Thursday, May 27, 2021

“Investing Inclusively: Building Shareholder Value Through Gender Diversity.” Review by Alice Gabidoulline, Impact Investing Intern, University of Michigan.

Maggie Walker.  In 1903, Maggie L. Walker became both the first African American woman to charter a bank, and the first African American woman to serve as a bank president.

On March 25, 2021, BrightTALK hosted Morningstar’s Amelia Furr—Head of Index Sales, and Equileap’s Diana van Maasdijk—co-founder and CEO. Their presentations focused on “Investing Inclusively: Building Shareholder Value Through Gender Diversity.” 

Ms. van Maasdijk began by providing an overview of Equileap, an ESG data provider focusing solely on gender. Equileap’s mission is to close the equality gap in the workplace, with the added value of being the largest global database on gender equality. The Equileap  database covers 4,000+ mid to large-cap companies in 23 developed economies. Equileap’s scorecard includes 19+ criteria (gender pay gap, parental leave, supplier diversity, etc.) in four categories—A through D. An annual report outlines the top performing companies. This year, top performance only required a score of 74%. Further, Equileap found that 85% of the companies did not publish information about their pay gaps, with a stark contrast between 5% of US companies and 78% of companies in the UK. Even more surprising, 51% of companies did not have anti-sexual harassment policy, and only 19% of companies globally offer flexible working hours and location. Equileap continues to create and publish data to promote their goal of increasing gender diversity in the workplace.

Next, Ms. Furr presented Morningstar’s Gender Diversity Indexes. Covering over 20,000+ indexes including a variety of ESG factors, Morningstar has partnered with Equileap to publish a robust report on gender equality in business. The report can be found here. Ms. Furr provided a variety of lenses and examples to analyze gender diversity. Several approaches outlined included core versus satellite allocation, active versus passive investing, and understanding size/sector/style biases. Ms. Furr also covered several examples, such as the RBC Vision Women’s Ldrsp MSCI Cnd ETF, and the Impact Shares YWCA Women’s Empowerment ETF—the latter scoring in the top 200 by Equileap and including additional ESG screens. Additionally, this presentation covered Morningstar’s Gender Diversity Index Family, which tilts security weights based on Gender Equality scores—capping individual security weight at 5%—and includes “alarm bell” criteria. Ms. Furr closed her presentation by showing how data from “Group 1”, the best-scoring companies of the Gender Diversity Index, outperformed the parent index by 113 basis points. 

The teamwork of Equileap and Morningstar to collect, promote, and publish gender diversity reporting is a step in the right direction. With data such as that the top 20% more gender diverse companies outperform bottom 20% companies by nearly 3% (Glenmede Report, Oct. 2020), investing inclusively brings both the financial and the social returns necessary to create positive impact in the current business landscape. 

To find a recorded version of this webinar, click here

For more on Diversity Investing, see: https://www.creativeinvest.com/FirstInvestingPortfolioDevotedtoDiversity.pdf

Tuesday, May 25, 2021

MAY 24, 2021 Have businesses kept their promises for racial justice? NPR Marketplace. Alice Gabidoulline, Impact Investing Intern, University of Michigan.


On NPR's Marketplace program broadcast May 24th, 2021, Kristen Schwab interviewed Mr. William Michael Cunningham, CEO of Creative Investment Research, and Ms. Gita Rao, who teaches social-impact investing at MIT. They spoke about the current state of corporate diversity pledges, especially remembering the murder and legacy of George Floyd one year ago tomorrow. 

Mr. Cunningham stated the need for an independent trust to create accountability for corporate pledges. While corporations pledged $55 billion to-date, the amount spent has only reached $250 million. Ms. Rao further noted that corporations should have a standardization of disclosure with regards to reporting diversity practices. 

As the landscape of corporate political and social involvement evolves, Mr. Cunningham and Ms. Rao highlight the increasing need for a framework of accountability in this space. 

Saturday, May 22, 2021

Review of "In Pursuit of Happiness: A Live Virtual Event" by Grace Pottebaum, Impact Investing Intern, Garrett Evangelical-Theological Seminary

 

Atlantic Magazine recently hosted "In Pursuit of Happiness: A Live Virtual Event, which explored the question: what does it take to be happy? Professionals from several fields provided innovative research that seeks contemporary answers to this question. The speakers for this event included Arthur C. Brooks, Deepak Chopra, Angela Duckworth, and many more. My analysis of the pursuit of happiness focuses on the final session, a discussion between Arthur Brooks, and Deepak Chopra. 

How do we measure and define happiness? Author and medicine advocate, Deepak Chopra, provides a detailed model that quantifies internal and external factors that commonly influence an individual’s pursuit of happiness. For example, Chopra states that joy is our innate state when we exist without resistance. Therefore, when we pursue happiness, Chopra argues that you are resisting the stress and struggle of existence in order to claim a spontaneous state of joy. External forces that inhibit one’s ability to effortlessly/peacefully exist (forces that cause stress and struggle), are oftentimes the result of monetary agencies people use in order to pursue happiness. Chopra states that there is no wrong in enjoying the finer things in life but asks: is chasing impermanent happiness worth increasing the risk of personal anxiety and societal injustice? Exploitation of resources, capitalism, colonialism, have all been contributors to inhibiting one’s ability to simply exist. 

In light of this, what do you do when one’s pursuit of happiness is an agent of another's struggle? For example, happiness that comes from power, wealth or status is likely to be accompanied by a fear of losing that agent of happiness. If one’s happiness is dependent on external factors or property outside of themselves, I would argue that it is likely to come at the cost of threatening the material necessities others need in order to live in a state where existing takes care of itself. 

When asked “what is the pursuit of happiness”, Chopra responded by proposing an alternative action. That is, if you invest in the pursuit of consciousness, you do not need to pursue happiness.

