When Roger Ferguson was a young child, his parents – his mother a teacher and father a government worker – could hardly have imagined that their son would go on to become one of the most powerful people in the history of the U.S. financial system.
Ferguson, President and CEO since 2008 of financial service organization TIAA, managing $1.1 trillion in assets, was Vice Chairman of the Federal Reserve from 1999 to 2006.
[Learn How To Build Wealth at TIAA.org]
“When you think about the Federal Reserve, the Vice Chairman is logistically the most important position,” says Art Hogan, Chief Market Strategist and Managing Director at investment banking firm National Holdings Corporation.
Hogan went on to put the power of the Fed Vice Chair position into context.
“The Federal Reserve, the world’s largest central bank sets the level of interest rates that the rest of the world depends on. Those rates affect every aspect of our lives from what we pay for mortgages and loans to the value of a dollar.”
“The Fed has the daily job of protecting the U.S. economy, making them more important than the combination of the White House, House of Representatives, and the Senate combined in the eyes of the financial world. That’s why markets around the globe pay more attention to the U.S. Federal Reserve than anything else.”
Becoming Roger Ferguson
How did a Black man rise to such heights in the financial sector – an industry where only 6.3% of lower-, mid- and senior-level management positions are held by African-Americans according to the Government Accountability Office (GAO)?
Ferguson says it started at home.
“My Father was very focused on financial matters, but he didn’t have any money at all…He was a government worker and not very highly compensated. He grew up in the Depression, and the Depression got him very interested in how banks work,” said Ferguson.
“My Mother was very interested in education…I learned from her that education was the one thing that society can’t take away from you regardless of what color you are. All of those things came together and I fell in love with economics, got very interested in the Federal Reserve, and had the good fortune to be appointed in 1997 as the third Black governor and in 1999 as the first Black Vice Chairman.”
Closing the Wealth Gap
Ferguson’s career journey has given him unique insights into such issues as the wealth gap between Blacks and Whites.
As we celebrate the life and legacy of the great Reverend Dr. Martin Luther King Jr. this week, it’s interesting to note that in 1968, when Dr. King launched The Poor People’s campaign, aimed at providing economic rights for Blacks, Latinos, Native Americans and poor Whites, the average wealth of White families was 7 times higher than Black family wealth. According to the Urban Institute, that number is the same or higher today.
Ferguson says there are three primary areas that need focus in order to close that gap.
“One is closing the income gap. The wealth gap is driven by the fact that we don’t have the income stream. Second is using that income smartly, which is about financial literacy – learning how to manage the money you have be it small or large amounts. And the third thing is to know where the assets are that create wealth. Blacks are under invested in a couple of things that have really drive wealth creation, particularly in the last decade. We are under invested in things like equities (stocks) versus other groups.”
[Learn How To Build Wealth at TIAA.org]
While Ferguson stressed the importance of education, particularly finishing college and taking on manageable levels of student loan debt, he acknowledged that even when we do everything right, Blacks have less successful financial outcomes.
“The sad truth is that racial discrimination has been a cancer on society from the very, very beginning…It is absolutely true that at every job level for the same education, Blacks tend to have less outcomes and lower wages, so let’s be honest about that,” said Ferguson.
“Having said that, I don’t let the foolishness of another group of people undermine my own sense of what I can do.”
While the numbers tell one tale, the reality is that Blacks are a study in resilience and are financially literate in a way that can teach all groups about the X factor in wealth building, or as Dr. King stated the ‘content of our character.’
Despite systemic discrimination, despite our nation’s history of racism, Nielsen Research found that Black households in the U.S. at every annual income level above $60,000 are one of the fastest growing income groups in the country. In 2018, Black households representing the middle class—$50,00 to $150,00—was 36%compared to 22% in 1967, and 4% of the upper middle class—$150,00 to $200,000 compared to zero percent during the same periods.
Black women are majority owners over a million businesses: $42 billion in sales, $7.7 billion in payroll, and we all know of Black families and single parents who manage to find a way to pay for food, clothes, and create opportunities for their children on minimum wage or less.
Black women have minority ownership in more than 1.5 million businesses with over $42 billion in sales, and 7.7 billion in payroll. According to The State of Women-Owned Businesses Report, as of 2019 women of color account for 50% of all women-owned businesses and generate $422.5 billion in revenue. Black women business owners generated $63 million in revenue.
Ferguson, Dr. King and others say that one of the most important things for Blacks to embrace is that they are a study in resilience and that they have power.
“Individually we are poor when you compare us with White society in America…but collectively we are richer than most nations of the world.” – Dr. Martin Luther King Jr. I’ve Been To The Mountaintop Speech.
Click here to watch the full Breakfast Club interview!