Discussion with the Fed Up Initiative for the Center for Popular Democracy

President Bostic participated in a panel discussion with Shawn Sebastian, leader of the Fed Up Initiative for the Center for Popular Democracy, held at the Center for Working Families in Atlanta. The discussion was moderated by Reverend Raphael Warnock.


Che Watkins: Good afternoon, everybody. My name is Che Watkins. I'm the president and CEO of the Center for Working Families, and I would like to welcome you to our space and to our home. The Center for Working Families has been working for the past 12 years in the community to ensure that people from underserved communities have access to job-readiness training and job-placement services, and making sure that they can move from financial stability to financial self-sufficiency. That's our ultimate goal here at the center. And we do that through a number of different ways: through a soft-skills job training program called STRIVE, through mobility mentoring coaching—halfway coaching on an individual basis—and through financial literacy training.

So we are very excited to have our wonderful partners here, the Federal Reserve. They have just been wonderful partners in really understanding the core issues that drive economic impact in our community. And especially, they've been focused around the underserved communities and what we can do to better serve the folks that we work with. So, we are so happy to have everybody here.

Today, we are in for a treat, I think. We had a smaller round table conversation earlier, where I had some residents from the area that were able to talk and share some of their experiences with the Fed folks, and I think it was a very rich conversation, and a rich dialogue. I think this is going to be richer. So, I would like to welcome my classmate, Dr. Warnock.

Raphael Warnock: But I'm older than her. You can tell she's much younger.

Watkins: He was at Morehouse when I was at Spelman. I didn't know him, though, because he was studying. So we are happy to have you here to give us some words. Our special guest, Raphael Bostic—he is, I think, a breath of fresh air at the Fed. His thought process and straightforwardness and thoughtfulness has really been a treat for me to experience. I have just met Shawn today, and he told me to stop telling him to eat. I was like, "You really need to eat before you have your dialogue." And he was like, "No, no, no." And Shawn is from Fed Up, so I think that this dialogue is going to be wonderful. I'm looking forward to it. You all keep eating. Make sure—and please, if anybody has an event coming up where you need a wonderful caterer, please make sure you have some cards. Marketa is one of our premier caterers, and she would be more than happy to serve you in the future. So, I'm going to go ahead and let you guys get started. Thank you for coming.

Sharon Turner: Good afternoon. My name is Sharon Turner. I am a formerly incarcerated people's advocate, community organizer here in Atlanta, and the national Fed Up Fellow. Thank you for joining me in welcoming Dr. Raphael Bostic to this space to engage in conversation with our community about our current economic status and how the Fed can help us recover from the last economic crisis. I had the pleasure of attending a listening session at Operation Global Hope Forum a few months ago, and that's where Dr. Bostic and myself met and spoke briefly about this day.

Earlier today, Dr. Bostic had engaged in conversation with some residents from the Thomasville Heights community about their struggles to secure safe, dignified, and affordable housing. And also, we discussed earning livable wages. Myself, I'm 62 years old, and I also share in the struggle to secure affordable housing, due to my background involved in the penal system 25 years ago. I'm looking forward to actually saying this is going to be a great conversation. It's going to be insightful, relevant, and educational. So I want to thank everyone for attending. Lend your ears now with us. And thanks to Fed Up as well as the New Georgia Project, and please ask your questions when it's time to ask questions. Thank you.

Warnock: All right. Thank you so much, Sharon. We are grateful for your sharing your story, because this is a conversation—not just about policy, it's a conversation about people, real people and their opportunity to thrive and for their families to thrive and do well. Right from the start, I want to thank the Center for Working Families for hosting the kind of conversation that probably does not happen often enough. And it's led by the amazing, brilliant, forever young, indefatigable Che Watkins, my classmate.

But seriously, they do very important work here at the center, this wraparound, this one-stop-shop of wraparound services. I've seen up close the kind of impact that nonprofits like this center have on communities and people in our communities. I want to welcome and thank Dr. Raphael Bostic, the new president of the Atlanta Federal Reserve Bank. And that deserves his own round of applause.

The Fed has been around 100 years—12 banks, and he's the first of his kind. And he's a brilliant choice, and we're grateful. We want to welcome him to Atlanta. He's been here about a year. He's brilliant, and he has a wonderful name. And so, we're grateful that Dr. Raphael Bostic is here. And we want to welcome our brother Shawn Sebastian from—let me get this right—the Center for Popular Democracy. So, Fed Up comes out of, this is the work of the Center for Popular Democracy. And Shawn Sebastian is brilliant and able in his own right. And he's part of the kind of grassroots conversation, well-informed, that we need.

So I'm sitting between the good kind of creative tension that Dr. King talked about, when he had this kind of dialectical view of the world, that the way to get to the truth is to have a thesis, antithesis, and the synthesis. I'm not the synthesis, but hopefully we can facilitate what will be a meaningful conversation. Dr. King reminded us that we are all tied together in a single garment of destiny, caught up in an inescapable network of mutuality. What affects one directly, affects all indirectly.

Thank you so very much for being here. I see a number of leaders in this room. The folks who are streaming this—I don't know if they can see the folks who are in the room—but we have great citizens of Atlanta: leaders, and workers, and various nonprofits who do important work every day. We want to welcome those who are streaming this live. Give yourselves a round of applause for being here.

So, Raphael, I'm going to start with a very difficult question that I hope you can answer. What in the world does a Federal Reserve Bank do in the first place?

Raphael Bostic: Well, Raphael, Reverend...

Warnock: Raphael is fine.

Bostic: Thank you for the introduction. Thank you for being here. Thank you, Shawn, for being here. I want to thank all of you as well. This is an important conversation that we need to be having in communities across the country. I'm responsible for the Sixth District, but the challenges that we see here, in this District, are not just the challenges of this District. There are people who are not as connected to the economy, and are not really having any opportunities that they should have on a day-to-day basis to achieve the things that they want to do. And to the extent that's ever true, then we need to be doing better. We need to find ways to come together and have a conversation and find some solutions. So I'm really glad to be here to have that conversation.

I wanted to start by thanking Che for hosting this. You have other things that you do. I appreciate that. And I know that this has been a real distraction from your mission, but I'm really grateful that you were willing to take the time out to do that. I trust that it will be worth all of our while. Your sacrifice will be greatly appreciated.

To your question, I would say that when I go around the Sixth District—the Sixth District is the Southeast U.S., so it's Florida, Georgia, Alabama, and the southern half of Mississippi and Louisiana, and the eastern two-thirds of Tennessee. So it's a large District. It's diverse. And it is really varied in terms of how the economy is working out, how people are living. But one thing that's common—nobody knows what the Fed does. Nobody has any idea. So I'd like to thank you for this question, because it's an important one.

