Digital Securities: Access to Capital and Market Liquidity SPV’s & SPE
Some of the reasons for creating special-purpose entities are as follow:
- Securitization: SPEs are commonly used to securitize loans (or other receivables).[3] For example, a bank may wish to issue mortgage-backed security whose payments come from a pool of loans. However, to ensure that the holders of mortgage-backed securities have the first priority right to receive payments on the loans, these loans need to be legally separated from the other obligations of the bank. This is done by creating an SPE, and then transferring the loans from the bank to the SPE.
- Risk sharing: Corporates may use SPEs to legally isolate a high risk project/asset from the parent company and to allow other investors to take a share of the risk.
- Finance: Multi-tiered SPEs allow multiple tiers of investment and debt.
- Asset transfer: Many permits required to operate certain assets (such as power plants) are either non-transferable or difficult to transfer. By having an SPE own the asset and all the permits, the SPE can be sold as a self-contained package, rather than attempting to assign over numerous permits.
- To maintain the secrecy of intellectual property: For example, when Intel and Hewlett-Packard started developing IA-64 (Itanium) processor architecture, they created a special-purpose entity that owned the intellectual technology behind the processor. This was done to prevent competitors like AMD from accessing the technology through pre-existing licensing deals.[citation needed]
- Financial engineering: SPEs are often used in financial engineering schemes that have, as their main goal, the avoidance of tax or the manipulation of financial statements. The Enron case is possibly the most famous example of a company using SPEs to achieve the latter goal.
- Regulatory reasons: A special-purpose entity can sometimes be set up within an orphan structure to circumvent regulatory restrictions, such as regulations relating to the nationality of ownership of specific assets.
- Property investing: Some countries have different tax rates for capital gains and gains from property sales. Letting each property be owned by a separate company can mean a lower tax bill. These companies can then be sold and bought instead of the actual properties, effectively converting property sale gains into capital gains in order to pay less tax.
Assure’s SPV in many ways mirrors the structure of SPV’s used by venture funds. They fill an allocation by finding additional investors and pooling them in a separate entity from the venture fund’s core fund. All capital is usually called upfront, eliminating the need for capital calls through the life of the fund. Other key features include:
- Removing audit and financial statement obligations
- Allowing for unique waterfall provisions and economics specific to an investment
- Giving investors the opportunity to choose specific investments
- Allowing investors to pool capital to meet minimum investment requirements
- Providing the SPV sponsor with carried interest or other performance fees
A mutual-benefit nonprofit corporation or membership corporation is a type of nonprofit corporation in the US, similar to other mutual benefit organizations found in some of the common-law nations, chartered by the government with a mandate to serve the mutual benefit of its members.
A mutual-benefit corporation can be non-profit or not-for-profit in the United States, but it cannot obtain IRS 501(c)(3) non-profit status as a charitable organization.[1] It is distinct in U.S. law from public-benefit nonprofit corporations, and religious corporations. Mutual benefit corporations must still file tax returns and pay income tax because they are not formed for a purpose that is meant to benefit the general public (unlike public-benefit nonprofit corporations) but rather to provide an association of people with a common benefit. Due to its private purpose, a mutual benefit corporation pays the same taxes as a regular for-profit corporation (C corporation tax rates). However, the IRS still allows for tax exemptions for certain types of mutual-benefit nonprofits (501(c)(6)).
Mutual benefit corporations are formed for common gain purposes such as providing insurance for members (many insurance companies still have “mutual” in their names, though many have since adopted other corporate forms), establishing a community financial institution, managing common property, or promoting the social or economic welfare of member individuals or organizations (for example through trade groups, professional organizations or business districts). Some mutual water companies are organized as mutual benefit corporations; an electric membership corporation is another example.
Mutual benefit corporations have their roots in the benefit societies that sprang up to offer services and solidarity to workers during the Industrial Revolution, though most today do not have any particular connection to labor movements.
Prohibited Assignments to REMICs
“As trust documents are explicit in setting forth a method and date for the transfer of the mortgage loans to the trust and in insisting that no party involved in the trust take steps that would endanger the trust’s REMIC status if the original transfers did not comply with the method and timing for transfer required by the trust documents, then such belated transfers to the trust would be void.”[15] “If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.”[16]
Permitted investments
Permitted investments include cash flow investments, qualified reserve assets, and foreclosure property.
