only in the mortgage space, but in a lot of other spaces. There have been a lot of studies that have been done that shown that Blacks with equal FICO scores to Whites end up being moved into subprime loans, et cetera. There's a wealth of information on that. One thing I do want to spend a little time on is the credit scoring of business. Some of the assumptions, one of the main assumptions of credit scoring, is that people start off at the same point in life. Then some engage in actions that will help their financial situation and others engage in actions that don't help their financial system.

It's a basic assumption, and you have to have an assumption that everybody's the same when you're using an algorithm. Obviously, that's flawed, because historically, when you think about Black and Brown communities, they have not started off at the same place as White communities. So we need to be thinking about, and I think you had asked a question earlier about, what's the role of the Fed in the financial services industry? When we think about access to credit, I think we very much need to reexamine some of the basic assumptions behind credit scoring and that undergirds everything; homes, business credit, access to jobs, access to apartments, et cetera. I think that's an area where the Fed could be a catalyst in trying to put together some minds on how we think about those underlying assumptions on credit scoring.

Farghalli: We're going to have a proposal later in the program about how to change credit scoring, so I think it's definitely a theme and I'm glad you brought it up. Terri, I wanted you to weigh in on this issue of access and what it actually means to you in terms of the work that you've done.

Friedline: I think my comments extend what Camille and Bill have just shared. From my perspective, access is fluid. When Camille defined the banked and the underbanked and the unbanked, we often think of those as categories, discrete categories of individuals, and our access is much more fluid. Our financial lives are much more fluid than that and access, I think, is much more fluid than a particular point in time. As someone gains access to a particular thing, which means that they, from my perspective, they have it and can use it in a full and dignified way, there are other parts of the system that, I think, work around that to hinder access at other points of that continuum.

With regard to credit access, one of the concerns is, as someone becomes credit visible and has a score, what does that create in terms of possibilities for predation and exclusion and exploitation? Because access in this one category has now raised the possibilities for racism and discrimination and harms in these other areas. From my perspective, this access is a fairly fluid concept and something that requires, then, our constant attention and evaluation for outcomes and impacts to ensure as racism and White supremacy shapeshift and move into other parts of our financial system, that we are paying attention to how that changes when points of access shift.

Farghalli: Can I ask you a follow-up? I was thinking about what you said earlier, and also just in terms of the technology and the innovation that's now happening in this space. We have heard about bank branch closures for years. I remember reading a New York Times article in 2011, it's 10 years later, and what happens in those situations is the push is for more technology, online banking, mobile banking. I wanted to ask all of you, how do you support and promote innovation without having it harden inequity?

Bynum: The people who we serve ... again, if you don't have a bank branch and you saw the bank branches are closing in record numbers, typically in low-income communities and communities of color, you're not going to have as ready access to the tools that are other people have. You have to figure out how to deliver affordable, responsible financial services through the means that we have. Black and Brown people have smartphones at a higher rate than the general populations. Unfortunately, they're not banked at comparable rates. If we can get them into banking product and services, they can be delivered. But it also is important, both José and I chair the Finance Protection Bureau, and there's terrible stories about exploitation in fintech. So fintech needs to be properly regulated. There needs to be transparency on who's getting loans.

I'm so glad that, finally, Dodd-Frank wrote [Section] 1071 that shines a light on who's getting business credit and who's not, moving forward. We've got to inject accountability into whatever tools are available because the shapeshifting point Terri made is so true. When there's money, there's going to be exploitation, and there's trillions of dollars flowing into the economy. Without accountability, the gaps are going to get even wider and more unsustainable. All the monetary policy and quantitative easing in the world will not be adequate if the emerging majority of Americans, people of color, remain on the outside of the banking system looking in and unprotected from the vultures that are looking to take advantage of them.

Friedline: I'd like to add to that. As we've been seeing bank branch closures, one of the things that fintech companies and social media companies promote in their offerings of digital currencies or their payment services, or whatever financial activities that they're developing and planning to offer, they're doing so saying that these new banking services will help low-income and racially marginalized groups. While there's a closure of bank branches, we hear news reports that Facebook, and now its rebrand of Meta, will be opening, perhaps, retail stores, and Amazon will be opening retail stores. As they are continuing to capture, at least within their share of profits, a larger share of profits from financial activities. I think that this is not unlike how banks have avoided opening branches in Black and Brown communities while creating spaces for payday and other higher-cost lenders to move in and exploit.

I think that there's a virtual, a digital dynamic for that to happen currently. I think it really behooves us to remember that we are in a particular moment in history where there ... like a White racial politic is making advances and we are seeing an upsurge of White supremacist violence. This should set off our alarm bells with regard to technology. While it may have some beneficial features, like at the big picture, what does it mean with regard to data collection and surveillance and privacy? When White people, who may feel more comfortable sacrificing their privacy in order to participate in the conveniences of fintech, those questions are, I think, really different. It's a whole different set of questions to ask Black and Brown people to sacrifice a much more limited set of privacy and be subjected to surveillance in these other forms, particularly in our current moments.

Farghalli: Camille, you worked on some of these issues around technology across the globe with the World Bank. Is there any lessons learned there that you think should be applied here in the fintech space?

Busette: Yeah, a couple of things, I think the first is that if we take a very bird's-eye view, the financial services system in the United States has, to a large degree, perpetuated high levels of inequality and high levels of inequality in accumulating wealth. As we move to more digital offerings, one of the lessons you do get from the global arena is that it is possible to bring responsible products to consumers who have not had interaction with formal financial services before. But as Bill said, those offerings have to be very highly regulated.

What I think I want to end by saying is that, whether we are talking about digital financial services or other kinds of financial services, there has been a record in the United States of cutting people out of access to credit and access to a range of formal financial services. That legacy is based on a history of practices and assumptions that we must interrogate, whether we're in the digital space or in the physical space. I think we need to do that and do it in a really fulsome way, in order to redraw the system so that it works for everybody.

Farghalli: I have one minute left and I wanted to ask all of you a closing question, so we've got to make this quick. If you get an invitation from the Federal Reserve in five years to participate in this panel again, what are some of the changes that you want to see to know that we made progress?

Busette: For me, it would be a much better credit scoring system, or a different credit scoring system, and much higher rates at prime levels of mortgage lending and other kinds of business lending to communities of color.

Farghalli: Thank you. Terri?

Friedline: I'll say an explicit racial equity mandate is something that I would like to see.

Farghalli: And Bill?

Bynum: It's great that the Fed is having this conversation. I'm glad we're going to hear from Lisa, José, and Abbey, their work so important. But it's even more important that the Fed and other regulators take a hard look in the mirror and consider their role in creating and allowing the conditions to make a 10-part Racism in the Economy series necessary. And what more can we do to inject accountability and equity into the financial system? All the HOPEs in the world are a drop in the bucket relative to need, but the banking system has to be held accountable and that what I'd like to see next time we convene.

Farghalli: I just want to thank you for kicking off our panel and our event. I do want to tell the audience, I could have asked them a thousand questions, they have a lot of speeches and research that are very interesting. if you want to follow any of them, I suggest going online and looking them up. I want to thank Bill Bynum, the CEO of HOPE. I would like to also thank Dr. Terri Friedline at the University of Michigan and Dr. Camille Busette at Brookings. Thank you very much.

Busette: Thank you, Nancy. And good to see everybody.

Friedline: Thank you.

Farghalli: All three of those panelists talked a little bit about what life is like on the ground. Now we're going to shift to a panel with folks who have spent most of their life on the ground, working with people to get them access to mortgages, business loans, and things like that. I am pleased to introduce Lakota Vogel. Lakota is the executive director of what we would call a native community development financial institution. So Lakota, you've been working there for about 10 years. Can you briefly talk about the work that you do there and what a CDFI is?

Lakota Vogel: I'm Lakota Vogel and I work at Four Bands Community Fund. It's located on the Cheyenne River Indian Reservation in north central South Dakota. And I'm a member of the Cheyenne River Sioux Tribe, so born and raised here. Briefly, a CDFI is a Community Development Financial Institution, it receives that certification from the Department of Treasury so we report to them. We're generally considered unregulated institutions. We can be in the form of depository institutions or non-depository; we're usually framed as revolving loan funds. We fundraise and bring capital into the communities we serve. We get to define the communities we serve, and usually it has to be marginalized communities or underserved communities; you have to have that within your mission statement. For mine, specifically, the geographic boundaries of the Cheyenne River Sioux reservation in South Dakota is comparable to the size of Connecticut. It means we have roughly 12,000 people spread across the state of Connecticut who commute 40 to 60 miles for basic services like groceries or health systems, including financial systems. Oftentimes rural geographies, which I represent, including reservation geographies, are ... we have limitless opportunities and I want to be sure that comes across because I am going to be sharing some difficult things that our consumers face, but there is a lot of limitless opportunities here and we're often overlooked and underestimated within our communities.

