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Majority of Black Americans see systemic bias in financial system: RPT

Lisa Osborne Ross, U.S. Edelman CEO, joins Yahoo Finance to breakdown findings in the 2021 Edelman Trust Barometer Special Report revealing systemic bias in the financial system and the impacts of financial inequalities caused by racism.

Video transcript

KRISTIN MYERS: A new and yet to be released report from Edelman shows the lack of trust between financial service providers and communities of color. We have Lisa Osborne Ross, CEO of Edelman United States, here to give us an advanced look of the findings. So, Lisa, I'm hoping that you could do a little bit of scene setting here for us. How is the relationship, or how would you define the relationship right now between communities of color and that of financial service providers?

LISA OSBORNE ROSS: Because I'm an optimist, I will say it could be better. There are systemic issues that communities of color have dealt with historically with the financial sector. Our research indicates that a lot of the things that we have seen historically-- biased treatment, unwelcome environments, excessive scrutiny, et cetera-- continue. However, there are some bright spots, and the opportunity to fix things is a lot better.

ALEXIS CHRISTOFOROUS: I want to dig into this report before we talk about how to fix things, just to highlight some of the findings here. You say that communities of color reported systemic bias regardless of their personal financial situation, meaning that even if somebody was a high income earner, sometimes their experience was even more negative. Can you talk to us about that?

LISA OSBORNE ROSS: Yeah, you know, it was, for me, one of the most intriguing findings. And the key findings, again, were, one, bias exists. Black Americans, API, Latinx across the board said that they experienced bias in all sectors. The bias was with mortgage lendings, with bank, auto, credit card insurance, et cetera. Second key finding is the one that you just talked about that regardless of income, that the level of bias and the level of discrimination continues, and in some cases is even higher.

I think this one is particularly interesting because the last time I was on your show, we had released our data that talked about, is racism people or is it institutions? And the respondents said it's really more people. And I think this research indicates that that's not actually true.

We always talk about the difference-- people say, Lisa, is it class or is it race? It's race. Because we have people in higher income brackets, people who make over $100,000, and people who make a million dollars a year, and they faced some of the same systemic bias that people at lower income levels do. So it kind of doesn't matter whether you make money or not, you're still seen as a person of color, and then a series of assumptions are made about you, regardless.

KRISTIN MYERS: So what's the impact of that racism? As you mentioned, it's not class, it's race. What ends up being the ultimate result of that racism?

LISA OSBORNE ROSS: It's sickening, actually, and it's discouraging. But again, I'm an optimist and so I think it can be better. The impact is, one, we're not putting to work all the resources that we could have. Communities of color make money. We are entrepreneurial. There is a history of that-- we're celebrating the 100th anniversary of the Tulsa race riots.

The first woman millionaire was a Black woman, Madam CJ Walker. And so what you're doing is you are eliminating and discouraging people from putting their money into the system, because absent fair treatment-- people use payday lending, they're using pawn shops, they put money in their own homes. And the other impact-- and this was acute among the Latinx community-- is the impact on mental health.

People across the board in all of those categories-- Latin, API, African-American-- talked about the impact is palpable. It doesn't make them feel good. It makes them insecure. And the Latinx community, 59% said, I'm uncomfortable even talking about money. That's never good. Another 52% said, not only am I uncomfortable talking about money, but it affects my mental health. It makes me sick.

When I think about it, I think about how I'm being treated, how I'm being discriminated against, and the lack of opportunity that is available to me because of this bias. So it hurts our systems, it hurts our institutions, and it hurts people.

ALEXIS CHRISTOFOROUS: So in the time we have remaining, just talk to us about some key things businesses on the financial services end can start doing today to start moving the needle here.

LISA OSBORNE ROSS: I'm not going to say they're easy, but I will certainly say they're doable. One, build representation into your workforce. Two, consider bias mitigation training. Some bias is real, but some bias I will accept that people really don't know that they're doing it. So look at how you can train people to detect bias, and to prevent bias, and to make sure that there's repercussions when there is bias.

Three, re-evaluate risk assessments. One of the first questions you asked is that, is it worse among communities of color who are higher income? Absolutely. So look at the types of questions that you're asking. How are you assessing risk, and how are you assessing engagement? And look and see if there is bias there.

And then the last one-- create inclusive, welcoming environments. The volume of communities of color who say when they interact with financial institutions, they talk about banks in particular-- things like not being greeted when you walk in the door, being treated differently. When you have a welcoming environment, people feel better about giving you their money and working with you to grow their money, which is good for them and good for us as a nation.

KRISTIN MYERS: All right, we're going to have to leave that there. Lisa Osborne Ross, US Edelman CEO, thanks so much for joining us today.