Racism Has An Economic Cost, Atlanta Fed President Warns

Jul 15, 2020
Originally published on July 15, 2020 7:15 pm

Raphael Bostic, president and CEO of the Atlanta Federal Reserve Bank, says racism is a danger to the health of America's economy.

In a recent opinion piece, Bostic reflected on the recent protests against police brutality that he says are fueled, in part, by economic inequalities that stem from systemic racism.

"By limiting economic and educational opportunities for a large number of Americans, institutionalized racism constrains this country's economic potential," he wrote. "A commitment to an inclusive society also means a commitment to an inclusive economy."

In order to get there, he tells NPR's Ailsa Chang, tough conversations have to happen that address and raise awareness about racial inequities, as well as the nature of those inequities.

"What I think is going to be really important is that those sorts of conversations continue so that people start to become much more sensitive about when their approaches to decision-making or allocating capital or hiring workers is being shaded by things that are inadvertently, in many instances, disadvantaging African Americans and other minorities," he says.

As the first African American to become president of a Federal Reserve bank, Bostic sees his leadership role as less of a burden and more of a "joy and satisfaction," knowing that his work at a high-level position "is really changing how people think about what's possible."

Here are excerpts from his conversation that aired on All Things Considered:

Home ownership, obviously, is one of the surest ways to gain wealth. What can the Fed do to help disadvantaged communities own their homes?

Well, I'm glad you talked about housing and it really does speak to the point that this is a multidimensional problem. We do have relationships with a lot of banking institutions that provide the financing that families take advantage of to buy homes. So, we've been working with them for a long time, we will continue to do that to try to make sure that they don't have biases in things that they do.

I do want to ask about this rule that the Trump administration is trying to move forward with, and it would basically be a rule that would make it harder to file discrimination cases with the Fair Housing Authority. Even lenders like Bank of America are opposed to this change. What do you think about this rule that the Trump administration is pushing?

It is a problem, and I think it is important that we create real opportunities for those who have been mistreated to find recourse.

I was pleased to see that the banking institutions and some pretty major organizations like the National Association of Realtors all have the same view. And I'm hopeful that even if this rule does go through, that they will continue to manage their business and activities in a way that's consistent with trying to stamp out fair housing violations wherever they occur.

As the first African American to lead a Federal Reserve Bank, did you feel any added pressure to do something different with this job than the people who came before you?

So, I've tried really hard in this role to not focus on that. I have to be the president and CEO of the Federal Reserve Bank of Atlanta first. And I'm an African American president second. But at the same time, I do recognize that, for many, this is something that they never would've imagined.

I've gotten so many emails from people saying, "I never thought that the Fed was a place that an African American could lead. And I'm thinking about my career in a different way."

Vincent Acovino and Peter Granitz produced and edited the audio for this story.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

AILSA CHANG, HOST:

Systemic racism is a yoke that drags on the American economy. Those are the words written by, perhaps, an unexpected author, a central banker. Raphael Bostic leads the Federal Reserve Bank of Atlanta. And he recently wrote an op-ed in the Atlanta Journal-Constitution detailing the, quote, "moral and economic imperative to end racism." Well, how does a central banker do just that? Raphael Bostic is with us now from his office in Atlanta.

Welcome.

RAPHAEL BOSTIC: Thank you, Ailsa. It's very good to be here.

CHANG: Thanks for being with us. The Fed, you know, it basically has a dual mandate - to control inflation and to maximize employment. So with those two goals in mind, honestly, what can you as a central banker do, as you put it, to end racism?

BOSTIC: Well, I think there are two things that are important to keep in mind. The first is that that maximum employment mandate, I think, is really a mandate to try to get as many people employed as possible. And racism is something that prevents people from being employed and being employed in ways that give them livable wages and the prospect for prosperity moving forward. In terms of actions, you know, certainly there's monetary policy, which can be used to really promote as much of a strong foundation for growth so that jobs can be created and people can get attached to them.

CHANG: But when it comes to unemployment specifically, can the Fed actually target - I mean, single out - a demographic group to help them?

BOSTIC: I think that's challenging when you think about monetary policy as a tool because monetary policy is a broad-brushed, blunt instrument.

CHANG: Right.

BOSTIC: But there are other things that we do. We are deeply involved in understanding the challenges that African Americans, Latinos and others have in terms of developing skills that might make them competitive for jobs that might be available. We're also having conversations internally about, you know, what kind of corporate policies should we have to make sure that we're as inclusive as possible as a central bank? And then we're going to take those learnings and try to get them deployed to as many businesses as possible so that we really change how the corporate sector and how the business sector more generally engages with different communities and tries to figure out where there are possibilities for opportunity, so we can really provide sort of a roadmap for those who are working hard to try to make progress.

CHANG: Well, what about housing? I mean, home ownership, obviously, is one of the surest ways to gain wealth. What can the Fed do to help disadvantaged communities own their homes?

BOSTIC: Well, I'm glad you talked about housing and - because it really does speak to the point that this is a multidimensional problem. You know, we do have relationships with a lot of banking institutions that provide the financing that families take advantage of to buy homes. So we've been working with them for a long time. We will continue to do that to try to make sure that they don't have biases in the things that they do.

CHANG: I do want to ask about this rule that the Trump administration is trying to move forward with. And it would basically be a rule that would make it harder to file discrimination cases with the Fair Housing Authority. Even lenders like Bank of America are opposed to this change. What do you think about this rule that the Trump administration is pushing?

BOSTIC: It is a problem. And I think it is important that we create real opportunities for those who have been mistreated to find recourse. I was pleased to see that the banking institutions and some pretty major organizations, like the National Association of Realtors, all have the same view. And I'm hopeful that even if this rule does go through, that they will continue to manage their business and activities in a way that's consistent with trying to stamp out fair housing violations, wherever they occur.

CHANG: Well, as the first African American to lead a Federal Reserve Bank, did you feel any added pressure to do something different with this job than the people who came before you?

BOSTIC: So I've tried really hard in this role to not focus on that. I have to be the president and CEO of the Federal Reserve Bank of Atlanta first, and then I'm an African American president second. But at the same time, you know, I do recognize that for many, this is something that they never would have imagined. I meet people who are extremely excited. And there is some extra burden recognizing that I'm being watched that closely, but there's also a real joy and satisfaction to know that by me doing the things that I have passion about, it is really changing how people think about what's possible. I've gotten so many emails from people saying, I never thought that the Fed was a place that an African American could lead. And I'm thinking about my career in a different way.

CHANG: Raphael Bostic is the president and CEO of the Atlanta Federal Reserve Bank.

Thank you very much for joining us today.

BOSTIC: Thank you. It's been a pleasure talking with you. Transcript provided by NPR, Copyright NPR.