We've been operating within this market for close to 22 years. We're involved in every aspect of a consumer's financial lives. Most relevant, which is coming upon us, the new tax season, we are an IRS-certified volunteer income tax assistant site. On any given year for the past 10 years that we've been operating this site, we e-file over 300 to 600 tax returns for free for our community members. But tax year 2020 was very different for everybody as we know; we tripled our numbers and reached over 1,800 individuals within this geographic space. The average AGI or adjusted gross income for Cheyenne River sits well below the national average sitting around $22,215. We assisted over 350 individuals with getting access to this, which we know with financial institutions, the federal stimulus funds came in late so we would encourage our consumers to set up bank accounts and they would do that.

Oftentimes the stimulus came in late, so the bank accounts would close and the consumer wouldn't be able to access their fund and the refund would be sent back to the IRS and then they'd have to wait, which actually impacted one grandma who was trying to, and multiple people actually, get down payment assistance for a new home they wanted to purchase, but couldn't do that because the banks have closed the accounts on them without notifying them or just couldn't find or locate the borrower. We had a lot of issues like that, but this sort of opportunity trajectory really impacts a lot of our community members and is an often untold narrative in the national landscape that you don't ever hear about.

Farghalli: Thank you, Lakota. I wanted to introduce Robert James II. First, happy birthday to you. And thank you for spending part of your birthday morning with all of us.

He is the CEO of Carver Financial Corporation in Savannah, Georgia, and also the chairman of the National Bankers Association. Robert, can you start off by talking a little bit about the work you do for the National Bankers Association and what you hear from your membership in terms of how they experience access and disparities on the ground?

Robert James II: Sure. First of all, Nancy, thank you for the birthday wishes, thank you to the Federal Reserve Banks for sponsoring this very, very important discussion on racism and the economy. As you mentioned, I'm very privileged to serve as the chairman of the National Banker's Association. Our association has been in existence since 1927 as the advocate for minority-owned banks in the country. African American owned, Native American, Hispanic, and Asian American owned financial institutions, insured depository banks. Even though we're advocates for all [minority depository institutions] MDIs, many of our banks are also certified CDFIs. And as Lakota described, many of us are subject to those reports to the Treasury in terms of our target markets and our lending into those target markets. One of the things that's been very interesting as I've taken the role as chairman of the NBA over the past year is that even though we speak on behalf of all minority- owned banks, there's really a crisis when it comes to Black-owned banks in particular.

Before the financial crisis of 2008, 2009, the great recession, there were 41 Black-owned banks in the United States. Now that number is at 19 Black-owned or Black-controlled minority depository institutions. Those banks control just $6 billion of total assets; $6 billion sounds like a lot of money until you compare it to the total amount of assets in the US financial system. The total amount of assets just in insured depositories in the United States is $22 trillion. I had to write this down because I had to do this math, but Black-owned banks have $6 billion in total assets. There are $22 trillion in all commercial banks in the US. Black banks have 2.6, one-hundredths of 1 percent of the total assets under management by commercial banks. The wealth gap that we're talking about is not just between individuals and, between Black and White individuals, or Black and Brown individuals and White individuals. The wealth gap is actually very, very pronounced in our institutions and it's actually even worse. For our institutions, the ones that we actually own that are insured by the FDIC, that provide deposits and provide lending in the communities that's not predatory, that treats people fairly—for our institutions. many of which are over 100 years old, to have less than one that much less than 1 percent of the total assets in the banking system means that it is really imperative that we try to shore up those institutions and try to make them stronger so that we can make more services available to the communities that we serve.

Farghalli: Thank you. I wanted to actually carry what you just said to our next panelist, Dr. Lisa Servon, who is a professor and chair at the University of Pennsylvania. Lisa, you wrote a book about five years ago, I think, called the Unbanking of America. One of the things that you did is you actually went on the ground to work at some of these institutions to experience what life was like for a consumer. I'm wondering five years later, what are some of the challenges and assumptions we should be interrogating based on where we are right now with structural racism in the financial services industry?

Lisa Servon: Thanks, Nancy. And thank you so much to the organizers for including me in this event. So many good insights already. As Nancy mentioned, for several years of my research life, not too long ago, I wanted to understand why so many people were using what we called alternative financial services, things like check cashiers and payday lenders and pawn shops instead of, or in addition to, banks and credit unions, what we call mainstream financial services. Those are in effect the unbanked and the underbanked. I actually don't like those terms so much because I think that they imply that people, that there's a deficit, that these people lack something. Whereas what I found when I did this work was that people were mostly very aware of why they were making the choices that they did.

The reasons that they did was that banks were not serving them well. I spent several years first with chunks of time working as a teller at a check cashing store in one of the poorest zip codes in the country in the south Bronx, then as a teller and loan collector at a payday lender in Oakland, California. What I wanted to do the reason for doing the research that way was to get really close to how people were making financial decisions. I felt like even interviewing them, I couldn't see it the same I could if I was behind that window. I wanted to just spend a couple of minutes telling you a first, a few things I learned to answer your question Nancy, that I think will add some insight to our conversation today.

The people that I served at my teller window and the people that I interviewed after that, what they told me about their financial lives were first, banks were too expensive and didn't provide liquidity. I'll tell you a very quick story about a Black woman named Michelle, who came to my window in the south Bronx. Michelle wanted to get money off of her EBT card, her electronic benefits card. I'd seen people do that for months, but this time was a little bit different. Michelle had $10 on her card and we charged $2 to get that. No matter what the amount was that you wanted, whether you wanted $100 or $53, it was a $2 fee.

The fact that she was spending 20 percent of what was available on her card to get that money struck me in a new way that time. After she left, I asked the teller next to me, "Why would she spend so much money to get the $8 dollars?" And the teller next to me says, "Well, you can only get so many of these withdrawals from an ATM a month, and ATMs don't usually give $52 or $8 or an odd number of money. They give $20 bills. She needs that $8 so much that she's willing to pay $2 to get it." That's one lesson, the banks were too expensive and they didn't provide liquidity. The second lesson was about transparency. I just want to ask for a couple of slides to go up here that I'd like to show.

The first one is a basic shot of a bank, right? Generic bank. Think about what it's like to go into this bank, if you've never banked before, or if your family did not go to a bank, you come in and you have no idea what's on offer what's for sale. What questions to ask... what the difference between these products is? Let's see the next slide. The next slide is of a check cashing store, where I worked in the south Bronx. It almost looks like a fast food restaurant, right? With these big signs above. And they tell you exactly what it costs for all of these services. Even if these services were expensive, I am not an advocate for check cashers and payday lenders, people knew exactly what they were paying. Whereas they often felt like they were being tricked with fees that they didn't understand...overdrafts, fees that were changing from their banks.

The third thing I'll say that I learned from these experiences to wrap up and close is that people didn't trust banks. At the check cashing store they gave, they tipped me, they brought my fellow tellers and me cups of coffee. There was a sense of doing service for people and feeling like they were being well served. I heard story after story about being treated poorly, particularly for people of color, in banks.

Farghalli: We have about a minute left in this panel. I was hoping to ask all of you the same question. It came from something that Lakota wrote recently about her experiences with access. She wrote a piece and I'm going to paraphrase the quote. She said, "Many financial institutions have rationalized their failure to invest as a way to mitigate risk." Given that all three of you have talked about financial institutions, I wanted to get your reaction. There's a sense that everyone is responsible, but no one is accountable. Who is accountable when we talk about financial services and structural racism? Lakota, I'll start with you since it was your writing.

Vogel: I think everybody's accountable, but I think it's going to take co-creation between all the sectors. I think public, private, and the nonprofits and philanthropic sectors—it's going to take co-creation of products that fit our markets.

Farghalli: Robert?

James: I would agree with Lakota. Even those of us in unregulated financial institutions, we still ultimately have to play within the same rails, the same rules. Those of us who have insured depositories are still regulated by the FDIC, or the [Office of the Comptroller of the Currency] OCC, or the Federal Reserve, or our state departments of banking. We still have to follow all of the same rules. The construct itself discourages us from taking certain kinds of risks, even when we can see the needs. I think we are going to have to look at some more holistic solutions in order to accomplish some real change here.

