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

. other sivs were independently managed. with hindsight one fairly obvious solution would have been for banks to consolidate, for accounting and regulatory purposes, any such vehicles that they sponsored, managed and provided credit lines for. looking ahead, banks should perhaps quit using such devices to move assets off balance sheet while retaining de facto control. supervisors should be alert to such devices in future. they might consider whether consolidation for these and other vehicles could be avoided only where a sponsor had made it 100 % clear that they would not provide any support in any circumstances. securities dealers the case of securities dealers is different – in that they were real businesses which had developed over many decades. after big bang – in the 1970s in the us, and a decade later in the uk – their balance sheets grew. the authorities had always been clear that they competed with commercial banks in credit markets ( including before the repeal of glass steagal ), but they were not regarded as monetary institutions and so they did not have access to central banks ’ liquidity - insurance facilities and were not regulated alongside commercial banks. it turned out that this was a misthink ; or, rather, that over time it was overtaken by developments in parts of their business. during the crisis, the big us securities dealers suffered a liquidity run on two fronts. repo markets closed to some of them ; i shall come back to that later. also, hedge fund prime - brokerage clients withdrew surplus balances ( and transferred trading positions, with the associated collateral, to banks ). some dealers had been using them to finance their business, effectively on - lending “ deposits ” into the credit and securities markets. and some of them could not easily raise the funds to repay. as a sense of this spread, the demand for repayment inevitably intensified, into a panic. whatever the details of the law in the us, the uk and elsewhere, the dealers ’ prime brokerage services seem to have taken them into the core monetary territory of banks. lehmans was running a bank, perhaps without knowing it. the dealers, or at least their prime brokerage outfits, should have been banks, with access to the central bank ’ s window and subject, at entity and group level, to us led bank regulation. alternatively, they should not have been providing de facto demand deposit services and using those deposits to finance themselves. the lesson here is to look at the economic substance, not the legal form. securities lending most accounts of the crisis give a headline