[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
AN ENDURING LEGACY: THE ROLE OF FINANCIAL
INSTITUTIONS IN THE HORRORS OF SLAVERY
AND THE NEED FOR ATONEMENT, PART II
=======================================================================
HYBRID HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
AND INVESTIGATIONS
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
DECEMBER 7, 2022
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-107
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
50-160PDF WASHINGTON : 2023
HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas
BILL FOSTER, Illinois FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
CINDY AXNE, Iowa TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts JOHN ROSE, Tennessee
RITCHIE TORRES, New York BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts LANCE GOODEN, Texas
ALMA ADAMS, North Carolina WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts
Charla Ouertatani, Staff Director
Subcommittee on Oversight and Investigations
AL GREEN, Texas Chairman
EMANUEL CLEAVER, Missouri TOM EMMER, Minnesota, Ranking
ALMA ADAMS, North Carolina Member
RASHIDA TLAIB, Michigan BARRY LOUDERMILK, Georgia
JESUS ``CHUY'' GARCIA, Illinois ALEXANDER X. MOONEY, West Virginia
SYLVIA GARCIA, Texas WILLIAM TIMMONS, South Carolina,
NIKEMA WILLIAMS, Georgia, Vice Vice Ranking Member
Chair RALPH NORMAN, South Carolina
C O N T E N T S
----------
Page
Hearing held on:
December 7, 2022............................................. 1
Appendix:
December 7, 2022............................................. 27
WITNESSES
Wednesday, December 7, 2022
Darity, William A., Jr., Samuel DuBois Cook Professor of Public
Policy, African and African American Studies, Economics, and
Business, Duke University...................................... 4
Federman, Sarah, Assistant Professor of Conflict Resolution,
University of San Diego........................................ 12
Francis, Dania V., Assistant Professor of Economics, University
of Massachusetts Boston........................................ 8
Roberts, Lily, Managing Director, Poverty to Prosperity, Center
for American Progress.......................................... 6
Rockman, Seth, Associate Professor of History, Brown University.. 10
APPENDIX
Prepared statements:
Darity, William A., Jr....................................... 28
Federman, Sarah.............................................. 32
Francis, Dania V............................................. 37
Roberts, Lily................................................ 40
Rockman, Seth................................................ 47
Additional Material Submitted for the Record
Emmer, Hon. Tom:
Memo to Republican Members of the Financial Services
Committee from Financial Services Committee Minority Staff,
dated December 7, 2022..................................... 52
AN ENDURING LEGACY: THE ROLE OF
FINANCIAL INSTITUTIONS IN THE
HORRORS OF SLAVERY AND THE
NEED FOR ATONEMENT, PART II
----------
Wednesday, December 7, 2022
U.S. House of Representatives,
Subcommittee on Oversight
and Investigations,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2128, Rayburn House Office Building, Hon. Al Green
[chairman of the subcommittee] presiding.
Members present: Representatives Green, Tlaib, Garcia of
Illinois, Garcia of Texas, Williams of Georgia; Mooney and
Wagner.
Ex officio present: Representative Waters.
Also present: Representative Garcia of California.
Chairman Green. Thank you, friends.
The hearing will now come to order.
Today's hearing is entitled, ``An Enduring Legacy: The Role
of Financial Institutions in the Horrors of Slavery and the
Need for Atonement, Part II.''
Slavery is our nation's original sin and one of the most
horrific crimes ever committed against humanity. It was an era
in infamy spawned by centuries of societal evil. It was
characterized by kidnapping, rape, murder, enslavement of
babies, denial of education, and forced labor.
It is my honor to convene this historic consequential
second hearing to continue the examination of the role that
financial institutions played in the perpetuation of this
horrific crime against humanity and of the need for atonement.
In June of this year, Full Committee Chairwoman Maxine
Waters and I, together with Subcommittee Chairs Sherman,
Cleaver, Perlmutter, Himes, Beatty, Foster, and Lynch sent
inquiries to the 10 largest U.S. banks and the 10 largest U.S.
insurance companies requesting information about their
historical connections to slavery.
While a number of institutions had researched their
history, and provided the committee with findings, many of them
had not, and certain of those had no intentions of doing so.
Many of our financial institutions have known connections
to slavery and have profited enormously from centuries of
economic prosperity that was built on the backs of enslaved
people.
In today's dollars, these institutions have a collected
value in the trillions. Today, we will examine the actual
valuation of slave labor and its impacts on the U.S. economy,
and how the exploitation of enslaved people caused the U.S.
economy to prosper while severely disadvantaging the
descendants of enslaved people throughout generations.
Our institutions that profited [inaudible] for this history
will also be examined. Ours is a great nation that will be a
greater nation when we atone for our seminal sin, the crime
against humanity known as slavery.
And in the course of today's hearing, I will examine one
other aspect of it, which is something that I call, ``a perfect
victim.''
I will now yield to the gentlelady from Missouri, my
friend, Mrs. Wagner, for 5 minutes for her opening statement.
Mrs. Wagner. Thank you, Mr. Chairman.
And, again, I want to thank our witnesses for taking the
time to testify before the subcommittee today. While I
understand this subcommittee has held hearings on this issue, I
would also like to highlight an issue that is affecting
minority communities in the present, and that is inflation.
Right now, the cost of goods is rising at a faster pace
than the rate of wage growth, and people are being forced to
put a larger portion of their paychecks towards necessities to
make ends meet. Studies show that inflation is
disproportionately more difficult to bear for lower-income and
minority households.
Last week, during our Full Committee hearing on the ties
between housing and inflation, we saw that many households
throughout the country are limited by rent, by home buying, or
by home buying power.
In many ways, the focus is on how our history has impacted
the racial wealth gap and how Congress can help reduce burdens
placed on lower-income and minority communities. This cannot be
achieved as a one-size-fits-all approach.
As we have seen in the response to the Majority's June 6th
letter to the nation's top 10 banks and insurance companies,
many respondents have implemented plans to address racial
equity throughout the communities that they serve. This is a
complex issue and one we must take very seriously so that all
Americans can achieve economic prosperity.
When we have seen instances of racial wealth gap, the
promotion of strong and consistent economic growth has helped
to reduce the gap by enhancing Americans' purchasing power, and
ensuring that government intervention doesn't increase the gap,
while attempting to find a solution.
In the 8 months since that first hearing, one aspect of the
economy that continues to disproportionately and negatively
affect underserved and minority communities throughout this
country is a continued high inflation rate. At the time of the
first hearing, the Consumer Price Index, or CPI, reported that
in February, inflation rose to a rate of 7.9 percent.
In the months following, Americans were faced with a summer
of rising costs and consistent inflation that peaked at 9.1
percent in June and remained well above 8 percent until
October.
Today, the Consumer Price Index still stands at a crippling
7.7 percent. More recently, the Farm Bureau estimated that
America's families spent 20 percent more just a couple of weeks
ago on Thanksgiving dinners than they did last year.
Underserved, minority, rural, and low- and moderate-income
communities across the country are facing the brunt of this
inflation and are using more and more of their paychecks on
critical necessities and becoming less able to direct their
income toward creating a secure financial future.
In June, the New York Fed issued a report which confirmed
that inflation disproportionately impacts Black and Hispanic
Americans more than any other communities. Individuals who have
lower incomes and historically have been able to build wealth
do not have the same safety net as individuals with higher
incomes or substantial savings.
This makes combating the negative effects of inflation that
much harder because these factors, among others, inflation,
will do nothing more than continue to increase the racial
wealth gap.
As Americans continue to head to the grocery stores, the
gas pumps, and the department stores during the upcoming
Christmas season, they will see that their purchasing power is
much less than it was. Congress needs to take immediate action
to curtail this inflation and let these communities know we are
focused on building a strong economy in which they can thrive.