Consciousness leads to the manifestation of creativity, imagination, insight, intuition, and visions of greatness. In concluding the final session, Chopra outlined three addictions that often hinder this pursuit. These include the addition to security, sensation, and power. Ironically, addictions do not compromise one’s pursuit of happiness, but they can interfere with knowing your inner self.

Furthermore, conditions of living do not compromise one’s ability to know their inner self yet can compromise quality of life. Therefore, my analysis of the pursuit of happiness suggests that pursuing happiness, which is monetary and impermeant in nature, runs the risk of increasing resource disparity, exploitation and perpetuated resistance. 

Finally, to conclude the session Brooks asked, “what can I do to share more love, and more joy with other people today?” Both speakers answered this question by emphasizing the importance of confronting your attachments and fears. Brooks commented that confronting attachments can lead to sharing the happiness you have acquired by loving yourself. The good news is that love is free, accessible to everyone, and is shown to increase an individual’s happiness. Therefore, in considering agents of happiness, I encourage the consideration of love as it derives from consciousness, eludes monetary value and escapes the imperishable nature of materiality. 

Editor: William Michael Cunningham

Sunday, April 11, 2021

China Creates a Digital Currency. Joseph LaRosa, Impact Investing Intern, The Ohio State University.

Cryptocurrencies surged in popularity recently due to their decentralized nature, transaction speed, and security. Governments around the world have taken note of this trend and are beginning to rollout nationally backed digital currencies. The first major nation to embark on this journey is China, which announced the Digital Yuan (DY). This federally controlled currency has the potential to disrupt modern financial structures and poses the largest threat to the US Dollar since the establishment of the Euro. 

DY allows the Chinese government greater control over the production and circulation of currency. It also adds a means by which the Chinese government can efficiently and effectively transfer funds between citizens, banks, and government entities, all while cutting out the "middleman" in transactions.  

Growing tired of a US dollar-driven world, China made a bold leap into the future, hoping to increase their global economic power. US officials have been quick to express their concern, acknowledging that the DY will likely affect the US’s ability to implement economic sanctions on China, lessen the US's ability to track Chinese government funding expenditures, and even poses a threat to national security. 

Clearly, from the perspective of the US dollar, broad adoption of the DY would have negative implications. In 2019, a team of veteran policymakers at Harvard University conducted an exercise to create a response to a scenario where North Korea developed a nuclear missile secretly funded with DY. These threats will continue to grow as the Chinese government replaces physical tender with digital currency. (We outlined these factors in 2019. See: Blockchain, Cryptocurrency and the Future of Monetary Policy https://www.prlog.org/12785779-blockchain-cryptocurrency-and-the-future-of-monetary-policy.html)

In our 2019 report, Creative Investment Research provided a basic breakdown of the current global reserve currency market structure and compared this to a forecast of the projected structure in 2031. It is important to note the growth of digital currencies such as Bitcoin and DY. 











In our paper, we noted Bitcoin’s success in transforming the global economy by facilitating the (almost) costless transfer of funds between individuals and entities. Given Bitcoin’s deregulated nature and the currency's lack of ties to government entities, we project tremendous growth in its use as a global reserve currency within the next ten years. We project similar, but not as extreme, growth for DY over the next ten years. 

Although many want to draw comparisons between these currencies, in reality, they are very different. DY is controlled by the Chinese government and therefore is less volatile. Growth in the currency will be constrained by Chinese monetary policy which will try to control for macroeconomic factors such as inflation. Despite its restricted growth from a foreign exchange perspective, China wants to continue the so-far successful rollout of DY, with the hope of protecting the sovereignty of its currency. 

The question is, will the US do the same.

See:

Is FedCoin, a US Government-issued cryptocurrency, feasible? https://www.prlog.org/12772509-is-fedcoin-us-government-issued-cryptocurrency-feasible.html

Blockchain, Cryptocurrency and the Future of Monetary Policy https://www.prlog.org/12785779-blockchain-cryptocurrency-and-the-future-of-monetary-policy.html 

Comments to the Reserve Bank of India on Blockchain, Crypto https://www.prlog.org/12765825-comments-to-the-reserve-bank-of-india-on-blockchain-crypto.html

Editor: William Michael Cunningham

Friday, April 2, 2021

Climate Change


Live version: https://twitter.com/i/status/1377996115061190661

BNP Paribas, UBS, Barings, Schroders, Inter-America Development Bank & more

Reuters Events


Just one in five of the world’s biggest listed companies disclosed data about their workforce in an annual survey run by a $7 trillion investor coalition, as corporations respond slowly to pressure to be transparent about their social impact. We expect social factor impacts on corporate activity to accelerate. Events in Minneapolis and the state of Georgia point to a period of rapid change.

As one of the original impact investing analysis firms, Creative Investment Research is proud to be a media partner for Reuters Events ESG Investment North America 2021 (15-16 June), the premier place to understand the materiality of the Social Factor, and why the most senior organizations in the finance & investment community are outperforming the market because of it.

See the full speaker list & agenda at the website here

Get your copy of the 2021 information pack to stay up to date with the latest program and speaker reveals, get first access to the confirmed attendee lists, and gain exclusive promotional and group discount codes!
  • Mike Freno, Chairman & CEO, Barings
  • Sarah Bratton-Hughes, Head of Sustainability, North America, Schroders
  • Herve Duteil, Chief Sustainability Officer, BNP Paribas
  • Jolyne Caruso-Fitzgerald, Vice Chairman - UHNW, Global Wealth Management, UBS
  • Anne Simpson, Director, Governance  & Strategy, CalPERS
  • Anthony Minopoli, President & CIO, Knights of Columbus
  • Lanaya Irvin, CEO, Coqual
  • Catherine Howeth, CEO, ShareAction
  • Erica Karp, CIO, Pathstone Capital
  • Leslie Samuelarich, CEO, Green Century
  • Emily Kreps, Global Director, Capital Markets, CDP
With such a strong line-up from the largest players in the industry, ESG 2021 is the place to be if you are serious about identifying risk and gaining superior investment returns

See the full speaker list & agenda at the website here

If you have any questions, feel free to contact Kevin Anderson at Reuters, listed below, or send an email to info@creativeinvest.com – I’d be more than happy to give you our viewpoint on this important event.

