Speaker 1: This is a Bloomberg Radio special, Black America Confronts a
Speaker 1: Credit crunch Shanali bask Though many Black Americans have been
Speaker 1: celebrating Juneteenth for years, it's only been two since the
Speaker 1: US finally declared it a federal holiday. While President Abraham
Speaker 1: Lincoln's Emancipation Proclamation officially freed slaves in eighteen sixty three,
Speaker 1: many areas in the South didn't follow through for some time.
Speaker 1: It was on June teenth, June nineteenth, eighteen sixty five
Speaker 1: that Galveston, Texas released the very last enslaved people in
Speaker 1: the country. But the day comes with the stark recognition,
Speaker 1: as far as we've come since slavery, we still have
Speaker 1: a ways to go for racial equity in the country
Speaker 1: for Black Americans, particularly when it comes to wealth. A
Speaker 1: Brookings Institute report shows that in twenty nineteen, the median
Speaker 1: net worth of a typical white household was nearly eight
Speaker 1: times higher than that of a typical black household. One
Speaker 1: key factor drive the disparity is access to credit. Everything
Speaker 1: from business loans to securing a mortgage remains a challenge
Speaker 1: for many black families. A Saint Louis FED report from
Speaker 1: that same year found that Black businesses were denied loans
Speaker 1: at much higher rates than their white counterparts, and today's
Speaker 1: economic landscape is no friendlier to Black Americans as recession
Speaker 1: fears and recent banking turmoil loom large. Over the next hour,
Speaker 1: we'll take a closer look at the challenges black communities
Speaker 1: are facing as we see a broader pullback and lending.
Speaker 1: We're joined now by Cynthia Day, She's the president and
Speaker 1: CEO of Citizens Trust Bank, one of the very limited
Speaker 1: number of black owned banks in the country, and Harold Butler,
Speaker 1: who leads the Diverse Financial Institutions Group at Wall Street
Speaker 1: Giant City Group. Cynthia, let's start with you, what does
Speaker 1: Juneteenth mean to you?
Speaker 2: I first have to acknowledge the fact that we're talking
Speaker 2: about Juneteenth, when a couple of years ago there were
Speaker 2: millions of people in our country that didn't even know
Speaker 2: June tenth existed. So today it's becoming the national conversation
Speaker 2: and the recognition of the significance of Juneteenth, I think,
Speaker 2: in itself is progress for me personally. When I think
Speaker 2: of Juneteenth, I think of a time to reflect and
Speaker 2: celebrate the American African American spirit, its resilient and the
Speaker 2: unsung contributions that have been made to the American society.
Speaker 2: It's also a time to look forward and recognize the
Speaker 2: deep impact and the cost of this, you know, his
Speaker 2: these historical events to the Black community and it She
Speaker 2: continuously reminded us to continue to press forward and to
Speaker 2: press for economic parity and financial well being in an
Speaker 2: African American community.
Speaker 1: As we set up the conversation about parity here, maybe Cynthia,
Speaker 1: you can kind of describe the role of black owned
Speaker 1: banks and black communities.
Speaker 2: Our bank has been around for, you know, over one
Speaker 2: hundred years. Our founding mission was to create parity. And
Speaker 2: the fact that our institutions are here, I think we've
Speaker 2: we've seen this tom and tom during the Great Recession
Speaker 2: and the pandemic, where we get into credit constrained areas
Speaker 2: and there's no access or people that understand the plight
Speaker 2: of these communities and what are as willing to extend
Speaker 2: credit for good reasons.
Speaker 3: In economic downcycles.
Speaker 2: But it takes a bank or an African American business
Speaker 2: that are that are in and of those communities. We
Speaker 2: saw this during the during the Great Recession, we saw
Speaker 2: it during the pandemic, whether it was through PPP or
Speaker 2: traditional credit.
Speaker 3: We were there.
Speaker 2: We saved businesses, we saved jobs, we saved home we
Speaker 2: save families, We saved communities.
Speaker 1: Now, Harold over at City Group, you're really spearheaded the
Speaker 1: program to work with minority depositary institutions. And that signals
Speaker 1: to me that you saw early on the ripple effects
Speaker 1: from big bank to medium sized bank to smaller bank
Speaker 1: across communities on the flow of capital. You know, why
Speaker 1: did you start this program? And you know where does
Speaker 1: the stand today? And what concerns do you have given
Speaker 1: that there are concerns about a credit crunch.