[The Fed does] a number of different things. First, we operate monetary policy. So, we have a mandate through our monetary policy to maintain a stable price level as well as maximize employment, get to maximum employment level. We do that through activities through the Federal Open Market Committee, of which I'm a member. You're probably not aware that we do that.

We also are a bank regulator. And so [the Federal Reserve System] oversees state charter banking institutions throughout the country. [The Atlanta Fed is] responsible for examining those institutions in the Sixth District. And we also have regulatory responsibility for big holding companies. So the biggest banks who organize themselves with an umbrella of structure, we're responsible for overseeing them. Our goals there are to make sure that banks operate in safe and sound manners and also allocate capital and credit throughout their entire District so that all the institutions that they are around have an opportunity to benefit from their activity.

We're also responsible for systemic risk, to make sure that the system remains stable and resilient and [that] we don't have a risk of our financial system collapsing. So we do that as well. Another thing is we facilitate payments. So, everyone knows that we have dollars. Everyone has dollar bills, right? Those are Federal Reserve notes, so they're ours.

But we also facilitate other types of payment transactions. So when you go to Target, or Walmart, or the corner store, you try to buy something with a credit card or debit card, what you're doing is basically saying, "I authorize you to take money out of my account and put it in someone else's account. Put it in that business's account." That all happens electronically, and there's a settlement that happens, and that settlement often happens along the Federal Reserve backbone. So, every transaction that happens, it likely touches the Federal Reserve as well. We provide just baseline value for the American public every day. One of my frustrations is that nobody has any idea about this.

So those are things that I like to talk about. But then, we also do community and economic development. I have a unit, the Research Division, who's tasked with engaging the communities that are in the Sixth District primarily, but not exclusively, to try to help them achieve their dreams, to the extent that they want more for their communities, or I see that there are gaps or things that could be improved to improve the standing for their residents. We want to be a partner to help them find solutions to those challenges. And sometimes that involves technical assistance that we can provide directly. We have technical experts here—some of them are here in the room—on housing and labor markets.

Other times, we want to connect you with the experts who are somewhere else. So that could be a nonprofit. It could be a financial institution. It could be an elected official. There are many different ways that we can do that. So many people ask, "Why do you guys do community and economic development?" Historically, the answer has been because of the Community Reinvestment Act, that banks have an obligation to reinvest in communities. Eventually, that's going to be in communities that need more help. And to the extent that those communities are lacking access, that they can't use those resources effectively, we need to bolster them. So our community and economic development activity is really designed to do that.

I don't like to talk about it that way. I actually think that our community and economic development activities are more fundamental to our mission. I mentioned maximizing employment, getting to a maximum level of employment. Maximum employment can look a lot of different ways. It could be 2 million people, it could be 10 million people, it could be 15 million people. And the answer to us is a function of, how many people are actually employable? How many people are in a situation and environment where they acquire a set of skills that allows them to be attractive to employers in the workplace?

It could be two, it could be 10, it could be 15. To me, our community and economic development activities are focused on trying to push us to 15. Get us to the maximum level so that everyone is included, everyone has an opportunity to thrive. And that's what we're trying to do. So I view this as part and parcel of the mission of the institution, and something that I feel like my colleagues are also very much in that same space. I'm really excited about the prospects for what we're going to do moving forward and for the rest of this conversation.

Warnock: So, I heard a number of things: community development—and we'll focus there—monetary policy, which has implications for working families and their ability to thrive; employment levels. Here you are in Atlanta, and of course, you're part of the federal system, so your focus is not in Atlanta in that sense, but here you are situated, in a city that happens to be the capital of the civil rights movement. It's also a city that, over the last five or six years, has the dubious distinction of either being number one or number two in the wealth gap around metropolitan areas in the country, which is really something to consider.... We're not talking about San Francisco. Atlanta. Number one and number two. A distinction we certainly don't want to have.

So how does being in the spiritual home, the capital of the civil rights movement and being located in a metropolitan area that has one of the largest wealth gaps in the country—how does that inform your work and the way you think about monetary policy?

Bostic: I'll answer this question in a slightly different way. My whole career has been focused on issues of getting access to capital, credit, and services to communities that haven't had them. From the time I got my PhD, those are the types of issues and questions I've been working on. The entire reason why I work on those is because if those things don't go there, wealth can't accrue, high-paying jobs won't locate [there], opportunities won't be available. So, for me, that's what I do. That's what I worry about. And I've been worrying about that wherever I was. I was in Los Angeles as a random professor, and I was worrying about it there.

To come here, what has been striking to me is—you talked about the wealth gap. I usually talk about a different problem that we have here, where we're also one and number two, which is the mobility gap, where if you're born into a poor situation, you're more likely to stay there here than in any other of the large metropolitan areas in the United States.

To me, that also speaks to opportunity, to access opportunity, and to a set of systems that are not working for clear segments of the population. And they're not working on a repeated basis. Once you get caught in that cycle, you stay there forever. And that's not acceptable. So one of the things I'm doing is trying to think about the multiple ways that we have to address this. This is not going to be solved with one policy instrument that's going to be a magic bullet—all of a sudden, everything's going to be wonderful. It's actually going to require engagement, change, and commitment, along with a host of different institutions and among a wide range of communities.

Let me just say—this morning, we went to a housing project, and it was not a good conversation. It was a conversation where people were talking about living with mold for two years, the rats running around. The ceiling in the living room fell on them. And then the ceiling in the kitchen fell on them a month later. These are not the conditions that tell you that you're going to thrive. Because you just have to worry about, "Is the roof falling on me tomorrow?" That's a different kind of reality that people are living in. And to the extent that happens, Federal Reserve tools are not the tools that affect that. We need the Housing [Authority] to be on this, we need HUD to be on this, we need the development community to be on this, and we need local leaders to be on this.

Then I was here a little earlier, and we had a conversation...about job training. And about how do we get people who are not connected? And that connection often requires the acquisition of a bunch of softer skills that, if you don't have them when you get into the workplace, you're going to fail. You're going to fall right back out of it, and be back where you were.

It was inspiring, people who have found this place to find a pathway to get to stability. Stability is the first step in starting to dream. You don't dream about big picture, big things, if you're worrying about little things. Again, in this space, these are not things where the Federal Reserve is going to jump in. We don't run job training programs. That's beyond our mandate. But that's an important thing as well. In January, I-

Warnock: You don't, but they are part of a larger economic ecosystem.