Fixing supply chains, supporting domestic energy
production, and stopping reckless government spending can be a
positive start to the deflationary effects that these families
so desperately need.
I thank the chairman, and I yield back the balance of my
time.
Chairman Green. The gentlelady yields back.
It is now my honor to recognize the Chair of the full
Financial Services Committee, the gentlewoman from California,
Chairwoman Maxine Waters, for 1 minute.
Chairwoman Waters. Thank you, Chairman Green.
At your previous hearing on this issue, we discussed the
significant role slavery played in building up the U.S. economy
and the financial services industry and fueling our nation's
wealth.
Large banks and insurance companies have profited from this
unjust economic legacy, yet the debt to the descendants of
enslaved people remains unsettled. The results from the
committee's inquiry into some of the largest banks and
insurance companies demonstrate that more work needs to be done
to ensure that the damages resulting from slavery have been
remediated and the racial wealth divide addressed.
Quite simply, public apologies and acknowledgements are not
enough. I look forward to exploring solutions that address this
history of exploitation.
And I yield back. Thank you.
Chairman Green. The gentlelady yields back.
It is now my privilege to recognize the Vice Chair of the
subcommittee, the gentlewoman from Georgia, Ms. Williams, for 1
minute.
Ms. Williams of Georgia. Good morning, and thank you, Mr.
Chairman.
It is our responsibility to end this series of hearings
with not just understanding, but, as Chairwoman Waters said,
also a plan of action. Where do we start? I think by passing my
abolition amendment, which will end an exception in the 13th
Amendment that still allows slavery as punishment for a crime.
This issue will sound familiar to the bipartisan majority
of members of this subcommittee who have cosponsored my bill.
It will sound familiar to the 76 percent of Alabamians, 56
percent of Oregonians, 80 percent of Tennesseans, and 89
percent of Vermonters who voted in November to abolish this
same exception in their State constitutions.
Even with 191 bipartisan cosponsors on my Federal bill, we
can't get it done alone. As the financial industry thinks about
atonement, joining our push to eliminate this exception is a
no-brainer. These are the types of issues where we need our
industry's voice and support. Let's walk away today identifying
as many of these solutions as we can. Thank you, Mr. Chairman.
And I yield back.
Chairman Green. The gentlelady yields back.
Today, we welcome the testimony of our distinguished
witnesses: William A. Darity, Jr., a professor of public policy
at Duke University; Dania V. Francis, an assistant professor of
economics at the University of Massachusetts Boston; Lily
Roberts, the managing director of Poverty to Prosperity at the
Center for American Progress; Seth Rockman, an associate
professor of history at Brown University; and Sarah Federman,
an assistant professor of conflict resolution at the University
of San Diego.
Witnesses are reminded that their oral testimony will be
limited to 5 minutes. You should be able to see a timer that
will indicate how much time you have left. I would ask that you
be mindful of the timer so that we can be respectful of both
the witnesses' and the committee members' time.
And without objection, your written statements will be made
a part of the record.
Dr. Darity, you are now recognized for 5 minutes to give an
oral presentation of your testimony. You have 5 minutes, sir.
STATEMENT OF WILLIAM A. DARITY, JR., SAMUEL DUBOIS COOK
PROFESSOR OF PUBLIC POLICY, AFRICAN AND AFRICAN AMERICAN
STUDIES, ECONOMICS, AND BUSINESS, DUKE UNIVERSITY
Mr. Darity. Thank you, Chairman Green.
I am William Darity, Jr., the Samuel DuBois Cook Professor
of Public Policy, African and African American Studies,
Economics, and Business at Duke University. I am a specialist
in stratification economics, a field that examines the sources
and consequences of disparities between racial, ethnic, caste,
and gender groups. I would like to examine the intimate
connections between slavery, the financial sector, and the
emergence of the Black/White wealth gap.
Mehrsa Baradaran has written, ``Slavery modernized credit
markets, creating complex forms of new financial instruments
and trade networks through which slaves could be mortgaged,
exchanged, and used as leverage to purchase more slaves. In
highly-profitable, speculation-based markets, many White men
built fortunes trading in slave-backed securities. As is true
of property ownership in any era, those who held slaves had the
ability to grow exponentially richer because they could use
their property to create more wealth.''
Her incisive comment neglects the wider benefits of slavery
to Whites in both the North and the South. Non-slaveowners in
the South could earn decent incomes by functioning as managers
of the enslaved workforce, by selling products to planters, or
by policing for the system.
Northern White industrialists in the textile industry were
directly dependent upon a key input: slave-grown cotton. The
fortunes of New England's most-prominent families were
frequently linked to the slave trade and to the shipping
industry that was allied with it.
In contrast, the enslaved were denied the opportunity to
acquire assets, to sell their labor for hire, nor were they
able to reap the monetary benefits of any technical innovations
or other products they designed. Slavery was the foundation of
today's huge disparity in net worth between Black and White
Americans.
Estimates from the Federal Reserve in 2019 set the average
difference in Black and White household net worth at $840,000,
a figure sufficiently large that it would take the typical
Black household 14 consecutive years of saving 100 percent of
their income to bridge the gap.
In fact, if generous donors created a fund to eliminate the
racial wealth gap by contributing $1 billion monthly, it would
take a millennium to reach $14 trillion. The combined budgets
of all State and local governments used to meet all of their
obligations amount to less than $5 trillion, but it would
require $14 trillion to close the disparity for approximately
40 million Black American descendants of persons enslaved in
the United States.
Financial institutions were key supporters and
beneficiaries of American slavery. The full scope of creditor-
debtor relationships interlocked with the slave plantation
system has yet to be documented adequately. For the record,
details are needed about which organizations financed the New
England textile industry, which bank or banks had Brooks
Brothers, producers of plantation wear for both the enslaved
and the enslavers, as a client, and who were the lenders to the
Southern planters themselves. This will require thick archival
research that has yet to be undertaken.
Several existing major insurance companies participated
significantly in providing slave owners with contracts to
protect them from financial loss in the event of death or
damage of their human property, particularly, their highly-
skilled property. These companies include New York Life, Aetna,
Baltimore Life, the Southern Mutual Insurance Company, the
Loews Corporation, and AIG.
JPMorgan Chase subsidiaries, the Citizens Bank and Canal
Bank in Louisiana, became slave owners after their slave-
holding clients defaulted on loans.
Citibank, Wells Fargo, and Bank of America's predecessors
all participated and gained from lending to slaveholders and,
also as a consequence of loan defaults, became slave owners.
In the aftermath of the Civil War, the nation made a
promise to the formerly-enslaved of 40-acre land grants as
restitution for their years of bondage. The promise was not
kept, and the American Freedmen received no land.
In contrast, 1.5 million White families were granted 160-
acre land grants in the Western territories as the nation's
colonial settler project was completed. Homestead Act patents
have benefits that resonate for at least 45 million living
White Americans. Eastern creditors supported and benefited from
the economic chain reaction of steady growth in the West that
built new towns and produced new States while making the basis
for the post-slavery racial wealth gap.
During the course of approximately 100 White terrorist
assaults on Black communities from the Civil War to the 1940s,
Black lives were taken and Black-owned property was seized or
destroyed by the White mobsters. Black property owners who
lived through the massacres rarely received any form of
compensation.
An estimated present value of $611 million of Black-owned
property was lost during the 1921 Tulsa Race Massacre. What can
best be described as a Negro clause in the policies gave
insurance companies the basis for denying the massacre victims'
claims.