Speaker 4: You know, we began this journey, you know, much before
Speaker 4: you know the world had its crises or took part
Speaker 4: and witness the murder of George Floyd. And you know,
Speaker 4: for us as a firm post that, it was really
Speaker 4: about determining what could we do to help make things better?
Speaker 3: Right?
Speaker 4: What role could city play at helping to achieve parody
Speaker 4: as we just talked about reducing the racial wealth gap,
Speaker 4: things of that nature. When you look at communities that
Speaker 4: are underinvested and underrepresented, they all have a common theme
Speaker 4: and that common theme is the lack of banking infrastructure.
Speaker 1: And they what about this moment in time. What does
Speaker 1: it feel like to run a bank today?
Speaker 2: Like many economic cycles that we've gone through, it just
Speaker 2: requires a lot of resilience. It could be very difficult.
Speaker 2: We have to make sure that we are strong and
Speaker 2: well managed and well focused and well capitalized so we
Speaker 2: can help our customers. They needed us, They needed us
Speaker 2: during PPP, they needed us during the Great Recession.
Speaker 3: They need us.
Speaker 2: I think partnerships with people like City and other corporations.
Speaker 2: I think that united in collaborative front can help us
Speaker 2: create greater impact. It can help us close these wealth gaps.
Speaker 2: It can help us increase home ownership. It could help
Speaker 2: us create healthy ecosystem within the communities that we serve.
Speaker 2: And I think it will be beneficial to our country
Speaker 2: because I think if we take this fourteen percent of
Speaker 2: this population, it can increase GDP. So I think this
Speaker 2: is not just a minority bank. It's not an underrepresented
Speaker 2: or under invested community. This is a national issue.
Speaker 1: Speaking of challenges, I think one major concern is a
Speaker 1: recession and what a recession would mean, what doesn't mean
Speaker 1: for all small business owners, let alone black small business owners,
Speaker 1: let alone black female small business owners. Another question that
Speaker 1: is Embedded in that too, is this decade's long disparity,
Speaker 1: this widening gap between the wealth of Black Americans and
Speaker 1: white Americans that has just expanded over time, and what
Speaker 1: a recession would mean for that. Does it create setbacks?
Speaker 1: What do you tell business owners communities that might be
Speaker 1: worried that some of the progress might be challenged in
Speaker 1: the next year or so.
Speaker 2: You know, we just keep the conversation open with our customers.
Speaker 2: We are consistently talking to them. We had to talk
Speaker 2: to them during this recent bank failures. We have to
Speaker 2: keep reassuring them that you know, we're here, We're with them,
Speaker 2: we are feeling some of the same impact and effects.
Speaker 3: We've been doing this for one hundred years.
Speaker 2: I keep repeating that we understand these different cycles that
Speaker 2: we go through. It does continue to take that conversation
Speaker 2: making sure we're there during those recessionary times.
Speaker 3: And I know that all of us.
Speaker 2: Are aware of that that during recessions, historically, African American
Speaker 2: communities have a deeper and more severe impact with higher
Speaker 2: business closures, higher job loss, hire unemployment, steep losses and
Speaker 2: home values and more importantly, you.
Speaker 3: Know the lag in the recovery.
Speaker 2: We saw the same issues and trends during the pandemic
Speaker 2: with you know, people of color seeing disproportionately higher job
Speaker 2: and wage loss. So it's hard to provide that comfort.
Speaker 2: But what we can say is, you know we were
Speaker 2: here with you during these times.
Speaker 3: We don't have a crystal ball.
Speaker 2: We don't know where all this is going, but we
Speaker 2: do know one thing. We're still committed. We were here
Speaker 2: to help with those providing access to capital for businesses
Speaker 2: during those times. But we do know we've been through
Speaker 2: this before. We're resilient, Our customers are resilient, and we're
Speaker 2: going to be there to help them through this time.
Speaker 1: Harold the question for you, and i'd like Cynthia away
Speaker 1: on on this too. I know over at to the group,
Speaker 1: we've done a lot of work with the US government,
Speaker 1: and if you think about the role the government plays
Speaker 1: both in supporting large banks, let alone black owned banks,
Speaker 1: medium and small size banks, if you think about kind
Speaker 1: of the work they've done to kind of foster the
Speaker 1: growth of minority depository institutions, where we know that the
Speaker 1: number has shrink over a wide number of years. What
Speaker 1: can they and should be they do? What can they
Speaker 1: and should they be doing?