Bostic: I'm going to get to that. So, in January, we have a tradition here that the president of the Federal Reserve [Bank of Atlanta] speaks to the Atlanta Rotary the first Monday of every January. I didn't know about this tradition when I took this job so there was a bit of scrambling that happened. I shouldn't say that. They were ready for it. I had to get my mind around it. When you're a professor coming right out of the holidays, you kind of ease into the semester. No, this was the real deal. And half the speech to a bunch of leaders throughout this metropolitan area was about this mobility problem, that if Atlanta were a number one business climate, all this sort of stuff, but we're also number one in immobility, how do those two coexist? How do they happen at the same time?

I wanted to make sure that the leaders of our metropolitan area were aware of it, understood it, and understood that it was their problem as well. So that's an important thing to do. And I've been doing this on a regular basis. I go around now. I make sure we talk about this because it's something that sometimes people aren't aware of. But if we don't all see this as our problem, then we won't get to our solutions. And in many regards, the solutions are going to require participation of a wide set of people.

All right,...that gets to, I think, the question you wanted me to talk about, which was monetary policy. For me, monetary policy is about long-run trajectories in an economy. We want to manage and make sure that the economy operates in a stable and predictable way moving forward, so that businesses and families can make plans and not be surprised. So, to the extent that we do that, then businesses should be as productive as possible; lenders should be willing to lend on a long-term basis, in a comfortable way, without being nervous; and families should be able to, and be willing to, invest in themselves in terms of getting skills, because they have some confidence that the economy will function in a way that allows them to have jobs available for them once their training is completed.

We need to do all of those things, and I think we do a pretty good job at that. I think the economy has been operating on a nine-year expansion. It's been steady. It's been predictable. There have been few surprises. And the surprises that have happened have not been the function of the Federal Reserve, and I'm very proud about that.

But one thing that we worry about is the economy overheating. If the economy overheats, and the reason—so, overheating. What does overheating mean? Overheating means that the economy starts accelerating. And you see an acceleration to a point where it stops being sustainable. People get a little overly ambitious. They get, maybe super optimistic. They make some deals, [saying], "Oh, it's going to work out. I'm sure of it." And then they start not working out. When that overheating happens, there's something I use—there's a technical term—but I call it the snapback. When that snapback happens, it's unpleasant. It's more unpleasant for a certain set of communities—the set of communities, precisely the ones who are trying to get connected in the first place.

In my view, we have to be very careful and very sensitive to the fact that we can't be just cavalier and say, "Let's grow as fast as we can, however we can, wherever we want," because I worry about the snapback. And my colleagues told me this—we have a diversity of opinions—I'll say that as well, about how close we are to a snapback condition, but it's almost always in my mind. It's always in my mind.

From my view, we are a long-run, horizon institution. It's important that we retain that. We were structured to not be subject to the headline of today or tomorrow. Fed governors have terms for 14 years. That's a long time. And it's long so that they don't have to worry about that. They can do things that are potentially unpopular in the moment, because people's passions are running hot about whatever it is at the time. But in the long run, it keeps [the economy] stable because you don't have to bounce policy around all the time. I think there's real value in that. When I talk to my business leaders—I talk to small businesses—they're like, "Please, just let me know, have some confidence about what tomorrow's going to look like. If I can do that, then I can do the rest. If you do that for me, I can do the rest."

So that's how I think about what we're trying to do.

Warnock: Thank you. Thank you. So, Shawn, you lead the Fed Up initiative for the Center for Popular Democracy. And you all have given a great deal of thought [to] these things as well. Obviously, Raphael has thought about it, even as a student, and as an academic, and now, engaged in ways that impact all of us. You're coming from a grassroots, sort of activist orientation. And it's really kind of unusual, because when I think of the activist community, people don't really get engaged in monetary policy. It's kind of heady, and most people don't think about it in those kinds of complex ways. But that's the work that you do. Can you talk a little bit more about the Fed Up initiative? How you ended up here, in this conversation? Not the first conversation with the Feds. And how you go at this same question that I asked Raphael, about what it means to be in an environment where there is a huge wealth gap and a lack of mobility.

Sebastian: Thank you so much, Reverend Warnock. And thank you, everyone, for coming. Thank you to the Center for Working Families.

The way I'm going to start answering your question is actually by rooting ourselves here in Atlanta, in the capital of the civil rights movement and Coretta Scott King. When Martin Luther King was assassinated, he was fighting for sanitation workers. Coretta Scott King carried on that work by focusing on full employment, by wanting to get as many people jobs as possible. The first thing that she focused on was the Federal Reserve. So the Fed Up campaign is not the first grassroots activist campaign around the Federal Reserve. It actually began with Coretta Scott King's efforts. She actually brought tens of thousands of people to the Atlanta Federal Reserve as part of her advocacy. President Bostic mentioned that the Federal Reserve has a dual mandate of full employment and stable prices. The reason it's a dual mandate, the reason that full employment is one of those two things they have to do, is because of Coretta Scott King and because she fought for that.  

So the reason she focused on the Federal Reserve is because we would argue that the Federal Reserve is the most important policymaker in the entire economy. Like, when it comes to whether or not we have jobs...in our communities, whether or not our wages are going up, the Federal Reserve has a ton of power. And you go where the power is.

We share the same frustration, where most people don't know what the Federal Reserve is, what it does, how they make decisions. So that's what we really try to do. We try to talk to the people who are most affected by the Federal Reserve's decisions, the people that are on the margins where, if a decision is made that unemployment should be a couple points higher, that's millions of people. And who are those people? Those are, primarily, people of color. And those people should be part of the conversation. So that is what we do at the Fed Up campaign.

And I'll just say that we've done this [for] four years. We've met with every Federal Reserve president. We've met with Chair Yellen twice, and also the current chair, when he was a member of the Board of Governors. I would just say, to emphasize a point that you made, that President Bostic is very different. He brings a level of expertise to the issues that we care about the most, that is unique, that no one really has, that we have not seen before. The typical profile of a Federal Reserve president, over the history, is overwhelmingly from Wall Street, overwhelmingly white, and overwhelmingly male. When we think about the people who are sacrificed by these huge decisions, and the people who have the most at stake, oftentimes, these are people that have no stake and no expertise, no understanding of these issues.

To have someone who has spent a career in public service, a career devoted to housing and housing discrimination—it's a big change, and I just really want to appreciate everything that you've brought to this role, everything that you've brought today, seeing you interact with people directly affected. It really makes a difference. But we do have creative tension between us. I don't want to just...and I think that, that's-

Warnock: Tell us about it.

Sebastian: Yeah, yeah. And so, I'll tell you about it. So, it can't just be a love fest, right? I mean, we do have-

Bostic: Oh no, it could.