Best regards,

Creative Investment Research (Reuters contact below):

Kevin Anderson
Head of ESG
Markets
Reuters Events
Telephone: +44 (0)2075138928
kev.anderson@thomsonreuters.com

Creative Investment Research is a Media Partner for Reuters Events, part of Reuters News & Media Ltd, 5 Canada Square, Canary Wharf, London, E14 5AQ. Registered in England and Wales: 2505735.

Thursday, March 25, 2021

Black Banking Startup Raises $40 Million

According to a press release, "Greenwood, the digital banking platform for Black and Latino individuals and business owners, today announced it has closed $40 million of Series A funding from six of the seven largest U.S. banks and the top two payment technology companies: Truist, Bank of America, PNC, JPMorgan Chase, Wells Fargo (Its still time to Clean House at Wells), Mastercard, and Visa."

The investor group also includes the largest Hispanic bank in the US, Banco Popular. (Looks like the crisis has finally forced the realization that, as MLK noted, "we must 'live together as brothers or perish together as fools." )

FIS, TTV Capital, SoftBank Opportunity Fund, Lightspeed Venture Partners and All-Pro NFL running back Alvin Kamara were also listed as investors.

For a startup to receive funding from six of the seven largest firms in its industry is significant. The key question is why and what will they do with this funding?

Greenwood started out of the BankBlack movement, an effort to redress years of neglect and discrimination.

We have observed a remarkable increase in the performance of minority bank stock: these stocks (blue line) have outperformed the S&P 500 (green line).




The S&P 500 Index (green) returned 74.73% over the past year. The Minority Bank portfolio (blue) returned 112.27% over the same time period. 

At the Federal Reserve Bank of Kansas City in 1994, I suggested the Federal Reserve purchase mortgage-backed securities (MBS) originated by Black banks as part of open market operations. The Fed, then under Alan Greenspan, refused, reversing course only in 2008, when large non-minority banks got into trouble.

We still believe the Fed will need to create a Black bank liquidity pool totaling at least $50 billion by conducting repo and reverse repo transactions, purchasing Treasury, MBS securities (and/or SBA PPP loans) from Black banks, asset managers and fintech firms with a record of actually making loans to the Black community.

Greenwood may very well be one of these. We will see.

Thursday, March 11, 2021

An Impact Analysis of Goldman's "One Million Black Women" Initiative

Goldman Sachs announced the launch of One Million Black Women, a $10 billion investing initiative focused on narrowing opportunity gaps for one million Black women. In reviewing the program, we focus on potential program effectiveness. We also review possible social impact. 

Goldman Sachs, a banking organization headquartered in New York, has a reputation for political savvy. Many economic policymakers in the Trump, Obama, Bush and Clinton Administrations, from Treasury Secretary to National Economic Committee chairs have been former Goldman employees. (While the Biden Administrations seems to have limited the number of ex-Goldman employees on staff, they are still present - SEC nominee Gary Gensler, for example.) The bank is also known for rushing to change from investment to commercial banking registration days before the financial crisis of 2008 took root.

One Million Black Women

The firm has pledged to invest $10 billion in Black women led companies and initiatives over the next ten years. 

Advisory Board

Goldman created an "Advisory Board" of Black women and men to provide opinions on managing the program.

Source of Funds

Goldman probably sources funds for the program from internal and external sources. 

Evaluation

Given the sourcing and the timing, we rate this program as having limited actual impact (D) and utility (D). 

As with Community Reinvestment Act (CRA) commitments, Goldman's pledge is subject to change depending on business and economic conditions, is not legally binding, and can be modified or cancelled at any point.

The role and power of the Advisory Board is unclear: our experience suggests this power is likely limited. Further, the Advisory Board is comprised of individuals (with a few exceptions) having limited track records for positive impact on the Black community beyond the symbolic. (A better set of advisors  might have been the three Black women who created Black Lives Matter.) We understand Goldman's reluctance to deal with actual innovators, however, having experience with prior efforts Black groups have made to work with the firm, specifically Goldman's Urban Investment Group. 

External funding sources are likely one of the many government and Federal Reserve liquidity programs. This means Goldman can fund this effort at very low interest rates, which it will then make available to Black women at elevated levels.  

In conjunction with the announcement, Goldman released an economic study titled "Blackwomenomics." (See our website: https://blackwomenomics.com/).

Ethical Concerns

On April 11, 2016, the Department of Justice announced that Goldman Sachs “agreed to Pay More than $5 Billion in Connection with Its Sale of Residential Mortgage Backed Securities.” 

More recently, on October 22, 2020, the firm "agreed to pay nearly $3bn (£2.3bn) to end a probe of its role in the 1MDB corruption scandal. The bank's Malaysian subsidiary also admitted in US court that it had paid more than $1bn in bribes to win work raising money for the Malaysian state-owned wealth fund."

As noted, several former economic policymakers have been Goldman alums. Thus, the firm must bear some responsibility for the failure of economic policy in those years to address both racial discrimination and inequality

These factors reduce the likely impact of the effort. 

Contact: Asahi Pompey, President of the Goldman Sachs Foundation and Global Head of Corporate Engagement. Asahi.Pompey@gs.com. 200 West Street | New York | NY 10282

Our 2017 Investment Advice for Black Women

The announced $10 billion dollar "investment" equals, for each of one million Black women, $10,000.

To maximize social and financial impact, we suggest the firm give each woman $10,000 in Bitcoin today, as we suggested in 2017 to several groups of Black women. (A $10,000 investment made then would now be worth $600,000.) This is a far more honest, ethical and potentially impactful strategy.   