Farghalli: Lisa?

Servon: I'll just add 100 percent to what Lakota and Robert already said, and I'll share one quick story. When I was living in New York City in doing this research, there was the creation of a New York City ID that people could use as a government-sponsored form of ID. I was at an event kind of like this. It was at the Ford Foundation talking about financial services. There was a representative of one of the big four banks there who was asked the question of why they didn't take that ID as an accepted form of identification to open up a bank account. Other banks, much smaller banks, were doing it at the time. There was some answer about how it wasn't federal, it was city, and sitting there and hearing that story and so many other stories, it's really hard not to read it as racism and an unwillingness to serve particular segments of the population. I agree that it's many different parts, and I think the Fed can play a leadership role here.

Farghalli: I want to thank Robert, Lakota, and Lisa. They will all be back shortly as we move to the policy proposal part of our event. They will be commenting on some of the policy proposals that we're about to hear. Thank you.

As you know, we've been talking a lot about financial inclusion and some of the disparities. We asked three people who work in different sectors to come up with some concrete policy proposals to change the conditions on the ground. Each of them will present their proposal, and then we will take audience questions. If you want to follow along, all the proposals have been submitted and are posted on the event web page for this event. First up is José Quiñonez. He is the CEO of the Mission Asset Fund. I will say, just reading all the proposals, one of the things that you see a lot is something that Camille Busette had talked about, which is the credit industry lending and home ownership. José, I'll leave it up to you.

José Quiñonez: Thank you so very much for including me in this very important conversation. I cannot think of anybody else to follow, but Bill and Lisa and Lakota's work and conversations about what is happening on the ground. At the Mission Asset Fund, our work started over 14 years go. Really trying to answer the questions yeah, we understand what's happening in the financial marketplace. We understand how people are being excluded. We understand that people don't have access to the financial products and services that we need in order to improve our financial lives. The question for us was, "Well, what do we do about it?" I mean, do we just, again, give them another lecture on how to improve their credit scores?

Do we hand out another glossy brochure on what credit scores are or how to balance the checking account and making sure that the glossy brochures are in Spanish, in this case? We knew we needed to do more than that. Understanding those barriers, understanding that in fact folks in the mission district, low-income and immigrant communities, it was more than just a question of access. It was more a question about affordability and also the products were not even available to them. In the mission district in San Francisco, we actually counted the number of financial providers, and we counted more alternative financial providers than there were Mexican restaurants along the mission corridor.

There were times where you have banks right next to payday lenders, meaning that people were not having access to the checking products or other services that were in the banks themselves. What we did was basically say, "Well, how do we help people get into the system?" What we did, we found that instead of looking at people from a deficit-based perspective, thinking that there was something just wrong with them, or there was something lacking about them, or that they were just doing something wrong, that we needed to change that. We said, "Well, what are they doing that is actually working?" What we found was that immigrants particularly were participating in these lending circles, this very traditional time-honored practice of people coming together to lending and saving money with one another. In Mexico they called them tandas or cundinas, and all throughout Caribbean they're called susus.

Really this practice is known the world over by a thousand different names. What we found was that, that activity, that informal financial product, was really the basis for lending and borrowing money with one another. What we did with MAF was based basically took that activity and formalized it by asking people to sign a promissory note, basically saying, I promise to repay this loan in this particular timeframe. Then that promissory note was to transform it into a formal financial activity that we were able to report to the credit bureaus. By reporting to the credit bureaus, we're able to help people improve their credit scores or get credit visible. We did that by basically again, changing the way we first thought about them, from basically thinking about them from a deficit-based to more of a strength-based perspective, and then thinking about, well, how can we use finance, the best of finance and the best technology in the service of poor people?

Because we realized that a lot of our clients were essentially secondary users to the products and services, that are offered at the banks. I think Lisa spoke to it very well about how that is actually the case. We said, "Well, let's put the best of technology in the best of finance in the service of the community that are the most needed. From that, we were able to build technology, build products, to actually get them into the financial marketplace. And then of course, we went beyond that in terms of how to scale that with partnering with other nonprofit organizations, which gets me to the core of our proposal, which is that we have to do better at getting people banked, because it's not just about participating in programs like lending circles, but it's about helping them in the time of most need. During this past pandemic, as we heard even today, was that even the federal government had a very difficult time actually getting money to the people that needed it just because they were not in the financial system.

This is a critical issue beyond just not having the right products and services. It's about how do we get everybody back. The way to do it is not with the current products; we need to conceive those checking accounts in a very different way to create them in a safe, responsible manner so that more people can actually get into the financial system. With that, we also need to invest more in a nonprofit infrastructure. Right now, a lot of nonprofit organizations are hurting. They routinely run deficits on their budgets and their funding. What we could use to fund this is the money that we're lending against bad actors in the financial marketplace, that we can actually use that funding to actually support the good actors in the financial marketplace so that we can provide better services to the people that need it most. To me, that's like the core of the proposal that really is born by our experience in how to help people improve their financial lives because it's doable, but we have to do it with intentionality, with respect, and then also support the dignity of the people that we're serving.

Farghalli: Thank you, José. Next up, I want to introduce Lisa Rice. She is the CEO of the National Fair Housing Alliance and has a proposal looking at home ownership and first-time home buyers, Lisa.

Lisa Rice: Hi, Nancy; thank you so much. I want to thank the Federal Reserve Banks for hosting this series on racism and the economy and inviting me to participate. The solution I would like to discuss combines two methods for addressing racial inequity. It's called the first-generation homebuyer special purpose credit program. Before I delve into this approach I want to talk a little bit about why this kind of an intervention is necessary. The home ownership gap between Black and White Americans is as large today as it was when redlining was legal. In fact, White households are 71 percent more likely to own their homes than Black households. The home ownership gap is so important because it drives the racial wealth gap, but home ownership remains elusive for far too many people of color because the financial services system was not constructed to serve them. It was designed to exclude them. Centuries of race-based laws and policies have created numerous structures of inequality, which still plague us today.

I want to delve a little bit into just one of those systems, which is the dual credit market. If you could share the slide, please, I'd appreciate that. Now, what you're going to see is a representation of the dual credit market. On the blue side, that represents the financial mainstream. Those are traditional lenders like banks and credit unions. The tan side represents nontraditional lenders like check cashers and payday lenders. The blue side of the market is more heavily regulated than the tan side, so there are more protections for consumers who access credit there. When consumers access credit from providers on the blue side, their positive behavior gets reported to the credit repositories, enabling consumers to become credit visible and benefit from their good behavior. The blue side is wealth building.

However, many of the players on the tan side have business models that are designed to really push borrowers into delinquency for fee extraction. These entities typically don't report positive consumer behavior to the credit repositories, leaving people credit invisible and unscorable. In a perverse arrangement, if people who are accessing credit on the tan side don't pay their obligations on time and that debt goes to collections, that negative behavior often does get reported to credit repositories. When consumers access credit on the tan side it's often wealth-stripping; moreover, some credit scoring systems will actually ding you for simply accessing credit outside of the financial mainstream. Even if you pay your obligation on time, your credit score can be deflated. Due to redlining segregation and other discriminatory practices, financial services providers on the blue side of the graphic are hyper-concentrated in predominantly White communities and players on the tan side are hyper-concentrated in communities of color.

We see it reflected in the data, right? This all means that consumers of color are much more likely to live in credit deserts, be credit invisible, have artificially deflated credit scores, and have lower wealth. The proposal I'm presenting for a first-generation special purpose credit program combines two racial equity provisions to circumvent systemic impediments, like the dual credit market that you just saw, to enable consumers to access quality credit. The first ratio equity provision incorporates an underutilized tool called special purpose credit programs. The equal credit opportunity act, or ECOA, allows financial institutions and other entities to create special purpose credit programs to expand fair access to credit, particularly for consumers and communities impacted by discriminatory practices. Special purpose credit programs can be really game-changing pro-equity tools. They provide a tailored way for organizations to meet special social needs and benefit economically disadvantaged groups, including groups that share a common trait like race or a national origin. ECOA also allows nonprofit and for-profit entities to use this tool if they determine a tailored program would benefit a class of people who otherwise would be denied credit or receive it on less favorable terms.