Sebastian: Yeah.

Warnock: Tell us about it. It's all right. The pastor's sitting right here.

Sebastian: He can be the mediator. So, I mean, I think one of the most important things that we think about when we're thinking about monetary policy is there's two things, as President Bostic said. There's full employment and price stability, or inflation. And when we look out and we see what the issues are, and in all the conversations that I've had, and the conversations today, we are just not at full employment. I see a lot of nodding heads. Because unemployment is historically low, when you look at the headline number. We're in the threes. We're like 3.9. But how many of us are working part-time and want full-time work? How many of us are working more than one part-time job?

In the meeting today, there were people who were dealing with housing issues, who were also getting called into work that day. They were texting while we were in the meeting with their employer so they could pick up a few hours. There are people who are working night shifts and day shifts. These are not conditions of full employment, right? If we had full employment, we would be able to not only have a job, but have jobs that gave us the hours we needed to survive, that paid enough.

I think that's the other really important thing, is that this low unemployment has not translated to wage growth. And we've seen wages stay flat over decades, while rents have kept going up and up and up and up. So, the question is, we say—I take to heart, President Bostic's concern about the snapback, but we're saying, let's look at conditions now. Are we where we need to be? Could we improve? Could we have more jobs that paid better? I think most of us who work in communities would say, "Yeah, we're really far from a point where we've met the full potential of where we can go." I take the point of the snapback seriously, and in your June 18 speech recently, you described the kind of main pillars of what you're looking at as wages and inflation. The fact is that inflation is still below the Fed's target, and a lot of that is driven by housing prices that have exploded as they've never exploded before. If you take out housing, inflation's pretty flat. It's not accelerating.

So if we're not seeing a reason to pull back, why not give our communities a chance to get those jobs? To argue for steady work? To argue for higher wages, and go there? So I think this is where our creative tension comes from.

Warnock: So, you're putting forth an argument, then, to do what?

Sebastian: So the Federal Reserve, as we describe it—monetary policy is setting the interest rate, whether it goes up or down. Setting the interest rate up, raising the interest rate means slowing down the economy, making credit more expensive and, ultimately, slowing down job growth and slowing down wage growth. We say it's not time to do that. We say keep interest rates low, and there's no reason to hike right now. There's plenty of people who need jobs—labor slack in the economy, we call it. And there isn't a justification, in terms of rising prices, when you take out the exceptional case of housing.

Warnock: So, it sounds, Raphael, like you're concerned about, in your words, the economy overheating and the potential of a snapback. Shawn is concerned that we look at the nuances where people, especially marginalized communities, are concerned, within that larger number. I even see Nancy Flake Johnson of Urban League; she's here. And when you said the unemployment rate, I heard her and saw her say, "That's not real." And those of us who work in these communities know that sort of double-digit unemployment in communities of color—particularly the African American community—that's the one unfortunately predictable thing about our economy. So I'm hearing these concerns on both sides. Should we expect a rate hike?

Bostic: So, I could go into my usual Fed speak on that-

Warnock: You can go at it the way you want, Raphael.

Bostic: But let me say a couple things. I want to start where you—not where you ended, but just before, which was on the question of unemployment rates in African American communities. So, historically, [the] African American unemployment rate is double the national rate. I think it still is close to that today.

There are two issues that come to mind. One is incarceration. So if you think about—and I mentioned the word employable before. There are many, many industries and sectors where if you have a record, you're not employable. You're wiped off the list. I know folks here at the Center for Working Families are working on this. There are folks from the state here on this. I've done some work in terms of housing policy on this. The reality is, once you're incarcerated, the way our system is set up, it makes it very difficult for you to reasonably get stable. You can't live with your family, if they're getting any kind of assistance. You can't get a job. You can oftentimes not participate in job training programs. You have nowhere to go, and nothing to do.

So in that context, it's not very surprising that recidivism rates are extremely high. [In] California, I think the statistic is 80 percent [or] something like that. And when you have that kind of reality, that's a huge barrier to increasing employment in the African American community. At a very base level, we could do anything we wanted, in terms of monetary policy, but that reality doesn't change unless things happen other places. So making sure that the conversation is in those other places and it's going on is quite important.

A second thing that you talked about is wages. Wages are really important. If you go back to economic theory, and I'll be very basic here—I think it's basic—the theory says that a person's wage equals their marginal product, [or] how much they add to the value of products that are produced in the marketplace. So if you want a high wage, you need to have a high value-add in the marketplace. How do you determine someone's ability to add value? It's the skills they have, skills they bring to the workplace—in terms of doing production; in terms of being able to manage a team, to have them be as effective as they possibly can; in terms of being creative, to understand processes of making things, and getting good to marketplace, so that you might be able to improve them. Those are the things that are really important.

And so when we talk about this wage space, I don't ever want to have a conversation around this without talking about skills. If skills is not front and center on that, then we're missing the boat. So for me-

Warnock: I was with the president of Georgia Power a couple of days ago, and he was saying that they need 1,600 electricians right now, and they had to go to Canada to get some of them. So there is this mismatch. In a sense, it's the issue of unemployment. But in some ways, if I'm hearing you correctly, there are jobs in some ways, but there's getting people the right skills to match the jobs that are actually available—[that] is an issue that I know that Nancy and others and folks here at the center are working on all the time.

Bostic: And Nancy, we've talked about this, trying to find ways to partner up employers with educational institutions to create these specialized programs to get those skills being produced at scale, and then engage—and this is what I told you guys, I think those programs need to be targeting particular communities to make sure that members of those communities are aware of them because these are direct pathways to jobs.

So, Che, you were talking about how you do your STRIVE program. And you have the health pathway, and the construction pathway. Because we know these are places where there are jobs, and that those jobs pay well. This is not minimum wage work. And so, these are really important. You know, I talked at the very beginning about institutions, and infrastructure. These are the institutions that need to be robust and strong, if we're going to succeed.

Let me just say one other thing, then I'll let you jump in. In the fall, we just started a new center, the Center for Workforce and Economic Opportunity, precisely because the Federal Reserve understands that the skill mix, particularly, is critical. If we continue to have this mismatch, we will continue to struggle. We'll have this same conversation five years from now, and maybe worse. Because if you think about how the economy is working today, we have a ton of disruption—Uber, and you see the machines in the grocery stores—all that kind of stuff. People are losing their jobs because of technological change. I wanted [to say], as a side note, that's always happening in the U.S. We were all farmers at one point. Machines came, and we're not farmers anymore. But what's happening now is the people who are losing their jobs don't have the skills for the jobs that are being created today.