The insurance companies fell back on an exclusionary clause
which said that insurers would not be held liable for loss
caused directly or indirectly by invasion, insurrection, riot,
civil or commotion, or military or usurped power.
Christopher Messer, a sociologist at Colorado State
University, says the clause was inserted in contracts with
Black property owners intentionally given the fact that, by the
early 1900s, insurance companies were well aware of the high
potential for White mob violence directed against prosperous
Black communities.
Insurance companies would not describe the assaults as
massacres, but instead as riots, implying greater neutrality in
the conflict or Black responsibility for the destruction.
Financial institutions--
Chairman Green. Dr. Darity? I am going to ask that you
suspend, and we will have to move on, but you will be given an
opportunity to say more when we ask questions.
Mr. Darity. Yes, sir.
[The prepared statement of Dr. Darity can be found on page
28 of the appendix.]
Chairman Green. The Chair now recognizes Ms. Roberts for 5
minutes to give an oral presentation of her testimony.
STATEMENT OF LILY ROBERTS, MANAGING DIRECTOR, POVERTY TO
PROSPERITY, CENTER FOR AMERICAN PROGRESS
Ms. Roberts. Thank you for the invitation to testify today,
Chairman Green, Full Committee Chairwoman Waters, and
distinguished members of the subcommittee.
Economic systems that developed in the immediate wake of
slavery continue to shape how people experience the labor
market, the financial system, and their own economic precarity
today. For example, in the United States in the 1870s, tipping
became an entrenched system of shifting cost burdens from
employers to customers, with particular prominence in
industries that employed formerly-enslaved people, including
restaurant, hospitality, and transportation work. Tipping was
codified by 1938's Fair Labor Standards Act, which totally
exempted those who received tips from any Federal minimum wage
law.
Only in 1966 were employers required to pay any base wage
to their employees who received tips. The minimum wage for
tipped workers has been stuck at $2.13 an hour since 1991,
losing more than half its value to inflation over the past 30
years. While Federal law dictates that if a tipped employee
makes less than the regular minimum wage, the employer must
make up the difference, this system is rife with abuse.
More than 17 percent of low-wage workers report being paid
less than the legal minimum wage, with $15 billion in annual
stolen wages.
Women represent two-thirds of the tipped workforce. Just
under half of workers in tipped industries are people of color,
while the total labor force is only 37-percent workers of
color. Employees are subject to the approval of the customer,
not their employer, a relationship in which just and fair
treatment is less governed by antidiscrimination and
antiharassment laws.
These workers are subjected to harassment and demands on
their behavior in exchange for their financial security. One
study showed that female tipped workers in States where the
subminimum wage is $2.13 experienced sexual harassment twice as
often as workers in States where tipped workers receive tips on
top of the regular minimum wage.
Lately, 76 percent of Black tipped workers said they were
financially penalized by customers for trying to enforce social
distancing and mask mandates, compared to 62 percent of all
tipped workers. Meanwhile, in spring 2020, more than 40 percent
of tipped workers were rejected by their State's unemployment
insurance agency for having earned too little to qualify for
unemployment insurance.
Not only are Black workers earning less than their White
counterparts, it costs them more to access and save the money
they have earned. This, too, is grounded in history. The
Freedman's Savings and Trust Company chartered by Congress in
1865 was intended to provide a savings institution for newly-
freed enslaved people and their descendants.
After several years of deposits, mismanagement and fraud
led to the bank's collapse. While most people had already
withdrawn their deposits and lost access to interest and
dividends during public uncertainty about the bank's fate, the
more than 61,000 remaining depositors, many of them recently-
freed people, lost the equivalent of nearly $81 million.
Although the failure pre-dated Federal Deposit Insurance,
contemporary advertisements and records indicate that bank
representatives led potential depositors to believe that their
account would be backed by the Federal Government and thus
immune from risk.
Depositors lost significant assets, and many Black families
and communities lost faith in financial institutions, with good
reason. It is unlikely that the Freedman's Bank disaster is the
driver of anyone's personal judgment of the trustworthiness of
modern-day financial institutions, but the disaster, and its
lack of significant consequences for those who contributed to
it, demonstrate a systemic exclusion of Black Americans from
the financial system and of a cultural willingness to accept
the destruction of assets and wealth that is accumulated by the
Black community.
Just before the pandemic, Black Americans represented 37
percent of the unbanked population, meaning they have no
savings or checking account. They represented 23 percent of the
underbanked population, meaning that while they have a bank
account, they primarily rely on fringe banking options such as
check cashers.
This has consequences not just for wealth-building, but for
the implementation of the public policy crafted by Congress.
When the pandemic hit, people who were unbanked had to wait
months for paper checks to arrive in CARES Act-funded economic
impact payments, unlike those who got much faster relief
through direct deposit. Lack of financial access and lower
wages, both of which have roots in the legacy of slavery,
compounds to make wealth-building harder for Black Americans.
By removing barriers to mainstream financial services,
constraining the ability of predatory actors to strip wealth
out of Black communities, eliminating wage disparities, and
redressing past wrongs, Federal policymakers can make effective
changes that could help close the Black/White wealth gap.
Thank you for the opportunity to testify today.
[The prepared statement of Ms. Roberts can be found on page
40 of the appendix.]
Chairman Green. Thank you. Dr. Francis, you are now
recognized for 5 minutes to give an oral presentation of your
testimony.
STATEMENT OF DANIA V. FRANCIS, ASSISTANT PROFESSOR OF
ECONOMICS, UNIVERSITY OF MASSACHUSETTS BOSTON
Ms. Francis. Good morning, Chairman Green, Full Committee
Chairwoman Waters, and members of the subcommittee.
My name is Dania Francis, and I am an assistant professor
of economics at the University of Massachusetts Boston. I am
honored to have been asked to address the subcommittee on this
important issue. I have been studying the economics of
reparations for Black Americans for over 20 years, and during
my career, I have also conducted extensive research on racial
economic disparities, particularly the enduring effects of
racial wealth gaps.
In my testimony, I will address the lasting economic harms
that slavery had on descendants of the formerly-enslaved.
From the date of emancipation, Black households were at a
significant disadvantage with regards to wealth accumulation.
While the relatively small share of Black Americans who were
free prior to the Civil War had accumulated some wealth and
property, the vast majority of Black Americans were formerly
enslaved with virtually no property or wealth at the time of
emancipation.
A team of economists that included Ellora Derenoncourt of
Princeton University constructed a continuous series of White-
to-Black wealth ratios in the U.S. from 1860 to 2020, compiled
from multiple historical and contemporary sources.
Derenoncourt's estimates suggest that in 1860, 5 years prior to
emancipation, Black Americans owned 2 cents for every dollar of
White wealth.
In 1870, 5 years after emancipation, the figure increased
to a little over 4 cents for every dollar. However, the gap in
wealth in emancipation was so large that simulations suggest
that even if Black households had the same capital gains and
savings rates as White households from 1870 onward, White
households would still have 3 times the wealth as Black
households today.
Why do these racial wealth disparities matter? Wages and
income impact a family's ability to meet day-to-day
expenditures, and can feed into a family's ability to
accumulate wealth through savings and investment of income.
Wealth, however, provides additional benefits beyond those
provided by stable wages and income. Having wealth can provide
a protective safety net, helping families weather economic
shocks such as unexpected unemployment or an inability to work
due to adverse health events.
Having wealth as a protective safety net may also reduce
stress and anxiety and improve health outcomes. Wealth also
provides access to opportunity. Households with greater wealth
are better able to afford homes in neighborhoods with better
schools, lower crime, and fewer environmental and health
stressors.
