Showing posts with label Black. Show all posts
Showing posts with label Black. Show all posts

Tuesday, March 31, 2015

DC's Revealed Black Economic Development "Plan"

DC's Revealed Black Economic Development "Plan" https://youtu.be/rlr_DomOais
DC's Revealed Black Economic Development "Plan"

DC has the highest rate of HIV infection, the highest Black/White income disparity and the most rapid gentrification in the United States. These facts are not unrelated. Together, they point to the true economic development policy, at least for Black people, in the city. My analysis and experience, described in detail below, supports this contention.
Since 2005, we have been managing an effort to bring crowdfunding to small businesses in DC. My firm was selected to develop a crowdfunding program for the District's Great Streets Program. The effort we undertook was initially funded at $85,000, was reduced to $25,000 and further reduced to $20,000. DC has actually paid a fraction of this amount. Despite this, we moved ahead.
At DC's Historic Metropolitan AME Church, we worked with four innovators to launchcrowdfunding projects in support of their DC-based businesses.
We helped increase positive perception of economic development officials in DC. A senior official at the US Small Business Administration complemented these efforts, stating that:
“It's good that the DC team (DMPED) continues to explore innovative paths to support entrepreneurs and civic-centered projects.”
Our efforts resulted in an innovative partnership between the US SBA and DC.
On March 6th, I testified before the DC City Council and provided detailed comments on economic development in DC.
The bottom line is this: male African-American DC native owned firms receive far less consideration from the DC Government, relative to the favors accorded and afforded non-minority (white-owned) firms in the city:
“The D.C. Council gave..$33 million in tax breaks for LivingSocial to keep the growing company in the District after members deemed it essential to city efforts to brand itself as a hub for start-up and technology companies…the deal will save the five-year-old company about $32.5 million in taxes over a five-year period beginning in 2015. Yet, LivingSocial has no male African-American DC natives in the management ranks.
The City recently "sold" the former site of the R.L. Christian Library at 1300 H Street NE to FundRise, another DC firm that operates in a discriminatory manner with respect to employment and with respect to offering development or investment opportunities to African Americans.
And, then, there's this: "District officials are slated to spend more than $475,000during their visit to South by Southwest in March.. half the budget would be used to convert a restaurant near Austin’s convention center into a “We DC” lounge and work space during the day, and a party venue for attendees to socialize at night. The rental and food costs would be $251,500 over five days."
Really? We spent $300 creating a "South by Southeast" conference focused on Anacostia. It was very successful in highlighting talent in DC. The reason the City did not support this is that we were focused on Black talent. This lack of support is consistent with the "development policy" noted above.
These different standards reflect the true, or revealed economic development plan for the City. It is one that ignores firms owned and operated by male African-American DC natives, women and minority firms, preferring to focus on firms owned by white 20 something entrepreneurs.
It is this policy and behavior that gives rise to the income and wealth gap pictured above.

Friday, July 5, 2013

'Minority' Bank Designation Has Become Meaningless

We note with interest the designation of Urban Partnership Bank as a Minority Depository Institution. According to Crain’s Chicago Business, “The $1 billion-asset bank based on Chicago's South Side
(formerly South Shore Bank) is officially a minority lender despite an ownership dominated by Wall Street giants like Goldman Sachs Group Inc. and J.P. Morgan Chase & Co.”

A Minority Depository Institution, as defined by Section 308 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"), used to be a bank in which 51% or more of the common stock was owned by one or more members of the following groups: Black American, Asian American, Hispanic American, or Native American.

The threshold now for MDI designation is a bank that meets one or more of the following standards:
  • 1.       51% or more of the common stock was owned by one or more members of the following groups: Black American, Asian American, Hispanic American, or Native American.
  • 2.       51% or more of the members of the Board of Directors are one or more members of the following groups: Black American, Asian American, Hispanic American, or Native American and the community the banks serves is primarily minority.
The FDIC expanded the MDI definitions because is says it found the old definition “ambiguous.” Now a bank that does not meet the ownership test can be designated an MDI if 51% or more of the directors on the board are members of those minority groups and the community the banks serves is primarily minority. This is how Urban Partnership Bank was able to obtain recognition as an MDI.

This means that any institution, no matter how discriminatory, can obtain this designation. The MDI designation is valuable because banking regulators use deposits in minority banks made by non-minority banks as evidence that the non-minority bank is not breaking the law by discriminating against racial minorities and that it (the non-minority bank) is meeting community credit needs.

The MDI designation originally helped Black-owned banks, whose historical significance was clear: they were created at a time when discrimination against Black people was legal in the US. They served as the only financial service providers to the community. Black banks do not now have the same level of significance to the Black or minority community today. They are too small to serve the community in any meaningful way. For example, they cannot serve as a line of defense against predatory lending. The result: banks like Wells Fargo are free to target wealthy black communities for predatory loans, in a nakedly discriminatory (and ultimately successful) campaign to strip wealth out of the Black community.

According to a June 12, 2012 article in the Washington Post, one Wells Fargo loan officer, “in sworn court testimony..described watching loan officers comb through heavily African American areas such as Baltimore and Prince George’s County, forging relationships with churches and community groups to sell their members (predatory) mortgages.” This same loan officer “processed loans for (Black) homeowners with sterling credit ratings with higher interest rates than they needed to pay.”

Of course, some will claim that the actions of a few bigoted individuals cannot mark an entire institution as racist. We disagree, and refer to the clear double standard concerning these matters, evidenced by the treatment of ACORN, after a few individuals at that non profit made mistakes.

What’s specifically relevant in this case is that Goldman Sachs, one of the owners of this newly designated “minority bank,” has a history of discriminatory behavior. The firm's bigoted attitude toward Blacks and women is described, in great detail, by author by William D. Cohan in Money and Power: How Goldman Sachs Came to Rule the World, a book released in 2011.

Cohan recounts the case of James. E. Cofield, Jr, an African American Stanford MBA who sued Goldman for discrimination in 1972. On December 6, 1987, a female employee filed another in a series of discrimination lawsuits claiming Goldman had "a hostile working environment in which women were demeaned." In March, 2010, yet another female employee filed a discrimination lawsuit. In September, 2010, three female former employees filed a class action lawsuit stating that Goldman "systematically discriminates against women in pay and promotion." 

This discriminatory behaviour appears to be ongoing. On Sunday, June 2, 2013, an article on Salon.com described a “series of racist and sexist ‘tips’ to succeeding at” Goldman Sachs. (http://www.salon.com/2013/06/02/wall_street_insiders_advice_for_interns_sleep_with_your_female_colleagues_then_brag_about_it/)

Goldman also has a history of manipulating financial data in order to support unethical business activities designed to maximize short term profit. In 2003, Goldman Sachs admitted that it had violated anti-fraud laws. In 2010, according to the New York Times, Goldman paid “$550 million to settle federal claims that it misled investors.” (http://www.nytimes.com/2010/07/16/business/16goldman.html?_r=0)

As part of that settlement, the firm “agreed to a judicial order barring it from committing intentional fraud in the future.”  As an investor in an institution that has received designation as a minority depository institution without actually being one, some may suggest that Goldman has violated that order.

At any case, Urban Partnership Bank’s designation eliminates an honest and ethical explanation of the “Minority Depository Institution” designation. As an analyst who has been producing statistical reports on women and minority banks for 30 years, this change also affects my ability to derive meaningful insights from bank performance data pre definition change and after the MDI designation change. It makes any long term statistical analysis meaningless, as I noted in the Minority BankMonitor, our annual review of the social and financial performance of minority banks.

More importantly, this change removes any real social meaning from the MDI status designation.
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