Speaker 4: You know, I think it's important for our government to
Speaker 4: continue to focus as they are right on creating programs,
Speaker 4: doing things that can uplift and support the need to
Speaker 4: change the narrative broadly. They're not easy, and I don't
Speaker 4: think anybody is under a delusion that it would be easy.
Speaker 4: These are tough things to sometimes, you know, have conversations about.
Speaker 4: But the important thing is that the government continues to
Speaker 4: do what it does and to lead these conversations to
Speaker 4: be a part of solutioning things that make sense for
Speaker 4: the space, because then I think we get to a
Speaker 4: better place.
Speaker 2: I agree with what Harold has laid out there, and
Speaker 2: I will say during the pandemic and during the bake failures,
Speaker 2: I think that the swiftness with which the government moved
Speaker 2: and some of the programs they put in place was
Speaker 2: very helpful and it really stopped us short of a
Speaker 2: catastrophic events more catastrophic than what we had during the pandemic.
Speaker 3: One of the number one things on my.
Speaker 2: List that I think would be helpful is to let
Speaker 2: like things and like businesses participate in a meaningful and meaningful.
Speaker 3: Way as vendor suppliers.
Speaker 2: There are trillions of dollars that flow within the governmental enterprises,
Speaker 2: and I think the supplier should reflect the diverse tapestry
Speaker 2: of the people they serve.
Speaker 3: And there are effective ways in which to accomplish this.
Speaker 2: I mean, we can encourage partnerships between minority suppliers, banks
Speaker 2: and other corporations like City.
Speaker 3: This can be effective, it can be efficient.
Speaker 2: Yet it provides for opportunities to grow minority businesses, to
Speaker 2: create jobs. It will increase home ownership, you can build
Speaker 2: generational wealth. It's something that we should be doing and
Speaker 2: something I think that we should be committed to make
Speaker 2: it happen.
Speaker 1: Special thanks to Cynthia Day, president and CEO of Citizens
Speaker 1: Treuss Bank, and Harold Butler, the head of the Diverse
Speaker 1: Financial Institutions Group at Citygroup, for joining us. Ryan Williams
Speaker 1: founded Cadre in twenty fourteen as a way for more
Speaker 1: investors to get access to commercial real estate markets. He
Speaker 1: grew up in Baton Rouge, Louisiana, and started investing in
Speaker 1: real estate while he went to college at Harvard University.
Speaker 1: When he was in his twenties, he went to almost
Speaker 1: a dozen banks for loans for investing in that real
Speaker 1: estate and was turned away by many. The bank willing
Speaker 1: to give him a loan Citizens Trust Bank that was
Speaker 1: a firm run by our last guest, Cynthia Day. For
Speaker 1: Ryan Williams, his relationship with citizens Trust Banks set him
Speaker 1: on a path to eventually starting Cadre. Ryan, talk to
Speaker 1: us about how you're thinking about this June teenth June team.
Speaker 5: To me, it's really a symbol freedom. You know, it's
Speaker 5: the commemoration of the end of slavery in the US.
Speaker 5: It's deeply personal to me because I have family members
Speaker 5: who were enslaved in Texas, and it's a reminder of
Speaker 5: the fact that there's still far too many Americans, especially
Speaker 5: Black Americans, that are fighting for economic freedom and opportunity
Speaker 5: and social freedom and opportunity. For me, it's really about
Speaker 5: how can I use my platform, my network to create
Speaker 5: greater financial opportunity, whether that's democratizing access to alternatives like
Speaker 5: we're doing at Cadre, or whether it's helping advocate for
Speaker 5: both private and public action to close the racial wealth gap.
Speaker 1: When you think about kind of getting through this credit
Speaker 1: crunch and the fact that people are worried about small
Speaker 1: banks in general, but the black owned banks in America
Speaker 1: have been under pressure for decades. How do black owned
Speaker 1: banks and black communities that rely on black owned banks
Speaker 1: really see through this credit crunch.
Speaker 5: Yes, I mean, I believe it's a combination of public
Speaker 5: and private partnership.
Speaker 6: You know.
