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reparations

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The Racial Wealth Gap, Political Power vs Economic Power, and Reparations with Mehrsa Baradaran

Mehrsa Baradaran is the author of the best selling book, “The Color of Money: Black Banks and the Racial Wealth Gap”.

This book has become required reading for those who want to get a better understanding of how Black communities have been shut out of the banking system and how wealth creation in the Black community has been stagnated.

In this interview, we discuss the series of events that led to the racial wealth gap and how the gap can be closed.

We also discuss Black banks and their past and present role in creating Black wealth.

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Tony O. Lawson


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The 2% Solution: How a Black Billionaire Plans to advance Economic Justice for Black Americans.

Robert F. Smith, the private equity billionaire who is the nation’s richest Black person, said on Thursday that large corporations should use 2% of their annual net income for the next decade to empower minority communities. Smith made the comments after circulating a plan among CEOs that first calls on big banks to capitalize the financial institutions that service Black-owned businesses and minority-run entrepreneurial ventures.

In a keynote address he gave at the Forbes 400 Summit on Philanthropy, Smith, 57, said Black and minority communities have been abandoned by large banks and are starved of the capital needed to build businesses and local institutions. Smith argued that pumping in what he described as “reparative” capital and investing directly in financial architecture would be a fast way to advance economic justice for Black Americans.

“Nowhere is structural racism more apparent than in corporate America,” Smith said. “If you think about structural racism and access to capital, 70% of African American communities don’t even have a branch, bank of any type.”

In recent days, Smith, whose net worth is estimated to be $5 billion, has been sharing a concrete plan with the nation’s business leaders that argues that an investment equal to 2% of net income over the next decade would be a small step toward restoring equity and mobility in America. He has implied that America’s big corporations should feel compelled to support such a plan given the exclusionary practices of many industries over several decades. Smith made the case that the average American household charitably donates 2% of its income annually and is asking corporate America to do the same.

During the pandemic, Smith discovered the structural racism in banking firsthand as he tried to help Black businesses and banks that serve Black communities obtain Paycheck Protection Program loans. Smith found that Black-owned businesses faced numerous structural obstacles and as a result had trouble accessing the emergency financing being provided by the federal government through the banking sector.

The balance sheets of the nation’s 4,700 banks are made up of $20.3 trillion of assets, but only 21 of those banks are Black-owned or led, and they have total assets of just $5 billion, less than 1% of America’s commercial banking assets. Blacks make up 13% of the population of the United States.

In his talk on Thursday, Smith pointed out that the net income of the ten largest U.S. banks over the last ten years was $968 billion. He figured just 2% of that would amount to $19.4 billion, which could be used to fund the core Tier 1 capital of community development banks and minority depository institutions that primarily service Black communities. Smith was also open to the idea that the capital could be donated in a tax-advantaged way to a nonprofit entity that could provide the core bank capital.

Smith thinks the federal government could supercharge the effort by leveraging up the provided capital with the Term Asset-Backed Securities Loan Facility the Federal Reserve established to support consumer and business credit during the pandemic.

“The deprivation of capital is one of the areas that creates a major problem to the enablement of the African American community,” Smith told the more than 200 top philanthropists who attended the 9th annual Forbes philanthropy summit, which this year was held on Zoom. “The first thing to do is put capital into those branch banks to lend to these small businesses to actually create an opportunity set . . . drive it into these small businesses, which employs 60%-plus of African Americans.”

In a way, Smith is proposing a private sector solution to reparations, the idea that the federal government pay financial compensation to Black Americans who are the descendants of slaves. Smith believes Black communities have experienced systemic inequality and exclusion in corporate sectors beyond finance, including healthcare, telecommunications and technology. The net income of the biggest U.S. companies in just those sectors was $1.3 trillion combined over the last decade and 2% of those profits, or some $25 billion, could be used to do things like strengthen healthcare infrastructure in minority communities, equalize broadband access, fund STEM education at historically Black colleges and digitize minority small businesses.

Through his plan, Smith envisions the nation’s banking sector could, over the next ten years, provide billions of dollars of capital to Black-owned banks and community development banks, with some of the funds used to digitize these lenders. His plan calls for the telecom and tech sectors to provide money to help prepare 180,000 students at America’s historically Black colleges for the jobs of the future, and to digitize one million minority small businesses.

Smith, who has an engineering degree from Cornell University, is the founder of Vista Equity Partners, the nation’s biggest private equity firm specializing in software transactions. Part of Vista’s stunning success has been built on Smith’s detailed and secret playbook for running software companies, which has helped Vista achieve some of the private equity industry’s best financial returns.

Now, Smith believes his playbook for economic justice could not only ensure Black Americans have better access to opportunity, but also increase the nation’s economic activity by more than $1 trillion annually.

“I think that will show Americans there is hope, there is an opportunity for the American dream to now be revitalized,” Smith said on Thursday. “And frankly, to give us all confidence that we can actually make this a better country and a better place to live.”

