Latest / Earn Your Leisure / Advance Placement: Why the Credit Score System is Racist

Transcript

Advance Placement: Why the Credit Score System is Racist · Earn Your Leisure

• 0:00
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 0:03
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 0:07
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 0:11
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 0:15
  Speaker 1: some of the heinous migrant criminals caught because of President
• 0:19
  Speaker 1: Donald J. Trump's leadership. I'm Christy nom the United States
• 0:23
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 0:28
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 0:31
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 0:35
  Speaker 1: are here illegally, your next you will be fined nearly
• 0:39
  Speaker 1: one thousand dollars a day, imprisoned, and deported. You will
• 0:43
  Speaker 1: never return. But if you register using our CBP home
• 0:46
  Speaker 1: app and leave now, you could be allowed to return legally.
• 0:50
  Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,
• 0:55
  Speaker 1: border and families will.
• 0:57
  Speaker 2: Be protected sponsored by the United States Department of Homeland Security.
• 1:00
  Speaker 3: So banks make money by investing other people's money, right yeah, essentially,
• 1:06
  Speaker 3: and they invest the money in loaning it out.
• 1:08
  Speaker 4: That's basically they take it to posits, they loan it
• 1:10
  Speaker 4: out live on the spread primarily.
• 1:12
  Speaker 3: So what is you guys' investment strategy or what what
• 1:20
  Speaker 3: do you guys invest take consume much money in.
• 1:24
  Speaker 4: So it's not about necessarily investing at the at the
• 1:27
  Speaker 4: whole and company level. Any investment we make has to
• 1:29
  Speaker 4: be approved by the federal regulatory bodies. UH, there will
• 1:31
  Speaker 4: be opportunities to do that, and I do think that
• 1:33
  Speaker 4: some of the work that we talked that we just
• 1:35
  Speaker 4: talked about in FinTechs, I think it's appropriate for us
• 1:38
  Speaker 4: to look at figuring out how do we spark more
• 1:41
  Speaker 4: innovation in the fintech space so that we can close
• 1:43
  Speaker 4: that ecosystem. So investing in technology and in businesses that
• 1:46
  Speaker 4: are in that space would make a lot of sense
• 1:49
  Speaker 4: for us. But what makes the technology we're talking about it?
• 1:52
  Speaker 4: You have to be able to in a post COVID
• 1:55
  Speaker 4: world where you know, nobody's walking in a bank to
• 1:57
  Speaker 4: do anything right now unless you just have have to.
• 2:01
  Speaker 4: We have to be able to get a concierge level
• 2:03
  Speaker 4: of banking, so that right now, where you're sitting at
• 2:06
  Speaker 4: wherever you are right now, if you decide that, hey,
• 2:09
  Speaker 4: you know what, I'm just going to go ahead and
• 2:10
  Speaker 4: buy his second house in New Orleans. I need to
• 2:14
  Speaker 4: just figure this out. We have to provide the concierge
• 2:17
  Speaker 4: level of banking so you don't feel like you're on
• 2:18
  Speaker 4: your own. That technology needs to be seamless, but it
• 2:21
  Speaker 4: still has to have real people working with you. Only
• 2:25
  Speaker 4: four percent of African Americans use Small Business Administration loans
• 2:28
  Speaker 4: and that's government guaranteed loans. That's the easiest way of
• 2:32
  Speaker 4: getting loans for businesses that have a hard time in
• 2:34
  Speaker 4: the dead field. Only four percent. And I used to
• 2:37
  Speaker 4: I was at SBA. You know, I was the regional
• 2:39
  Speaker 4: administrator for SBA for the Southeast United States. At the
• 2:41
  Speaker 4: end of the day's that is one of the biggest
• 2:44
  Speaker 4: strategies we have out here because we're not getting access
• 2:47
  Speaker 4: to these resources. But I get why people don't do it.
• 2:49
  Speaker 4: It seems like a headache. Nobody wants to deal with it.
