In Banking on a Revolution: Why Financial Technology Won't Save a Broken System, U-M Professor Terri Friedline calls attention to systemic issues in society and the economy. Rather than separately dissecting issues, Professor Friedline groups these systemic issues under the term financialized racial neoliberal capitalism. Instead of pretending that institutions and philosophies are race and gender blind, she demonstrates how racism and patriarchy have infected the world in which we live.
Professor Friedline evaluates financialized racial neoliberal capitalism through an intersectional lens. The history of racism in America is well-documented, but she highlights that the history of finance and banking in America has its roots in slavery. Institutions including Wells Fargo and BNY Mellon have their roots in banks that profited from the slave trade. For a century after slavery was outlawed in the United States, banks continued to pursue explicitly racist policies, including redlining, that served to exclude black people from owning property and accumulating wealth.
As wealth inequality in America continued to rise in the twentieth century, so did the philosophy of neoliberalism. Individualism, a key part of neoliberal politics, pushes the narrative that the primary driver of financial success and social status is hard work: anyone can be successful if only she is smart and determined enough to pull herself up by her proverbial bootstraps. Individualism appeals to the predominantly white male population that has benefitted from generational wealth and access to financial tools, careers, and institutions. However, neoliberalism is willfully ignorant of the continued benefits that white households enjoy as a result of generations of de jure privilege.
While many see the rise of FinTech as a major opportunity to right the wrongs of racial inequality, Professor Friedline's historical evaluation suggests that this conclusion is an overly-optimistic prognosis. Since the 1980s, finance has been one of the fastest growing parts of the U.S. economy. With this rapid financialization of the economy, one might reasonably assume that there has been greater access to higher quality financial services. Reality tells a different story, one where wealth has been mined from black and brown communities to benefit high profile financiers, a class composed almost exclusively of white men.
Professor Friedline proceeds chapter-by-chapter to demonstrate how discriminatory practices by various institutions, ranging from the federal government to payday lenders, have operated to perpetuate racialized and gendered wealth and power inequality. Brick and mortar banks choose to locate their operations away from black and brown communities, resulting in much-needed services being provided by predatory payday and auto-loan service providers. Mortgage providers push subprime loans on black and brown borrowers even when they are qualified for safer and lower-interest mortgages. When for-profit colleges and universities targeted women of color with false promises of higher earnings, the Department of Education under Betsy DeVos fought to protect the investors in those universities and denied relief to the students who had been swindled. Generations of discriminatory housing policies—pushed by financial institutions and all levels of government—have pushed already marginalized people into poor neighborhoods and areas that are more susceptible to natural and man-made disasters. Senior positions in financial institutions and government are still disproportionately filled by white men, and these institutions have done little, if anything, to correct the systemic injustices they perpetuate. Even progressive movements, such as Occupy Wall Street, do not honestly grapple with the role that racism plays in American capitalism. Professor Friedline reaches the inevitable conclusion that institutions are designed to succeed when women and people of color fail; financialization has not promoted equity, but has stood as the vanguard of inequality.
In a June 2020 memo, Charles Scharf, the CEO and President of Wells Fargo, offered, "the unfortunate reality is that there is a very limited pool of Black talent," as an excuse for the lack of diversity at Wells Fargo, particularly among the bank's leadership. Through the lens of financialized racial neoliberal capitalism, this viewpoint is lamentable but predictable. Professor Friedline does not deny that the financial industry is on the precipice of a technological revolution. But without a broad conscientious effort throughout the financial sector, this technological revolution will merely serve as another tool gatekeepers can use to exclude the most disadvantaged members of our society.
Nick Adkins is a student at the University of Michigan Law School and a research assistant for the Center on Finance, Law & Policy.