Cash flow investments are temporary investments in passive assets that earn interest (as opposed to accruing dividends, for example) of the payments on qualified mortgages that occur between the time that the REMIC receives the payments and the REMIC’s distribution of that money to its holders.[17] Qualifying payments include mortgage payments of principal or interest, payments on credit enhancement contracts, profits from disposing of mortgages, funds from foreclosure properties, payments for warranty breaches on mortgages, and prepayment penalties.[18]
Qualified reserve assets are forms of intangible property other than residual interests in REMICs that are held as investments as part of a qualified reserve fund, which “is any reasonably required reserve to provide for full payment of” a REMIC’s costs or payments to interest holders due to default, unexpectedly low returns, or deficits in interest from prepayments.[19] REMICs usually opt for safe, short-term investments with low yields, so it is typically desirable to minimize the reserve fund while maintaining “the desired credit quality for the REMIC interests.”[20]
A foreclosure property is a real property that REMICs obtain upon defaults. After obtaining foreclosure properties, REMICs have until the end of the third year to dispose of them, although the IRS sometimes grants extensions.[21] Foreclosure property loses its status if a lease creates certain kinds of rent income, if construction activities that did not begin before the REMIC acquired the property are undertaken, or if the REMIC uses the property in a trade or business without the use of an independent contractor and over 90 days after acquiring it.[22]
Artificial Intelligence Could Be a $14 Trillion Boon to the Global Economy — If It Can Overcome These Obstacles
Industry 4.0 is the catch-all term for the implementation by businesses of big data, improved robotics, and artificial intelligence systems. And it’s still expected to be a major driver in global growth over the next decade, and beyond. Yes, even in manufacturing.
By 2035, this A.I.-powered push will provide a $14 trillion boost to the global economy, consulting giant Accenture predicts. Source https://fortune.com/2019/10/09/artificial-intelligence-14-trillion-boon-only-if-overcome-one-thing/
Actually, the deficit is on track to hit $1.2 trillion this year, but what’s $200 billion among friends?
Seriously, what is it? To the average person, a number that big probably doesn’t mean much. At some point long before the hundred-billion-dollar mark, large numbers simply become figures on the page, well beyond human scale and intuitive understanding. And yet as the discussion about the economy and the impressive numbers that come along with it continue to dominate the news, it may be more important than ever to try to understand. Is a $700 billion financial-industry bailout a lot? Is a $775 billion economic-stimulus package enough? (See the worst business deals of 2008.)
Unfortunately, our puny human brains aren’t particularly up to the task. Go back thousands of years and think about the simpler times of human existence. “We had a few friends; we had to be scared of a few animals. A trillion didn’t come up very often,” says Temple University mathematician John Allen Paulos, whose book Innumeracy addresses the topic. “There is a sense that when numbers are too big or too small, the brain just shuts off,” says Colin Camerer, a professor of behavioral economics at the California Institute of Technology. “People either don’t think about it at all or there is fear, an exaggerated reaction.”
The genius of our numbering system is that we can signify massive quantities in short spaces. One billion takes no longer to write than one million does, points out Andrew Dilnot, an economist at Oxford University and author of The Numbers Game.
But that similarity trips us up when it comes time to imagine how those figures translate to the real world, where three more zeros make all the difference. “My favorite way to think of it is in terms of seconds,” says David Schwartz, a children’s book author whose How Much Is a Million? tries to wrap young minds around the concept. “One million seconds comes out to be about 11½ days. A billion seconds is 32 years. And a trillion seconds is 32,000 years. I like to say that I have a pretty good idea of what I’ll be doing a million seconds from now, no idea what I’ll be doing a billion seconds from now, and an excellent idea of what I’ll be doing a trillion seconds from now.”
A common strategy for beginning to understand big numbers is to devise visual representations. One time, sitting at a baseball game in Philadelphia, Paulos started counting seats along the first-base line. Multiplying the number of seats in a row by the number of rows, Paulos came up with a section of the stadium that he figured contained about 10,000 seats — an image he can now think back to whenever a person starts talking about tens of thousands of a particular thing. When numbers get too large, though, that method breaks down. A stack of one trillion $1 bills would reach more than a quarter of the way to the moon — replacing one incomprehensible thought with another doesn’t do much good.