• 2:51
  Speaker 4: You have to create. JP Morgan gives a fifty million
• 2:55
  Speaker 4: dollar customer is what we give a fifty thousand dollars
• 2:58
  Speaker 4: customer redemption that level of handholding, working with you every
• 3:01
  Speaker 4: step of a way to make sure you get access
• 3:03
  Speaker 4: to the products and services. So what we invest in
• 3:06
  Speaker 4: is like we take these deposits that people that these
• 3:08
  Speaker 4: big corporations are giving us, and then we turn them
• 3:11
  Speaker 4: into loans and opportunities, whether it's your home loan, your
• 3:14
  Speaker 4: business loan, your faith based organization loan. We create debt
• 3:17
  Speaker 4: based opportunities. And when it comes to investing, it is
• 3:20
  Speaker 4: critically important for us to look at investing at any
• 3:23
  Speaker 4: business that closes the racial wealth gap and secures the
• 3:26
  Speaker 4: ecosystem for black wealth. If anybody's in that space, then
• 3:30
  Speaker 4: absolutely that's something Redemption should be looking at investing in.
• 3:33
  Speaker 5: So the numbers are staggering, right, like you said in
• 3:35
  Speaker 5: the sixties, is one hundred and thirty five black banks
• 3:37
  Speaker 5: about the early two thousands dot com bubble with down
• 3:40
  Speaker 5: to forty seven today, were roughly about sixteen to seventeen
• 3:44
  Speaker 5: of those banks. However, inside of that sixteen to seventeen,
• 3:48
  Speaker 5: I don't know how many of them manage over a
• 3:50
  Speaker 5: billion dollars, Right, So there's one, Yeah, there's one that
• 3:55
  Speaker 5: manages over a billion dollars. How do we get the clientele,
• 3:58
  Speaker 5: the corporate accounts, the customers is with that high net
• 4:02
  Speaker 5: value to be part of Redemption Bank? Like, what's the
• 4:06
  Speaker 5: marketing plan? What's the strategy to make sure we're getting
• 4:08
  Speaker 5: this type of clientele so that we have enough money
• 4:10
  Speaker 5: to now lend out to our community.
• 4:13
  Speaker 4: Yeah, so just a little bit about how this banking works.
• 4:16
  Speaker 6: Man.
• 4:16
  Speaker 4: At the end of the day, because a lot of
• 4:19
  Speaker 4: these banks are in low to modern income areas, regulators
• 4:22
  Speaker 4: look at their loans and say they're risky. And now, honestly,
• 4:26
  Speaker 4: historically this has been deemed as racist in many aspects.
• 4:31
  Speaker 4: They grade out every loan and we see I've talked
• 4:34
  Speaker 4: to black bank presidents that would tell me I got
• 4:37
  Speaker 4: regulators coming in here grading my loans for a barbershops risky.
• 4:41
  Speaker 4: When these people have never missed the loan, they paid
• 4:44
  Speaker 4: on time, they've done everything I've asked them to do.
• 4:46
  Speaker 4: But because they in this neighborhood, they get treated as
• 4:50
  Speaker 4: though as risky. And what that means is if that
• 4:52
  Speaker 4: loans for one hundred thousand dollars, then the regulator tells
• 4:56
  Speaker 4: that bank you need to keep one hundred thousand dollars
• 4:58
  Speaker 4: of cash in your reserve because that loan may go under.