The risks associated with entrepreneurship can be less
costly for higher-wealth individuals who have more of a safety
net to fall back on should their businesses not succeed. In
that sense, wealth provides greater freedom to pursue self-
actualization. Thus, wealth provides access to education,
provides security to take career risks, and provides seed money
for creating small businesses that can eventually grow into big
businesses.
All of these things are instrumental in building future
wealth. In this way, differential access to wealth leads to
differential access to education, entrepreneurship, and other
wealth-building activities.
If we ignore the fact that there are racial wealth gaps, we
ignore an important root cause of other societal gaps such as
racial achievement gaps, income gaps, health gaps, et cetera.
Barriers to access to wealth and opportunity are not just
in our past; they are ongoing. Today, they may take the form of
exclusionary zoning policies, for example. If you want to
exclude Black families from a neighborhood today, you don't
have to engage in blatant discrimination. You can instead pass
a local zoning ordinance that requires all residential plots to
be at least 1.5 acres or to be single-family dwellings.
This has the effect of pricing many Black families out of
these neighborhoods because they don't have the wealth
endowment necessary to afford properties carrying those
restrictions. In a sense, these types of zoning laws then are a
way of capitalizing on the results of past racial
discrimination in a seemingly race-blind way.
In their book, ``From Here to Equality,'' William Darity
and Kirsten Mullen argue that enduring harms of slavery and
ongoing post-emancipation discrimination can be captured in and
quantified by current racial wealth gaps.
The intergenerational transmission of wealth makes relevant
today the historic wealth differentials present at the time of
emancipation, providing a direct link from the economic
injustices of slavery to the economic disparities of today.
The financial and insurance institutions that benefited
from those injustices should have to reckon with the economic
disparities of today.
I thank you for the opportunity to discuss the enduring
legacy of harm from slavery and the role of financial
institutions.
[The prepared statement of Dr. Francis can be found on page
37 of the appendix.]
Chairman Green. Thank you, Dr. Francis.
Dr. Rockman, you are recognized for 5 minutes to give an
oral presentation of your testimony.
STATEMENT OF SETH ROCKMAN, ASSOCIATE PROFESSOR OF HISTORY,
BROWN UNIVERSITY
Mr. Rockman. Chairman Green, Full Committee Chairwoman
Waters, and members of the subcommittee, I am honored to speak
with you today. I join you as an historian whose research has
focused on the role of slavery in American capitalism.
In my scholarship, I have argued that slavery shaped the
terrain of economic development in the United States. I do not
believe that our society has fully grasped the degree to which
the economic opportunity we celebrate as characteristic of the
American experience writ large was historically contingent upon
the exploited labor and commodified bodies of Black Americans.
My reflections also draw on my experiences as a member of a
community that has grappled with its own historical
relationship to the ill-gotten gains of slavery. I must
acknowledge the hope of Brown University's former president,
Dr. Ruth Simmons, that our institution's engagement with our
own history might serve as a model for the nation itself in
pairing historical truth-telling with accountability and
repair.
My research specifically considers slavery as a national
economic institution, not merely a Southern one, but rather one
whose products and profits shaped lives and livelihoods
thousands of miles away: in the Pennsylvania and Rhode Island
textile mills that voraciously consumed slave-grown cotton; in
a small Massachusetts village where virtually every family was
involved in making shoes for slaves; and in the banks of New
York City, where numerous financial calculations traced back to
the price of cotton and to the assets stored in enslaved people
as salable property.
In light of these long-distance entanglements, my position
emerges from the difficulty of determining precisely where the
economy of slavery ended and some other kind of economy
presumably began. These blurred boundaries suggest that the
committee must be expansive in how it defines involvement in
chattel slavery.
For example, how should we reflect upon firms that
manufactured slave-grown cotton into textiles and that spurred
on the American industrial revolution? Remember, for example,
that Berkshire Hathaway was once a textile company whose
genealogy traces to a New England Quaker entrepreneur and the
cotton textile mills he built in Rhode Island and Massachusetts
as early as 1806.
The proprietors of what was eventually the Valley Falls
Company rarely paused to ask where their cotton came from, and
as with almost every other firm in the New England textile
manufacturing complex before 1865, virtually every cotton fiber
they spun and wove would have been slave-grown and slave-
picked.
New England textile manufacturers, as well as their
lenders, their investors, and their insurers had a stake in the
price of slave-grown cotton rivaling that of any slaveholder.
Would not such enterprises then fall under proposed legislation
requiring firms to disclose their ties to slavery?
The same would hold true for a firm that brokered slave-
grown cotton or sugar into global markets like Brown Brothers
Harriman, a company which impressively makes its history
available on its corporate website. Insofar as the products of
stolen slave labor were perhaps more likely to be
collateralized than actual slaves themselves, we must recognize
that the relationship of finance in slavery was more expansive
than we would see if we just scoured the archive looking for
debt instruments explicitly backed by enslaved people.
Eventually, scholars may find that the wealth created in
credit lines, tax breaks, rental revenues, annuities, and
sales, that is value created through the market and the law's
treatment of enslaved men, women, and children as assets was
comparable to the value of the cotton, sugar, and rice those
same men, women, and children produced through their unpaid
field labor.
As we assign a central role to finance in the overall
functioning of American slavery, we must remember that
references to property that was liquidated or settled or
secured, referred to husbands being sold away from wives, or
parents from children, transactions with affective costs far
higher than anything that could ever be listed upon a balance
sheet.
To conclude, I want to concur with an earlier comment from
Professor Darity in his April testimony: ``The largest burden
falls upon the Federal Government, under which all of these
horrific transactions and speculations were legal.''
Entrenched legal definitions of property and people and
prevailing legal commitments to the sanctity of contract
allowed the edifice of American finance to be built upon
enslaved labor, reaching deep into places where slavery itself
had already been abolished. Slavery was a national institution,
and whatever successes we will have in redressing slavery's
long-lasting harms must be national in scale.
I commend this committee's effort to put Congress, the
deliberative body that legislates on behalf of the nation, at
the forefront of specific policymaking that will seek to close
the racial wealth gap, create civic space for remembrance and
reconciliation, and preserve a truthful accounting of the
American past, lest anyone in the future try to erase the
fundamental fact that, for much of our nation's history, market
freedom and human freedom stood in painful opposition to one
another.
Thank you.
[The prepared statement of Dr. Rockman can be found on page
47 of the appendix.]
Chairman Green. Thank you, Dr. Rockman.
Dr. Federman, you are now recognized for 5 minutes to give
an oral presentation of your testimony.
STATEMENT OF SARAH FEDERMAN, ASSISTANT PROFESSOR OF CONFLICT
RESOLUTION, UNIVERSITY OF SAN DIEGO
Ms. Federman. Good morning, Chairman Green, Full Committee
Chairwoman Waters, and distinguished members of the
subcommittee. Thank you for the opportunity to speak today. My
name is Sarah Federman, and I am a professor at the Kroc School
of Peace Studies at the University of San Diego.
My research looks at the intersection of corporations and
mass atrocity, how they atone or reckon or do not for genocide,
slavery, and colonial legacies. I began my career as an
international advertising executive.
I discovered that when you trace the thread of cotton
through U.S. history, it does lead us to Wall Street, and the
finance industry, more generally. Today, I have been asked to
share a little bit more about the challenges of corporate
reckoning, why we must proceed, and how best to do so.
One of the arguments that we run into when engaging with
corporations is that it is applying the law ex post facto
because slavery was legal at the time. While I am not a legal
scholar, I want to remind us that we are not pursuing criminal
justice in these efforts; we are pursuing transitional justice
through which nations and institutions differentiate themselves
from a prior criminal regime by addressing the harm and
committing to ethical behavior going forward. Most financial
institutions that profited from slavery have not yet done this
work.
