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In a historic move, President Biden nominates two Black economists for the Federal Reserve’s Board of Governors.

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President Joseph Biden nominated two Black economists - Lisa Cook and Philip Jefferson - to serve on the seven-member governing board of the Federal Reserve. Currently a professor at Michigan State University, Ms. Cook was a senior economist in the Obama administration. Her research centers on African American innovation. Mr. Jefferson is a poverty researcher and professor at Davidson College. These appointments are significant in several ways. Not only is this the first time two African Americans will be nominated at the same time, but, with the simultaneous nomination of Sarah Bloom Raskin, if all are confirmed, women would constitute the majority of Federal Reserve Board members. This is truly unprecedented . The nominations come at a critical time. Inflationary pressures have increased, due mainly to a rise in corporate profits driven by a desire to lower business risk in the face of pandemic-induced uncertainty. In December, 2021, the Fed announced that it expects to curtail “its

Crypto Inclusion Myths

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One of the key myths concerning cryptocurrency is the claim that these new forms of money will increase financial inclusion by making financial services more broadly available to poor and low-income consumers. This is an unproven assertion at best, an allegation of dubious veracity, made in all likelihood to obtain regulatory support for cryptocurrencies. No independent, objective data exists to support the inclusion claim with respect to Black people and communities of color. This is the same tactic used to generate regulatory support for subprime lending, and, as with that disaster, it is a myth. While my support for cryptocurrency rests on it’s potential to increase financial inclusion, the fact is that this potential is unproven. Hyperbolic and false statements about financial inclusion make it less likely that this potential will ever be realized. In a statement for the record to the House Financial Services Committee following their December 8th hearing on digital currencies, I

The Real Risk is not Inflation: it's Civil War

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We note the Federal Reserve now expects to "end its pandemic-era bond purchases in March (2022) and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022.."  While we agree the Fed is correct in observing that, for whites, "the economy no longer needs increasing amounts of policy support," specific sectors and demographics require ongoing support. The key skill of a central bank in the current environment is identifying these demographic sectors and providing targeted, non-inflationary support. There are a number of ways to do so, but, given the lack of relevant African American diversity on and at the Board, we do not expect the Fed to be familiar with these techniques. (We suggest they see our Maternal Mortality Reparation Facility for Black Women. ) We continue to believe that the recent inflation spike is due to fear and greed-based labor and supply chain disruptions resulting from the unprecedented and ongoing COVID crisis. This

Regulators, Legislators and Marketplace Ethics

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        The SEC defines insider trading as buying or selling a security in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security. Insider trading is not isolated to Wall Street and has increasingly become an issue on Capitol Hill and in regulatory agencies, like the Federal Reserve. A 2004 study examining common stock returns generated from 1993-1998 on equity held by US Senators found that a portfolio mimicking the purchases of Senators outperformed the market by 85 basis points each month. On the other hand, portfolios mimicking equity sales by Senators underperformed the market by 12 basis points each month. The study noted that these results “suggest Senators knew appropriate times to both buy and sell their common stock.” Congress is privy to nonpublic information obtained via briefings from regulatory agencies, other Congress people and trade associates. They have access to this informat

FDIC selling controlling stake in Black-owned bank. The American Banker Newspaper. By John Reosti. December 01, 2021

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The Federal Deposit Insurance Corp. plans to auction off a controlling stake in Birmingham, Alabama-based Alamerica Bank on Wednesday, a move that could result in Alamerica passing out of minority ownership. While a preliminary bidder’s list included several large Black-owned banks, it also included some non-minority bidders. Founded in January 2000, the $15.4 million-asset Alamerica is the smallest of the 17 remaining Black-owned banks in the United States. According to William Michael Cunningham, CEO at Creative Investment Research and an authority on Black-owned banks, the FDIC-owned shares were used as security for a $4 million loan from Silverton Bank. They passed into the FDIC’s possession following Atlanta-based Silverton’s failure in May 2009. The FDIC “certainly has the right to do this,” Cunningham said Tuesday, but he called it troubling that Alamerica might wind up outside the minority banking sector as a result of the auction. “If Alamerica is no longer Black-owned, that c