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As last recorded by
the US Federal Government,
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the median wealth for a white family
in the United States was 171,000 dollars
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and the median wealth for a Black family
was just 17,000 dollars,
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a 10x different over 150 years
after the end of slavery.
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I think first we have to ask ourselves,
what is wealth really?
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Well, wealth is all of your assets,
all of the things that you own,
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minus all of your liabilities.
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Assets are things like your car,
your house, your savings account,
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your checking account, your investments,
if you own other properties,
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your business.
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Well, that gap, that 10x gap,
is partially because for many years,
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decades in fact,
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Black Americans were left
off of that ladder
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and didn't really have access to it.
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Well, why are we talking about this now?
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Well, in 2020, in the midst of
a global pandemic and a looming recession,
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inequities are really laid bare
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across nearly every system
in the United States:
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health care, education,
criminal justice, and finance,
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and people were moved
to take action online, in streets,
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in meetings at work,
in corporate boardrooms.
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And I, as a consultant, started
having conversations with clients
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that I thought I would never have.
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I guess the question
that I'd been asking myself is,
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how do we make sure that in this moment,
this results in action and progress
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that starts to close that wealth gap
for Black versus white Americans?
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So who am I?
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My name is Kedra Newsom Reeves.
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I am a consultant for banking institutions,
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hedge funds, asset managers.
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But before any of that,
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I am a Black American
who is the descendant of slaves.
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And when we talk about the wealth gap,
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it's really important
to understand the history,
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so I thought I'd tell
a little story about a family,
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my family,
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and how policy intersects with wealth.
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So we'll start with
my great-great-grandfather.
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He was a man named Silas Newsom,
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and Silas was born a slave
outside Nashville, Tennessee,
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on Newsom Station,
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where he and his family
worked on a quarry.
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He didn't own anything.
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He didn't own his home.
He didn't own property.
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He didn't really own his own body,
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his labor, his children.
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Any of those things,
all of those things,
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were here to create wealth
for someone else.
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So we believe that he was a servant
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during the Civil War
for a Confederate general
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who was actually fighting
to keep him enslaved,
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so he really had no wealth,
he had no control over his life.
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Well, at the end of slavery,
there was a policy opportunity.
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There was a question:
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what do we do for
the hundreds of years of slavery
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now that we are ending slavery
and the country is coming together?
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And there was a choice.
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We could make a settlement
with the slaves,
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or we could make a settlement
with the slaveowners.
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Well, the slaves had no power
to advocate for themselves in that moment,
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and the country had to be united,
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so the federal government decided
to give that settlement to slave owners,
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essentially giving them money
for the property that they had lost
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at the end of the war.
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And not their physical property,
not their homes, but people,
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the slaves that had provided
free labor for years and decades.
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So Silas, at the end of the Civil War,
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had no wealth.
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He was free, but had no wealth.
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He became a sharecropper.
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My great-grandfather Silas was born
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a number of years
after the end of slavery,
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and he was drafted to serve in World War I
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along with 350,000 other
Black American soldiers
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in segregated units.
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He served in the war.
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When he came back to the United States,
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at the end of the war,
there was very anti-Black sentiment.
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The economy was compressing,
there were a lot of stressors,
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and Black people could not get land,
they could not get loans for homes,
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they really could not acquire any credit
to build wealth over time,
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so he also became a farmer.
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And he had a son, also named Silas --
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there are a lot of Silases in my family --
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my grandfather.
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My grandfather Silas was also a soldier
and fought in World War II.
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After World War II,
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the US Federal Government
passed the GI Bill,
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which provided support for veterans.
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And the bill provided
for building of hospitals,
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student loans,
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and, most importantly for wealth-building,
low-interest home mortgages for veterans.
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In the years following the war,
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the GI Bill accounted for
four billion dollars of funding
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to nine million veterans.
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But Black veterans
largely did not benefit.
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So Silas, my grandfather,
came back to Nashville, Tennessee,
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and he married my grandmother,
whose name is Cinderella.
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Yes, my grandmother's name was Cinderella.
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And they had eight children.
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They never bought a home.
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And the highlight of their housing journey
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was moving into
a new public housing project
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with their children and paying rent
for that housing project,
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which in terms of the quality of housing
was fantastic for them and a step up,
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but did not allow them to build wealth.
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My father, another soldier,
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a 20-year veteran
of the United States Marines,
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bought his first home in his early 50s,
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but it took four generations
for our family to move into homeownership
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and begin to build ownership
and equity in a home.
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That's one family's story,
and I skipped a lot of things
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that happened between
the end of slavery and today:
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redlining, housing discrimination
before the Fair Housing Act in the 1970s,
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the really important role
that Black-owned banks played
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in building Black communities,
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the Savings and Loan Crisis of the 1980s,
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which crushed a lot of Black banks,
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and the subprime crisis in 2008,
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which strIpped a lot of Black
and brown homeowners of their homes.