We also hear, rightly so, that we are all beneficiaries of
cotton capitalism and plantation agriculture, so why focus on
the banks? Here, I underscore another prior point that, yes,
this will require government and taxpayer participation, but
corporate as well.
Another argument is that many businesses profited from
slavery, both in the North and in the South--look at Lehman
Brothers. But most companies have folded, so is it fair today
to only hold the surviving enterprises accountable?
To this I say, when legacy companies continue to profit
from their heritage brand and strength due to ill-gotten gains
but do not participate in the reckoning work, they continue
their complicity with the prior regime. All institutions with
these ties want to commit to transparency, relevant
institutional reform, and to work with the affected
communities.
We also hear that everyone directly impacted by slavery is
dead. Those here today and many others have detailed the
legacies of slavery in the present. My written testimony offers
some of these sources.
Another argument you hear is why punish today's executives,
employees, and shareholders for the ill deeds of the past?
First, I would like us not to use the word, ``punish,'' because
this is about addressing the harm, not focusing on punishment,
so a more restorative frame. But beyond that, leaders of all
institutions inherit the problems of their predecessors.
Corporations and their leaderships can't refuse to address
failed product lines or underperforming divisions simply
because they did not create these problems. It is for leaders
to take responsibility for those challenges in front of them,
not just for their actions.
Let's say corporations contribute to a fund like the German
corporations did. How best to distribute the money? I do want
to say that descendants and policymakers will never reach a
consensus.
When I interviewed Baltimore students and families, some
wanted a check; others worried the money would disappear; some
didn't want money from White people at all; and others were
concerned that compensation would be a way to shut Black
Americans up without sharing power or actually challenging
discrimination.
So, how best to proceed? Many people know what to do. We
know what to do. There are many effective, underfunded programs
like Safe Streets and Restorative Justice for Oakland Youth.
There are experts doing great work in this area, like the
California Reparations Task Force that has identified five
major areas: housing discrimination; mass incarceration; unjust
property seizures; devaluation of Black businesses; and
healthcare. To this, I would add education. I saw in Baltimore
how student loans became modern-day shackles. I believe
offering three generations of free higher education to Black
Americans will help undo some of this harm.
Whatever we decide to do, the details matter. Holocaust
survivors told me, many of them, told me that the letter they
received from Germany was as meaningful as any money, but to
have that recognition.
Given that compensation can actually even worsen
discrimination, because other groups don't understand why they
haven't been compensated for their losses and their suffering,
to mitigate this backlash, we must continuously educate those
who do not know the history or understand the legacies of
slavery as we move forward.
This is a very divisive issue. You can never undo all the
harm and we can never undo all discrimination, so why bother?
We address the harm to Black American families not because it
is easy or for accolades; we do it because these families had
been repeatedly deprived of life, liberty, property,
prosperity, and dignity, and if the United States wishes to
continue to have any legitimacy on the global stage as
advocates for human rights.
Thank you to those who have educated me and those new to
this work. As thankless as it may feel at times, you will help
people you never hear from and acknowledge those who suffered
their entire lives without recognition. Thank you for your
time.
[The prepared statement of Dr. Federman can be found on
page 32 of the appendix,]
Chairman Green. Thank you, Dr. Federman.
I now recognize the Chair of the Full Committee, the
Honorable Chairwoman Maxine Waters, for 5 minutes for her
questions.
Chairwoman Waters. Thank you very much, Congressman Green.
I first would like to thank you for having not only the
courage, but the energy that you are putting into raising, I
think, one of the most significant questions about slavery that
could possibly be raised, and you are in the right committee to
do that in the House of Representatives.
I want to address a question to Dr. Darity. Do you believe
that local laws and ordinances such as the City of Chicago's
Slavery Era Disclosure Ordinance passed in 2002 are effective
measures to ensure that financial institutions remedy any harm
they caused through their involvement with slavery?
In your opinion, should the Federal Government model these
laws and require similar audits?
Before you answer that, I just want to, number one,
remember my good friend, Dr. Ogletree, who has been involved in
an aspect of this issue for so many years. He took me to
Tulsa--and I have been to Tulsa several times--and I got to
meet some of the survivors of the massacre, and the Supreme
Court case that took place.
So, I have watched what was being done in Oklahoma. And
when we talk about these local ordinances, I don't see that, in
Oklahoma, they have been able to do more than kind of
apologize--I don't even think they have a statue. They have
something else that they were doing.
Dr. Darity, the question becomes, what about these local
laws and ordinances? Are they effective?
Mr. Darity. I think the local laws and ordinances that seek
full disclosure for the historical record from companies that
do business with cities and States have been effective. The
Chicago case has generated a significant amount of information
about the historical practices of a number of firms.
And I think that is something that could be effectively
replicated at the Federal level, and I think it is very much in
the spirit of your June 2020 inquiry with a number of
corporations. There needs to be some teeth behind that inquiry
in the sense that, if they don't follow through, there should
be some penalty that they are subjected to. But I think that is
a very wise set of ordinances.
In terms of other types of policies that have been pursued
at the State and local level that aim at restorative justice, I
am probably not quite as enthusiastic. I don't think that the
issue of the racial wealth gap in the United States can be
addressed in any significant way without the Federal Government
adopting a program of reparations for Black Americans--
Chairwoman Waters. Why do you believe that the Tulsa
Massacre has never been significantly addressed in Oklahoma?
They have not done anything with local ordinances, have they?
Dr. Darity?
Does anyone know what has been attempted in Tulsa to deal
with the massacre that basically killed, murdered, and burned
down all of the businesses of the Black community in Tulsa?
Mr. Darity. I apologize--I lost audio a moment ago, so I
couldn't hear what your question was, but--
Chairwoman Waters. The basic question is, have you any
knowledge about anything significant that has been done locally
in Tulsa to deal with this issue?
Mr. Darity. Yes. You mentioned Dr. Ogletree, and he was
deeply involved in an effort to try to get some sort of
judicial-based compensation for the victims of the Tulsa
Massacre. And I think that most of the efforts that have been
conducted in the Tulsa context have been attempts to go through
the courts for some form of compensation, given the fact that
the insurance companies did not provide any compensation.
Chairwoman Waters. I want you to know that some of the
original Black business individuals were still alive when Dr.
Ogletree was working on this issue. I met three or four of
them--they are all dead now--but they got no compensation.
Mr. Darity. They got no compensation.
Chairwoman Waters. They got nothing.
Mr. Darity. But I don't think this can be handled by going
through the judicial route for one fundamental reason, which is
that the Federal Government ultimately has jurisdiction over
this array of massacres. There were a hundred of them that took
place, and the Federal Government either turned a blind eye or
it actually provided, in some instances, the arms that were
used by the White terrorists.
And so I think we really, again, have to turn to the
Federal Government to try to address the full array of
atrocities that took the form--
Chairwoman Waters. Thank you so much, Dr. Darity. I am way
past my time. The Chair has been very generous.
Thank you very much, Mr. Green.
Chairman Green. The gentlelady yields back.
The Chair now recognizes the gentlelady from Missouri, the
Honorable Ann Wagner, for 5 minutes.
Mrs. Wagner. I thank my friend, Chairman Green, for the
time, and again, I thank our witnesses for being here today.
As I mentioned in my opening statement, right now the cost
of goods is rising at a faster pace than the rate of wage
growth, and people are being forced to put a larger portion of
their paychecks towards necessities to make ends meet.
Studies show that inflation is disproportionately more
difficult to bear for lower-income and minority households. And
just last week, during our Full Committee hearing on the ties
between housing and inflation, we saw that many households
throughout the country are limited by rent or home buying power
or lack thereof.
Dr. Darity, do you believe that the current inflation rate
is exacerbating the racial wealth gap?