Link to buy $100 of Bitcoin for $90: https://www.coinbase.com/join/cunnin_0?src=android-link


Rating Justification

As we stated in our 2019 talk before the Congressional Black Caucus (below), the fate of Black economic development rests in the hands of Black women. We have calculated the impact coefficient of this demographic to be significant. Thus, any efforts to address this group will have an elevated impact on the Black community overall. Putting a significant effort in this area into the hands of an organization that is ethically and ethnically suspect, with a proven track record of damaging Black economic interests, is inappropriate. 

We have determined that the projected impact coefficient from Goldman is low, given the firm's prior performance in the Black community and in the marketplace overall. Accepting such an effort on face value, without critical review, is foolish. See our comments below on the gap in entrepreneurial activity and the role of Black women for more information on our rating.

Wednesday, March 10, 2021

Big Banks Violate BLM Pledges

On February 22, the Biden-Harris administration announced reforms to the $284 billion Paycheck Protection Program (PPP). These changes directed funding “to the smallest businesses and those that have been left behind in previous relief efforts.”

Among the reforms, the administration established a 14-day exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees, including sole proprietors. (Recent data shows that 96 percent of Black-owned businesses operate as sole owner-operator firms.)

The main program administrator, the Small Business Administration, was tasked with eliminating other PPP program impediments. These barriers, including those due to student loan defaults or due to a non-fraud-related criminal record, stopped many businesses from applying for these loans.

In the most potentially impactful reform, PPP loans were directed to one-person (sole proprietor) firms. 

Unfortunately, major financial institutions have formally stated that they will not abide by PPP reforms: JP Morgan Chase notified loan applicants that it “won't let them take advantage of Biden's new rules that let sole proprietors and the self-employed obtain larger loans. Businesses will have to accept less aid via Chase or hurry to find another bank as many lenders prepare to wind down.”

Bank of America announced similar restrictions.

This is the same behavior that was referenced in a "Friend of the Court" brief we filed in the U.S. Court of Appeals. The April, 2020 brief was part of a case brought by a Black-owned firm that sought an injunction preventing Bank of America from limiting Paycheck Protection Program (PPP) applications. According to news reports at the time, "Bank of America initially would only accept paycheck protection loan applications from small business clients that were active borrowers at the bank." https://www.prlog.org/12820237-william-michael-cunningham-files-amicus-brief-in-paycheck-protection-program-case-20-1438.html 

Last year, large banking institutions, including JP Morgan Chase and Bank of America, publicly pledged to support Black Lives Matter (BLM). We believe the refusal to abide by PPP reforms violate the Black Lives Matter pledges each of these institutions made. Their BLM pledges have been published in corporate annual reports and other regulatory filings submitted by these banks, so we believe their refusal to abide by the Biden PPP reforms may have triggered a violation of securities laws and of regulatory obligations. As noted, most Black companies operating in the US are sole proprietors. By refusing to honor their earlier pledge of support, the banks may be guilty of fraud. We suggest securities regulators review this behavior.

Further, in an April 2020 survey we conducted, of the 60% of survey respondents who applied for the PPP program, 33% got some level of funding. One commented that he “received 1/12th of the amount I asked for.” https://www.prlog.org/12819707-ppp-funding-survey-of-african-american-businesses.html 

The defilement of the BLM pledges may also violate the Equal Protection Clause of the US Constitution, since Black firms are specifically excluded from receiving Federal program benefits that white firms take for granted.

We also suggest banking regulators investigate the BLM pledges and the lack of compliance by large banking organizations. These banks are, in essence, “redlining” Black businesses. 

Rather than suggesting that the public boycott these mega banking institutions, we suggest the public ask major corporate clients of these large banks, specifically firms who also made BLM pledges, to review the PPP sole proprietor situation. These firms include Facebook, Google and most of the S&P 500. 

Asking these firms to review and to possibly stop doing business with these large banks may be a way to enforce BLM pledges. 

Thursday, February 25, 2021

Over the Past Six Months, a Portfolio of Stock in Minority Banks Beat the S&P 500.

Over the past six months, a portfolio of stock in minority banks beat the S&P 500. The S&P 500 Index (green) returned 74% The Minority Bank portfolio (blue) returned 112%.


Much of this performance has been due to the increased attention being paid to the minority banking sector. The portfolio consists of equal weights in the following banks:

Symbol Name Ethnic Group

BOH Bank of Hawaii Corporation Hispanic

BPOP Popular, Inc. Hispanic

BYFC Broadway Financial Corporation Black

CARV Carver Bancorp, Inc. Black

CATY Cathay General Bancorp Asian

CZBS CITIZENS BANCSHARES CORP GA Black

EWBC East West Bancorp, Inc. Asian

HAFC Hanmi Financial Corporation Asian

HRBK HARBOR BANKSHARES CORP Black

IBOC International Bancshares Corp Hispanic

IBWC IBW FINANCIAL CORP Black

MFBP M & F BANCORP INC Black

PFBC Preferred Bank Hispanic

Now, there are a few things to keep in mind:

It's hard to actually buy this portfolio, mainly because stock in Black-owned banks is hard to come by. It is thinly traded and very illiquid. We are aware of a few with selected availability, but this is the exception, not the rule. Reach out to info@minoritybank.com for more information.

We do not expect this situation to last. Most of the overperformance is due to investments made by large non-minority banks, like JP Morgan, Morgan Stanley, Citibank and Wells Fargo. You can't expect that these institutions will continue to pump up minority bank stocks.

Also see: https://www.linkedin.com/pulse/over-past-six-months-portfolio-minority-bank-stock-sp/ 

    Banks Redouble Efforts to Aid Black-owned Businesses. By John Reosti, The American Banker Newspaper. February 24, 2021.