Now, the second part of the proposal, special purpose credit programs, centers around a down payment assistance program developed by the National Fair Housing Alliance and the Center for Responsible Lending with research from the Urban Institute. Down payment programs are one of the most effective means of helping economically disadvantaged borrowers access home ownership. A special purpose credit program can contain many program features; for example, they can be designed to eliminate credit scoring requirements or exempt borrowers from risk-based pricing restrictions or circumvent credit overlays. While these types of provisions may be necessary to help afford consumers an opportunity to access credit on more favorable terms, down payment assistance really helps close the racial wealth gap and mitigates several primary reasons people of color are denied credit like high debt-to-income and loan-to-value ratios.

Using the first generation screen provides a race-neutral way of targeting critical assistance to consumers of color. There are roughly 5 million potential first- generation homebuyers in the United States; 70 percent of those first-generation homebuyers are people of color. Targeting down payment assistance to this group can significantly close the racial wealth and home ownership gaps. A fully funded—now that's $100 billion—a fully funded special purpose credit program that provides down payment assistance for first-generation homebuyers will increase the home ownership rate for Blacks by 5.6 percentage points. It'll increase the home ownership rate for Latinos by 4.2 percentage points. It'll also increase the home ownership rate for native and other groups by about 3.3 percentage points. Thank you very much for allowing me to share this proposal, and I'm really looking forward to the discussion.

Farghalli: Thank you, Lisa. Our last proposal comes from Abbey Wemimo. He is the co-CEO and co-founder of Esusu Financial. Abbey, it's interesting in terms of your proposal, because it was already mentioned at the top of this event, how we should rethink credit scores.

Abbey Wemimo: Absolutely. Thanks a lot for that. I just wanted to express my deepest gratitude to the Federal Reserve Bank System for including me in this program and the exceptional panelists to essentially opine on such an important issue, what we're dealing with in society today and really talking about, the systemic issues that we face, rather than the symptom of larger disease. The proposal I'm going to be focused on today is how do we bridge the racial wealth gap through the power of data, particularly as it relates to credit building. I'll be remiss If I don't tell my personal story, which is directly intertwined into the issue in and of itself and the solution we've created at Esusu.

I grew up in the slums of Lagos, Nigeria. I lost my father at the age of two, and I was raised by my mother and two feisty sisters. My mother believed education was the most important ticket to have a better life. She afforded my school fees to one of the finest high schools in the land. Fast forward, I had the opportunity to come to the United States, immigrating from Lagos, Nigeria, 80 degree weather to negative 22 degrees in Minnesota. When my mother and I came, something important happened. We didn't have a credit score. We walked into one of the largest financial institutions in Minneapolis to borrow money. We were turned away and had to go borrow money from a predatory lender at over a 400 percent interest rate. In addition to that, my mother pawned my father's ring and a bunch of other jewelry. That's how we got started in the United States. Really inspired by this experience, your status is based on three core premises; where you come from, the color of your skin, and particularly your financial identity should never determine where you end up in the wealthiest nation the world has ever seen. Dare I say anywhere in the world.

One thing that really struck a chord as it relates to my story is this issue of credit building. What happened to my mother and I is not only common through our own immigrant experience. There are 45 million people in this country that do not have a credit score or are considered credit invisible, or have credit thin files, which means they don't have a lot of credit, or recent credit profiles. This is very pervasive, particularly in immigrant, African American, and other minority groups. I found the data very interesting from bank rates that essentially illustrated when communities like this are going to get a $200,000 mortgage over a 30-year period, someone with a 620 credit score, which is considered subprime credit score, versus someone with a 760 credit score and above, which is considered a good or a prime credit score. The person with a 620 credit score will pay roughly $155,000 of interest over the lifetime of that 30-year mortgage and the person with a 760 credit score will pay only $92,000. If you do that math, that's $64,000 extra over a 30-year mortgage.

You might think that's in infinitesimal but it's big. If you think about the 41 million African Americans in this country, 15 percent of them have poor or no credit scores. That's roughly 6.2 million people. If you multiply 6.2 million times $64,000, that's over $400 billion in additional interest rates they would have to pay. That's three times the size of Minnesota's budget. That's the magnitude of what we're dealing with here. So at Esusu our focus is essentially to help capture on-time rental payment data and report it into the credit rating agencies. You might ask, "Why is this important?" Today, less than 10 percent of that data has been captured and structured and reported into the credit rating agencies. If you pay your mortgage today, that data is captured and reported. All we are saying is let's give credit where credit is due.

On an average, 35 percent or 110 million Americans rent. They send on average $1,100 to their landlords, which accounts for $1.44 trillion annually in rent payments. If we capture this data and report it, predominantly low- to medium-income people that rent will be able to essentially get the benefit of having this data reflected, which can unlock a lot of financial products for them. At Esusu, we work with large multifamily owners, the landlords, and operators to report on-time rental data. Today, landlords essentially own 35 percent of the US housing market; we're in all 50 states and cover over 2.5 million rental units. The results of this initiative have led to 51 points on average in credit score improvement and built or established credit scores for over 150,000 Americans.

That's essentially what we are proposing here. The true value of what we're doing was essentially exemplified in one of our customer's story. She said something that really struck the chords of my heart, which is, "Today, I'm not renting anymore; I picked up the keys of my home and I'm recommending Esusu's service to my neighbor."

That's what gets us up every day at Esusu, and our proposal is really simple. There are a lot of things that have led to the marginalization of low- to medium-income people in this country. The average debt in America is roughly $92,000. These 45 million people, if they get access to that debt on average, we unlock over $4.1 trillion in capital for folks. That's not only good for those people, that's not only advantageous to bridging the racial wealth gap, but that contributes towards taxpayers dollars. It really fulfills the true founding creed of these United States, which is to make it more perfect. That's what we're fighting for every day. We're calling on Congress to pass a policy that mandates the reporting of on-time rental data into the credit rating agencies so we can pave a permanent bridge to financial access and inclusion for people of color and eventually everyone. Thank you.

Farghalli: Thank you, Abbey. Before we go to the response panel, I did want to ask an audience question to all of you. We have a couple of minutes, and it gets to the question of data that all of you talked about. How do you measure racism in lending practices when it comes to credit scores and home ownership and lending? What is the best way to do that?

Rice: Well, there are multiple ways to measure racism in lending practices. You can look at access and how well people are accessing different kinds of financial services, not just in the mortgage space, but also in the homeowner's insurance space and in other related spaces. You can also measure the cost, and Abbey and José talked about that as well. The cost of accessing that credit is another way to measure. There was a research analysis done by Berkeley Institute researchers that showed that African Americans and Latinos are paying $765 billion more than their commensurate level of risk when they do access mortgage credit. There are multiple ways of measuring it.

Farghalli: Thank you. I wanted to... José, do you want to add a quick word before we bring the panelists back?

Quiñonez: I think that's a big question. How do you measure racism overall? I'm sure there's a researcher that's behind that, but I think we have to look at the consequences, the outcomes, the end results of people's financial lives and then work backwards from there. Because what we're all saying is basically, these results that we're seeing, the gaps that we're talking about, didn't just come. They're not God-ordained or anything like that. They're products of our own making. So we have to accept that and then work backwards from there.

Wemimo: Yeah. If I may, I'll just add a quick thought, Nancy. I think measuring the impact of racism and as it relates to lending is the wrong question, right? The question is are we dealing with a symptom of a larger disease and what has happened in the past, right? If you go back to the legacy of redlining, what that has cost, what the Federal Housing Authority did marginalizing predominantly people of color and African Americans, and then the credit scoring system has something important called the age of credit and our system treats you like guilty until proven innocent, right? So you're starting from 10,000 yards behind and you have a White family that can essentially get credit passed down at the age of 14, and then you have an African American household coming to the United States, like I did, starting from zero. That's how you measure it. You have to go back to history and don't relegate that fact. Then we can have a commonplace conversation.

Quiñonez: That's right.

Farghalli: Thank you. I wanted to now introduce our panelists from the Grounding the Work panel. Each of them had a proposal to look at and they're going to be commenting on the proposals that our presenters just made. Lakota, I'm going to start with you. You were assigned José's presentation on lending circles.

Vogel: Yes, thank you. Great proposal, José. I'm privileged to be able to comment on it. Some of the things that, in summary, really stuck out to me were some of the lines that you mentioned that products really aren't designed for the people that we're serving. At best, we're considered secondary users of these products. There seems to be a value system based on individuals who can keep cash idle and usually, at worst, we're an afterthought. Most of our populations are invisible to financial institutions and that really stuck out to me, as well as that we spend a lot of our time talking to people and trying to coax them into products that weren't made for them.

