Repairs ‘Certainly’ Have Merits, Says First Black Fed Chairman

by



[ad_1]

“There is certainly merit in the sense that if people have been wronged by the laws then there should be a discussion about redress,” Bostic told CNN Business in an exclusive interview.

“We have African Americans today who have much less wealth,” he said, “in part because they could not inherit the wealth that would have been accumulated had their ancestors been able to. accumulate this wealth. “

Chicago suburbs approve repairs for black residents

Even though redlining – an illegal form of lending discrimination – has been banned for decades, consumer advocates argue the practice persists thanks to predatory lending. Today, there is a 30 percentage point gap between black and white homeownership, larger than the gap that existed in 1960, according to the Urban Institute. Last week, the Chicago suburb of Evanston, Ill. Approved the nation’s first reparations program for black residents. Paid by a 3% tax on legalized cannabis, the program funds home loans to residents that can demonstrate the harms caused by decades of discriminatory housing practices.
`` This is crazy. There is no inventory. & # 39; Housing industry veteran marvels at real estate boom

“We had to do something radically different to bridge the racial divide we had in our city, which includes historic oppression, exclusion and disinvestment in the black community,” Alderman Robin Rue said. Simmons told CNN last week.

Bostic called the idea “quite interesting” and “creative”, mostly because it is explicitly linked to those who can show that they have been hurt by racism.

“It’s an interesting idea that many more should think about as we move forward,” he said.

Biden supports study of reparations

Until recently, the idea of ​​the federal government paying for repairs was fine. outside of mainstream political thought. For decades, politicians tried and failed to get the federal government to even study such a program. However, the drive to explore reparations is gaining momentum – and prominent supporters.
In 2019, Democratic Representative Sheila Jackson Lee of Texas sponsored a law that would create a commission to study the consequences and impact of slavery and make recommendations for proposals for reparations.
Evanston, Illinois approves nation's first reparations program for black residents
President Joe Biden is supporting the study of whether descendants of slaves should receive reparations, the White House said in February. Last month, a House judicial subcommittee held a hearing to discuss a federal commission that would explore how the U.S. government could compensate descendants of enslaved Americans. Earlier this month, Amalgamated Bank became the first major U.S. bank to announce support for the repairs.
Raphael Bostic, the first openly gay and the first black Fed chairman, worries about how the pandemic is worsening inequality.

Federal Reserve officials, including Bostic, have previously said little about the merits of the reparations.

However, a working paper released earlier this year by the Minneapolis Fed concluded that reparations in the form of direct wealth transfers will not close the racial wealth gap in the future, highlighting the profound consequences of discrimination. .

The logic behind this conclusion, writes the author of the article, is that “century-long exclusions” would lead black families to “go into redress with pessimistic beliefs about risky returns and forgo investment opportunities. “.

How Bostic overcame racism

Bostic, who is also the first openly gay Fed chairman, said he had “clearly” faced racism and discrimination in his own life and career.

“If you’re African American, people are going to judge you by how you look,” he said. “In some situations that means you are going to be subject to different types of screening.”

Bostic grew up in New Jersey and graduated from Harvard University in 1987. He earned a doctorate in economics from Stanford University. Bostic urged those who face discrimination not to be held back.

“You just have to keep moving forward and try not to be defeated by it and try not to be beaten by it,” he said. “It’s one of those things where you can live in the world you wish you had, or you could live in the world you actually have. I’d rather do the latter.”

In 1995, Bostic joined the research department of the Fed, where he studied the Community Reinvestment Act. He then worked in the US Department of Housing and Urban Development. He joined the Atlanta Fed in 2017 from the University of Southern California, where he was a department chair at the university’s school of public policy..

Fed Chairman Bostic?

Bostic recognized that the field of economics can be “difficult” for minorities and women because culture is “sometimes not as inclusive and understanding” of the challenges these groups face.

“There were times when I wondered if it was really for me,” he said.

Biden's stimulus will keep US economy booming for years, Goldman Sachs predicts

Still, Bostic said his passion for understanding how markets and cities work has helped him persevere. “It took over that frustration and gave me the motivation to keep moving forward,” he said.

The lack of diversity in the upper echelon of US financial regulators is remarkable. Only 10 black men or women have been appointed to head these agencies since the 1930s, according to a study released last year by the Brookings Institution.

Bostic is said to be in the running to be Biden’s treasury secretary. The Fed, one of the most powerful institutions in the world, has never been run by a person of color.

When asked if he would like to lead the Fed someday, Bostic replied that it was not something he was thinking about. “We will let things unfold as they move forward,” he said. “To me, it’s just flattering that you even ask this question and I think in that context.”

Fed could start removing stimulus next year

Bostic, who is a voting member of the Fed’s policy-making committee this year, expressed optimism about the economic recovery from the pandemic, predicting “robust job growth.” But the job market is still down by nearly 10 million jobs due to the health crisis and Bostic said it will take “several months” to fully recover, perhaps not before the end of the year. next year or even until 2023.

The pandemic has made America’s inequality problem worse by cutting four times as many low-income jobs as high-income jobs. “The people who have the least are the hardest hit,” Bostic said.

'Racial prejudice runs deep' in America's biggest banks, study finds
Bostic hopes the government can tackle the inequalities, but added: “There is no doubt it is a tall order.”

This may explain why the Atlanta Fed chief is in no rush to get the central bank out of emergency mode. Bostic said he wanted to see “a lot of progress” on the jobs and inflation front before voting to remove the Fed’s extraordinary stimulus. Not only are interest rates still at zero, but the Fed buys $ 120 billion in bonds every month through a program called quantitative easing.

When could the Fed slow down its bond purchases? Bostic said he “hopes” that tapering can begin within the next 12-18 months.

‘The great unknown’

Some fear that low rates, quantitative easing and an unprecedented fiscal stimulus could overheat the economy, causing debilitating inflation that bypasses the recovery.

Bostic acknowledged that inflation readings will be volatile over the next few months as the economy recovers, and he stressed that the Fed will not overreact to a few months of significantly higher prices.

“If we see the trajectory of inflation moving far, far from our target of 2%, then I think it will be time to act,” he said. “But again, we’re a long way from that point right now.”

Still, Bostic admitted that no one knows what will happen with inflation because it is a pandemic that only happens once in a century.

“She’s a big unknown,” he said.

[ad_2]

Source link