Mr. Darity. I certainly think that the current inflation
rate, as you suggested, has a disproportionate impact on low-
income families, particularly Black and Latino families, but I
don't think there is a significant relationship to the racial
wealth gap.
The racial wealth gap is primarily driven by the
intergenerational transfers of resources that are
disproportionately held by White Americans in comparison with,
say, Black Americans.
Dr. Francis talked about that in some detail in her
remarks.
I think that the inflation has an adverse effect on
people's capacity to save, but personal savings is not the
primary factor that drives people's wealth accumulation. It is
what you get from your parents and your grandparents that is
really decisive in terms of determining your wealth position,
and that has been racially disparate in the United States for
multiple generations.
Mrs. Wagner. Let me go on and cite the Bureau of Labor
Statistics here. According to them, the median weekly earnings
in the third quarter of 2022 for Black, Hispanic, and Latino
workers with full-time jobs were about $300 lower than those of
White and Asian workers.
Dr. Darity, if wages rise slower than the rate of
inflation, what is the net effect? And is it, therefore, fair
to say that rising prices are disproportionately more painful
for Black, Hispanic, and Latino workers?
Mr. Darity. I acknowledge that, but in terms of the
implications for the racial wealth gap, they are marginal. They
are not significant or important. The racial wealth gap is not
primarily a consequence of differences in savings outcomes
across families; it is a consequence of the inability of Black
families to transfer substantial resources to subsequent
generations because of the nation's history of deprivation of
previous generations from the opportunity to accumulate wealth.
Mrs. Wagner. Thank you, Dr. Darity.
Dr. Federman, you talked a little bit about the research
that you have done.
Can you elaborate a little bit more about what the
difficulties are in finding, kind of, a one-size-fits-all
solution with such a large group of impacted people? What steps
do we need to take to understand all of the perspectives?
Ms. Federman. Thank you for that question. And I think one
is to prepare ourselves that there is not going to be
consensus, and that doesn't mean that there is something wrong.
As we move forward in working with affected communities, for
example, as Dr. Rockman talked about, Brown Brothers Harriman,
but that is from Alexander Brown and Sons family, which is
based originally out of Baltimore; there is so much to do in
Baltimore that the banks could work together in that area,
those institutions that are legacy institutions to just address
what is happening in Baltimore.
So, there are a lot of local-level activities that can be
done. People in these communities know what they need. We can
walk into these communities and know what they need, so it is
not terribly mysterious, but I think we are going to want to
look at a plan that includes housing. And in the wake of George
Floyd, when we saw a lot of American financial institutions
give money for racial equity, they often did it in the form of
loans that they could profit from, and I think it is very
important as we engage these corporations going forward that we
are talking about grants, housing grants, student loan grants
as well, not just more loans, because people are so buried in
debt.
I think we want to engage continuously with affected
communities, have these conversations with them about what they
need, support those organizations that have proven to be
effective but are simply underfunded, and then maybe a
conversation about whether people should be getting checks.
That is going to be a conversation for the nation to have as
well.
Mrs. Wagner. Thank you very much. I have used all of my
time.
And I yield back to the Chair.
Chairman Green. The gentlelady yields back.
The honorable gentlewoman from Michigan, Ms. Tlaib, is
recognized for 5 minutes.
Ms. Tlaib. Thank you so much, Chairman Green, for holding
this hearing. It has been truly an honor to serve under your
leadership on this subcommittee, from hosting you in the 13th
District to this incredibly important historic work that you
have tackled on looking at the unthinkable horrors of slavery
with the urgency that justice demands.
Thank you so much, Chairman Green.
I also want to thank our witnesses for their exhaustive
research. Due to your work, we know the historical role of
slavery in the financial industry is not abstract. The legacy
of American slavery is still being felt in our communities
across our nation today.
We cannot look away. We must address these horrors, so that
is why I really appreciate this subcommittee hearing.
When we look at financial institutions that responded to
our subcommittee's inquiries, of the seven institutions that
found historical connections to slavery, just two have taken
any steps. Of these two institutions, Truist provided a public
acknowledgement, and JPMorgan created a $5-million scholarship
fund.
To all of our panelists, going down the line, yes or no, do
you think these remediation steps are sufficient to acknowledge
and atone for the role in American slavery?
Dr. Darity?
Mr. Darity. No, I don't think that these steps are
sufficient, and I have argued in the past that what financial
institutions ought to do, that would be a substantial act of
atonement, is to build the endowments of Historically Black
Colleges and Universities (HBCUs) to a level comparable to
their predominantly-White peer institutions. I think that would
be a step which would really be substantive.
Ms. Tlaib. You answered my second question, Dr. Darity, so
I appreciate that.
I do want to ask you, Dr. Francis, do you think that these
remediation steps by Truist and JPMorgan are sufficient to
acknowledge an atonement for the role in American slavery?
Ms. Francis. No, I don't think they are sufficient.
Ms. Tlaib. Ms. Roberts?
Ms. Roberts. No. And it also seems that the lack of
response from other institutions is insufficient.
Ms. Tlaib. Absolutely.
Dr. Rockman?
Mr. Rockman. Insufficient.
Ms. Tlaib. Ms. Federman?
Ms. Federman. Insufficient.
Ms. Tlaib. My next question is--and I know Dr. Darity
discussed it--but do you have any recommendations of what they
can do to properly address their role in American history?
Dr. Francis, I know you talked a little bit about this, but
what do you think that we can do as a subcommittee to push them
towards the appropriate response?
Ms. Francis. Thank you. Thank you for the question.
I think that financial institutions should commission
studies to fully examine their historic involvement in and
benefit from slavery. There should be greater transparency in
the financial services industry regarding racial disparities
and their current lending practices.
Financial institutions should commit to funding and
resources to community development activities in Black
communities, and these efforts should be guided by local Black
organizations. They should also review ways their current
policies and practices may internalize and systemize racial
discrimination in the form of race-neutral wealth-related
requirements.
And I also will note that Dr. Federman had a lot of
excellent recommendations in part one of this hearing regarding
steps for atonement, but importantly, I think that these
atonement activities should not be mistaken as reparations,
which, as Dr. Darity mentioned earlier, involve a much larger
Federal effort.
Ms. Tlaib. Thank you.
So, a critical part of the process is properly
understanding the role in the value of slave labor and how it
affected the overall labor market in the U.S. economy.
Dr. Rockman, can you help us understand the effects of
slave labor within the U.S. economy on the broader labor
market? Could the unpaid labor of enslaved people have
comparable value to paid labor at the time, or did the very
existence of unpaid labor fundamentally skew the entire labor
market?
Mr. Rockman. I would argue that the presence of enslaved
labor in the U.S. actually skewed the entire labor market of
the United States as a whole, including setting some of the
wage levels thousands of miles away in the North, but also, in
perhaps, say, mitigating some of the class conflict that might
have grown necessarily out of the development of the wage
system.
If we look at the transition to factory capitalism in
Europe, we see massive conflict between workers and their
employers through much of the 19th Century. We see
significantly less of that in the United States.
What if it turns out, hypothetically speaking, that it is
White supremacy and a commitment to keeping Black people
enslaved that created solidarities between White workers and
White employers in the North, which mitigated some of the bumpy
political transitions that accompanied capitalism in the 19th
Century? That would change everything.
Ms. Tlaib. Yes.
With that, I yield back, Mr. Chairman.
Thank you so much.
Chairman Green. Thank you. The gentlelady's time has
expired.
The Chair now recognizes the honorable gentleman from
Illinois, Mr. Garcia, for 5 minutes.
Mr. Garcia of Illinois. Thank you, Mr. Chairman. And I
thank all of the witnesses for joining us.