I also really believe that we have the standard assumption in America that low credit scores or a lack of credit history imply people can't pay. I think that your proposal really talks about relationship lending versus transactional lending, which I think is what we need to get back to. I know that there's a cost of that; it affects ROI, the return on investment, but it needs to be a co-created solution so we can get back to that and serve the marginalized communities we have. I have a saying, and I think others have heard this before, but how we perceive is how we proceed. Oftentimes we live in communities that others perceive as risk, and I don't think that's accurate. Everything that you wrote about is talking about perceiving our community with the right risks in mind if at all.

I think some things that are challenging [are things that] for generations we've been asked to accept. We're reminded of a scarcity mindset people are imposing on us, saying the pie is only so big for your population set that you're serving. We're told to bite-size our expectations, which is that the individual is expected to overcome the structural and it gets exhausting for our families. To convince them to participate in a traditional financial cycle is hard for them, and understandably, right? I think what it takes is community members like ourselves viewing our community from the mindset that's needed.

At Four Bands Community Fund we actually did a regression analysis on our loan portfolio. We analyzed 105 small business loans to determine what was mitigating risk. Of all the loans we've done was it credit score, and we analyzed it. What came back was it was character, so how the native employees who sat in their seat and judged the character of our community members, how we judged our commitment into business and allowed the relationship to develop with the client and credit score, were the largest mitigators of risk, not collateral, not equity, none of those things that often are barriers for our clients to access due to asset-stripping strategies for the past centuries. I think your proposal is right on with the lending circles and it's got great success; it's back to that relationship lending.

Farghalli: Thank you. I wanted to now go to Robert who was reading Lisa's proposal.

James: Thanks, Nancy. And thanks to Lisa and the National Fair Housing Alliance for a really interesting, and I think very impactful, proposal regarding down payment assistance. I want to focus really on the down payment assistance portion of the proposal. Couple of just quick observations. One is that, in my life as a lawyer, I've had to grapple with constitutional issues around, essentially we're... The way that our constitution has been interpreted in the 14th Amendment requires us to come up with race-neutral solutions to race-based problems. I think that's a fundamental question for a different day in a different group, but that's a really very challenging proposition when you can see, all this hard evidence of really race-based problems, but yet you're forced to try to put together race-neutral solutions. I think that the notion of first-generation homebuyers being a proxy for who would receive the down payment assistance is a brilliant approach because it's race neutral. It doesn't take into account race. I think that's really actually critical in terms of a policy like this.

Couple questions I have just in general in reading the proposal. It wasn't really clear where the money would come from. The $100 billion that you're talking about, it wasn't exactly clear where that would come from. I think that's important if we're talking about federal subsidy or federal appropriation. I just wonder if there has been any economic analysis to support the value proposition of making that investment. My supposition is that if you did some economic analysis, you would be able to show incredible return on investments from the Treasury. If the Treasury was to invest this money in down payment assistance, the return to the GDP, the return to our overall economy and the tax space, would be exponential. I would think you would want to go down that rabbit hole.

Another question I have is whether the funds are repayable. I wasn't exactly clear whether that would go into the mortgage itself and get repaid or some portion of it. That's a question that I have. Any thoughts about, you sort of imply this in your proposal, but there really needs to be, in my opinion, a wholesale review of the 30-year mortgage product itself. The 30-year mortgage was an invention that created some of this wealth gap in the first place, right? Federally insured mortgages that went to largely White families and not to Black families that were based on federally insured 30-year mortgages, that also actually helped increase the wealth gap between Black banks and non-Black banks. The 30-year mortgage product itself may need some re-engineering because, it's just not sustainable in many of the markets that we serve for anyone. The affordability in housing is far out-stripping people's ability to earn money. For working class people, particularly in urban environments, it's just becoming more and more impossible for folks to even think about buying a home, particularly if they're first generation. I think we also need to look at the 30-year mortgage as a construct and start thinking about, how do we re-engineer that to make it more relevant for the current economic environment?

Farghalli: Thank you, Robert. I now want to just go to Lisa who will be commenting on Abbey's proposal.

Servon: Thanks so much. I really enjoyed reading his proposal and have thought for a long time about one of the ways that we could fix or improve credit scores is to take into account so many of the things that people pay on time and that are not recorded or thought of as part of that algorithm, including rent, including utilities. Reading the proposal made me think about one of the people that I met during the research that I talked about before. It actually made me think about a lot of the people that I met when I was working behind the bulletproof glass as a teller, and then interviewing people who had turned to payday lenders, largely because they didn't have the right credit score to be able to get a cheaper loan, a more affordable loan.

I was remembering sitting across a Starbucks in Dallas/Fort Worth with a guy named Dan, and Dan was a guy who'd used the same bank for 30 years. He was in his 50s; he held the same job for almost the same amount of time. One of his adult children had recently lost his job, so Dan was doing everything he could to some support his son's family, along with his own, including wrecking his own credit score, because that's what parents do for kids. He had maxed out his credit cards. He was late on some of his bills and his credit score took a big hit.

Dan recalled the time—he and I were probably about the same age; he was maybe a little older than me at the time—when he could go to his bank and get a $500 loan based on his reputation and a handshake. He told me, he said, "They see my paycheck coming into my account every two weeks, but they won't even consider giving me a loan now,." Dan was White; if he had been Black there's little chance that he would've gotten that handshake loan even 30 years ago, and this refers back to Bill Bynum's story from the beginning of the seminar. So I think the issue that Esusu tackles is a critical one, that has the potential to level the playing field between people who rent their homes and people who own their homes.

Conversations about this issue have been going on a long time. But the current problem obviously is that these services like Esusu cost money, right? So this proposal to make it mandated is critical so that neither landlords nor tenants have to pay to be a part of it. It's another way in which financialization is extracting wealth from low-income communities and communities of color. I think so much of the unevenness that's structured into our economy and policy like this is invisible to the average American.

I mentioned this just yesterday in a class of first-year graduate students. They were kind of like wide-eyed that they didn't realize that renters are disadvantaged in the credit score. While racism and the way it's structured into our society isn't new, the financialization of our economy and society is growing, right. The example of financialization that's most connected to what we're talking about today is this credit score, and I think again, a lot of people, especially younger people don't realize that credit scores were not even a thing, until the 1980s, right? People weren't using them as widely. Now we have this thing that my colleague, Fred Wherry, who I know, José knows Fred's work very well, he calls financial citizenship, that we need these of credentials almost in order to get access not only to cheap credit, but housing, a job, et cetera. I think that's why this proposal is so important.

I have a couple of thoughts and questions just about maybe sharpening it or some further things to look at. First, I think it's really interesting and great that the state of California recently passed LSB 1157, which is a law that does at the state level exactly what Abbey is proposing here at the national level: mandating landlords to report on-time credit payments. As we advocate for this national level policy... my dog is barking in approval... it's going to be important for researchers and advocates and policymakers and the Fed to follow that story and hopefully gather the kind of evidence that will help make the case for taking this idea national.

A couple of quick things about the data that were cited in the proposal. I wanted to know, as a geeky researcher, how many participants were in that study, how much time was there in between the intervention, and the 51 percent increase in credit scores. While it makes the current credit scoring model better, potentially, we also need to think, do this kind of pragmatic, maybe small step that can have huge ramifications. And also think about, kind of blasting the credit score notion wide open. Thanks Abbey, for this proposal and giving me the opportunity to comment on it.

Farghalli: Thank you, Lisa. One of the things that struck me about all the proposals was this idea that José had in his submission about meeting people where they are. I think all three, actually, talk about that and the structural change that needs to happen. I wanted to get to some audience questions, and I know this is a very big panel. We have about six minutes left and I'll direct some of the questions, but we got a lot of questions around intergenerational and generational wealth. One of the themes that we've seen in the questions is how do you use intergenerational communication to help people get over their distrust of traditional financial institutions? José, do you want to start?

Quiñonez: Yeah, just a quick thought, two thoughts. One is in everything that we do we make sure to communicate its important value, which is the level of people's wealth does not equal the level of worth. I know that's shocking to us to hear that, right, because we think that wealth is the only metric that we use to evaluate a person's worth, and that is not the case. I think we need to not do that anymore because we have to look at people and uplift the human dignity through technology and finance. It's really important.