Speaker 5: I believe that there needs to be proactive action taken
Speaker 5: by the government, whether that's helping incentivize private investment into
Speaker 5: many of the banks to help further capitalize these banks
Speaker 5: to ensure that they can continue to lend to their communities,
Speaker 5: or whether that's entrepreneurs and companies taking action to intentionally
Speaker 5: funnel capital to many of these banks that have been
Speaker 5: the bedrock for their community. It's ultimately about the flow
Speaker 5: of capital, and it's ultimately about incentivizing those in the
Speaker 5: private sector and those in the public sector to do
Speaker 5: more to accelerate that flow of capital into these banks
Speaker 5: and communities.
Speaker 1: Maybe talk a little bit about what those solutions could
Speaker 1: look like, because you're one of the people that has
Speaker 1: worked with other entrepreneurs and that has worked with large
Speaker 1: financial institutions to get the ball rolling.
Speaker 5: One of the most encouraging solutions that I've seen was
Speaker 5: the way JP Morgan stepped up to help infuse capital
Speaker 5: and to challenge banks over the past really three to
Speaker 5: four months and created effectively a syndicate. Now, it didn't
Speaker 5: ultimately have the result of stabilizing First Republic in this case,
Speaker 5: but it did show that this collective action when banks
Speaker 5: come together or financial institutions come together to invest and
Speaker 5: those that are struggling, can ultimately lead to a result
Speaker 5: in more opportunity.
Speaker 1: I'm glad you mentioned the biggest banks here too. I'm
Speaker 1: glad you mentioned JP Moore again. We're also talking to
Speaker 1: Goldman and City Group and different banks who are looking
Speaker 1: to work to finance black entrepreneurs. Talk a little bit
Speaker 1: more about the role of the financial system, especially because
Speaker 1: in this year we're watching the biggest banks get bigger,
Speaker 1: which means the eyes are really on them to make change.
Speaker 5: It's right, Yeah, I mean, I think the divide and
Speaker 5: delta between the haves and have nots is increasing faster
Speaker 5: than it has in recent memory. One of the best
Speaker 5: approaches here is the largest banks thinking about ways to
Speaker 5: create syndicates, partnerships and investments that elevate banks that maybe
Speaker 5: aren't directly competitive with them, but have specialized focused on
Speaker 5: communities that they're not reaching or can't reach, or that
Speaker 5: offers certain you know, loans to certain types of companies
Speaker 5: rather that otherwise would not be capitalized. And so I
Speaker 5: really think that American ingenuity. You know, some of the
Speaker 5: unique elements of each region of our country are financed
Speaker 5: by many of these regional community ranged banks, and without
Speaker 5: government or larger bank action, I think you're bound to
Speaker 5: see many ultimately fail or lose market position.
Speaker 1: When you think about the involvement of larger banks into
Speaker 1: the minority depositary institutions, black owned banks and black owned
Speaker 1: businesses for that matter. With all the commitments that have
Speaker 1: been made over the last couple of years, how do
Speaker 1: you feel about the pace of progress?
Speaker 5: Now, Yeah, it was it was incredibly encouraging to see,
Speaker 5: you know, so many institutions and corporations discuss, you know,
Speaker 5: how important they felt it was to ensure there's greater
Speaker 5: economic justice and opportunity, you know, commit to various organizations
Speaker 5: that are focused on creating more economic opportunity and access
Speaker 5: by and larger I think it's been pretty discouraging and
Speaker 5: disappointing that a lot of those commitments and a lot
Speaker 5: of those statements have not been met with any kind
Speaker 5: of accountability. There's been no progress report of note that
Speaker 5: I see that analyze whether these commitments are being met,
Speaker 5: and so I think this Juneteenth is actually an incredible
Speaker 5: opportunity for many of these corporations to look inwards, to
Speaker 5: hold themselves accountable for the commitments that they made in
Speaker 5: the immediate aftermath of June teenth, and you know, to
Speaker 5: also ensure that at a time when you know, things
Speaker 5: like diversity or inclusion on a lot of different dimensions
Speaker 5: can be overlooked for you know, solving the most pressing
Speaker 5: business issues, that those commitments, you know, don't get completely
Speaker 5: washed out.
Speaker 1: Let's also talk about the fact that you're an entrepreneur.
Speaker 1: You're an entrepreneur who look to black owned banks to
Speaker 1: help get financing as you really got off the ground.
Speaker 1: We've talked about this a couple of times before. Tell
Speaker 1: us a little bit about the role they played and
Speaker 1: why they were so important relative to the big banks.
Speaker 3: Absolutely.