    Banks of all sizes are continuing to direct funds to minority-owned businesses months after the social unrest that followed last year’s death of George Floyd.

    JPMorgan Chase just announced plans to invest $40 million in four Black-run banks. Ally Financial, Banner, Citigroup, Texas Capital Bancshares and First Republic Bank joined JPMorgan in providing capital to help fund Broadway Financial’s pending acquisition of the $435.4 million-asset CFBanc in Washington.

    Four community banks — First National in Strasburg, Va.; Fauquier Bancorp in Warrenton, Va.; Eagle Financial Services in Berryville, Va.; and Potomac Bancshares in Charles Town, W.Va. — recently created a $1 million fund to provide loans to Black-owned businesses and farms in their markets.

    The latest efforts show that the banking industry is still evaluating ways to help underserved markets.

    “There’s no doubt we needed to do an assessment on what more we could do as a firm,” said Brian Lamb, global head of diversity and inclusion at the $3.4 trillion-asset JPMorgan. “I think we took the opportunity in the summer of 2020 to really do that assessment internally.”

    Though JPMorgan declined to disclose how much it invested in the Black-run banks, the $686 million-asset Carver Bancorp in New York said it received $6 million and the $765 million-asset Liberty Financial in New Orleans brough in $10 million.

    The $481.6 million-asset Broadway in Los Angeles disclosed that it will receive $20.2 million from a group of investors that includes six banks after completing its purchase of CFBanc in Washington. The Los Angeles company raised $12.7 million in November after Bank of America, Wells Fargo and Cedars-Sinai Medical Center made an investment.

    The $309 million-asset M&F Bancorp in Durham, N.C., did not disclose the size of the investment made by JPMorgan Chase.

    Bank of America invested $950,000 in Carver in October.

    The equity injections may signal an “inflection point” for underserved markets, Carver CEO Michael Pugh said in a Tuesday press release. “Public and private firms are recognizing the importance of investing in communities of color and institutions that support economic empowerment.”

    Smaller banks are finding their own ways to support minority communities.

    Discussions among the Virginia and West Virginia banks that led to the creation of the Banking on Diversity Minority Business Fund began about two years ago, spurred by a task force the Virginia Bankers Association created to focus on financial inclusion and diversity, said Scott Harvard, CEO of the $951 million-asset First National.

    “We were missing out on a really broad, diverse population, so we started talking about what we could do to bridge that gap,” Harvard said. “The events this summer clearly put a spotlight on things. It got everyone’s attention.”

    First National, the $867 million-asset Fauquier, the $1.1 billion-asset Eagle and the $621 million-asset Potomac will use the fund to make interest-free loans to minority-owned enterprises.

    “Initially, we talked about a grant program, but we figured we could leverage more money with a loan fund,” Harvard said. Loans also provide a surer foundation for building long-term relationship with minority businesses, he added.

    The fund “stands out,” said William Michael Cunningham, the CEO of Creative Investment Research in Washington and an economist who has studied Black-owned banks for three decades. “I think it’s exactly the type of thing we need to see.”

    The big banks that have invested in the Black banking sector might have produced more far-reaching results if they had acted in concert, though "it’s hard to question their intentions,” Cunningham said.

    JPMorgan, for its part, plans to be a passive investor in the Black-run banks whose shares it has purchased.

    “In terms of governance, our intent is much more about capacity building and end-to-end solutions for minority depository institutions,” Lamb said. “It’s a lot less focused on governance.”

    The goal ultimately is to give Black-run banks enough tools to serve as long-term, durable financial partners in minority neighborhoods.

    “We know there’s been a contraction in this space for the past two decades,” Lamb said. “When these institutions are active in their local communities, those communities have a better chance of growing and thriving.”

    Tuesday, February 23, 2021

    African Continental Free Trade Area (AfCFTA) AND THE SUSTAINABLE DEVELOPMENT GOALS. Faisal Gbadegbe, African Trade and ESG Associate

    The seventeen Sustainable Development Goals (SDGs), approved by the United Nations at the end of 2015, seek to develop the living conditions and conservation of the environment especially in developing countries. It also seeks to eliminate inequality across the globe in all sectors.

    SDG 16 and 17 clearly recognize the fact that only through the implementation of laws and enforcement of same can we guarantee the SDGs. Implementation of the SDGs will therefore require that countries use a wide range of policy and program approaches. It is therefore pleasant and refreshing to learn that the African Continental Free Trade Area (AfCFTA) has a strong development focus, highlighting economic and social development. 

    The AFRICAN UNION’s (AU) Agenda 2063 highlights the point that Africa’s growth and integration into the Sustainable Development Goals (SDGs) is part of the Agenda agreement. The positive aspect is that African Countries, by signing and ratifying the AfCFTA, will in the long run, have to ensure that their domestic laws incorporate the SDGs; AfCFTA is an indirect implementation of the SDGs!

    However, although the AfCFTA references sustainable development in its objectives and specifically refers to some areas covered by the SDGs (such as gender equality and food security), full alignment with the seventeen SDGs and their 169 goals and 230 targets will require addressing a number of additional areas of law beyond those slated for Phase II negotiations. These include strategies to address food security, health (including rules on medicines and medical equipment, which are increasingly important in light of the COVID-19 pandemic), and environment and climate change, along with binding rules on gender, labor, and other aspects of human rights. (1)

    (1) Derived from Katrin Kuhlmann, Chantal Line Carpentier, Negin Shahiar, Tara Francis, and Ana Maria Garces Escobar, Trade Policy for the New International Economic Order: A Sustainable Development Model for Trade in the Midst of International Protectionism and Decentralization, 2020 And The African Continental Free Trade Area : Toward a New Legal Model for Trade and Development by Katrin Kuhlmann and Akinyi Lisa Agutu in Geo. J. Int’l L. 4 (2020)

    Monday, February 1, 2021

    GameStop


    On crowdfunding website Kickstarter, 57,502 gaming projects have raised $1.37 billion dollars as of January, 2021. In fact, the most successful crowdfunding project raised $300 million (and counting) for Star Citizen, a computer game.

