Minneapolis Fed joins with other regional banks to tackle racism and the economy

Should the federal government get into the business of giving out credit scores in order to help reduce racial disparities?

Should more funding of programs aimed at reducing racial inequities in education come from public sources, rather than private foundations?

Are there more creative ways the Federal Reserve can address the glaring wealth gap between Black and white Americans?

These were some of the questions thrown out at a kickoff event Wednesday for a series on racism and the economy jointly conceived and sponsored by the Federal Reserve Banks of Minneapolis, Atlanta and Boston.

"We recognize we have a role to play [at the Fed] and it's not OK for us just to say, 'Hey, it's somebody else's problem; hey, we're looking at the medians,' " said Neel Kashkari, president of the Minneapolis Fed, at the virtual event. "We have to look at what role we can play to try to improve outcomes for all Americans."

Subsequent panels in the coming months will tackle specific topics from education and housing to criminal justice, health and employment.

The series is another sign of an evolving Fed, which historically has shied away from speaking out on social issues. In recent months, some regional presidents have been increasingly vocal on issues such as racism and in raising questions about whether there's more the Fed should be doing to reduce inequalities.

Kashkari said he decided to reach out to his counterparts at the two other banks after the police killing of George Floyd in Minneapolis to see if there's more they could do.

Since taking the post in 2016, Kashkari has been using his role to highlight racial disparities in the economy. A few years ago, for example, he launched the Opportunity and Inclusive Growth Institute at the Minneapolis Fed to more closely study economic inequalities.

Raphael Bostic, president of the Atlanta Fed and the first Black leader of a regional Fed bank, said each of the regional banks participating in the series has been in the spotlight as part of the national conversation on race because of various incidents that have happened in their cities.

"In their own ways, each of these speaks to the reality that racism exists in the United States, and as I wrote a few months back, continues to be a yoke that is a major drag on our economy," Bostic said.

He added that the intention of these sessions is to focus on potential solutions and actions.

The coronavirus pandemic, many speakers noted, has shone a light on many of the racial disparities that exist in the U.S., with Black Americans, for example, disproportionately losing work and becoming sick from the coronavirus.

Racism "is baked into every system in America so that even as people let racism go from their hearts, it does not go from our systems," said Angela Glover Blackwell, the founder of PolicyLink.

She urged the audience to capitalize on this moment when many Americans are demanding change by thinking big.

"We're not going to solve this with pilot programs," she said. "We're not going to solve it by just deciding to pay a little more attention to people of color in our midst. It is going to require our radical imaginations" to picture what it would "look like to have a fully inclusive society."

Ursula Burns, former CEO of Xerox Corp., is one of relatively few Black CEOs to have led a Fortune 500 company. Kashkari asked her why there hasn't been more progress in having more Black leaders in senior positions of major corporations.

"I'm going to be really blunt," she said. "Racism and supremacy. There is no doubt that we have more than four African American people in the country who can run one of the Fortune 500 companies. There's no doubt that we have more than 30 people who are women who can do it."

But she said the system — the playing field, the rules, the reward system and the judges — have all been set up by white men and that has structurally kept people of color and women out.

So companies have to be more explicit and aggressive in recruiting and developing diverse talent, she said. Many of the boards of these companies, she added, also have little diversity.

Kashkari said when he first arrived at the Minneapolis Fed in January 2016, he was handed a report from consultants, based on a survey of workers, showing that the regional bank had a problem with diversity and inclusion, with women of color in particular feeling excluded. So he met with that group.

"They let me have it," he said. "I appreciate them for speaking up."

He made several changes, including working to widen the bank's recruiting pipeline. As a result, in the past few years, the Minneapolis Fed has increased the diversity of its top 60 officers to 25%, up from 12%, he said.

"Now it's a feedback loop," he said, adding that more diverse and talented people are now interested in working there. "You can do it. You can absolutely diversify, but it takes concerted effort from the leadership team."

Kavita Kumar • 612-673-4113

Twitter • @kavitakumar