Speaker 5: I mean it goes back to pattern matching and pattern
Speaker 5: recognition number one, and then being nimble. I think those
Speaker 5: are two unique attributes to community oriented banks and and
Speaker 5: MDIs as well. They're more agile, they're able to move faster,
Speaker 5: and then you know, they have a different quote unquote
Speaker 5: risk box than many of the larger banks. They're able
Speaker 5: to really understand the nuances behind why certain local businesses
Speaker 5: may succeed in certain areas and why they may not.
Speaker 5: And as a result, they're able to help propel and
Speaker 5: prop up many local businesses that would not get the
Speaker 5: time of day from larger banks. And so, you know,
Speaker 5: for me personally, I was turned down by more than
Speaker 5: ten banks, you know, to finance the acquisition of an
Speaker 5: apartment complex in the Atlanta metro area. I had incredible
Speaker 5: credit behind me. I had multiple ultra high net worth
Speaker 5: investors were willing to behind the guarantee. But when I
Speaker 5: spoke to some of the larger banks and they saw
Speaker 5: that I was, you know, relatively young African American and
Speaker 5: you know, relatively new in my career, I was shut
Speaker 5: down for even had a chance to start to get along.
Speaker 5: No One Bank, Citizens Trust Bank, who we actually work
Speaker 5: with now today. Black Owned Bank started in the nineteen
Speaker 5: twenties that focuses and serves Atlanta and other markets in
Speaker 5: the Southeast. You know, they saw something different. They knew
Speaker 5: you know, the region, the area that I was investing in.
Speaker 5: They knew that there weren't a lot of people who
Speaker 5: looked like me, who were buying apartment buildings in that area,
Speaker 5: and they understood my business plan and that you know what,
Speaker 5: We're going to give this young man the benefit of
Speaker 5: the doubt. We're going to lend to him, We're going
Speaker 5: to think about building a long term relationship with him.
Speaker 5: We think that the way that he's investing in the
Speaker 5: community will actually not just elevate his investors, but actually
Speaker 5: the community itself.
Speaker 3: And you know, we're going to.
Speaker 5: Look at the opportunities versus the risks and lint as
Speaker 5: a result. And if it weren't for that bank, I
Speaker 5: probably would not be where I am today, you know,
Speaker 5: the founder and CEO of Cadre, because that acquisition ultimately
Speaker 5: ended up in generating significant returns for my investors, and
Speaker 5: that put me on the path to saying, Okay, how
Speaker 5: can I democratize access to this kind of institutional real
Speaker 5: estate today because it created a track record for me.
Speaker 1: Our thanks to Ryan Williams, founder and CEO of Cadre,
Speaker 1: for joining us on today's program. You're listening to a
Speaker 1: Bloomberg Radio special, Black America Confronts a Credit Crunch. I'm
Speaker 1: Shanali Basik. Today we're looking at how black communities are
Speaker 1: faring as economic uncertainty is leading banks to pull back
Speaker 1: on lending. It's a situation that often has an outsized
Speaker 1: impact on Black Americans. Asahi POMPEII is one of the
Speaker 1: most senior black women on Wall Street. She's on the
Speaker 1: management committee at Goldman Sachs and as head of Corporate Engagement.
Speaker 1: She's also president of the Goldman Sachs Foundation. She leads
Speaker 1: initiatives like ten Thousand Small Businesses, which supports smaller business
Speaker 1: owners through education, finding fresh capital, and more. She also
Speaker 1: helped Goldman launch one Million Black Women in twenty twenty one,
Speaker 1: an initiative that pledges ten billion dollars in investments and
Speaker 1: one hundred million dollars in philanthropic funds to address racial
Speaker 1: and gender bias across businesses. Black executives from across the country,
Speaker 1: including Walgrand CEO, Rosalind Brewer, and political powerhouses Valerie Jarrett
Speaker 1: and Counduiz of Rice, are among the program's advisors. I
Speaker 1: was wondering if you could start just kind of big
Speaker 1: picture when you think about June teenth, you know, how
Speaker 1: do you think about it from your stands at Goldman
Speaker 1: Sachs and how do you talk to your colleagues about it.
Speaker 6: You know, if we think about June Team, we really,
Speaker 6: you know, think about how Black Americans are faring in
Speaker 6: this country overall, from an economic perspective, what's happening on
Speaker 6: the social front, and in particular, because we're an investment
Speaker 6: bank for us, the focus is really on black small
Speaker 6: businesses and how they're faring. I would describe this June
Speaker 6: teint as a really jittery June teint for black small
Speaker 6: businesses and small businesses of color. And that's as a
Speaker 6: result of a number of factors that I am happy
Speaker 6: to go into.