    GameStop is a crowdfunding project.

    Along with the recent increase in the value of bitcoin, from $3,000 to $42,000 (low to peak in 2020), this points to the main problem with economics and finance: these "fields" serve the needs of a small, non-minority group of people. They are also, at core, racist and dishonest.

    We pointed this out some time ago in comments to the US Securities and Exchange Commission: December 22, 2003 "Envy, hatred, and greed have flourished in certain capital market institutions, propelling ethical standards of behavior downward. Without meaningful reform, there is a small (but significant and growing) risk that our economic system will simply cease functioning." http://www.sec.gov/rules/proposed/s71903/wmccir122203.pdf

    Regulators, including the SEC, failed to protect the public interest, having been prohibited from doing so by Congressional and Senate republican legislators. As we noted in 2006, "Individuals and market institutions with the power to safeguard the economic system, including investment analysts and rating agencies, have been compromised. Few efficient, effective and just safeguards are in place. Statistical models created by the firm show the probability of system-wide market failure has increased over the past eight years. Investors and the public are at risk." http://www.sec.gov/rules/proposed/s71005/wcunningham5867.pdf February 6, 2006.

    Less than two years later, this decline in regulatory ethics led to the 2008 financial crisis and an economy-wide $19 trillion dollar loss.

    The financial crisis of 2008 also led to the development of crowdfunding, bitcoin and cryptocurrency, all a direct result of the failure of financial institution regulators. Cryptocurrency and it's underlying technology, blockchain, highlight the hidden, fourth function of money. The three widely recognized main functions of money are as: a medium of exchange, a unit of account, a store of value. There is a fourth function of money that is hidden and rarely discussed: as a means of social control.

    GameStop and cryptocurrency force this function into the open.

    Monday, January 25, 2021

    Biden’s Brilliant Start


    Sounding long overdue and welcome words at his inauguration, President Biden has gotten off to a brilliant start.

    The new President signed thirty (30) executive orders in three days. One third directly reverse the policies of the prior Administration. As the first real first attempt by any Administration to address the COVID-19 crisis, we applaud the effort.

    What’s brilliant about these policies is the honest way they address the touchstone of American politics: race. One of the first Executive Orders issued by the Biden Administration mandated a “comprehensive approach to advancing equity for all.” The executive order requires the US Government to “identify the best methods, consistent with applicable law, to assist agencies in assessing equity with respect to race, ethnicity, religion, income, geography, gender identity, sexual orientation, and disability.” Finally, the order requires that “each agency...assess whether underserved communities and their members face systemic barriers in accessing benefits and opportunities available” from agency policies and programs.

    We also are positive about the Biden Administration’s effort to increase the minimum wage from $7.50 to $15. As we stated in 2019 at a session on Black Wealth held at the Congressional Black Caucus, (see: https://youtu.be/x4ukwLKqEzs?t=1242) this is the one economic policy that would have the most immediate and positive impact on the Black community.

    Our optimism is, however, leavened by memory: the Obama Administration also got off to a very fast and hopeful start. To make the effort as effective as possible, the current Administration will need to recognize some hard truths. These executive order-based initiatives suffer from the faults of their makers: they are first steps one would expect from a group of wealthy white people: minimum wage policies from people who have never worked a minimum wage job and food stamp policies from wealthy white people who have never had to depend on them. In a sense, these flaws are similar to the stereotypical racial attitudes that were the hallmark of the prior Administration.

    This may be due to the fact that the Administration has chosen to fill its economic team with persons beholden to Wall Street, not strategic economic thinkers operating in the public interest. This increases the risk that the social and economic performance of the Administration will not be as positive as it could be.

    The President named former Federal Reserve Chair Janet Yellen to be Treasury Secretary. Ms. Yellen’s tenure at the Fed is particularly concerning. She never pushed the Fed policy envelope to increase economic fairness. In fact, her ties to Wall Street are so close that she needs to obtain “clearance” from an internal Treasury ethics official if she is required to participate in any matters involving Citi, Goldman Sachs, or any other bank that paid her.

    This concern is particularly relevant in light of testimony Ms. Yellen made to the House Financial Services Committee in 2015, where she stated that “there really isn’t anything directly the Federal Reserve can do to affect the structure of unemployment across groups, and unfortunately, it’s long been the case that African-American unemployment rates tend to be higher than those on average in the nation as a whole.” See: https://www.linkedin.com/pulse/why-janet-yellen-wrong-black-unemployment-cunningham-am-mba/

    In addition, the President named Brian Deese, a BlackRock executive, to head the National Economic Council. BlackRock is the largest money management firm in the US, but the thought processes and skills needed to fully protect the public interest in a crisis differ greatly from Wall Street profit maximizing money management skills. A cursory look at BlackRock’s track record reveals a trail of economic damage. In addition, the firm has a history of discrimination. (See: New Jersey, BlackRock Sued for Alleged Discrimination and Theft. Bloomberg News. Bob Van Voris and Kelsey Butler, June 23, 2020. https://www.bloomberg.com/news/articles/2020-06-23/new-jersey-blackrock-sued-for-alleged-discrimination-theft May 1, 2014. BlackRock is a "Toxic environment for women and minorities." See: https://www.glassdoor.com/Reviews/Employee-Review-BlackRock-RVW4156964.htm )

    We also observe that Secretary of State nominee Antony J. Blinken, made seven figures advising companies like “private equity giant Blackstone and the asset management company Lazard.” The nominee for Director of National Intelligence, Avril Haines, consulted for Palantir, a firm which has provided “data and surveillance services to law enforcement, including the United States Immigration and Customs Enforcement.” (See: https://www.nytimes.com/2021/01/01/us/politics/yellen-speaking-fees-disclosure.html )

    The popular definition of insanity is doing the same thing over and over with the same people and expecting different results. Rather, we suggest they immediately hire the three Black women who created "Black Lives Matter", a protest movement that generated activity on all seven continents.