So we have to be thoughtful about what are we doing, in terms of getting people pathways to get those skills. And our center is designed to, first, identify what some of the skills of tomorrow are going to be. Where are jobs being created? And then, we're talking about research. We do some research and we identify research that highlights successfully programs, interesting programs, interesting ideas that create those pathways. We're also trying to go to talk to educators and employers, to tell them, "You guys need to do more of this."

We worry about wages a lot, and we are doing a lot in this space. Many of the things that need to happen for wages to actually change are not things that we directly control. But that doesn't mean that we shouldn't be engaged, and it doesn't mean we shouldn't talk about it.

Warnock: Say that name of that center again. The Center for-

Bostic: For Workforce and Economic Opportunity.

Warnock: Workforce. And that's good news. Shawn.

Sebastian: Yeah. I believe with all of the work that is going on to make those connections, and bridge those gaps—it's incredibly important. But I do want to push back on the economic piece about marginal wages. That's not how I think wages work, because we have—I don't have the graph in front of me, but if you can imagine this, there's a graph of productivity versus wages. Productivity is how much money we make for our boss. That line has gone up and up and up and up, and our wages have stayed flat.

To me, wages are a function of the power workers have to bargain for those wages. And there's a big reason why those two things have gone apart, and it's about collective bargaining and unions. But the other way that workers get bargaining power is when labor markets are tight, when demand for labor is high, and people can argue for those things. So when you look at different places in the country—I'm actually from Ames, Iowa, and it's the place in the country with the lowest unemployment rate. What you see there is people recruiting formerly incarcerated people—people recruiting people and training them on the job and paying them to go through that training.

The Federal Reserve doesn't have the power to wave a magic wand and solve all of our problems, but making labor demand higher and eliminating labor slack actually incentivizes a lot of different things that we need to get people higher wages.

Warnock: I think that's a healthy, and principled, intellectual discussion to continue. And it's not just an intellectual discussion, obviously, it has—It's real. And the folks who are in this room are engaged in this.

I'm going to press on. There's so much here. Is this rich or not? I mean, this is an important conversation, but I want us to have a chance to pivot and hear some questions in just a moment or so from the audience that's gathered here.

We've come through the Great Recession, and one of the things that I think about all the time is the impact, certainly on the American people in general, but African Americans lost over half of their wealth. We lost over half of our wealth during the recession, largely through falling homeownership rates, and also loss of jobs. We're not in the market as much. Most African Americans—their wealth is right there in their house—which is the case, probably, for many Americans.

That, coupled with just the kind of chronic levels of unemployment and underemployment that we deal with in our communities. How do you see this, Raphael? I'm sure you've thought about this. It goes to the questions that Shawn is raising. What's the responsibility of the Fed on that score, while looking at the macro? Again, you have these communities that—as we say often in our community, when America has the flu, we have pneumonia. How do you keep this sort of steady disinterested, in the scientific sense, approach to the work that you do, looking at the macro? But at the same time, recognizing that here, you have 12 percent of the American population that lost over half of its wealth from this recession. For a lot of people, they haven't come back yet.

Bostic: Let me say a couple things on this. First is the Great Recession. The Great Recession hurt my heart. And it did that because a lot of the people who wound up losing their homes and their wealth, didn't need to. They already owned the house outright. They already had some savings in their home. But they got talked into a mortgage, to fix a boiler, to patch a roof. These were not things that were necessary. And the types of mortgages they have were definitely not necessary to accomplish those things.

The loss is a deep loss, because on some level, it was an unnecessary loss. And that bothers me. And so, you said, disinterested, but you're certainly not disinterested. I am certainly not disinterested.

Warnock: You know what I mean.

Bostic: I knew exactly what you meant. But I do want to emphasize, this is-

Warnock: I didn't say uninterested, which is different.

Bostic: No, this is real. This is people's lives. I was in Washington in 2009. I flew to communities, not just African American communities. I was in Phoenix, and [there were] whole neighborhoods gone. And you see these people, and they don't know what to do. They don't have options. They had trusted the idea that homeownership was the answer. And if you just got into homeownership, you didn't have to think. You could do anything else, you were good to go. And it turned out to not be true.

For me, one lesson I took from this—well, there are many lessons. One is that homeownership is not for everyone. We need to make sure. We talked about housing—the goal is to get people housed well. Housed appropriately for their circumstance or their situation, and be clear and straight with them. Also, because if you get into homeownership, there are risks. It is not for—I remember [when] I bought my first house. Within six months, I had to replace the roof, I had to replace all the plumbing, and we had to patch the floors. I was not ready. I was lucky, I was very lucky that I had worked for a while, and I had built up a little bit of savings. But I wasn't ready for that. I wasn't expecting that that would be what homeownership was. So, there's all this extra stuff that's going on. I don't think we talk about that enough, that homeownership, once you get into home ownership, that's the beginning, not the end. And you need to be extra diligent, and extra mindful.

My folks at the Bank know this is one of my soapbox things. We need to make sure that people understand the implications of financial decisions, understand when they do something, it has long-term implications. And those implications, they can be positive, but they can be horrible, horribly bad. I feel like the Great Recession was a huge and tragic example of that, to some extent.

So what do we do about it? It was a long road to get wealth created in the African American community at all. If you look at statistics, homeownership rates are already lower. It turns out the house price appreciation, the rate the prices increase, they increase slower in African American communities and in lower-income communities.

Building wealth is hard. It takes time. This is another one where I don't think there's a magic bullet. But what we can try to do is advise people on how to manage the finances that they have to make sure that they're being as efficient and as effective with their resources, so they might be able to build up some wealth and savings, that we—again, I go back to income. Savings is a function of income minus expenses. If your income goes up, your likelihood to have savings, your possibility to have savings, goes up. So we need to make sure that employment is as robust, as high quality in our communities as it possibly can, that we get back to making people employable.

And then we need to be honest. This is not going to turn around overnight. It's not.

I mentioned small business lending before. I do think that one thing that has not happened as much, but—OK, this is going to be a much more complicated conversation. Because if we want to grow robustly, in lower-income communities, we're going to need private capital. We cannot just rely on the public sector to make a difference. To do that, we're going to have to talk to folks and engage companies and organizations that have not historically had conversations with us. But we're going to have to do it in a way that we create partnerships, so that as progress happens, there is not displacement. And that is a shared game.

Too often—and Atlanta's ground zero for this—there are a lot of neighborhoods that have historically been minority neighborhoods, often minority homeownership neighborhoods, that are starting to face pressures from other powerful economy, and it becomes either/or. It's either you sell it to us, and we get all the gain—you'll get some of it, but not most of it, and then you don't get to live there when the place has changed, and you don't have to worry about safety and all that kind of stuff. Or you're going to stay there, and we're going to leapfrog over to the next neighborhood, and we're going to just let this be completely the way it is.