• 5:02
  Speaker 4: Now what that means is that you got to keep
• 5:04
  Speaker 4: that one hundred thousand dollars and it's not on the
• 5:06
  Speaker 4: street making money anymore. You got to hold you got
• 5:09
  Speaker 4: to hold it. So what we do to get around that,
• 5:11
  Speaker 4: what we're going to be able to do is say, look,
• 5:14
  Speaker 4: you know, we're going to cast a wider net. See,
• 5:16
  Speaker 4: most black banks are CDFIs. They're highly concentrated in cities,
• 5:20
  Speaker 4: in regional areas. We're choosing not to be a CDF
• 5:23
  Speaker 4: five because unfortunately cdfives are too often equated to nonprofits
• 5:27
  Speaker 4: and they have all these restrictions. Don't get me wrong,
• 5:29
  Speaker 4: they do the really hard work. They are mission driven. However,
• 5:32
  Speaker 4: not taking that label and just being a straight up bank,
• 5:35
  Speaker 4: you get an opportunity to play across the country. You
• 5:37
  Speaker 4: get an opportunity to recruit across the country. And this
• 5:40
  Speaker 4: bank was built by black entrepreneurs, and I think that's
• 5:42
  Speaker 4: the biggest difference having a bank that eighty five percent
• 5:47
  Speaker 4: of our black investors are entrepreneurs, doctors, lawyers, you know,
• 5:51
  Speaker 4: hedge fund folks, private equity people. We got one pitch,
• 5:56
  Speaker 4: Let's build a bank we actually use. That's something. Let's
• 5:59
  Speaker 4: build a bank that you, me and everybody who wants
• 6:01
  Speaker 4: to bank black will actually use. Now we can all
• 6:03
  Speaker 4: have a conversation about why we don't bank black now,
• 6:05
  Speaker 4: and we know what those reasons are, well, let's alleviate
• 6:08
  Speaker 4: those reasons by creating a bank that gives me the
• 6:10
  Speaker 4: service I need and the access to credit I need.
• 6:13
  Speaker 4: How I need it to make sure my business grow.
• 6:16
  Speaker 4: If we can do that, then naturally I believe that
• 6:20
  Speaker 4: black people will support black owned banks. But if you can't,
• 6:23
  Speaker 4: you can't make that up. You got to show up
• 6:25
  Speaker 4: with the services. We don't give each other a pass.
• 6:27
  Speaker 4: How many how many of us got black bank cards
• 6:29
  Speaker 4: in our wallet but may not even use them? And
• 6:31
  Speaker 4: then their study at Stanford a while back that showed
• 6:33
  Speaker 4: that sixty four percent of black people said they would
• 6:35
  Speaker 4: automatically go move to a black bank if they felt
• 6:38
  Speaker 4: they got the services that they could get at a
• 6:40
  Speaker 4: white bank. We gotta beat that threshold. We have to
• 6:42
  Speaker 4: be able to be competitive even to get our.
• 6:46
  Speaker 5: This episode is brought to you by P and C Bank.
• 6:48
  Speaker 5: A lot of people think podcasts about work are boring,
• 6:51
  Speaker 5: and sure, they definitely can be, but understanding a professionals
• 6:55
  Speaker 5: routine shows us how they achieve their success little by little,
• 6:59
  Speaker 5: day after day. It's like banking with P and C Bank.
• 7:03
  Speaker 5: It might seem boring to save, plan and make calculated
• 7:06
  Speaker 5: decisions with your bank, but keeping your money boring is
• 7:09
  Speaker 5: what helps you live or more happily fulfilled life. P
• 7:12
  Speaker 5: and C Bank Brilliantly Boring since eighteen sixty five. Brilliantly
• 7:17
  Speaker 5: Boring since eighteen sixty five is a service mark of
• 7:20
  Speaker 5: the PNC Financial Service Group, Inc. P and C Bank
• 7:24
  Speaker 5: National Association member FDIC Earners.
• 7:29
  Speaker 2: What's Up?
• 7:30
  Speaker 5: You ever walk into a small business and everything just
• 7:32
  Speaker 5: works like the checkout is fast, the receipts are digital,
• 7:36
  Speaker 5: tipping is a breeze, and you're out the door before
• 7:39
  Speaker 5: the line even builds Odds are they're using Square. We
• 7:43
  Speaker 5: love supporting businesses that run on Square because it just
• 7:46
  Speaker 5: feels seamless. Whether it's a local coffee shop, a vendor
• 7:49
  Speaker 5: at a pop up market, or even one of our
• 7:51
  Speaker 5: merch partners. Square makes it easy for them to take payments,
• 7:55
  Speaker 5: manage inventory, and run their business with confidence, all from
• 7:59
  Speaker 5: once system. If you're a business owner or even just
• 8:03
  Speaker 5: thinking about launching something soon, Square is hands down one
• 8:06
  Speaker 5: of the best tools out there to help you start,
• 8:09
  Speaker 5: run and grow. It's not just about payments, it's about
• 8:12
  Speaker 5: giving you time back so you can focus on what
• 8:15
  Speaker 5: matters most Ready to see how Square can transform your business.