    We need a team that understands most rich people rarely have the ability to operate in the public interest, as the Trump administration has proven conclusively. In 2020, they created 56 new billionaires while from 8 to 14 million people, many of them Black and Hispanic, fell into poverty. (See: https://www.washingtonpost.com/business/2020/12/16/poverty-rising/ and https://www.cbpp.org/research/poverty-and-inequality/research-note-number-of-people-in-families-with-below-poverty ). This is especially obvious now: most of the 140,000 jobs lost in the last quarter of 2020 were formerly held by women (particularly black and Hispanic women).

    We applaud this Administration’s fast start and look forward to supporting their efforts, but we can no longer afford uneven, unfair and wealth concentrating economic policies. While the first week of the Administration gives us reason to be optimistic, the performance bar is very low, and four years is a long time.

    Monday, January 18, 2021

    Why trump Will Win (June 11, 2016)

    (For the original June 11, 2016 post on LinkedIn, click here: https://drive.google.com/file/d/1xL15GdePWD_3nOJJT60nM4686gqq0yVU/view?usp=sharing )

    Our initial 2016 Election Fully Adjusted Return Forecast indicates that Donald J. Trump will win the election for the Presidency of the United States. This follows from one sufficient and one necessary condition.  

    The sufficient condition: seventeen (17) Republican states have enacted laws restricting access to the voting booth, restrictions so onerous as to defy both common sense and the spirit of democratic governance. These laws guarantee that the people who would vote against Mr. Trump will be blocked from participating in the election. For example, to vote in the State of Texas, a gun permit suffices. A college ID does not. So it is in 17 of 50 US States. 

    Game. 

    The movement to block access to voting has been a long term effort, a reaction to the election of the first African American president. Rather than effectively fighting voter disenfranchisement, Democrats were convinced that this was a Black issue (Florida 2000, Ohio 2004), and therefore unworthy of serious consideration. It is now too late to do anything about this.  

    Democrats allowed themselves to be distracted by fabricated controversies, like the birther issue (promoted by one Donald J. Trump).  Finally, having the nation's largest news channel bring forth an unprecedented level of misinformation (as in the birther issue above) aimed at the current President and the presumptive Democratic nominee served to create an atmosphere of  mistrust. The financial crisis added to the level of dissatisfaction. 

    What this means is that Mr. Trump can insult Mexicans all he likes.  He can insult Muslims, immigrants and members of other minority groups as well: they are not going to be able to vote. 

    Set. 

    Thus, Mr. Trump's behaviour is not accidental. This brings us to the necessary condition. Having blocked access to the polls, all that is required to push Mr. Trump into the White House is a surge in voting by biased, uneducated, low to moderate income white voters. This, the biggest demographic in the election, must be incentivized to participate. Mr. Trump's behaviour and language does so. 

    Trump will  use Orlando as part of a fear based strategy to increase voter participation in his targeted demographic. He will use the economic chaos caused by Britain's vote on exiting the European Union to support his fear driven strategy.   So long EU, hello Trump. 

    (We initially forecast that Britain would not exit the European Union, and the assassination of a female, liberal Member of Parliament lowers the chances they will leave, but their possible exit is part of the same violent, supremacist, chaos-inducing, "we want our country back" movement that is leading Trump to victory in the US. What every single "traditional" economist misses is this: the "movement" is not about rational economic decision making.  It's about showing you are willing to pay the price required...to engage in bigotry and discrimination...)

    Given the above, a Trump popular voting victory is assured. The Electoral College, the only votes that really matter, will be forced to follow. 

    Match. 

    Game. Set. Match. 

    Welcome, President Trump.

    Trumpism (December 26, 2016)

    For the original 12/26/2016 post, see: https://drive.google.com/file/d/16wkfCn1aD7iCw1VQaSaH48r8BzDW8Scs/view?usp=sharing 

    "Populism is a belief in the right of ordinary people, rather than political insiders, to rule." Trumpism, by contrast, operates on the presumption that ordinary white working class people are never going to get a chance to rule, no matter what, so they might as well disrupt the political process using the only tool left that is still available to them: the vote. 

    These are white, working class men and women who know that, by all intellectual and economic standards, they cannot win at the fixed "money game." So, egged on by wealthy bigots at Fox and Breitbart, they lash out at politicians, judges, Hispanics, scientists, teachers, Wall Street, universities, Blacks, the media, women, legislatures—even at elections. They are not interested in serious reform to the system. Under the enormous economic pressure of a rigged "free market" they are either too pessimistic or too damaged to believe that reform is possible. So the best they can do is adopt a position of total irreverence: to show they hate the players like Walker, Ryan, Hillary and Obama and the game. 

    The retaliatory, extremist right-wing politics that now goes by the name of Trumpism is about something far more consequential than Trump, something that has been brewing and building in the US and globally since Ronald Reagan damaged the white working class with "trickle down" economics and hid the harm he caused behind money worship and a façade of celebrity. The result: "uneducated white Americans are living sicker and dying earlier" due to 40 years of sustained economic turmoil, now combined with a massive influx of prescription and nonprescription opioids. (Most of the world's heroin comes from Afghanistan, and if you’re looking for the chief kingpin in the Afghanistan heroin trade, it’s the United States.) 

    Unable to recognize that their lives have been made far worse by the very right wing policies they were fooled into supporting, white working class people oppose common sense solutions, like Obamacare. This serves to establish their susceptibility to further manipulation. Hiding the growing damage requires more extreme distractions, however, hence the "unpresidented" 2016 campaign and the "election" of a true demagogue. 