In terms of the intergenerational wealth, that is something that we talk about actually uplifting the rich traditions that people have in managing their finances. Instead of belittling that, we actually uplift that. We have to uplift the rich tradition that has happened throughout generations. All of this is to say that it becomes logical, when you have to have a mental shift in perceiving the people that we're talking about, that they're not broken, that they're not belittled, that they're not risky. In fact, they're the opposite. Once we shift the way we see them, then we can actually see the richness they're in.

Servon: I want to just follow José for a second because in doing my research in the check cashing store in the South Bronx, I met a lot of people who were doing these rotating savings and credit associations, like José has started, and really thinking thought about connecting to the mainstream economy. From the intergenerational perspective, what I saw is maybe the first generation folks oftentimes using those informal mechanisms exclusively. The next generation maybe used banks and/or check cashers and payday lenders, but they continued to use those rotating savings and credit associations. One of the women I met, who ran one of those in the South Bronx, actually had people deposit money into her informal credit, informal savings association, into her Wells Fargo account. She was using the formal, the mainstream bank, in order to make her informal mechanism work for people. I thought it was incredibly sophisticated.

Wemimo: Yeah. I think, the way we think about this is essentially to rethink the models, age of credit, if we're still looking at age of credits from a credit access standpoint, we're kind of wasting our time, to be honest with you. We need to just expand the way we look at financial identity that goes beyond that three-digit number so someone has a holistic picture. Someone has been paying their rent for seven years and that data is not in their credit profile and they get denied for a mortgage. There's something wrong, right? We need to have a like-for-like idiographic approach to essentially understand risk, not just use nomothetic, one-size-fits-all approach to price risk. That's what we need to do; it takes a lot of work. It takes reframing the way we think about credit. That's why I sort of concur with what Robert said; I think Lisa's proposal also plays a quintessential role in creating and leveling that playing field.

Farghalli: I wanted to get to a last question since we have about two minutes left, and I wanted to ask all of you to contribute to this last question. It was the last question I asked the first panel. In five years, if you're given an invitation to participate in this panel again, what would you like to see that will make you believe that we've actually had constructive change? Lisa Rice, I'll start with you.

Rice: Well, I'd love to see the GSEs and FHA accepting different credit scoring mechanisms. Right now, they only accept one credit score model, which is in my opinion an outdated model. We have newer models that have less discriminatory impact, and I think that would be significant. We've been trying to get that policy change for over 15 years, and if we could get it done in the next five years, that would be huge.

Farghalli: Thank you. José.

Quiñonez: Well, I'd love to see the Federal Reserve Banks more involved in the conversation about how to get people banked. Maybe we can expand upon the FedNow program into creating Fed accounts for unbanked individuals.

Farghalli: Lakota.

Vogel: I would like to see financial institutions investing in Indian Country reservation-based communities with any loan product. We'll take any of them.

Farghalli: Abbey.

Wemimo: I think it's shrinking in the wealth gap. That'll be success because that's the ultimate metric we should.... I'm really passionate about. So if it's 10X now, maybe it's 2X or even eradicated that would be success.

Farghalli: Robert.

James: Black home ownership increasing.

Farghalli: And Lisa, last word to you.

Servon: Sure. Free basic bank accounts for everyone that are mandated by government, and that shrink the time between when people put a check or money into their account and when they can get access to it.

Farghalli: I want to say thank you to José, Lisa, Abbey, Lakota, Robert, and Lisa for the great two panels. I also wanted to remind everyone, if you want to read the proposals, you can go to the event website. They're all listed there. Thank you very much.

I want to turn to a conversation with three Federal Reserve presidents. We have Esther George, the president of the Federal Reserve Bank of Kansas City. We also have Thomas Barkin, the president and CEO of the Federal Reserve Bank of Richmond, and finally Raphael Bostic, the Federal Reserve Bank of Atlanta president and CEO. Welcome.

I wanted to actually start with a question about today. It is about inflation, which is something that all of you have commented on. Given what you've heard in terms of the strain that people experience when they don't have access to traditional financial services, I'm wondering how you think about inflation in the context of financial services as millions of households are facing higher daily expenses right now. Esther.

George: Well, thanks Nancy, for that softball question. Obviously, the very founding of our institution and the mandate we've been given is targeted at economic and financial stability. I think today's panel is a reminder of how important that stability is to every segment of our economy, and particularly to those that tend to bear disproportionately, whether it's the cost of financial services, the cost of a loaf of bread, or other things. All of this is important to the Federal Reserve and how we carry out what we do.

Farghalli: Raphael.

Raphael Bostic: I have to say, I totally agree with Esther on this one. It's one of the reasons when you think about how we have set our benchmarks to monetary policy, we've set inflation to not be very high. That's precisely because we need to have an environment where every person can function and not have the stress about the prices today, the price they're going to have to pay in the marketplace. That's one of the reasons why I think you've heard from all of us concerns about the higher levels of inflation that we've seen recently and the need to get that back under control.

Farghalli: Tom.

Thomas Barkin: Agree with my colleagues, and then I just point to one interesting thing; a fact to look at is the most recent Michigan Consumer Sentiment survey. What you see is despite the fact that wages are up, despite the fact that, if you will, the top line economy is very strong, sentiments at a level that you might associate with a recession. I think that's very much because of the impact the prices have on people and in particular, those who are at least fortunate and who do in fact pay for gas and pay for food. And that's a huge part of their income.

Farghalli: Yeah, it's interesting. Retail sales data obviously came out today and it was good, and it was high, but it's also because people aren't necessarily buying more. They're just paying more for certain things. It's an interesting context in terms of inflation. I wanted to talk a little bit about the FedNow program, which I think is going to be the biggest revamp of the payment system in the last 30 or 40 years. I wanted to ask, given what we've heard over the last 90 minutes regarding inclusion and inequity, how do you design a program that has financial inclusion at the heart of it so you don't duplicate some of the issues that we have talked about over the last 90 minutes? Esther?

George: So Nancy, this FedNow work, which really was to recognize a couple of things going on. Technology now allows us to deliver things very differently as you've heard from the panelists there. When the Federal Reserve thinks about its role, we really think about three things. One is, is this an efficient payment system? Do consumers benefit from lower cost by our involvement? Is it safe and secure? Because I also heard the word "trust" in this conversation, which is, can I trust when I press send or I take my money to pay for something that it's good money? Of course the last thing is the accessibility piece. We want to make sure, sure that across a network of some 10,000 financial institutions in this country, whether you're in rural places, whether you're in metropolitan places, there is broad access to this system. This rail is really intended to reduce the time. So again these proposals we heard about today in some of the feedback, the liquidity part of this, how quickly from the time I am set to receive something that I can do something with that money is really at the heart of what we're trying to accomplish with building this new infrastructure, this new highway on which our payments will flow. I think it's a very important aspect and it's a direct role that the Fed plays in trying to make sure this payment system works for everyone in the economy.

Barkin: When Lisa mentioned liquidity it really and immediately took me to FedNow and to brainstorm this question of how much of people being unbanked or underbanked is because, if you will, when you get your check you need to have that money right now. If the bank's not open, or if the bank's not available to you, you go to a check cashing outlet. If it really could be available immediately, I'm intrigued with the possibility of how many people might find that barrier reduced.

George: And not having a limit on how many ATM visits, if you were able to access your money that way.

Farghalli: Raphael, I did want to ask you, given what we've heard about structural racism in the financial service sector, one of the things you heard during the pandemic is people would get their relief checks or their stimulus checks, and they went to the bank and they couldn't actually deposit it and they had to wait for it, or they went to other traditional places because they didn't have big accounts and they got charged high fees. How do you think about structural racism in terms of what the Fed's mandate is?

Bostic: Well, I would say Nancy, a couple things on this. First of all, I would echo where my colleagues were in the sense that I do think that technology can speed access to funds and make it possible for people who need money right now to access it. We're seeing innovation right now in the private sector where companies like Walmart and others are basically saying when your paycheck comes in, you can get the money today, and day-to-day I think we're going to see more of that. I think FedNow really facilitates that.

I also think that we learned a lot coming through the pandemic about what is necessary or what's required in the system for people to get their funds. We've actually deployed that through the pandemic. The different waves of relief, you heard far fewer complaints about these things in the third wave than the first wave, because we learned a lot about how people do access it and how institutions facilitate those things, so I think that we can make a positive change there.