We need to get out of this either/or environment. We need to have a different set of conversations so that there is an expectation and a reality that as we invest, as we improve, as we grow, everybody benefits. And I've been saying this as much as I can. I trust you guys will as well.

Warnock: I won't push you to say more than you can, or should. But just generally, you talked about the lessons from the recession on the side of consumers, and that's critical, and that's a lesson. And that's the kind of education I think churches and other community groups ought to be engaged in. We do financial literacy at our church. The incarceration piece you talked about, we've been engaging in that, expunging criminal records. Have we, as a country, learned the regulatory lessons that we could've, should've learned from the Great Recession?

Bostic: That's a fair question, that's a fair question. Before I answer that question, I do want to say—financial literacy, I'm glad you guys do it. We have a lot of financial literacy materials. We're actually just starting a program—actually it's not a program, it's a series, where we're going to have financial tips on our website. They're going to come out once a month. You should check up on it. They're designed to be accessible, useful for regular people, so you don't have to have a PhD to understand this stuff. I do believe this is one area where many people fall short. Even in my Bank, we fall short. And it's a problem. I could tell stories, but I won't do that. So, now I forgot what question you asked me about.

Warnock: You want to tell a story.

Bostic: So, you know, I'm with a preacher, right?

Warnock: This is a preacher right here. He's got stories.

Bostic: I've gotta testify, right?

Warnock: No, no, but seriously-

Bostic: Oh, for the...regulatory lessons.

Warnock: Have we learned the regulatory lessons? Because-

Bostic: I would say, yes we have. I just hope that we don't forget them. So, the regulatory reform that happened, in terms of finance reform, tried to address a number of the difficulties in the system, a lot of the shortcomings in the system that allowed us to almost go completely over the edge.

Banks were not holding enough capital. They were engaged in transactions that had too much leverage. They were in too much debt [and] finance, where accountability was going to go somewhere else. And they had made no provisions. They did no thinking about, "Well, what happens if a bad outcome happens?" They weren't prepared.

The financial system—the reform tried to address all of those things. A lot of the conversations that [have] gone on in the regulatory space [have] been, have we gone too far? Are we too aggressive in this? And what is true is, the answer for some things [is] probably yes. All these things are like a pendulum. It doesn't just stop right on a dime, so you're going to swing maybe a little far. But we should not ever, in my view, return to a space where it's easy for banks to offload capital, and where it's easy for banking institutions to not think about worst-case scenarios, to not be prepared for continuity and resilience and all those sorts of things.

Oh, we do that, as an institution. We have a Business Continuity Office that is charged with making sure that if something crazy happens, like maybe a hurricane coming through here, as it did last fall, that we stay in operation. And we need our financial system to do that as well. So I'm hopeful that, as the conversations around regulation in the financial system continue, we will continue to reaffirm all of those, or both of those tenets.

I think we've been consistent on that, from our leadership. I think right now the debate is, where do you draw the line? As the pendulum starts swinging, do you stop here? Do you stop here? Or do you stop here?

Sebastian: I have a follow-up question, actually. The OCC [Office of the Comptroller of the Currency] is proposing what they call a modernization of the CRA [Community Reinvestment Act], [which is] a huge part of the civil rights legacy—what I call a gutting or repeal of the CRA that would significantly make it so that banks who fail the CRA test wouldn't have to pay a fine. And this is the OCC, the FDIC [Federal Deposit Insurance Corporation], and the Fed plays a role. The Board of Governors plays a role. Do you have an opinion on that effort that you can share?

Bostic: I have opinions on just about everything. Here's what I would say. The CRA was passed in the late 1970s. In the 1970s, banking was done at the branch level. So the regulation was set up with the branch as the focal point. So today—there's some young people here, right? Do you guys go to branches anymore? Do you go to the branch anymore?

Audience member 1: Yes, I do. From time to time.

Bostic: From time to time.

Audience member 1: I go through the drive-through the most.

Bostic: Through the drive-through—that's better than most. Do you have banking apps? Financial assistant apps on your phone?

Audience member 1: Yes.

Bostic: Do you use them?

Audience member 1: Oh, all the time.

Bostic: All the time.

Audience member 1: Yes.

Bostic: The world has changed, in terms of how banking happens, but our regulation has not. If we don't have our regulation match how the world actually operates, there's no hope that regulation is going to be as maximally effective as it could. I think we need to modernize the CRA. I think that's fully appropriate. Because we need to tailor the reg to help people actually live.

I've talked to some bankers. They say an increasing amount of their business happens with no people involved. You can take pictures of your checks. You can do all the stuff that you do. We need to make sure that our regulation acknowledges that, and engages in that.

Moreover, as a second modernization: for me, we need to be creative about what counts. It used to be just loans. There's a little community development stuff, but mainly loans. For me—and I said this earlier today—it doesn't make sense to give money to someone if they're not ready to use it. That money is just going to be squandered.

So we should think about financial training for small businesses, financial literacy programs—a wide range of things to help prepare people so that when we get to the loan stage, the loans are going to be used well, and then you might get more businesses. You might get more out of lending for housing and all that kind of stuff. I think there's a lot that needs to be done in the CRA space.

Now you focused on the one controversial thing that I usually don't talk about. So I will say this. There are—every regulation needs to have teeth, or else people are just, the institution will just ignore it. I actually think there needs to be real teeth in that. There are a couple of elements to this. Some have a more interesting and potentially compelling aspect to them. Others I don't think are as compelling.

I would say that among the people I've talked to in our institution, there's not consensus. We have not settled on anything, and we certainly haven't endorsed the proposal that's come out of the OCC. My hope is that there's going to be a continued conversation. As a proposal gets released, there's going to be a lot more commentary on this. One of the debates we're having with our team is, do we submit our own content? Because we may want to articulate our institutional view on this, and we just haven't decided.

Warnock: Because there are a lot of folks watching and listening, even via streaming, could you take just a moment to explain exactly what the Community Reinvestment Act is? You talked about how banking has changed. I think we may be assuming that people know what CRA is.

Bostic: That's fair, that's fair. Have I said CRA?

Sebastian: I said it.

Bostic: All right. I try not to talk in acronyms. I know, because I live in a specialized.... So the Community Reinvestment Act, I think, was [passed] back in 1977–'77 or '79 [1977]. It was passed because there was a belief that banking institutions were taking deposits from communities—you'd go to the branch and you'd put your deposits in it—and they would take that money and do lending in communities that weren't anywhere near where the deposits came from. So they were benefiting from your business, but not giving you the benefit of their service.