Speaker 1: Yeah, let's get into that a little more deeply here. Obviously,
Speaker 1: there are worries about a recession, but there's also worries
Speaker 1: about what a credit crunch might be given so many
Speaker 1: smaller banks have started to face so many troubles. What
Speaker 1: are the biggest concerns you're seeing?
Speaker 6: You know, we're seeing a number of sinctionally. You know,
Speaker 6: on a good day, it's challenging for black businesses to
Speaker 6: get funding, and this year that gets amplified, and so
Speaker 6: they are really worried about the credit crunch. It's frustrating
Speaker 6: their ability to be able to access access capital and
Speaker 6: it's a very uncertain time for small business of color,
Speaker 6: and in particular black small businesses since the done of
Speaker 6: the pandemic. The last three years, Golden Taxes conducted over
Speaker 6: seventeen surveys of small businesses to really keep a pulse
Speaker 6: on what's happening. And here's what we're seeing. Dial back
Speaker 6: a year ago, when we surveyed small businesses and said,
Speaker 6: how do you feel about the economy more generally and
Speaker 6: in particular your ability to access capital, We found that
Speaker 6: seventy seven percent of them were confident in their ability
Speaker 6: to access capital. Today, seventy seven percent of those businesses
Speaker 6: are now concerned about their ability to access capital. So
Speaker 6: they went from confident twelve months ago to concern right now.
Speaker 6: And that's really manifested in terms of what they're experiencing.
Speaker 6: They're experiencing a higher loan rejection, They're being asked for
Speaker 6: more data than they were ever asked for before, more
Speaker 6: scrutiny on their projection. Things are taking longer prolonged barring
Speaker 6: approvals for their borrowing things that would take three months
Speaker 6: now taking upwards of seven months to get approved.
Speaker 1: So how much of this is because of the strains
Speaker 1: that small banks are feeling in the United States, and
Speaker 1: that extension to black owned banks, which are smaller than
Speaker 1: America's top five for example, you.
Speaker 6: Really put your finger on it. Small businesses rely on
Speaker 6: small banks, and we know that. You know, they received
Speaker 6: almost seventy percent of their commercial loans from banks with
Speaker 6: less than two hundred and fifty billion in assets and
Speaker 6: thirty percent from banks with less than ten billion in assets.
Speaker 6: So when small banks have small have problems, small businesses
Speaker 6: have problems as well. In particular, you know things like
Speaker 6: you know your do you have a pre existing relationship
Speaker 6: with the bank, what's your geographic proximity to the bank.
Speaker 6: All of those are important factors as it relates to
Speaker 6: a small business's ability to be able to access capital,
Speaker 6: and all of that gets exacerbated when you think about
Speaker 6: it for black small businesses.
Speaker 1: And I want to be clear about this too, because
Speaker 1: when we saw the bank failures in the United States,
Speaker 1: it's not the black owned banks that necessarily faced the
Speaker 1: same troubles. But with that said, you do have the
Speaker 1: sense that financial conditions are tightening and credit is contracting.
Speaker 1: What does that mean for black owned businesses in particular
Speaker 1: black owned banks in this kind of a cycle. I
Speaker 1: think there's a worry here that some of the disparities
Speaker 1: that we have seen into the run up into the
Speaker 1: runop into COVID, for example, might be exacerbated if we
Speaker 1: were to face a recession ahead.
Speaker 6: I would definitely agree with that. Look. I would say,
Speaker 6: the same condition that can cause a small business to
Speaker 6: shiver will cause a black small business to freeze because
Speaker 6: they don't have the same safety net and frankly, the
Speaker 6: same capital. And I'm talking about the social capital that
Speaker 6: we know is a part of being able to access
Speaker 6: actual capital for their business. We know that black small
Speaker 6: businesses tend to are more likely to be denied for
Speaker 6: a loan, they tend to get less favorable loan terms
Speaker 6: even when controlling for credit worthiness, they tend to get
Speaker 6: higher interest rates and stricter requirements. And so all of
Speaker 6: those issues are creating significant concerns for what I'm calling
Speaker 6: a jittery June teen for black small businesses.
Speaker 1: But there's a reason also that you're leading this ten
Speaker 1: thousand small businesses program as well as one million black women.
Speaker 1: Where is the overlap.
