WEBVTT

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- In America today, for every
hundred dollars of white

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family wealth, black families
only have about $5.04.

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In fact, the percentage
of the total wealth owned

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by black Americans hasn't
really grown appreciatively

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since the Civil War.

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This level of inequality

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isn't about failing to pull
yourself up by your bootstraps.

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It's a direct result of centuries
of racist banking policies

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and practices that systematically

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kept black Americans from prospering.

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(gloomy music)

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After emancipation,
President Lincoln approved

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reparations to help
former slaves transition

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from being treated as
property to owning property.

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Each family was supposed to
receive 40 acres and a mule

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but after Lincoln's assassination,

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that order was reversed by
President Andrew Johnson.

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What the free slaves did get was a bank.

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The Freedman's Savings Bank.

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Over the next decade,
former slaves deposited

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their hard earned wages,

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more than 75 million
dollars into this bank.

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But it turned out to be
a one way relationship.

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The bank's white management
refused to give any loans

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to its black clients.

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Instead, they lost nearly half
the money on bad investments

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before the bank closed in 1874.

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The Federal government failed
to hold anyone accountable

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for this loss.

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Soon after that, Jim Crow laws
were enacted across the South

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and owning land became
even less attainable

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for black Americans.

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In the 1930s, President
Franklin Roosevelt's new deal

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helped create a new middle
class but it also further

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cemented the racial wealth gap.

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With the help of the
federal infrastructure,

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10s of thousands of banks
and credit unions were created

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at this time to issue
mortgages that in effect

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all went to white families.

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During this time, neighborhoods
were explicitly zoned

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to reinforce segregation.

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And those in black neighborhoods
were denied mortgages.

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These policies essentially helped create

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2 separate credit markets.

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1 of the affluent white suburbs

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and the other of the black ghettos.

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This law professor Mehrsa Baradaran.

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She wrote about this history in her book,

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The Color of Money.

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- The segregation of our
banks and our neighborhoods

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and our mortgage credit, it
was a partnership of banks,

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homeowners who didn't want
to live in black areas.

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It was realtors who
wouldn't sell to blacks.

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It was the market deciding
that a white neighborhood

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was worth more than a black neighborhood.

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It was the regulators not stepping in.

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It was the legislature not stepping in.

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You know, it's not just
the Klan that did this.

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It was a whole American society.

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- Civil Rights leaders
recognized the fundamental

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economic injustice and
proposed bold solutions,

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including integration,
reparations, and land grants.

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But once again, at this fork
in the road of American history

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the nation took the wrong path.

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Instead of going forward with
any of these radical solutions

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President Nixon proposed black capitalism.

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A series of policies that
encouraged black entrepreneurship

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and asked that corporations
to voluntarily support

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black owned banks.

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This policy paid lip service

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to closing the racial
wealth gap but in reality

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did nothing to fix the underlying problem.

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Variations of the toothless
black capitalism policy

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have been carried on by every
administration since Nixon.

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- That we never fixed
our legacy of Jim Crow,

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white supremacy, credit discrimination,

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all of these systemic problems
and to put a little bandaid

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on it and say OK, well we'll
celebrate entrepreneurs,

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black entrepreneurs,
that's not the answer.

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- While U.S. law banned explicit

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racial discriminatory
banking in the late 1960s,

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racism in the industry
is still alive and well.

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In the early 2000s,

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federally regulated banks and
other financial institutions

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profited from selling many
subprime loans which charged

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higher interest to compensate
for higher risk of default.

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Many were designed

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to make repayments
difficult or impossible.

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These toxic loans were purposely pedaled

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to black neighborhoods.

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In one lawsuit filed
by the city of Memphis,

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Wells Fargo bank officials
testified that employees

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referred to minority
customers as "mud people."

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And subprime loans as "ghetto loans."

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And data show discrimination
in lending was based on race,

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not economic status.

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By 2006, higher income black
Americans including many

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who could qualify for
regular loans were 4 times

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as likely to have subprime loans

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as higher income white Americans.

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The Federal Reserve's own
survey at the time revealed

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as much but they didn't
act to stop the banks

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predatory lending practices.

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By 2008, the housing bubble
burst and no community

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felt the consequences
more than black Americans.

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- From Jamaica Queens in New York City

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to Oakland California.

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Strong middle class African
American neighborhoods

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that saw nearly 2 decades
of gains watched them reversed

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in a matter not of years but of months.

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Anyway you look at it,
that's an absolutely tragedy.

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- So surely we've learned
our lesson from this tragedy.

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Apparently not.

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The Trump Administration
is rolling back regulations

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put on the big banks after
the 2008 financial crisis.

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And the subprime loans are
being sold under the name

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of non-prime loans in
many communities of color.

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The racial wealth gap has
not closed in 200 years

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and it won't close in the
next 200 unless the government

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acknowledges its role in creating

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and perpetuating economic inequalities.

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It's up to the government to
fix the problem it started.