[Podcast]: The Biggest Risk to the Financial System Probably Isn't What You Think

Some of the statements made in this podcast are troubling to me. 
The first statement was made by Rob, speaking to and about Mrs. Petrou:  "...during the past decade the rich have gotten richer and the poor have gotten poorer and this is particularly true for the African-American community, most of which has been left behind by the economic growth in the past two decades.  In a recent blog post you noted that some people may be confused because they believe that African-Americans are better off now economically than they were during say, the Civil Rights movement in the 1960's and I think that if you polled a lot of white people that would be the answer.  And yet the data you pulled together completely refutes it and it's even worse than the economic situation in the 1960's..." 

I looked at some of the references and realized that these statements refer to relative terms rather than absolute terms.  Is that not an important distinction to make?  Instead of getting poorer, hasn't the standard of living been raised for everyone over the past 60 years?  The data is skewed by what is considered a household or family and is limited by the data reported versus the data that is never reported - the  underground economy.  Ask any banker who looks at a financial statement and compares it to a tax return, or sees a standard of living that doesn't jive with the tax return.

Then Mrs. Petrou states:  "Things went very wrong partly because of the hopes that everybody had after the '60's...the real hope as the Civil Rights movement turned into a nationwide movement...and then the subsequent legislation...  At least in the North...everybody black and white thought that it would get better...but it didn't." 

My understanding is that she is referring to both racism and the economic status of African-Americans.  I can't get past these statements.  Anyone who was alive in the '60's, maybe especially in the South, knows that both racism and economic conditions have greatly improved.  I'm not sure how the problem can be fixed if we can't define the problem better than this. I think most bankers are good people who are interested in improving our society and country.

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Mary Fowler
Chief Executive Officer
The Peoples Bank
Magnolia AR
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Original Message:
Sent: 06-23-2020 12:18
From: Barb Rehm
Subject: [Podcast]: The Biggest Risk to the Financial System Probably Isn't What You Think

Karen Shaw Petrou, Managing Director of Federal Financial Analytics, who I've called "the sharpest mind analyzing bank policy today," says banks and policymakers need to focus on economic inequality before it's too late. In the latest episode of Banking with Interest, she discusses her proposed solution and what happens if we don't act in time.  It's a really interesting conversation that's well worth listening to. It gets dark, but ends on a hopeful note.

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Barb Rehm
Senior Managing Director
Promontory Interfinancial Network, LLC
Arlington VA
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