Author examines the racial wealth gap in America

published on July 13, 2020

I want to talk about Netflix for just amoment because when Netflix is ReedHastings decided to inject a hundredmillion dollars into black banks he didso after reading a book by our nextguestso we're joined now by Marisa Bharata an

Author of the color of moneyblack banks and the racial wealth gapand UC Irvine Law Professor Law Schoolprofessor thanks so much for joining ustoday Marisa thank you that's the bestpronunciation of my name I've ever heard

So I know you know you know briefly giveus a lay of the land we already knowthat black communities are underbankedunderserved they pay more in fees forbanking and financial services I'mwondering if you can kind of highlight

For us how this has really kept orhelped drive poverty in blackcommunities yeah so yeah everythingstarts back at the new deal with the FHAMaps and the redlinedsort of structure of risk that was done

In 1934 and the baking sector that wehave today builds on mortgage creditmortgage credit fuels and wealthcreation for the middle-class it fuels aton of you know bank profits and andreally you know the majority of credit

At least for the middle class ismortgage or student loan credit and allof that sort of you know the blackcommunity was redlined and not um somedid not get that credit subsidized andand that was new policy and then it was

Perpetuated by banks and so that kind ofstructural is explicitly a race-basedinequalities perpetuate to this day suchthat you you you know black homeownership gap is massive the wealth gapis massive and doesn't close over time

It has not closed and part of the reasonis homes in black neighborhoods don'tincrease in value the same way thathomes in white neighborhoods do and sowhen you have black base or any bank ontop of that market it really creates a

Difficult and profit trap and so that'skind of the history that I lay out inthe book using banks to explain sort ofbroader broader social structures andand why individual businesses can'talone overcome these these patterns

Without sort of systemic systemic changerightnow you say that you actually needcapital to build more capital as I justmentioned Reed Hastings gave a hundredmillion dollars but how much more

Capital is needed we the amount ofcapital that was provided to theAmerican middle-class no more no lessand and that is it's not exactly capitalit's not just you know here is capitalit is an investment with a long-term

Commitment to grow so the what what theFHA does initially is it doesn'tactually infuse capital it guarantees asystem of credit that is very low riskthat is underwritten by the federalgovernment but it's the capital comes

From private the private sector it'sjust the government programs lower therisk it's sort of what the Fed does withits monetary policy and and that kind ofstructural you know maneuvering iswhat's needed for for black community so

It's not I don't advocate you know allyou know people just donating into theseareas it really does have to bestructural it does have to be you knowlink to Fed policy into Treasury policyinto congressional policy but it's also

Great you know like Netflix did andother firms did instead of you know justmaking these broad statements aboutblack lives mattering or you know mysocial media we're gonna you knowexpress this commitment to actually put

Your money where your mouth is which isinvestments in in certain communitiesand that's what businesses can dothere's what policymakers and voters cando but then there's what a businesswho's interested in actually not

Perpetuating these inequalities cancommit to so on that point about whatpolicymakers can do because I wasspeaking recently with economists andreparations expert dr sandy Daughertyand he kind of highlighted that the top

Five black banks have two billion inassets seems like a lot when you untilyou contrast that with the roughly threetrillion dollars just JPMorgan has ashake it with that policy withoutpolicymakers really addressing this

Because that seems like an impossiblylarge gap to bridge I mean is itabsolutely critical that we have to getpolicy behind this in order to try tobridge that gap absolutely becausepolicy created it that's why it's not

Handout it's just repair its damages forwhat policy created it's not justredlining it's that you knowdiscriminatory a sort of criminaljustice system it is you know hundredsof years of Jim Crow and then the

Implicit and explicit racism that isstill ongoing but more what I try to dois focus on the structures of inequalitythat that keep this wealth gapperpetuating right so it's unjust theblack banks combine look at the black

Wealth combined right so when we thinkof black well sometimes you think of OhOprah or LeBron James or you know thefive black billionaires that there are Idon't even know there are that many butyou look at the combined Blackwell

Versus a combined white wealth and it'sstaggering I mean combined black wealthis 1% of the total pie and the the gapbetween even highly educated high-incomewhite families versus high-income blackfamilies is also massive and and hasn't

Closed in hundreds of years so there'ssomething else going on right evenwealthy black families their homesaren't increasing in value in the sameway that wealthy white family homes dobecause of certain ways that we code

Race into home values all right MarisaBharata on author of the color of moneyblack banks and the racial wealth gapI'm gonna be picking up that book soon Ihope you come back to join us on YahooFinance thanks so much for joining us

Thank you so much for having me Iappreciate ithey investors Zack Guzman here are youinterested in learning more about themarkets and getting the latest financialnews well then click right here to

Subscribe to our Yahoo Finance youtubechannel get the latest up-to-the-minutemarket analysis big interviews in theworld of finance and information on howto manage your money every day whereveryou are

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