    This brings us back to Trumpism. 

    "Ours is a singularly dangerous time." What is "most dangerous about Trumpism is that it encourages the distrust of all authority—except for the authority of brute force." 

    This is why the treasonous* act of conspiring with a foreign government to modify the results of both Senate and Presidential elections is cheered (“A win is a win” according to Larry Kudlow, incoming Chair of the Council of Economic Advisors in the Trump Administration) and the main perpetrator, a communist, is celebrated by the right wing in the US

    Under any conceivable scenario, the current situation is very bad, and I mean toxic, for democratic institutions in general and for people of color specifically. 

    Bottom line: our Fully Adjusted Return Forecast** indicates that, over time, things will get much, much worse..... 

    Modified from: "This Political Theorist Predicted the Rise of Trumpism. His Name Was Hunter S. Thompson."

    * Oran's Dictionary of the Law (1983) defines treason as "...[a]...citizen's actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation]." In a democratic system based on the vote, helping to falsify the results of an election counts as serious injury. In the United States, misprision of treason is a federal offense, committed where someone who has knowledge of the commission of any treason against the United States, conceals such knowledge and does not inform the President, a federal judge or State Governor or State judge (18 U.S.C. § 2382). It is punishable by a fine and up to seven years in federal prison. It is also a crime punishable under the criminal laws of many states (so, in theory, states could sue Trump and his associates for treason...)

    There is No Double Standard in Health Care, Law Enforcement or Politics

    Our economic models are based on our December 26, 2016 forecast: "Under any conceivable scenario, the current situation is very bad, and I mean toxic, for democratic institutions in general and for people of color specifically. Bottom line: our Fully Adjusted Return Forecast** indicates that, over time, things will get much, much worse....." From: Trumpism. https://www.linkedin.com/pulse/trumpism-william-michael-cunningham-am-mba/ 

    Unfortunately, we were right. By January 6, 2021: 

    1. An administration-inspired violent insurrection attempted to prevent the Congress of the United States from certifying the result of the 2020 presidential election. This is, of course, the true nature of the republican party: racist, greedy, angry, entitled and violent. Black people know that crowd: it's the same mob seen at every lynching. The noose below was constructed at the US Capitol on January 6, 2021.  

    2. A foreign government (Russia) attacked and compromised all critical federal  information systems. It is entirely likely that members of the administration granted access in exchange for cash.  

    3. A pandemic resulted in the deaths of (eventually) 500,000+ American citizens. The US death toll may reach 2 million as COVID mutates, changing in a way that allows it to evade all efforts to eradicate it.  

    4. We have seen the expansion of a systemic program of police violence targeting African American males. This, in addition to the uneven impact of the COVID virus, show the true nature and status of African Americans in the United States. 

    As we stated on June 11, 2016, ("Why Trump Will Win" https://www.linkedin.com/pulse/why-trump-win-william-michael-cunningham-am-mba/ ), 

    "all that is required to push Mr. Trump into the White House is a surge in voting by biased, uneducated, low to moderate income white voters. This, the biggest demographic in the election, must be incentivized to participate. Mr. Trump's behaviour and language does so." 

    That language led to January 6th, and we forecast this behaviour will continue throughout 2021. 

    These events confirm what we have known all along: there is no double standard in health care, law enforcement or politics. 

    These systems work exactly as intended.

    Sunday, January 17, 2021

    The Case for the 14th Amendment

    There can only be one reason for the events of January 6, 2021 - republican political culture officially sanctioned “insurrection, terrorism and treason.” A collection of racist and fascist sympathizers sought to murder the Vice President and members of Congress. We discussed this eventuality on December 26, 2016:

    "Under any conceivable scenario, the current situation is very bad, and I mean toxic, for democratic institutions in general and for people of color specifically. Bottom line: our Fully Adjusted Return Forecast** indicates that, over time, things will get much, much worse....." From: Trumpism. https://www.linkedin.com/pulse/trumpism-william-michael-cunningham-am-mba/  

    Now, the power of right-wing lobbyists, conservative think tanks and fanatic media outlets have directed American public policy in support of extremism and militarism. 

    In order to understand what happened, we must recognize that the key motivational force was Trump’s call to violence. Only a statement by ten (10) former secretaries of defense may have prevented a military coup. 

    The extremist philosophy known as free market economics is also guilty. Globalism failed to provide, broadly, the benefits promised. Self-directed retirement savings accounts or 401k’s, siphoned off trillions in cash to financial institutions as opposed to more beneficial defined benefit plans. These financial institutions operate beyond state control, having caused a massive $19 trillion loss resulting from the 2008 financial institution fraud, failure and the resulting crisis. 

    There are a number of reasons for the failure of free market economics, but the main factor is that this system of thinking was never designed to promote fairness. It was designed to protect wealth held by a narrow group of non-minority individuals. As Pope Francis stated in 2013, and as proven by 2020, 

    “Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless. As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape. 

    Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills….”  From: APOSTOLIC EXHORTATION EVANGELII GAUDIUM Pope Francis. November 24, 2013. 

    To generate a means of escape, GOP supporters were fed a steady diet of irrational conspiracy theories. This led to efforts on January 6th to correct what is a fabricated election controversy.   



    Republican party entities not only supported Trump's January 6 rally, but financed attendance, in some cases paying for buses to DC. We also know that over 130 “House Republicans voted to nullify the results of” the election after, not before, the riot. 

    Legislative and government responses must invoke Section 3 of the 14th Amendment to remove insurrectionists in the House and Senate. Corporate campaign funding must also be cut, along with social media access. Insurrectionists should be added to the no-fly list, as well. 

    Appeals to leniency for the sake of “unity” are worse than useless in this situation. They are dangerous. These people must be disciplined. Firmly. Quickly. 

    We can discuss reconciliation after we apply the rule of law.