• 8:19
  Speaker 5: Visit Square dot com backslash go backslash eyl to learn
• 8:24
  Speaker 5: more that Square dot com backslash, go backslash eyl. Don't wait,
• 8:29
  Speaker 5: don't hesitate. Let's Square handle the back end so you
• 8:32
  Speaker 5: can keep pushing your vision forward.
• 8:36
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 8:40
  Speaker 1: in Massachusetts. An MS thirteen gang member from El Salvador
• 8:44
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 8:48
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 8:52
  Speaker 1: some of the heinous migrant criminals caught because of President
• 8:56
  Speaker 1: Donald J. Trump's leadership. I'm Christine Noman, the United States
• 8:59
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 9:04
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 9:08
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 9:11
  Speaker 1: are here illegally, your next you will be fine nearly
• 9:15
  Speaker 1: one thousand dollars a day, imprisoned and deported, you will
• 9:19
  Speaker 1: never return. But if you register using our CBP home
• 9:23
  Speaker 1: app and leave now, you could be allowed to return legally.
• 9:26
  Speaker 1: Do what's right. Leave now under President Trump America's laws
• 9:31
  Speaker 1: border and families will.
• 9:33
  Speaker 2: Be protected sponsored by the United States Department of Homeland Security,
• 9:36
  Speaker 2: Home People support and that's fine.
• 9:37
  Speaker 4: I'm okay with it. I'm not afraid of competing. That's
• 9:39
  Speaker 4: exactly why we're doing this in Utah so we can
• 9:42
  Speaker 4: have access to the resources in a regulatory environment so
• 9:45
  Speaker 4: that we can compete. I don't want you come to
• 9:47
  Speaker 4: be just because I'm back. Once you come because I'm the
• 9:48
  Speaker 4: best of what I do and you believe in what
• 9:50
  Speaker 4: we're doing, because we want to be the best for us.
• 9:52
  Speaker 6: I think over the last twenty years banks have been
• 9:54
  Speaker 6: in a crisis. This year, mid size and small banks
• 9:58
  Speaker 6: have been falling apart on publicanas, trade to market. What
• 10:01
  Speaker 6: are some of those services that people need and what
• 10:03
  Speaker 6: do you think banks can do better if I'm being
• 10:07
  Speaker 6: honest to have our trust, because when I talk about
• 10:09
  Speaker 6: a lot of banking stocks on the show, not many
• 10:13
  Speaker 6: people say that they trust banks, and for a multitude
• 10:16
  Speaker 6: of reasons. Can you address, like what you're going to
• 10:17
  Speaker 6: do to build those kind of relations where they do trust?
• 10:21
  Speaker 6: And then what do you think some of those services
• 10:23
  Speaker 6: that people would need to make us want to bank
• 10:25
  Speaker 6: with you.
• 10:26
  Speaker 4: You know the distrust of African Americans and the banks
• 10:29
  Speaker 4: has been since the since right after the Civil War.
• 10:32
  Speaker 4: W the Boys said it the best when the Freeman's Bureau,
• 10:35
  Speaker 4: which was created for free people, ended up being a
• 10:37
  Speaker 4: Ponzi scam and deleting ninety percent of all black wealth.
