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Financial Fairness

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Carroll G. Robinson
June 16, 2023

Financial discrimination is real. We have all heard of redlining when it comes to mortgage loans, credit card interest rates and bank loans to Black, Hispanic and women-owned businesses. 

Sadly, technological advances have created opportunities for more sophisticated and pervasive discrimination and will likely make things worse, if we fail to proactively prevent it from happening. Below are a few suggestions that should be explored to ensure that Black, Hispanic, woman and minorities are treated fairly going forward.

First, the use of Artificial Intelligence (A.I.) in making business decisions and on the Internet needs to be responsibly regulated by Congress.

A.I. is starting to be used by more financial institutions to make loan decisions and by businesses to make hiring decisions. There is just one big and glaring problem; A.I. is biased and discriminates against Black, Hispanic and low-income Americans. Congress should develop responsible measures to eliminate the inherent discrimination and bias present in A.I. programs.

Second, more and more grocery stores, and other businesses, are going cashless (and removing cashiers) and requiring payments be made through so-called digital wallets. This is a major looming problem for all Texans and Americans who don’t have a bank account or a credit card. 

This problem needs to be addressed and solved now. For those Texans with a Lone Star Card, it’s use needs to be expanded to more businesses and the state should allow PayPal and other such payment platforms the ability to deposit funds on Lone Star Cards.

Cities and counties should move to digital security chip based library cards that could accept digital cash deposits. 

Texas cities and counties should also work with the major credit card companies and public transit agencies across the state to authorize use of their digital library cards as an acceptable way to make payments. 

This is the 21st Century and we are a quarter of the way through it on our way to the 22nd Century. Government needs to partner with the private sector to use technological innovation to help solve problems to better protect and empower low income Americans as well as Black and Hispanic Texans who have historically been left out and left behind. 

In addition to the solutions I am proposing above, two other things also need to be done immediately. Congress needs to regulate cryptocurrencies and prohibit companies from carrying tokens and NFTs they self-create on their balance sheets as assets, if they are not traded on an exchange regulated by either the Securities and Exchange Commission (SEC) or the Commodities Future Trade Commission (CFTC). Being traded on a foreign exchange alone is not good enough to allow Americans to be subjected to the instability and financial risk of cryptocurrencies, after what just happened with Sam Bankman-Fried and FTX.

Finally, Congress needs to expand the requirements of the Community Reinvestment Act (CRA) to Hedge Funds, Venture Capital, Private Equity and other such investment vehicles. This should be the price they pay for the big carried interest tax break they have been enjoying. 

Applying the CRA to Wall Street would help drive economic development and economic growth at home on Main Street and in underserved communities.

Change is upon us and we must harness and direct technological change to better protect, include and advance access to the economic opportunities of our financial system and the American dream for all Americans regardless of income or race.

Author: Robinson is an Associate Professor at the Barbara Jordan-Mickey Leland School of Public Affairs at Texas Southern University in Houston, Texas.

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