The third thing I would say is you've mentioned this earlier today, which is the importance of meeting people where they are, understanding the circumstances that people are living in and how they need to access and use their resources and making sure that all of the tools, and all the services, and all the products that are available do that. We've just put up a special committee on payments inclusion where we're looking at ways that the innovations that happen in payments might exclude some people and we're encouraging innovators to think hard about "Can we get them included?" I think we're doing a lot on this to try to make a positive change, and events like this have really introduced some interesting thoughts for me as the things I need to push further as you go ahead.

Farghalli: Can I follow up with you? It's more of a personal question to all of you is how do you interrogate your own assumptions and how do you ask other people to interrogate theirs? You produce a Beige Book every year. It comes out, I think eight times a year. It's anecdotal; all of you talk to CEOs, entrepreneurs, workers, creators in your Districts, right? And this is the 10th session. You've heard a lot of input from a lot of people, so I'm curious what questions you're asking people to answer as you talk to them about structural racism in the economy.

Bostic: I'll just say for me one of the things that has really struck me through this whole series is how there are so many assumptions embedded in how our structures operate. Now I think a lot about, and this came up today, in terms of perceptions of character. How do we think about people's lives as a commentary on the quality of the person? We heard José say earlier, levels of wealth do not equal levels of worth. All of these are very significant. I've actually personally done a lot of research in this area, and I've often put the amount of wealth saved in your savings account as an explanatory variable. This series has really helped me to say, well, wait a minute, that level of wealth is not actually an exogenous thing that just comes up. The structures and people's histories play an important role.

It's gotten me to really approach things, and I use the phrase people positive, and how are we making sure that our structures and our systems are maximally people positive and not penalizing them for things that have happened in the past, but really giving people a true shot. When I talk to lenders and others, I ask them: Are you sure that your products are really reaching everyone they could? Are your customers having to go to other sorts of service providers that are higher costs because you haven't really examined the set of products that you offer? And I am having different conversations. I think as we all start to go through this, we're going to wind up with a different set of products that will start to tick off some of the things that we heard people are hoping for five years from now.

Farghalli: Esther?

George: You know, Nancy, one of the things I think all of us have to guard against, and it's particularly true for those of us at the Fed, are blind spots. It's really not the stuff that you don't know, it's what you think you know that just ain't so, I think this saying goes, that that can often hurt. By the very nature of how we're structured this idea that we do sit down to talk to people in communities, to bankers, to business leaders, to those that are serving low- and moderate-income communities, these proposals here are really at the heart of what shines a light on our blind spots, of what really tells us there are things here that maybe we might have not ignored intentionally, but just had not surfaced in a way. I think this series has really helped with thinking about what are those things that we should know that we can act on.

Barkin: You have to be humble, really humble, and that's probably pretty hard for the three of us, but you actually have to be humble about what you know, and what you don't know, all the de-biasing literature you said says you need information from multiple places. I bought Lisa's book about an hour ago when she was talking, on Amazon, because what she had to say was so interesting and I knew there was so much more from those interviews than what she shared. We've had a great research team in our shop. We've had them go down to first principles here on this whole issue of wealth and take me through, if you will, a bare bones look at, how the research would play out in these places. We've talked about being in communities, and one of the things I focus myself on is going to the low-income communities. In my District, a lot of them are inner city, but a lot of them are also small towns. How do you figure out on the ground, what actually is happening, what doesn't happen, and what works and doesn't work? I just think you have to test yourself in places you're not familiar if you're going to take a shot at de-biasing yourself.

Farghalli: One of the things, Tom, that your District has really focused on is broadband. I think you made a speech a few months ago about how there is perception that the broadband issues and the digital divide really exist in rural areas and not urban areas, and they are in urban areas as well and we saw this through the pandemic. We seem to be shifting in a lot of ways to a cashless society where we're asking people and businesses to do more with technology and mobile phones. I'm wondering again, how do we do that without hardening inequity if broadband is not a reliable, consistent thing across the country?

Barkin: Well, because we spent so much time in the inner cities, in the small towns, even before this pandemic, broadband was a research focus. What's interesting is our team estimated it's roughly $80 to $100 billion to cover the country that doesn't have broadband with both broadband and whatever subsidies you need to make it affordable, who can't plus or minus. The interesting thing is with this new infrastructure bill and the stuff that's been passed over the last five years, that's about the amount of money that's out there. I think for the first time you can actually tell yourself, there's now money to deploy broadband. Now it's great to pass legislation, but you've still got to deliver the money. I wrote another essay on a thing called the Last Mile.

We've now been in a lot of these communities, and it's really challenging if you're an inner-city community or a small town to get access to this money, which has already been passed. There are all sorts of process you have to go through and they're pretty sophisticated. People at the local level don't have the sophistication to get them. There are providers in these markets who have maps that seem to show that everyone's covered when in fact they're not covered, so you've got information gaps. This question of how one can enable, and there are a lot of nonprofits working pretty productively in this space; in West Virginia in particular, I think there's some interesting stuff going on in actually just helping communities go through the process to get access to the money that has already been passed so they can deploy the broadband and get it out there faster. I think it's absolutely critical here. I'm really hopeful that this particular issue, at this particular time, has now been funded. And it's now just needs to get deployed and quickly.

Farghalli: I wanted to ask you, there's been some criticism; obviously you're Fed presidents, you get the criticism all the time, but there's been criticism that you haven't done enough in this space and you have a dual mandate and you also have a role as a regulator. There's conversation about whether your scope should be expanded. Do you feel like you have the tools that you need to create a more equitable access and better relationships for individuals with financial service?

George: Nancy, I'll start and I'm sure my colleagues have thoughts too. I think we do. I would couch it in this way. The Federal Reserve cannot solve every problem and we should not. You want the Central Bank to be focused on its mission and not get outside of its lanes. But I think within that mission, this program, this series, other things we have been doing really are relevant to saying: "Is that mission really serving the economy in the way that we intend?" Have we thought about, for example, in our regulatory and supervisory programs, we have tools like the Community Reinvestment Act? We do care about access to credit. Have we been thinking about it with a certain model in mind, as opposed to extending our lens around this? I'm satisfied we have the authorities we need. The question in is always, are we getting outside of our comfort zone? Are we thinking about the world differently as we talked about it here? I think there are opportunities for us to work on that.

Bostic: I would disagree with Esther on that point. I think that two things are true. We actually have some tools that are well within our purview to act. Esther mentioned the Community Reinvestment Act. We are engaged a lot in the payment space, the committee that I'm working on, even though we don't have regulatory authority over payments, because of our role as a player we can stimulate conversations to really focus on inclusion and really try to bring together people so that that inclusion actually happens. The second thing is we engage with a lot of people so we can see where there are challenges and barriers that perhaps we don't have the authority to address, but others do. One of the things I found in my role is that when I call people up and say, “Come, let's talk about something” they usually come. That gives us an opportunity to really have different kinds of conversations. And I will say that this series has been very interesting.

And just on today's point when people think about financial services, a lot of times I hear people equate that with financial literacy or sophistication. What I heard a lot today is that it's actually about that plus other things, and many of the barriers around products and services and not having access to products and services or using different ones sometimes isn't because you're not sophisticated. It's because the services that would be the equivalent for you just don't exist. This can really help change those conversations, and I'm going to continue to do that and push with the folks that I interact with.

George: Raphael, if I could jump on your point about being an honest broker. Nancy, this is one thing that I think we often underestimate, but so important, and that is we can be a catalyst for things. In 2013, I had a community group here that thought that if we had moved interest rates in a certain way it would have solved for a particular problem. We invited some community members in. As it turned out, they began to talk to one another and found some solutions to issues around workforce, around certain communities, that actually ended up being the big payoff there, policy issues aside. I think we shouldn't lose track of the fact that even within the existence we have that there are ways to be influential.

Barkin: I'll just throw in the research side; we have a world-class research team. There are a lot of topics we can add value to. The whole conversation about credit scores today, I found fascinating and illuminating whether it was Abbey's idea on rent or Lisa talking about credit visibility. But the whole notion that you might have well-meaning institutions making credit decisions on the wrong factors, or an incomplete set of factors, and therefore not making all the loans that they could otherwise make to optimize their profit or whatever else they're trying to optimize—that's very interesting. That's the kind of thing that really does yield to study and research and data. We've got a great team that's been doing that kind of work.

Farghalli: I want to pick up on this idea of being humble. One of the things I heard today that I will say that we have said on Marketplace for years, we have used the phrase unbanked and underbanked. It made me think about Raphael. About a month ago I think, you did a presentation at Peterson, where you brought out a swear jar that sits in your office, that you use with your staffers, anytime someone said the word "transitory" to describe inflation, they would have to put a dollar in the jar. I'm wondering, given what you've heard over the last two hours, what's in that swear jar right now in terms of phrases and words we should not be using to frame this conversation.