• 10:41
  Speaker 4: When that bank closed, nobody got to refund, nobody got
• 10:43
  Speaker 4: to io you. It was just gone. WB the Boys said,
• 10:46
  Speaker 4: it would have been better off if we had to
• 10:49
  Speaker 4: remain slaves for another decade, then to suffer the ramifications
• 10:53
  Speaker 4: psychologically of losing all of our money in a federal
• 10:55
  Speaker 4: bank that the government created, and we are the children
• 10:59
  Speaker 4: of that distrust. We're still here and the trust is
• 11:02
  Speaker 4: still real. So it starts with the fact of who's
• 11:05
  Speaker 4: running the bank. Can you put faith in these people
• 11:07
  Speaker 4: that run the bank? And then two, when it comes
• 11:10
  Speaker 4: down to making a decision. I know, we got laws
• 11:12
  Speaker 4: that's supposed to say it's anti discriminatory, you should not
• 11:15
  Speaker 4: use race in a negative way. But the numbers are
• 11:18
  Speaker 4: the numbers. We have to be able to think outside
• 11:21
  Speaker 4: of the box. Because I'm gonna tell you right now,
• 11:23
  Speaker 4: as long as we rely on credit scores in this
• 11:26
  Speaker 4: country as a primary indicator of who's worthy of owning
• 11:29
  Speaker 4: anything or getting access to credit, we will fundamentally have
• 11:32
  Speaker 4: a racist system. So the future of banking has to
• 11:35
  Speaker 4: be around looking at people more than a credit score.
• 11:38
  Speaker 4: The future of banking has to be able to see
• 11:40
  Speaker 4: people from cash flow. And you and I know dealing
• 11:42
  Speaker 4: with black entrepreneurs. Ninety percent of us are sold entrepreneurs,
• 11:46
  Speaker 4: and a lot of them just go straight cash because
• 11:48
  Speaker 4: they don't for the exact reasons. They'd rather just be
• 11:49
  Speaker 4: a cash based business than go into debt. But that
• 11:51
  Speaker 4: doesn't mean they're not good at what they're doing. They're
• 11:53
  Speaker 4: actually slowing themselves down by not leveraging credit. But if
• 11:56
  Speaker 4: we could go to them and show them, look, the
• 11:59
  Speaker 4: decisions will be based off of more than this algorithm.
• 12:03
  Speaker 4: And that algorithm that experience Echo Facts and TransUnion put
• 12:06
  Speaker 4: out there says that fifty percent of black people shouldn't
• 12:08
  Speaker 4: be trusted. That's what it says, and so any system
• 12:12
  Speaker 4: that possibly could believe the fifty percent of us shouldn't
• 12:14
  Speaker 4: be trusted to get along, that system shouldn't be trusted.
• 12:17
  Speaker 4: So we must be at the forefront, all of us
• 12:19
  Speaker 4: who are in this space and moving our people away
• 12:22
  Speaker 4: from these antiquated algorithms that talk about credit scoring in
• 12:26
  Speaker 4: a way that limits our ability to have full access
• 12:29
  Speaker 4: to this capitalist economy.
• 12:31
  Speaker 3: So, okay, when doctor Martin Luther King dicead it was
• 12:34
  Speaker 3: one hundred and twenty banks, right, black banks on hundred
• 12:36
  Speaker 3: and thirty five, one hundred and thirty five yep, And
• 12:41
  Speaker 3: now there is twenty right, So that's pretty disturbing. So
• 12:46
  Speaker 3: a how come that isn't something that people have talked
• 12:50
  Speaker 3: about a lot? And why has that drastic Because I'm
• 12:56
  Speaker 3: at this point is probably going to be zero if
• 12:58
  Speaker 3: this trend continue in the next thirty years, that there's
• 13:02
  Speaker 3: not gonna be any any black owned banks at all.
• 13:04
  Speaker 3: So what is the root cause for the for the
• 13:07
  Speaker 3: collapse of black banks? And why has it anybody really
• 13:13
  Speaker 3: been champion that?