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There's a lot of history there,
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but that story tells you a bit
about how we get to this 10x gap
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where we are today.
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Now, certainly, as we think about
the size of that gap,
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it is critical for the Federal Government
to take a number of actions.
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That said, financial institutions
play a really important role
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in providing access to credit,
access to capital,
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to build communities
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and allow Black communities to thrive.
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We have to be clear;
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managing 17,000 dollars better
does not get us there.
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Better education does not get us there.
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Access to credit and capital are critical.
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So I want to talk about
four solutions today
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that financial institutions can contribute
to start to close the wealth gap.
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Number one is getting
more people on the ladder,
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getting more people banked.
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We know today that
about half of Black Americans
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are un- or underbanked.
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Unbanked means that
you don't have a banking account.
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Underbanked means that you
have a bank account,
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but you use alternative services
for check-cashing or payday lending
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or paying bills.
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And that's not just expensive
from a transaction perspective
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in terms of the fees that you pay,
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it's also expensive in terms of the time
that you commit to paying a bill.
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Think about how you pay
your utility bill today.
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It probably comes
out of your checking account.
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You don't even think about it.
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You set it up in advance,
and it's automatic.
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Well, if you're unbanked,
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you are probably going
to get a money order somewhere,
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physically, a piece of paper.
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You then travel to City Hall or your DMV
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to pay that bill.
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About 40 percent of people
who are unbanked
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say they are unbanked because they think
they don't have the minimum amount
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to really maintain a checking account.
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Well, that's just not true.
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In the last several years,
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credit unions, community banks,
and major banking institutions
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have created low-cost, no-minimum
checking and savings account products
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specifically made for this population.
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So we have an issue with awareness.
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Banks, community partners, and others
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have to work together to increase
the awareness of these products
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in communities that need them,
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so that we can start to reduce
the number of people
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who are un- and underbanked
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and get them on the ladder
that we talked about earlier.
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The challenge is about 28 percent
of Black and Latinx families
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are credit-invisible,
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which means that you have
a thin credit file or no credit file.
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And the way that credit works
and creditworthiness assessments work
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is to say, if you can prove
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that you have paid credit back
consistently previously,
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then I can lend you more credit.
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It's kind of a chicken
or an egg situation.
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The interesting thing is is that banks
and financial technology companies
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have really innovated in recent years
to use alternative data --
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cable bills,
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utility bills,
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rent payments, etc --
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to show that you're able
to consistently make payments.
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The additional challenge on this one,
unlike the last one,
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which was more about awareness,
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is that you need to have
regulatory support to do these things.
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You need to prove to regulators
that you are able to fairly use
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alternative data to lend credit
to marginalized groups.
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What we need to see is,
from the Federal Government
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and the banking industry,
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to come together to create
innovation sandboxes
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to start to use alternative data
to expand to marginalized groups.
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Well, what about communities?
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Without community wealth,
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individual wealth, in a way,
is on an island.
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And if you go into most
major cities in the United States
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to most communities of color,
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what you'll find
is underinvested communities.
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For every economic crisis,
these communities have suffered severely.
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For every economic boom,
they have not benefited.
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And so what we're seeing
in a number of cities across the country,
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and I'll use Chicago as an example,
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is the partnerships occurring
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between banking institutions,
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philanthropists,
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the city and community leaders
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to invest hundreds of millions of dollars
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to build community resources
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and communities that have
historically been disinvested.
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Lastly, we've got to talk about business,
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and not just small businesses.
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Now, when you have individual stability
and a banking institution,
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and you have access to credit,
and when you have community wealth,
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those are all fantastic things,
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but we need also job creation.
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Take all of the new tech companies,
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and I say "new" because now
they're not so new,
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but take Facebook, Google, Amazon.
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At some point, all of those companies
were sole proprietorships
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with one employee
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or a few employees
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that were building a technology
that was not yet proven.
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What those companies received early on
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was venture capital money.
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And when you look
at venture capital today,
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only one percent of venture capital funds
go to Black founders.
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So if Black entrepreneurs
are largely shut out of those networks
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they're not able to grow,
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and the only way for that to change
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is from within the industry itself.
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In this generation, we must not only
be talking about thriving businesses
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in Black communities.
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We must also be talking about
seeing more Black-owned
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and founded businesses going public.
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Those are just four solutions.
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There's many other things
that can and should be done
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to close the wealth gap.
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This gap is not new.
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It was born and perpetuated
by federal policy, social constructs
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and business practice over time,
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and all of those things need to change
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to start to close the gap.
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Financial institutions play
a really critical role
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at the individual level,
at the community level,
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and at the business level.
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It's important to our families,
it's important to communities,
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and it's important to our economy.
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Instead of talking about
how the gap continues to grow,
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let's begin to close the gap now.
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Thank you.