The Community Reinvestment Act was really designed to say, "No, you can't do that. You have to make sure that some significant fraction of your activity is reinvested in the neighborhoods where the deposits came from." That's why they call it the Reinvestment Act, because it's money that's already there and you're going to reinvest it. Subsequent revisions to the regulation—there were some data releases to increase the transparency of how banks are performing that allow community groups, people like you guys, to say, "Look, you guys aren't really reinvesting enough. You're selling the communities that you're supposed to serve short, and that's not okay."

It has changed the conversation. One of the things that Shawn was talking about—if you did poorly on the CRA, then you couldn't open up any new bank branches, you couldn't merge with another bank. There were a whole bunch of activities that you might want to do that you're no longer able to do. So banks pay attention. When this could affect business strategy or opportunities to grow, then they had to take it seriously.

Those were the teeth that were put in, at the beginning. Now we just need to make sure there's a comparable set of teeth today, in my view.

Warnock: Raphael Bostic and Shawn Sebastian—wonderful and healthy conversation. Thank you so very much. Give them a round of applause. If Che will give me another moment or two, there may be a couple of questions in the audience. Yes, Keith.

Keith: Good afternoon. It's been a thrilling conversation.

Bostic: You have to get the mic. We're streaming this.

Keith: Good afternoon. Again, I thought it was a brilliant, very, very fruitful conversation. The business I'm in, we help people find jobs—in particular, for people with barriers. A lot of the things you all touched on gave me a great deal of pause about what happens in the future. That with the economy as it stands now, there's so much optimism from some folks that they're borrowing more than maybe they should, spending more because they've seen paper games in their 401ks, and that sort of the thing. These same people buy $700,000 condos in Midtown. All of this heating up, [so] that when the next recession comes, it will even be more disastrous than the last one was. The question comes to, what do we do as different entities to inform people more usefully about these decisions that they are making now, when they shoot for it, or exist about just how great things are?

Bostic: It's a very good question. The first thing I say: talk to people. This just needs to be a regular part of our conversations. We often don't talk about money in open spaces, or what a good decision looks like. And we need to do that more, and bring it to ground. There's not a distraction, this is not about those people over there. This is about us. Are we ready?

So I think the condos in Midtown—that's interesting. So, OK, I've got to step back a little. As you look across this metro area, there are some cold neighborhoods, there are some warm neighborhoods, there are some hot neighborhoods, and there are some piping hot neighborhoods. Midtown, where our Bank is, is piping hot. There's a lot of construction. It's targeted to very high-income people. They're counting on a whole lot of those people coming in. Right?

As you move down the distribution, you go to hot and then warm. For some people, warm, because of an income or wealth situation, feels hot. We need to make sure people come from being housed well. I worry that in a lot of people's heads, homeownership is still the answer. So we're going to get people to make decisions, to get into financial arrangements that put them at more risk. And then, what you say is exactly right. The one thing that makes me a little more comfortable is that if you look at the profile of borrowers, they have stronger credit, because a number of the riskiest products have been regulated out, so they don't really happen as much anymore. So the people who are making these bets tend to be in a more stable financial situation.

But depending on the scope of the disruption, it could pull a whole lot of other people down with it. So we have to be careful, and we have to be mindful. We have to talk about it. For me, that's why I've been pushing our guys on this [financial] tips thing, because we have to get people to have some intuition about what a good approach to managing money is. All the evolution in the marketplace is to make it easier to transact, easier to buy things. You tap the card here. You don't even have to see a price.

And then, it's like, "Ooh," all of a sudden. There was an article in the Wall Street Journal last week that shows that people who use those sorts of technologies spend more money than people that don't—and don't know it. That's a recipe for disaster. So making sure that we are thoughtful as a community. Maybe we start talking about this more at church and other places, so that every day, we're sensitive to this. It needs to be part and parcel of how we approach the world every day. And hopefully, that will buffer us and allow us to be prepared for when the waves start coming, [so] that we can weather it.

Warnock: Yes?

O'Callaghan: Hey. John O'Callaghan with the Atlanta Neighborhood Development Partnership. I'm boiling a little on your homeownership comment, and I'll try to be as calm as Shawn. Here in metro Atlanta, the area I know well, homeownership is cheaper for moderate-income people than rental right now. Fact one. Fact two: folks lost a lot of money when the stock market fell by 25 percent. So there's this rap on homeownership. Nationally, 92 percent of wealth in African American communities was in homeownership, so those that were renting got evicted. Whatever wealth they had got lost in that eviction. Those in homeownership also got hit.

So we haven't found other tools. And right now, the rate differential—so that $700,000 condo is maybe somebody got foreclosed and had the ability to get back in the market, because the market is funding those $700,000 condos. But the market is not funding any new construction and bank loans in African American communities because the regulators have said housing is risky, new home construction is risky. The Fed, the Fed used to-

Bostic: Hold on, hold on, hold on. Just stop right there, because you're just speaking untruths. The Fed's-

O'Callaghan: And it's three points I wanted to get your reaction.

Bostic: Not if they're going to be untruths. I want them to be grounded in fact.

O'Callaghan: So my perception—and then we'll have to get your reaction—is that the bank regulatory environment—and it may just not be Fed, it may be other regulators—have said real estate is an asset class that we're watching, fact one. Fact two-

Bostic: That's untrue, just for the record.

O'Callaghan: But if I could give you three facts. The second fact is that the Fed, in its monetary policy, had been investing in mortgage-backed securities, which had helped to lower the rate of mortgages, so the cost of homeownership is, in part, from price appreciation, but in part from monetary policy.

And fact three—that we could just disagree that the risk of homeownership in my mind—so, just make it safe, and we can disagree on this—versus the benefits we're seeing not in communities of color, and the rate differential, to my knowledge, is where it was when the FHA redlined, or the federal government. So that's not all the Fed, that's beyond the Fed—that's systemic. So if I've got some fact wrong, I'd love to be corrected. Where we disagree, I want to disagree friendlily. I, too, am a very big fan of your openness and your candor, and you being here. So, these are friendly pushes.

Bostic: That's fine. So let me say a couple things. So one is—I want to be clear—I have never said that no one should be a homeowner. You've not heard me say that. If anyone thought they heard me say that, I did not say that. All right? What I said is that there are a lot of people who got into homeownership who did not have the financial resilience and level of resources to make sure that it was going to be sustainable. And to have people get into homeownership in a situation where the likelihood that they're going to lose that home and be more disrupted is high—that's not good. So, I just want to be clear on that. I'm not saying homeownership is not good for some people, it doesn't work for some people—but it doesn't work for all people. And we need to just be direct on that point.