Speaker 6: As we think about closing the racial wealth gap. We
Speaker 6: published a report called Black Women on Its and we
Speaker 6: found a number of things. In particular, it talks about
Speaker 6: the multiple things that are at issue when you think
Speaker 6: about black people's ability to create into generational whether it's education,
Speaker 6: whether it's access to capital, whether it's healthcare, whether it's
Speaker 6: jobs and workforce. And as Golden Facts thought about where
Speaker 6: can we step in and really change the tie, and
Speaker 6: in particular, entrepreneurship and our focus on entrepreneurship has been
Speaker 6: that area. I'll share with you a couple of facts.
Speaker 6: Over ninety seven percent of black small businesses are solopreneurs,
Speaker 6: and that means it's a single person or maybe a
Speaker 6: part time person working in that business. Now, black people,
Speaker 6: black women in particular are starting small businesses faster than
Speaker 6: any other demographic in this country. However, after three years,
Speaker 6: what we're finding is that the majority of those businesses
Speaker 6: have failed, and in particular, these women who started off
Speaker 6: with such enthusiasm and such commitment are actually in a
Speaker 6: worse position than if they hadn't started the business to
Speaker 6: begin with. Now, a lot of PEOPLETIONALLI would see this
Speaker 6: as a problem. Golden Facts saw this as an opportunity,
Speaker 6: and two years ago we launched one million Black Women
Speaker 6: Black in Business with the specific goal of working with
Speaker 6: black women solopreneurs to do a number of things to
Speaker 6: grow their revenue, to move them beyond being solopreneurs, to
Speaker 6: employing individuals in their community, because we know black small
Speaker 6: businesses employ black people in their community, and to really
Speaker 6: be able to start to create intergenerational wealth. And so
Speaker 6: we just had about three hundred of them here at
Speaker 6: Goldmen Sacks headquarters a couple of weeks ago, and that's
Speaker 6: a part of our business that we've been doubling down
Speaker 6: on now.
Speaker 1: I want to go back to a term you've used
Speaker 1: a couple of times, jitterary June teenth. You know, that's
Speaker 1: a really tough reality when you're thinking about all of
Speaker 1: the challenges that people are facing in the economy right now.
Speaker 1: What do the next six to twelve months look like,
Speaker 1: given some of the big problems that we're seeing in
Speaker 1: the economy, And is there a risk that some of
Speaker 1: the strides that corporations that the economy has made with
Speaker 1: trying to close the racial wealth gap, is there a
Speaker 1: risk that some of that is unwound.
Speaker 6: Look, I think there's definitely a risk. I would love
Speaker 6: to paint a rosy picture for the next six to
Speaker 6: twelve months in the US economy. But there are a
Speaker 6: number of headwinds. One, we've got high interest rates. We've
Speaker 6: seen the FED hike interest rates ten times since March
Speaker 6: of last year. Secondly, we inflation persists, it's stubborn and
Speaker 6: it's continuing to be high. We see seventy one percent
Speaker 6: of our small business owners saying that inflationary pressures have
Speaker 6: increased in the last three months. The third thing we're
Speaker 6: seeing is workforce challenges. Seventy eight percent of small businesses
Speaker 6: say they're having trouble finding qualified applicants for their open position.
Speaker 6: And fourthly, we've still got supply chain issues that are problematic. Now,
Speaker 6: is there some relief around the debt ceiling. Absolutely, we're
Speaker 6: seeing that in our small business community. But when you've
Speaker 6: got high interest rates, high inflation, workforce shortages, supply chain issues,
Speaker 6: a credit crunch, it's hard to be optimistic in that environment.
Speaker 6: Except I would say this, I would bet any day
Speaker 6: on the resilience and the tenacity of our small business
Speaker 6: community and our black small businesses. I would bet on
Speaker 6: them any day.
Speaker 1: That's a Sahi Pompei, global head of corporate Engagement at
Speaker 1: Golden Sacks and President of the Goldman Sachs Foundation. This
Speaker 1: is a Bloomberg Radio special, Black America Confronts a credit crunch.
Speaker 1: I'm Shinali Basek. June teens marks an important day for
Speaker 1: Black Americans, but it's also a reminder that there's still
Speaker 1: a long road ahead to achieving parody. And as shown
Speaker 1: by our conversations across the financial industry, economic parity in
Speaker 1: particular can't be achieved without doubling down on efforts, some
Speaker 1: of which have only emerged in the last couple of years.
