The past weeks have been a exciting ride. On my mind today: #FedWeek in Congress, Community Reinvestment Act, and our next generation of economists.
Congress Created the Fed and Holds it Accountable
Chair Powell testified on Tuesday before the House Financial Services and Wednesday before Senate Banking, Housing, and Urban Affairs. Congress require testimony from the Fed Chair twice a year. Senators Hubert Humphrey and Augustus Hawkins led in establishing this practice in 1978. The Fed also submits a Monetary Policy Report to Congress. Why does this matter? The officials at the Federal Reserve are not elected by a popular vote, and yet they have an important role in the economy. The Federal Reserve is independent from Congress and the Administration, in that they do not take orders on how to conduct policy. Even so, they are accountable to the elected members of Congress. The arrangement is not perfect, but it’s basically the best of all other options.
If you have time to watch only one snippet from the hearings, listen to the exchange between Representative Ayanna Pressley and Chair Powell. You will hear more from me at Equitable Growth on all of Representative Pressley’s questions and his answers. In the meantime, read up on Coretta Scott King’s pivotal role in creating the full employment mandate. I bet Chair Powell has been studying it too since the hearing.
#FedWeek ended with a bang on Thursday. Senate Banking held the confirmation hearing of Judy Shelton and Chris Waller. The Senate’s role in confirming Fed Governors is a another crucial way to hold the Fed accountable. Please watch this hearing from start to finish. I live tweeted the hearing here. See also my reaction in Brendan Greeley‘s article for The Financial Times:
Community Reinvestment Act: Its Matters
Monetary policy is not the only responsibility that the Federal Reserve has. Bank oversight is another key responsibility. Last week I wrote a piece at Equitable Growth, “Encouraging banks to serve the credit needs of everyone,” about the Community Reinvestment Act. I give a brief overview of the reason for the legislation. Its main goal was to address an ugly history of banks discriminating against black families through the 1960s. I discuss the current proposal from Joseph Otting, the Comptroller of the Currency to change the way the oversight is done. Above all, I argue that the work is not complete, as one can see in the large disparities in the wealth of black and white households today.
My chart caused a stir on the Twitter. Racists, men economists, and others told me I was sending the wrong message. Several men economists claimed that my chart was “sensationalist,” since I did not show wealth per capital. Whites population is six times black population. If you take than into account, on average, white have 3.5 times the wealth of blacks. I was told “20 > 3.5.” Seriously? I have a Ph.D. in economics, in addition, to the fact that I finished elementary school. But I digress.
I showed wealth totals by race for A GOOD REASON. I read Professor Mehrsa Baradaran’s book, The Color of Money, in one weekend last spring. It was compelling and horrifying. I learned from her that blacks were almost entirely kept out of the banking system in the United States for decades and decades. In response, blacks created their own banks. Unfortunately to have a viable banking system, you have to have deposits to lend out. Discrimination in all aspects of their lives meant that blacks had too little in savings to make black banks flourish. Black banks then failed at a much higher rate than other banks, leading to destruction of the little savings they had.
To be generous to my ‘chartsplainers,’ I did not know the heartbreaking history of black banks until I read Professor Baradaran’s book. Live and learn. I too have much to learn too. After tweeting, in particular about the need for reparations, Professor Sandy Darity graciously offered to talk with me about the details of his proposal. Details matter, as does rectifying the injustices evident in the racial wealth gap today.
Diversity and Inclusion in Economics
I am dedicated to a more diverse and inclusive economics profession. It is equitable. It will also help us understand the world around us and give better policy advice. My world view has widen so much from reading research from and conversation with economists of color, especially women of color. Damn, they have so much to teach the rest of us. I get tougher (and better) questions from them than macroeconomist men.
Highlight of last week: I talked with Rahma Ahmed and Chinemelu Okafor, two early-career black women economists who have founded Research in Color. They have paired 15 early-career black women with mentors. The mentees are doing independent research projects that they will present at a conference this summer. Research in Color is also committed to giving funds to each mentee for their applications to graduate school and travel expenses. It costs money to even apply to graduate school and it’s bad for economics to lose future researchers due to a few hundred dollars. DONATE here.
Highlight of this week: The second annual Sadie Collective conference for young black women is almost here!! I have been in awe of this group since the start. Co-founders Anna Gifty Opoku-Agyeman and Fanta Traore are a force of nature. You can listen to them on this episode of the St. Louis Fed’s Women in Economics podcast. I had the privilege of working with the scholars on who will share their research at a poster session on Thursday night. You can support then financially here.
When I get discouraged about the economics profession and how it treats people, I think of the next generation of researchers. They are fighting so hard. They should not have to. I should not have to. But hey, we are making a difference. The economics and the many people who economics affects are better for it.