In terms of the real estate, we have been aggressive in terms of banking institution investments in commercial real estate. That's typically multi-family, but also office and industrial. And why is that? During the Great Recession, more banks failed in the Sixth District than in any [other] district in the country. Period. And most of that was due to exposure to commercial real estate. So one thing you will know about regulators, we're not going to let the thing that happened before happen again. So every bank in this District, and across the country, is on notice. If you're going to go wild in commercial real estate, which is a riskier, harder product to manage, we're going to be concerned. We're going to express that concern, we're going to regulate you at a higher level of scrutiny. So it's not about single-family homes. There is risk there, but that's not what we're about. I want to be clear on that.

In terms of your second point, about our policies affecting mortgage rates—our policies do affect mortgage rates. There is a connection to that. In terms of—and this is maybe more technical than I should do in this audience—but one of the responses to the Great Recession was the Fed started buying a bunch of assets to keep markets liquid, to make sure that loans were available. That's called quantitative easing. We bought, primarily, two types of assets. We bought U.S. Treasury bonds and we bought mortgage-backed securities, because we were worried about the housing market. We were worried about the mortgage markets, because if people needed to refi, there were going to be opportunities for that. There needed to be capital in that space. So, we did those things.

That increased liquidity would lower interest rates. The rate impact by most estimates has been relatively small. And so we've been unwinding that in the last year. But I don't think that's been material, in terms of affecting the rates and mortgages. But we did that as an emergency thing.

Let me step back and say one other thing, which I think is important. I know I keep saying this.

Warnock: You're like a Baptist preacher—you have four closings.

Bostic: But let me tell you one other thing, which is, we came out of the Great Recession. Now, the Great Recession was the worst economic experience since the Great Depression. And if you think about that, think about all the institutions that were created during the Great Depression. There were lots of things done. And now, think about what was created in the Great Recession. It's a little different.

Because of that, we had to do a lot of things, a lot of emergency things. But we can't, as an institution, stay in the emergency space. We've got to get back to a more normal position. A lot of things we're doing is just trying to get back to normal. The one thing I would say to your first argument, [that] we're slowing down the economy—I don't think we are. Our position is not contractionary. It's just less stimulative. How big do you want the spigot to be open? How fast do you want that acceleration to happen? I'm not in favor of us being in a contractionary condition. I'm on record for that. I just feel like, the closer that we get to the economy standing on its own feet, the longer that we are in a big stimulating position, that increases the likelihood of the snapback. That increases the likelihood of overheating. I don't want that to happen.

So I hope you guys don't think that we want to just ground this economy to a halt because of some theoretical notion of what optimal outcome is because that's not what we want. I want this to be stable. In my best possible world, we'd never have another recession. We'd find a way to just let this go on as long as we possibly can. And that requires us to not just have the spigot all the way open all the time. Because that will guarantee we get there.

Sebastian: So you say we. I know you are on record as saying you're not trying to make the economy shrink. You're not trying to raise unemployment. But William Dudley, on his way out, said, "Unemployment needs to be 1, or 1.5, or 2 percent higher. We need to make more people unemployed." So, I'm curious about this we. I know about you.

Bostic: Well, I didn't say that. Look, one of the beautiful things about the Federal Reserve is that it is the collective decision of 19 people. And if all 19 people thought exactly the same thing, why do you need all 19? The whole point, and I think one of the reasons why you guys push for diversity in leadership, is have diversity of viewpoints. And let those diverse views argue and grapple, and let's see how it comes out. I don't know what you've heard, so I'm not going to talk about that. What I would say is, we are now getting to a place where the question will be called, "Are we going to be contractionary or not?" We're not there. I don't think we're there today. I don't think we'll be there by the end of the year. I don't think so.

Warnock: I'm going to take one more question.

Audience member 2: Hi. I'm from the New Georgia Project, and we work with registering young people to vote. People know us for our voter registration, but we also find ourselves as chief explainer of public policy to young people—people who are going to college this year, people who are voting for the first time this year, born in the year 2000. So they were nine years old, when the recession happened. I think the question that we've been getting a lot, is that we've been hearing about the student loan problem. As we prepare ourselves to talk to young people who are about to go to college—in what ways will this student loan bubble, if it bursts, be different from the Great Recession? Or is that a fair comparison? How do we talk to young people about what that looks like, in the next couple of years?

Warnock: She said older people, too.

Bostic: Older people, too—yes, for sure. Okay, quick tutorial on student loans. There are two types of student loans. There are the good ones and the bad ones. The good ones are loans that are taken out for students that go into programs that they actually finish, and then come out with skills that allow them to have a different earnings potential. So that is college, that is master's programs, that's nursing programs—all those sort of things. If people do student loans for that, they wind up being able to pay them back. The burden is not overwhelming.

But then there are a whole host of other types of things that people get student loans for—for programs that they often don't finish, many of them online, many of them for a profit, many of them uncertified, or programs that don't have a professional certification. So when you don't finish, you have exactly the same money as you had before—and you just have more debt. You're in a bad place.

What's happening in the recent years is that the split between the good loans, the share of the good loans and the share of the bad loans has shifted. We have more people in the bad loan category than we had before. Now that peaked. I was looking at some statistics about a week ago on this—that peaked probably four years ago. Now we're seeing the bad loan category shrink a bit. I think some of the bad press around for-profit schools and all that kind of stuff has been positive, in that regard. The reason I tell you all that is to say that a student loan isn't evil just because it's a student loan.

Student loans can work for many people, if they're applied properly for the right types of programs. Now, we have a lot of people who are burdened with student loan debt right now, and we've got to figure out what to do with that. There's a huge debate that is going on in the Department of Education about this. There were some proposals to find ways to either do debt forgiveness or shield students from potentially going to debt in programs that have had high either dropout rates or a high rate of students coming out with extra burdens. And that discussion needs to continue, because I think there's a lot to be done there.

Because otherwise, these decisions to get in these bad loan situations are going to shackle people and make it difficult for them to do the investments in homeownership or whatever that could be possible to help them build stability, and build wealth, ultimately.

So this is another one that's a whole conversation. This is really, really important, in particularly for young people—young, and less young—who have really been caught up in this.

Warnock: I think you'll agree that this has been a fascinating and important conversation. One that needs [to], and I believe will, continue. So I want to thank Dr. Raphael Bostic of the Federal Reserve Bank and Shawn Sebastian of the Center for Popular Democracy, Fed Up initiative, for taking the time. I want to thank the Center for Working Families for hosting us. And we're grateful for everything that you do. Thank you all so much for being here.