I want to thank everyone who has kept this issue and this
great challenge to our country alive by probing for answers and
information.
In 2002, as Chairwoman Waters pointed out, Chicago became
the first major city to require companies interested in doing
business with Chicago to disclose their ties to slave trade and
labor.
As a result of this ordinance, and additional legislation
from States that followed, financial institutions have
disclosed the profits they got from the financing of slavery,
prompting apologies and renewed commitments to diversity and
inclusion initiatives, but disclosures and apologies from
financial institutions are not enough.
We need legislation that requires actionable steps from
public companies to address their ties to slavery and to remedy
the history of racial inequity and economic disparity in the
United States.
Dr. Francis, Evanston, Illinois, has created a plan to
provide housing grants to Black residents, prioritizing
descendants of those who were harmed by discriminatory housing
policies in the City.
Do you believe that these initiatives sufficiently
compensate for the suffering of Black Americans, and should
they be implemented more broadly?
Ms. Francis. Thank you for your question. No, I don't think
they are sufficient, but I do recognize the spirit in which
they are arrived at. And I think the reckoning that local
jurisdictions have been doing with their past and their
connections to slavery and discrimination is honorable and
should be encouraged. But, again, the sheer size of what would
be necessary to atone for, to repair, to address the history of
slavery, again, thinking about the size of the racial wealth
gap as symbolic of that, is much too large for any local
jurisdictions to be able to marshal on their own.
I guess, maybe to conclude, I think that it is good
grassroots energy to think about mobilizing people at the local
level, but it would be much better if that grassroots energy
was devoted to a concerted national Federal response.
Mr. Garcia of Illinois. Thank you. This question will be
for both Dr. Darity and Dr. Francis. Please be mindful of time.
I have about 2 minutes.
The U.S. economy has benefited from centuries of unpaid
labor and the business generated from slavery. You have
estimated that a program to remediate this harm could cost the
U.S. Government between $10 trillion and $12 trillion.
How should the Federal Government structure the reparations
program, and what can financial institutions do to address
current structural disparities that could be traced to slavery?
Mr. Darity. Dr. Francis, do you want to start with this one
or--
Mr. Garcia of Illinois. I have a minute and 20 seconds,
just saying.
Ms. Francis. Absolutely. There are many ways that we can
address a reparations program by financing reparations through
taxing and transferring. Reparations programs can be
implemented as cash reparations, as trusts. And this is
something that I think people have spent a good amount of time
researching, but we still have unanswered questions. And I
think that is why it is important to establish a commission to
work on this and develop a solution.
Mr. Garcia of Illinois. Thank you. Dr. Darity?
Mr. Darity. The amount to eliminate the racial wealth gap
is at least $14 trillion. The Federal Government has
demonstrated its capacity to make those types of levels of
payments, particularly if it is distributed over a 10-year
timespan, in terms of its response to the Great Recession and
also its more recent response to the pandemic.
Mr. Garcia of Illinois. Thank you to all of our witnesses.
Mr. Chairman, I yield back.
Chairman Green. The gentleman yields back.
The Chair now recognizes the honorable gentlewoman from
Texas, Ms. Garcia, who is also the Vice Chair of our
Subcommittee on Diversity and Inclusion.
Ms. Garcia of Texas. Thank you, Mr. Chairman.
And thank you to all of the witnesses who are appearing
before us today. It is great to see that we are continuing this
discussion in this second series of discussions on the enduring
legacy of slavery.
I am reminded over and over that racism and the lasting
horrors of slavery are built into every fiber of our financial
system. The topic of today's hearing and the subcommittee's
research into the history of financial institutions profiting
from slavery reminds me of this even further.
Our nation's history in this regard is dark. We must work
tirelessly to right the wrongs of the past, because they are
not the past. The lasting impacts of slavery continue to impact
Americans every single day of our lives, and particularly in
the financial sector.
Throughout my time in Congress, I have committed myself to
equity in financial services, striving for financial health and
success for all Americans. During Part I of this hearing
series, I asked about tangible steps that we could take to make
the finance system more equitable. In reviewing today's
committee materials, I understood that they need to continue
with that line of questioning, because concrete actual progress
is still urgently needed. I think some of you mentioned some of
this being insufficient. I agree with you.
Dr. Darity, of the finance institutions surveyed by this
subcommittee, a concerning low number of companies with ties to
slavery have taken concrete steps to enhance their community
investments or, a great example you used was dollars to the
endowment funds of the Historically Black Colleges and
Universities. In an era of public commitment to diversity and
inclusion from industry giants with perhaps too little action,
what concrete actual steps can financial institutions do
immediately, without us in Congress dictating what they should
or shouldn't do?
Mr. Darity. I think immediately, they could take steps to
raise the endowment levels of Historically Black Colleges and
Universities to a position that would be comparable to peer
historically or predominantly-White institutions. That is a
step that they could take immediately.
Ms. Garcia of Texas. Right. Is there any other example that
you can give us?
Mr. Darity. Of other types of steps that they could take?
Ms. Garcia of Texas. Yes, sir.
Mr. Darity. They certainly could make sure, in some sense,
that they could get their own houses in order in the sense of
ensuring that their own personnel, staff, and leadership is
reflective of the composition of the national community at
large. And that is a diversity and inclusion project.
Ms. Garcia of Texas. Correct. And we do have a Subcommittee
on Diversity and Inclusion, where we work really hard on that.
Ms. Roberts, we have data which shows that Black and other
minority populations have extremely reduced access to lending
services and other forms of capital necessary to help
businesses thrive.
In practice, how do we address this? What can Congress do
and what can banks do to ensure that access to capital is more
equitable?
Ms. Roberts. Thanks for the question. Ensuring that all
communities have access to capital could require something as
easy as investigating their own sort of openness and
accessibility to different communities, ensuring that
information is available in community, geographically and based
on neighborhood, in the language that is spoken by the
community that is relevant, and ensuring that services are
accessible with little or no financial barrier in order to get
in the door. That is good for a bank's business. It would
ensure that they have sort of a robust customer base that they
are building up.
But I also want to point out that shareholders have power
in this capacity as well. In different financial institutions,
shareholders are making demands all the time of business
practice and ensuring that institutions are behaving
responsibly, in terms of the environment, in terms of
investments. They could also be doing so to ensure that
financial services are accessible to a wide range of
communities.
Ms. Garcia of Texas. Thank you.
Ms. Roberts, I wanted to quickly talk about today's current
redlining. It is no longer people getting together and actually
drawing red lines on a map; it is done with algorithms and
online applications that will know whom to invite in.
What can we do to have better access to homeownership
despite some of these barriers that seem to be cropping up and
we just can't seem to--it is what I call the high-tech
redlining.
Ms. Roberts. Ensuring that financial institutions are not
using algorithms in a discriminatory way is a really crucial
part of this, but there is also still a human element.
Significant research has shown the lower valuation that
happens when a home valuator assumes or knows that the owner of
the home is Black. That has shown significant impact on
neighborhood-based home price increases over the past decades.
Federal Government efforts to ensure that there is a check
on valuation discrimination is a really crucial part here, as
well as providing upfront capital and support. That has
happened at the local levels. For example, the District of
Columbia has been working on that significantly to increase the
support for first-time homebuyers and others who have been
excluded from the intergenerational transfer of wealth, as
Professor Darity has so clearly articulated here.
Ms. Garcia of Texas. Thank you.
I see my time is up, Mr. Chairman. I yield back.
Chairman Green. The gentlelady's time has expired.
The honorable gentlewoman from Georgia, Ms. Williams, who
is also the Vice Chair of our Subcommittee on Oversight and
Investigations, is now recognized for 5 minutes.