 

Source: FORBES


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Oakland’s New Marijuana Law Aims to offer Economic Reparations

When I first heard that Colorado was legalizing marijuana, one of my first thoughts was “Man, everyone who is or has ever been locked up for weed is gonna be pissed.” But for people who use marijuana for medical purposes, that is a whole other story. You have to get a medical card before you are able to obtain this product, as it has to be issued by a doctor. I know a few people who use marijuana as a way of dealing with any pains they are going through. Once, a friend of mine showed me what the product looked like. When I saw it, I wasn’t shocked with the product itself, but more so for what it came it. It looked a little dodgy and a quite suspicious. I’m no designer, but these businesses need to really update their marijuana packaging, just so it doesn’t look so obvious that someone is carrying marijuana. The smell is bad enough so the packing needs to outweigh this somehow.

I would imagine one of those people is DeMarcus Sanders from Waterloo, Iowa. A few years ago, he was pulled over for playing his music too loud. The police officer ran his license and then insisted on searching the car because he smelled marijuana. During the search, he found a small amount and charged DeMarcus with possession. The tide is turning on marijuana laws across the United States and Canada. Legitimate businesses like my green solution are now flourishing, whilst also serving a real demand. Unfortunately, this didn’t come soon enough for DeMarcus.

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DeMarcus Sanders and his son

DeMarcus plead guilty and served 30 days in jail. During that time he lost his job, his drivers license and credit for college classes he had been taking. Even though it has been a few years since he was arrested, Mr. Sanders still owes the state over $2000 for room and board at the jail, fines, court costs, and other fees.

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Getting arrested for marijuana possession in Iowa automatically triggers a six-month license suspension. Before it can be reinstated, one has to pay off a percentage of court fees and fines. As you can imagine, it’s hard to pay off fines and court costs when you are unemployed. It’s also hard to find or keep a job when you don’t have a driver’s license.
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Another case that is even more tragic is that of Bernard Noble. The 49-year-old father of seven is serving more than 13 years behind bars for being caught with the equivalent of two joints’ worth of marijuana in 2010. He was arrested after two police officers ordered him off his bicycle and searched him without probable cause.
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They found 2.8 grams of marijuana. Because he had prior non-violent drug offenses — for small amounts of cocaine and marijuana — an Orleans Parish jury convicted him under a state law that gives harsher punishments for habitual offenders.

These men and countless others are going through all of this for a substance that is now being legalized. Imagine all the other stories that are similar or worse.032014-national-aclu-calculator-on-racial-disparity-marijuana-arrests

Marijuana Law

In an attempt to begin repairing the damage caused by the disproportionate targeting of Black people in the questionable U.S. war on drugs and give us a share of this multi million dollar green pie, Oakland’s City Council recently approved an “Equity Permit Program” that would make the city’s marijuana industry more inclusive of Black and Latino residents. The program was introduced by Councilwoman Desley Brooks.

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Brooks has stated publicly that she wants a form of economic reparations for people and neighborhoods affected by the war on marijuana.

Under the new law, half of new marijuana business permits will be reserved for people who live in East Oakland or were incarcerated for a marijuana-related arrest. The applicants must also have at least a 51 percent ownership stake in the business they are seeking to permit.

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The city plans to issue eight new permits a year, as well as introduce permits for other marijuana businesses, such as cultivation, production, manufacturing and transportation. There are also many marijuana seo businesses that aim to boost marijuana stores up the Google rankings in order to make more sales. Currently, there are eight dispensaries in Oakland, but the businesses that supply the dispensaries are not licensed or permitted by the city.

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The program was opposed by the majority of Oakland’s own Cannabis Regulatory Commission, who worked on the expansion for 18 months. Council member Brooks added the permit program as a last-minute amendment, which passed unanimously at 1 a.m. one week ago.

Supernova Women, a support group for Black women pot entrepreneurs says the policy was too narrow and should be expanded to other areas of Oakland or they would not be eligible. The council said it plans to make amendments to the new law at a later date, which could include expanding the permits to more police beats.

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Amber Senter (L), Nina Parks, and Sunshine Lencho (R) are the co-founders of Supernova Women

Other critics say handing out every other new permit to a tiny group of people will create a “licensing bottleneck” that will drastically slow down Oakland’s vast expansion in licensed medical pot nurseries, farms, kitchens, stores, and testing labs.

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Over the next months, amendments will be offered to expand the eligibility area for equity permits and possibly include the children or spouses of individuals incarcerated for marijuana crimes.

In my opinion, the prison industrial complex is nothing more than modern day slavery. The new slave masters alter laws and policies that funnel an overwhelming majority of Black people back onto the fields, or in this case behind bars. Instead of picking cotton, many of these prisoners are paid near nothing to make products ranging from Victoria Secret lingerie to Starbucks packaging.

I’m all for a program or policy that can provide some type of economic empowerment to those who have suffered directly or indirectly from an unjust set of laws that weren’t really created to protect anyone to begin with.