Bostic: That's actually interesting. I think for me, one word is "unsophisticated" and the idea that people don't acknowledge their potential incentives to know what they can and can't do. Another one is, for me, and actually this isn't a word, I'm trying to figure out if you want to have one word. It's the idea that because I've worked in a place, I know everything about that place and that there's still not stuff to discover. As I've talked to folks, we do this not only in financial services, but on things like the benefits cliffs for social assistance that sometimes we are so bought into our system that we think that there are no issues and there are no holes. Esther talked about holes in sight. For me, it's sort of maybe self-assurance, which I wouldn't actually say, but that kind of concept to put that on the jar. I'm going to try as much as possible to really challenge folks as they think about their customer base and their geographies. Do you really know everything? Have you really talked to people and really engaged? We do so many surveys now, and a lot of times we're surprised by what we hear because they wind up coming back with a level of clarity on some difficult issues that I might not have expected. So that's how I think about this.

George: So at the risk of getting in trouble for using this as an example, I think financial education is one. I don't know if I can put it in the category of a swear word, but my own bank has invested in how can we improve financial literacy and education. I think there is an important component there, but I think it assumes that if I just tell you there's something else you should come over here and do it's really not really getting at the core of the issue. I think each of those proposals spoke to that in some way of saying just knowing doesn't mean that this phrase I'm meeting you where you are, there is a different model that best serves what the need is there. I think it really should make us think more deeply about what are the aims of that education, and are we really both for existing banks and financial institutions? For those that we are trying to bring into the financial system more fully, I want to think more about that.

Bostic: So Esther, can I just jump in on this? Cause I would agree with that unless we were also using it for the financial institutions themselves. If you use it in like in a two-way street, then I think it may be okay, but the way is typically used is not that way, so I can get behind where you are.

Farghalli: Tom?

Barkin: So I'm just gonna cheat. I guess Raphael grew up with a swear jar. I grew up with a cookie jar and I think I want to talk about access. I think this whole notion of how do we give everybody access. Full access, fair access. I think there's a lot of interesting stuff there. So I want to eat a cookie every time we talk about how to get more access.

Bostic: You may be eating a lot of cookies. This is something that I'm committed to talking about.

Farghalli: I have one last question and we have a minute left and it's the question I've asked every panelist. There's a phrase that often gets used at [Federal Open Market Committee] FOMC minutes and meetings; it's called substantial further progress in terms of dual mandate. What is substantial further progress in this space and in five years, if you had another session, what would you be talking about?

George: For me, Nancy, I would like to see in five years that shrinking disparities can be noted. Every one of these events tends to point out how that gap is growing, how the issues are magnified. I guess I would look forward to seeing substantial further progress as it relates to the disparities that we talked about today.

Barkin: A good example of that is access to bank accounts, which was a huge topic 10 years ago. That was, I think in the 8 percent range 10 years ago; it's in the 5 percent range now of people who don't have bank accounts. We ought to make even more progress on that in the next 10 years, and you can imagine the same conversation around credit score and lending.

Bostic: And for me, I would say just off the top of my head, lower cost for accessing your own money and making sure that as people have access, they are able to get to their money through whatever institution they can at as low a cost as possible. I would really try to target maybe a 40 percent reduction figure and let's call out a number and start to see that moved down. I think the FedNow, and the instant payment, is a way to start to move in that direction, but I think there's a lot of space there to make just being poor less expensive. If we can make progress there, I think that then leads us to change the conversation, be able to focus on other things.

Farghalli: Well, thank you to Tom, Esther, and Raphael. Thank you so much. Now we're going to turn to Neel Kashkari of the Federal Reserve Bank of Minneapolis for some closing remarks. Before I turn over to him, I do want to say thank you to all of the staffers at the Federal Reserve who made this program possible in terms of logistic, tech, and support for all the panelists and me, the moderator. Mr. Kashkari.

Neel Kashkari: Thank you Nancy. Good afternoon. Thank you all so much to all of our panelists and moderators who contributed to today's session, focusing on financial services. I also want to extend my deep thanks to all of the individuals who participated in our nine earlier sessions. We began this journey over a year ago to examine the ways that structural racism manifests itself in America. We promised to take a frank and honest look at the systems in our society that have, and continue, to perpetuate discrimination.

I'm sitting in my office at the Minneapolis Fed in downtown Minneapolis. More than a year ago George Floyd was murdered, and it was a shock to people in Minneapolis. It was a shock to our country. It was a shock to the world to see that all on video. My colleagues and I at the Minneapolis Fed asked one another, what more can we do, given this terrible tragedy that's just taken place? I called my colleague, Raphael Bostic who was just on that panel at the Atlanta Fed. I called Raphael because Atlanta is also an epicenter of these issues, just like Minneapolis is. I asked Raphael: "Is there something we might do together?" Our colleagues then reached out to the Boston Fed. We didn't know what to expect. Would anyone care if we launched the series, would we be able to attract the best experts? Well, this series has far exceeded our hopes. All 12 Reserve Banks, shoulder-to-shoulder, all 12 Reserve Banks participating and putting the weight of their institutions behind this work. We've been able to bring in wonderful experts and moderators, including today's terrific moderator, terrific media interest, which has been essential to getting these ideas out across the country. We've had blunt, honest conversations about topics that are sometimes uncomfortable.

One of the things that I heard from some when we first started this series was we're not supposed to talk about these issues—at least some people thought that—but having all 12 Reserve Bank presidents at the table, shoulder-to-shoulder, has helped change the narrative even inside the Federal Reserve System. We've had enormous audiences inside and outside the Fed. I randomly hear from staffers across the Federal Reserve System, from law enforcement officers in some banks, from our IT professionals, who are tuning in and saying: "Hey, thanks for having the series; I learned a lot." We have heard bold proposals from our participants grounded in data and analysis, but also in the lived experiences of people in the communities that have been excluded.

As I said in the opening session last November, we recognized that we at the Fed have a role to play in understanding the role of racism in economic conclusion. We don't simply say this is someone else's problem. We have to look at what role we can play to try to improve outcomes for all Americans, because we work for all Americans. This is fundamentally grounded in the mandate that Congress has given us, which is maximum employment. Maximum employment. Not full employment, maximum employment, as many Americans as possible participating in our economy contributing to our economic growth. This is not new to the Fed, but we continue to deepen our focus on it. If you just look back at the wide range of topics that we've covered over the past year, we learned about occupational segregation limiting career opportunities for people of color. We learned about the consequences of using an adequacy standard for education and how that's leaving millions of school children behind. We learned about how historic decisions in housing still play out today in areas like Minneapolis, which has one of the highest Black-White home ownership gaps in the country.

We heard about systemic barriers to insurance and lending impacting entrepreneurs of color across the country, but we also heard from visionaries with solutions and policies that might change the trajectory of some of these issues; policy changes that might make our economy and society more inclusive, and our economy more vibrant. People have asked me, what have I learned individually? Well, the answer is where do I begin? I mean, some of these topics I knew something about, some of these topics I knew very little about. Overall, my biggest takeaway, if I had to boil it down to one big takeaway is something I mentioned in a prior session. These gaps, these barriers, have been there the whole time. In some cases only now, am I seeing them. Why am I now able to see them? Because the speakers forced me to look. And now that I see them, I can't unsee them. I can't look away. I hope others have had a similar experience as I have had. We need to first recognize the barriers if we have any hope of removing them.

Today's session was the last, the final in our topic focus series. In our next session in early February, it's time for us, the Fed, all 12 Reserve Banks, to talk about shaping how we do our work, carrying out our maximum employment mandate. What have we taken away from this? How are we going to incorporate in our daily work, across the various things that we do at the Federal Reserve, and what actions might we take up to try to move the needle on economic conclusion? We hope that you too are thinking about this and asking how can these ideas shape the work that you do in your own organizations.

I hope you'll reach back out to us. I hope this is not just a one-time, hey, tune in, and then we're not going to hear from you again. We want to hear from you because we want to learn from what you were learning. We don't have all the answers, as you can tell, but we want to learn from you, and we want to learn as we tackle these issues together. We will be back in February with all of my colleagues, so I want to thank you again for joining us today. Thank you for joining the series. And we look forward to seeing you again in the new year as we share some of our takeaways and how we're going to incorporate this into our work going forward. Thank you, and good afternoon.