Ms. Williams of Georgia. Thank you, Mr. Chairman.
In the post-Civil War era, the Exception Clause of the 13th
Amendment was exploited as Black Americans were arrested for
minor crimes under Black Codes and then released out to work in
many of the same places they had previously been enslaved.
Dr. Rockman, can you give us a sense of the economic impact
of the exploitation from the Exception Clause?
Mr. Rockman. I am afraid that is beyond the purview of my
own direct research. But my sense, from what seems to be a
scholarly consensus around the issue, is that the economic
exploitation of Black Americans existed before slavery and
after slavery, in the 18th Century, in the 19th Century, and in
the 20th Century.
And wherever we choose to start the clock in looking for
where we need to address repair, we will find ample cause to do
so.
Ms. Williams of Georgia. Thank you so much.
Ms. Roberts, today, what role could the financial industry
play to pass a bill like the Abolition Amendment to fully
eliminate the Exception Clause as industries work to ensure
equity and atone for the past?
Ms. Roberts. Financial institutions obviously have enormous
capital, and with capital comes political reach. And I would
encourage financial institutions to think critically about the
ways that they are using their political reach to advocate for
policies that will bring more people in their doors as future
customers.
With financial stability comes greater access to financial
services. It would be to the advantage of many of these
financial institutions to ensure that all Americans have a
level economic playing field.
Ms. Williams of Georgia. Thank you, Ms. Roberts. I think
the Abolition Amendment, which is a great bipartisan piece of
legislation, is a great start.
And, with that, Mr. Chairman, I would like to yield the
balance of my time to you for any questions that you may have.
Chairman Green. I thank the gentlelady for yielding, and
would move forward with the question before I yield time to
myself, as I am next in line to speak.
Friends, at the September 21st hearing, I presented the
CEOs of the largest U.S. banks with information on their
connections to slavery. I asked if they had done enough to
atone for their connectivity to slavery, to which all indicated
they had.
However, thereafter, I followed up and asked them if they
had and would commit to preparing an atonement plan, and I
asked if they would raise their hands if they were prepared to
submit an atonement plan. These are the persons present, and
none, not one, raised a hand.
I mention this because I think the point that has been made
today by several members, including Mr. Garcia, Mrs. Beatty,
who is not here, and Ms. Garcia, who is here, Mr. Garcia, Ms.
Garcia, and members of the panel, including Dr. Darity, the
notion that we will be able to resolve this by simply having
these very wealthy businesses simply cooperate, which is what I
would like to see, doesn't seem to be manifesting itself. I
just don't see that happening in the current circumstance that
we are dealing with.
Given that it doesn't, I have a bill that I filed as a
placeholder, and this bill would simply give us the opportunity
to amend it and later on file an additional bill that would
allow us to move forward with the kind of bill that you have
been discussing and calling to my attention. It requires the
Securities and Exchange Act to allow us to have racial equity
audits. I think that this is the genesis, but I think there is
much more that we need to do.
What I would like to do is ask Dr. Darity about your desire
and belief that we can have these endowments funded by these
institutions. I have had the honor of working with you, Dr.
Darity, and I believe you have presented a plan, a sort of
outline as to how this can be accomplished.
Would you take just a moment, please, and explain how you
would have this take place as it relates to the financial
institutions?
Mr. Darity. I think I would like to talk about a specific
example, which is the case of JPMorgan Chase that had two
subsidiaries that were based in the State of Louisiana. And I
performed an exercise of examining the Historically Black
Colleges and Universities in the State of Louisiana and matched
them with peer institutions.
For example, I matched Dillard University with Tulane
University, I matched Southern University with Louisiana State
University, and looked at the per-student differentials in
endowments across--
Chairman Green. Mr. Darity, I am going to ask that you
suspend for just a moment, because the time for Ms. Williams
has expired.
I now recognize myself for 5 minutes, and I would ask that
you continue. Thank you.
Mr. Darity. Okay. Thank you. I came up with a calculation
of the amount that would be required to bring the endowments of
the Historically Black Colleges and Universities (HBCUs) in
Louisiana on par with their peer historically White
institutions.
And, if I recall correctly, the total amount was not
particularly staggering relative to JPMorgan Chase's assets,
which are now, I believe, in excess of $3 trillion.
It is interesting that it was mentioned earlier that they
had set aside a fund for $5 million. I think that's a very,
very small allotment, given the scale of their resources.
Chairman Green. Thank you. Let me move to another area of
great concern for me, and the chairwoman mentioned this in her
questioning, and that is, why have we not moved along to a
greater extent in trying to get this reparations and
atonement--I separate the two--to get this done?
I find that many people are ashamed of being associated
with the title, ``slave.'' I consider myself a proud, proud
ancestor, proud to be associated with my ancestors who were
slaves. I think that is a part of my heritage.
They built this country, to a certain extent. They are the
foundational mothers and fathers of this country. The Capitol
Building, Yale, Harvard University--they constructed facilities
there. And I am very proud to be a descendent of the people who
built the country, but many are not.
I am asking now, how is it that you think we can get beyond
this, being the perfect victims, the persons who are victims,
yet ashamed to acknowledge that we are associated with an
institution that we did not create but that has caused us great
harm over the centuries, not over the years but over the
centuries?
Who would like to give me some assistance? Yes, if you will
announce your name and speak, please?
Ms. Francis. Thank you. It is Dania Francis.
I think an important aspect is education. We are afraid of
teaching the history of this country in a way that erases all
of these things that we don't want to see. At the University--
Chairman Green. Let me interrupt you for just a moment,
because you have gone exactly where I would like you to go.
Now, in Texas, we are making it almost impossible to teach
this type of history, because it is being labeled as something
that is antithetical to the best interests of children. Are you
familiar with what I speak of? Okay. You may continue, please.
How do we address it?
Ms. Francis. Absolutely. And I think it is a local problem
that becomes national, and we need to have solutions that
address it locally as well.
We need to be in those school board meetings. We need to
mobilize and try to take back some of the control over the
curriculum and spaces that are trying to deny what is the
documented history of the country.
I think it is a local problem that we have to address.
There has to be a grassroots effort in order to avoid the
larger national problem that it is becoming.
Chairman Green. Thank you.
Finally, I would like to ask each of you, if you would, to
give me a yes-or-no answer to this question. This committee has
jurisdiction over financial institutions. Do you believe that
we should develop legislation that would have an impact on
financial institutions should they fail to engage in atonement?
And I will leave it as impact as opposed to the type of impact.
We will just say impact for now.
Let's start with Dr. Darity. Yes or no, should we?
Mr. Darity. Yes.
Chairman Green. Dr. Francis?
Ms. Francis. Yes.
Chairman Green. Ms. Roberts?
Ms. Roberts. Yes.
Chairman Green. Dr. Rockman?
Mr. Rockman. Yes.
Chairman Green. And, finally, Dr. Federman?
Ms. Federman. Yes.
Chairman Green. All persons having agreed, I think that you
have given us reason to move forward with legislation, and I
will encourage my friends who have addressed this issue today
to help me with the legislation, both Mr. and Ms. Garcia. Mrs.
Beatty has already been involved with this. And let's see if we
can come up with legislation--Ms. Williams as well--that will
help us to encourage our financial institutions to atone for
their connections to slavery that have benefited them over the
years.
I thank all of our witnesses for your testimony today.
The Chair notes that some Members may have additional
questions for these witnesses, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
This hearing is now adjourned, and I thank all of the
witnesses again for being with us, and I look forward to having
a follow-up visit with you.
[Whereupon, at 11:31 a.m., the hearing was adjourned.]
A P P E N D I X
December 7, 2022
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