Speaker 1: So how can the country keep pushing forward? Let's get
Speaker 1: closing thoughts from each of our guests, Asai Pompey at
Speaker 1: Goldman Sachs, Ryan Williams at Cadre, Cynthia Day at Citizens Trust,
Speaker 1: and Harold Butler at City Group.
Speaker 6: You know, I think it's about recommitting every day because
Speaker 6: systemic issues needs sustained focus, and I think the critique
Speaker 6: has been, you know, people being episodic or headline chasing.
Speaker 6: And I think what's particularly important is that commitment on
Speaker 6: a daily basis to who are you hiring, who are
Speaker 6: you extending credit to? And so we see that the
Speaker 6: impact of slavery and discrimination persists in this country, and
Speaker 6: I think June tem while it's an important day to
Speaker 6: recognize that and to talk about it, it's about the
Speaker 6: daily commitments about all the days that are not June teemed,
Speaker 6: and what are we all doing then to hold ourselves
Speaker 6: accountable to really making advances.
Speaker 5: I have these definitely one way to think about this
Speaker 5: period of recollection in June teenth. You know, the word
Speaker 5: that I associate sort of with this current context and
Speaker 5: environment is opportunity. And I think of opportunity from the
Speaker 5: perspective of there's a lot of stress, there's a lot
Speaker 5: of challenges. There's so many open questions about, you know,
Speaker 5: where the economy is going, about where certain businesses are going,
Speaker 5: and there needs to be a lot more answers, and
Speaker 5: with those answers, you know there will be opportunity to
Speaker 5: build and during businesses.
Speaker 3: There will be.
Speaker 5: Opportunity to reimagine how we actually finance and capitalize businesses
Speaker 5: that are backed by diverse entrepreneurs. There's going to be
Speaker 5: an opportunity, and there is opportunity to reimagine how we
Speaker 5: support banks that are going to be disproportionately overlooked as
Speaker 5: we work through this period of turbulence in our market.
Speaker 3: I think we have to be intentional.
Speaker 2: I think we have to be committed, and I don't
Speaker 2: think this is segmented into just minority underrepresented communities.
Speaker 3: I think this is.
Speaker 2: A collaborative effort for our whole country. That we need
Speaker 2: to continue to focus on access to capital that creates jobs.
Speaker 2: We need to ensure that our leadership and our management
Speaker 2: inside of our board of directors, in our companies and
Speaker 2: in our government are reflective of diversity and thought and
Speaker 2: ethnicity of our customers.
Speaker 4: It's very important that we not make this a moment
Speaker 4: in time right. Much of what and how we've been
Speaker 4: focused here at the Bank and doing the things that
Speaker 4: we're doing, the commitment of the Diverse Financial Institutions Group
Speaker 4: by you know, Jane Fraser and Mark Mason was a
Speaker 4: game changer for us in many ways. And we've learned
Speaker 4: that it not only matters to the space right to
Speaker 4: our industry peers, to the banks like Cynthia's firm, but
Speaker 4: to our employees themselves. And so you know, it goes
Speaker 4: along way to helping us to indeed change the narrative
Speaker 4: and through very deliberate and purposeful focus. And the last
Speaker 4: part of that, and I say this all the time.
Speaker 4: We need to keep telling the story right, asking the questions.
Speaker 4: If questions are asked and it makes people uncomfortable, it's
Speaker 4: probably the right question.
Speaker 2: We want to continue this conversation of how these recessions
Speaker 2: are impacting these communities. You don't have to go look
Speaker 2: at a study. You can come talk to me and
Speaker 2: I can tell you what I've seen firsthand, but also
Speaker 2: can tell you the successes that come out because we
Speaker 2: keep doing what we do.
Speaker 1: Some closing thoughts to remember on this Juneteenth holiday. Our
Speaker 1: thanks to Asahi POMPEII, Ryan Williams, Cynthia Day, and Harold
Speaker 1: Butler for joining us on today's program. You've been listening
Speaker 1: to a Bloomberg Radio special, Black America Confronts a Credit Crunch.
Speaker 1: If you missed any part of our program, you can
Speaker 1: listen back to the podcast anytime it's available on Today's
Speaker 1: Bloomberg Business Week, Bloomberg Surveillance Feeds. Subscribe any time on Apple, Spotify,
Speaker 1: or anywhere else you get your podcasts. I'm Shanalie Bassek,
Speaker 1: and this is Bloomberg