We next move on to more formal manipulations. When trying to comprehend a trillion-dollar deficit, you might calculate how much money that represents per person in the U.S. One trillion dollars divided by 300 million Americans come out to $3,333. Then your search for a useful comparison. A convenient — though perhaps unsettling — comparison is to the amount of credit-card debt carried by the average person in this country. That figure is $3,245. “So a good way of thinking about government debt financing is that it’s similar to what the average person is doing,” says Camerer.
In The Numbers Game, Dilnot and his co-author, journalist Michael Blastland, suggest dividing government spending by the number of citizens and the number of weeks in a year. A $700 billion bailout thereby translates into $45 per week for each American man, woman, and child. Going one step further, it comes out to $6 a day. Are you willing to pay $6 a day to have a functioning financial system? Source http://content.time.com/time/business/article/0,8599,1870699,00.html
— Loans and guarantees to businesses, state and local governments: $500 billion. Includes up to $50 billion for passenger airlines, $8 billion for cargo carriers, $17 billion for “businesses critical to maintaining national security.” Companies accepting loans may not repurchase outstanding stock; must maintain their employment levels as of March 13, 2020 “to the extent practicable”; and bar raises for two years to executives earning over $425,000 annually. Companies are not eligible for loans if top administration officials, members of Congress, or their families have 20% control.
— Small businesses: Includes $350 billion in loans for companies with 500 employees or fewer, including nonprofits, self-employed people, and hotel and restaurant chains with no more than 500 workers per location. The government provides eight weeks of cash assistance through loans to cover payroll, rent, and other expenses, much of which would be forgiven if the company retains workers. Also, $17 billion to help small businesses repay existing loans; $10 billion for grants up to $10,000 for small businesses to pay operating costs.
— Direct payments to people: One-time payments of $1,200 per adult, $2,400 per couple, $500 per child. Amounts begin phasing out at $75,000 for individuals, $150,000 per couple.
— Education: $31 billion. Includes $13.5 billion for states to distribute to local schools and programs, $14 billion to help universities and colleges.
— Food and agriculture: $15.5 billion for food stamps; $14 billion for supporting farm income and crop prices; $9.5 billion for specific producers including specialty crops, dairy, and livestock; $8.8 billion in child nutrition. Money for food banks, farmers’ markets.
— Social programs: Includes $3.5 billion in grants for child care and early education programs; $1 billion in grants to help communities address local economic problems; $900 million in heating, cooling aid for low-income families; $750 million for extra staffing for Head Start programs.
— Economic aid to communities: $5 billion in Community Development Block Grants to help state and local governments expand health facilities, child care centers, food banks, and senior services; $4 billion in assistance for homeless people; $3 billion for low-income renters; $1.5 billion to help communities rebuild local industries including tourism, industry supply chains, business loans; $300 million for the fishing industry.Source https://www.fox2detroit.com/news/breaking-down-how-the-2-2-trillion-coronavirus-stimulus-package-will-be-dividied-up
In the next few days, Washington will almost certainly reach a deal to raise the debt ceiling above $14 trillion, which is the current level of total government debt. Who owns all those promised payments?
We do, mostly. More than half of the total national debt is owed to the Federal Reserve, “intragovernmental holdings,” such as the Social Security Trust Fund, domestic investment accounts, and U.S. households. Within the more regularly cited category of “public debt” held outside the U.S. government, foreign sovereigns and investors own about half.
Who owns what? Here, let us break that down for you:
Assets run by the world’s 500 largest fund managers hit $100tn (£77tn) for the first time last year, according to research from the Thinking Ahead Institute.
The Willis Towers Watson-backed not-for-profit research house estimated portfolio assets climbed 15% from the previous year’s high of $91.5tn.
Globally, fund assets also continued to consolidate however, the 20 biggest managers running 43% of the total, up from 40% in 2010 and 38% in 2000.
Roger Urwin, the co-founder of the institute, said: ‘The investment industry has always been dynamic, but the pace of change is speeding up, manifested notably through consolidation.
‘In addition, rapidly advancing technology is changing the shape of mandates and producing products that require less governance and are more streamlined.’ Source:https://citywire.co.uk/wealth-manager/news/the-100-trillion-club-the-worlds-20-largest-asset-managers/a1415316
So, who are the top 20 money managers dominating global AUM?
