john c williams : building an equitable future remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the economic inequality policy forum : the impacts of covid - 19 on communities of color and policy insights for an equitable economic recovery, 24 september 2020. * * * hello everyone, and welcome to the new york fed ’ s third economic inequality policy forum. it ’ s a pleasure to speak with all of you who are joining us for this conversation. for me, today ’ s event is about sharing research and hearing your recommendations, so i ’ m going to keep my opening remarks brief. before i continue, let me give the disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. since the outbreak of the pandemic, we ’ ve seen severe economic pain, unprecedented levels of unemployment, and enormous uncertainty about the future. the health and economic effects of covid - 19 have created tremendous hardship for many americans across the country, but they have been especially painful for communities of color. we know that people of color and black people in particular have experienced higher rates of illness and death. significant representation in essential services work and insufficient access to healthcare are key factors that have contributed to these outcomes. 1 the pandemic ’ s convergence with a moment of reckoning for the united states around racial justice makes conversations on issues like equitable growth even more important and relevant. when i think about equitable growth, i think about an economy where everyone can realize their full economic potential. while today ’ s conversation is about equitable recovery, everyone here is aware that an equitable economy did not exist before the pandemic. another important dimension of equitable growth is equal access. and the pandemic exposed just how dramatic the fault lines in racial disparities are, for access to things like healthcare, credit, and housing. recent research by the new york fed revealed that black - owned businesses are almost twice as likely to shutter during covid - 19 as white - owned firms. black - owned businesses are also more likely to be located in coronavirus hot spots. 2 i ’ m hearing about how these statistics are playing out for families through regular conversations with community leaders like many of you in our district and beyond. far too many are facing unemployment, losing access to their healthcare, and dealing with

##s increased on that day, with a substantial amount of trading activity at fairly low rates. these year - end effects were transitory, and the level and distribution of rates in the federal funds and eurodollar markets returned to pre - year - end conditions on the following day. although the effects were transitory and did not adversely affect policy implementation, spending a bit more time on this episode can contribute to our understanding of money market relationships. why did we see the year - end drop in unsecured rates? recall that the framework functions by creating opportunities for investors to borrow funds in money markets to earn ior whenever there are significant differences between market rates and the ior rate. on quarterends, the actual and perceived marginal balance sheet costs of a number of depository institutions increase as they publish financial statements and calculate regulatory ratios. 38 these increased balance sheet costs mean that depository institutions borrowing funds in money markets to earn ior must do so at a lower interest rate to account for these costs. further, the reduction in balance sheet capacity can temporarily lower the bargaining power of lenders, again allowing borrowers to obtain funds at lower rates. many lenders in the federal funds and eurodollar markets with access to the on rrp facility responded to these low rates by increasing their use of the facility, as shown in figure 10. however, other lenders remained in these markets, including those without on rrp access, those who received funds late in the afternoon after the on rrp operation had already occurred, and those for which the on rrp was not an acceptable substitute. on this last point, for some institutions, the on rrp is an imperfect substitute to lending in private unsecured markets because, in the tri - party repo system through which the on rrp is settled, cash is not returned at maturity until late the next day, whereas in private unsecured markets, earlier return of funds can be negotiated. 39 these quarter - end effects, as measured by the effective federal funds rate, are likely to appear a bit larger when we switch in early march to a median calculation. as i mentioned, on december 31, the median fell a bit more than the mean did, 20 basis points in the median versus 15 for the mean. a larger relative decline isn ’ t unusual ; averaging across the quarterend dates in march, june, and september 2015, the median declined by 7 basis points while the mean declined by 6. the median declines more