• 13:14
  Speaker 4: Look, that's a great question. A dear friend of ours, Mersa,
• 13:20
  Speaker 4: wrote the book Color of Money. If you want to,
• 13:22
  Speaker 4: if you're out here right now, you want to read
• 13:23
  Speaker 4: the history of all this, The Color of Money, black
• 13:25
  Speaker 4: banks and closing the racial wealth gap, take a look
• 13:27
  Speaker 4: at it. Give her a shout out. She did an
• 13:28
  Speaker 4: amazing book there. But let me give you some personal
• 13:31
  Speaker 4: history here. My family started a black bank in nineteen
• 13:35
  Speaker 4: thirty six in Georgia, South Georgia Baker Byromville. This bank
• 13:39
  Speaker 4: was started by my great great grandfather and his brother
• 13:42
  Speaker 4: in law, and it was built for the fact of
• 13:45
  Speaker 4: they wanted to create a bank that could finance sharecroppers
• 13:50
  Speaker 4: to buy the land that they were sharecropping on. Because
• 13:52
  Speaker 4: everybody knew that when slaves left and started sharecropping that
• 13:55
  Speaker 4: ten percent was just a way to stay alive long
• 13:57
  Speaker 4: enough to keep working. But we created a bank that
• 14:00
  Speaker 4: could finance them buying the land that they were formerly
• 14:02
  Speaker 4: slaves on, and these sharecroppers could go and create prosperous
• 14:05
  Speaker 4: lives and it worked. Now. That bank ran from nineteen
• 14:07
  Speaker 4: thirty four, and in nineteen thirty four it was about
• 14:10
  Speaker 4: one hundred and eighty black banks. There was a tremendous
• 14:12
  Speaker 4: amount of black banks. We went out. We lost that
• 14:15
  Speaker 4: bank in nineteen seventy six. We lost that bank in
• 14:17
  Speaker 4: seventy six because the American economy declined right after Vietnam War.
• 14:21
  Speaker 4: Everything was economically trash. Really a lot of hints of
• 14:24
  Speaker 4: where we are right now. But we were forced We
• 14:27
  Speaker 4: were forced out. It wasn't like we just closed because
• 14:30
  Speaker 4: we didn't have business. The bank closed because regulators were
• 14:34
  Speaker 4: over regulating black banks and not giving us the same
• 14:36
  Speaker 4: treatment as they were giving white banks. The regulators at
• 14:39
  Speaker 4: the end of the day, all the police at the
• 14:41
  Speaker 4: end of the day, they are the police of the industry.
• 14:43
  Speaker 4: And we all know policing is different in different neighborhoods.
• 14:47
  Speaker 4: In our neighborhood with the black banking neighborhood, traditionally, those
• 14:51
  Speaker 4: regulators have been harder on black banks, not making them
• 14:55
  Speaker 4: have the capital requirements that white banks had, and forcing
• 14:58
  Speaker 4: us in the situations where ultimate, my family's bank was
• 15:01
  Speaker 4: forced to auction. Now because we're making money, we got
• 15:03
  Speaker 4: forced to auction, like literally auctioned off. And we know
• 15:07
  Speaker 4: what that looks like in the Deep South, right, And
• 15:09
  Speaker 4: ultimately that our black bank was auctioned off and got
• 15:12
  Speaker 4: rolled up into what we call now P and C Bank.
• 15:16
  Speaker 4: That's the story of America.
• 15:17
  Speaker 3: So your bank got turned in to P and C Bank, right.
• 15:21
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 15:24
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 15:28
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 15:32
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 15:36
  Speaker 1: some of the heinous migrant criminals caught because of President
• 15:40
  Speaker 1: Donald J. Trump's leadership. I'm Christy Noman, the United States
• 15:44
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 15:49
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 15:52
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 15:56
  Speaker 1: were here illegally, your next you will be fine nearly
• 16:00
  Speaker 1: one thousand dollars a day, imprisoned and deported, you will
• 16:04
  Speaker 1: never return. But if you register using our CBP home
• 16:07
  Speaker 1: app and leave now, you could be allowed to return legally.
• 16:11
  Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,
• 16:16
  Speaker 1: border and families will be protected.
• 16:18
  Speaker 2: Sponsored by the United States Department of Homeland Security.