“We as business leaders can step up and solve many of these economic problems for people,” Frazier added, saying that education, particularly financial literacy, is the “great equalizer.”
“Damages is a normal factor in a capitalist society for when you have been deprived of certain rights,” he said. “If this money goes into pockets like the [coronavirus] stimulus checks … that money is going to return back to the economy” in the form of consumption. There will also be more black-owned businesses, he added. Source: https://www.cnbc.com/2020/06/01/bets-robert-johnson-calls-for-14-trillion-of-reparations-for-slavery.html
The alternative assets industry is predicted to grow to $14 trillion in size by 2023, according to a new report by data intelligence provider, Preqin.
Published this month (October 2018) and entitled “Future of Alternatives”, Preqin’s report expects that the alternative assets industry — comprising private capital and hedge funds — will reach $14 trillion in assets under management by 2023, a hefty raise from the industry’s current hold of $8.8 trillion in assets as of the end of 2017. The figure is predicted to expand by 59% over the next five years (a compound annual growth rate of 8%).
Data also suggests that private equity funds will overtake hedge funds to become the largest alternative asset class. They are projected to grow by 58%, rising from their current AUM of $3.1 trillion to $4.9 trillion, while hedge funds will post lower growth of 31% to rise from $3.6 trillion to $4.7 trillion in assets.
The alternative assets industry is predicted to expand across all asset classes over the next five years. Levels of growth expected within the asset classes vary, with the smaller asset classes set for sharper growth, while the more established markets are expected to continue to attract larger amounts of capital. As of December 2017, the private equity and hedge fund industries represent a combined $6.7 trillion, or 75%, of the $8.8 trillion alternative assets industry.
While industry participants are predicting this share to decrease over the next five years to 69%, as other alternative asset classes look set for faster growth, these industries are expected to contribute the majority (56%, $2.9tn) of the growth in dollar terms over the next five years.
The private debt market is predicted to double in size, reaching $1.4 trillion in 2023, and, in doing so, overtake the real estate market to become the third-largest alternatives industry.
Only the hedge fund industry is expected to grow at a slower pace than the real estate industry over the next five years, at 31% and 50% respectively. Representing $0.7 trillion (8%) of the alternative assets industry, the real assets universe is predicted to be the fastest-growing area of alternatives over the next five years. Driven by natural resources, real assets are expected to represent 13% of the $14 trillion alternatives industry by 2023 as an industry of $1.8 trillion, 1.5x the size of the combined natural resources and infrastructure markets of 2018.
Preqin chief executive, Mark O’Hare, said: “Fourteen trillion dollars may sound like an overly ambitious prediction for the alternative assets industry, but it is lower than the average growth rate we’ve seen in the past decade.”
O’Hare cited several key factors set to drive growth including the proven long-term performance of alternatives, growing opportunities available in private debt, and the rise of emerging markets in which alternatives funds are already entrenched. “If anything,” he said, “we believe that $14 trillion is more likely to be too low than it is to be too high.”
The report stated additional factors affecting the rise of alternative assets for reasons including technology (especially blockchain) advances, which will facilitate private networks and help investors and fund managers transact and monitor their portfolios, and reduce costs compared to public markets. Moreover, the report stated that investors increasingly want more control and influence, as well as the ability to add value — and private capital enables this for investment. Source: https://iclg.com/ibr/articles/8707-alternative-assets-industry-set-to-hit-14-trillion-by-2023
Last week, the House Judiciary Subcommittee on the Constitution, Civil Rights, and Civil Liberties held the first hearing in a decade on H.R. 40, the Commission to Study and Develop Reparation Proposals for African-Americans Act. The bill was first introduced in 1989 by former Congressman John Conyers (D-MI). Conyers reintroduced the bill each year until his retirement in 2017 — and each year, the bill languished in Congress.
The bill’s focus was not to pass reparations, but to research, the impact slavery had on black Americans and develop proposals for redress.
‘Payments are not the focus of H.R. 40’
The subject of reparations has remained a political hot potato, with presidential candidates Sen. Kamala Harris (D-CA), Sen. Cory Booker (D-NJ), Sen. Elizabeth Warren (D-MA), Beto O’Rourke, and Julian Castro supporting some form of reparations. But while the Democratic-controlled House is willing to hear the bill, it seems likely that a bill on reparations will die in the Senate where Republicans have a majority. When asked about the hearing, Senate Majority Leader Mitch McConnell (R-KY) said he opposed the measure, given that “not one of us currently living are responsible” for slavery.
