Read on Twitter
A thread on the Fed's role in inequality & racial equity.
I think this tweet (from a great reporter!) is indicative of a narrow conception of the Fed that misses key points. It's not about "making more minorities own financial assets."
So why is racial equity the Fed's job? https://twitter.com/vtg2/status/1291024183720316929
I think this tweet (from a great reporter!) is indicative of a narrow conception of the Fed that misses key points. It's not about "making more minorities own financial assets."
So why is racial equity the Fed's job? https://twitter.com/vtg2/status/1291024183720316929
1. On the Fed's monetary policy mandate, proposals have already been floated to require that the Fed target the Black unemployment rate, which is consistently worse than the rate for white Americans even in tight labor markets. https://www.washingtonpost.com/business/2020/06/10/black-unemployment-rate-fed/
2. The Fed is a key statistical agency. Others @equitablegrowth like @AustinClemens2 are working on this & know more, but the Fed could oversample on surveys to create better & more targeted economic data on racial disparities. Their data collection & research shapes econ policy.
3. The Board did $245M in contracting for goods and services in 2019 and only 1.24% went to Black-owned firms.
Moreover, only 23% of senior/exec managers at the Board identify as minorities. The Fed doesn't disaggregate further by race. https://www.federalreserve.gov/publications/files/omwi-report-20200331.pdf
Moreover, only 23% of senior/exec managers at the Board identify as minorities. The Fed doesn't disaggregate further by race. https://www.federalreserve.gov/publications/files/omwi-report-20200331.pdf
3. (continued) These stats are bad, & they haven't improved since @RepMaxineWaters created the Offices of Minority and Women Inclusion in Dodd-Frank. What's worse, all of the regional reserve banks don't even put out this data. This is something the Fed could easily improve on.
4. Because of the @Fed_Up_Campaign, more attention has been paid to a lack of diversity in regional bank boards. Indeed, 74% of the Boards of Directors at Fed regional banks are white. This lack of perspective shapes decision-making. https://populardemocracy.org/sites/default/files/FedUp-Diversity-Data-Brief_2019_web.pdf
4. (continued) In 2011, Fed minutes showed officials blaming drug use for stagnant employment numbers. It was dismissive & demonstrated a lack of understanding of challenges in minority communities. At the time, Kocherlakota was the only POC in the room. https://www.federalreserve.gov/monetarypolicy/files/FOMC20111102meeting.pdf
5. The Fed is a banking & consumer finance regulator. Policy moves by the Trump-era Fed may have the effect of increasing racial inequality. Changing the Fed's explicit mandate in law could shape future reg changes or give legal recourse to community groups.
5. (continued) The Fed ignoring climate change also has deep implications for financial stability, which has knock-on effects for racial equity. The costs of inaction re ignoring financial stability risks will disproportionately harm BIPOC communities. https://www.americanprogress.org/issues/economy/reports/2020/07/31/488320/feds-oil-gas-bailout-mistake/
6. The Fed has the authority to approve bank mergers, which have a large impact on access to financial services, competition, and fees charged. Rewriting the Fed's mandate requiring a view to racial equity might change how the Fed sees the costs and benefits of merger activity.
7. Congress gave the Fed fiscal policy authority under the CARES Act. An explicit racial equity mandate could have reshaped how the Fed designed bailout programs. How does buying fossil fuel co. bonds impact racial equity? Worker protection requirements as a condition of aid?
8. The Fed is an active agent in our economy, increasingly shaping markets & competition, rather than a prisoner to fiscal policymakers. It's not a matter of just pulling the lever backwards v forwards. The Fed's culture & legal authorities have large distributional effects <end>