Wealth inequality between the races has only increased throughout the years. In 2016, according to the Inequality Project at the Institute for Policy Studies, the U.S. median wealth — or the total of all assets — for white families was just under $150,000, compared to the national median wealth of $82,000. In 2016, the median figure for African-Americans stood at roughly $3,500. That’s less than half the median black wealth 35 years ago.
Economist Larry Neal tried to tabulate the price tag of unpaid wages to slaves from 1620 to 1840. In 1983 when he calculated the number, he estimated that slaves were owed $1.4 trillion in unpaid wages, or $3.6 trillion today. Economist James Marketti estimated that unpaid wages totaled somewhere between $3 trillion and $5 trillion dollars — again in 1983. Today, when accounting for inflation that number leaps from $7.7 trillion to $12.9 trillion.
SAN FRANCISCO, June 6, 2018 (Newswire.com) — Taulia, the global pioneer of technology-enabled working capital solutions today announced that it is hosting two working capital summits — the biggest of their kind seen in North America. The summits will bring together business leaders from Global 2000 companies to explore how the latest technology innovations in supplier financing are transforming the way companies across the supply chain free up and deploy cash.
The first of the two events will be held in NASDAQ Entrepreneurial Center in San Francisco on October 10, 2018, and the second on October 18, 2018, in the Virgin Hotel, Chicago.
“This initiative falls right in line with our mission of offering mentorship resources that fast-growing entrepreneurs can use in real-time to scale their companies,” said Nicola Corzine, Executive Director of the Nasdaq Entrepreneurial Center. “Access to mentorship and capital are probably the two biggest challenges we hear about from business leaders, so we’re expecting quite a program.”
Notes to editors: Taulia delivers working capital solutions that make it easy for businesses to free up cash, accelerate payments, and improve supply chain health. Since its founding in 2009, Taulia has envisioned a world where every business thrives by liberating cash. Today, Taulia’s game-changing technology powers a network connecting 1.5 million businesses across 168 countries and has accelerated more than $80 billion in early payments. Using its AI-powered platform, businesses now have the option to choose when and how to pay and get paid. It sounds simple, but Taulia’s painless process provides both buyers and suppliers the chance to rocket their cash — cash to fuel economic growth all over the world. It’s a win-win for everybody. Taulia is headquartered in San Francisco with locations across the United States, the UK, and Europe. Source https://www.newswire.com/news/taulia-addresses-14-trillion-trapped-in-supply-chains-20511633
Every quarter, the Federal Reserve puts out the Financial Accounts (aka “Z1” or “Flow of Funds”), which provide economy-wide aggregates for nearly every kind of asset and liability there is. Every three years, they put out the Survey of Consumer Finances (SCF), which is a household survey that records many of the same kinds of assets and liabilities that are in the Financial Accounts. In a perfect world, the assets and liabilities in the SCF would sum up to the aggregates in the Financial Accounts, but for various reasons they do not.
Recently, the Federal Reserve released a new data series called the Distributive Financial Accounts, which combine the Financial Accounts and the SCF to provide quarterly estimates of the distribution of wealth in America that do sum to the aggregates in the Financial Accounts. The series goes back to 1989, the first year the modern SCF was administered, and runs to the fourth quarter of 2018, the last quarter for which there is Financial Accounts data.
The insights of this new data series are many, but for this post here I want to highlight a single eye-popping statistic. Between 1989 and 2018, the top 1 percent increased its total net worth by $21 trillion. The bottom 50 percent actually saw its net worth decrease by $900 billion over the same period.
To derive this, I initially take the nominal net worth aggregates for each wealth group that is provided by the Federal Reserve and subtract out consumer durables. Consumer durables are things like cars and fridges that many academics who work on wealth distributions do not consider wealth. The average person in the top 1 percent owns around 32x as many consumer durables (in dollar terms) as the average person in the bottom 50 percent owns. So the subtraction of them reduces the inequality between the top 1 percent and bottom 50 percent.
From there, I adjust the 1989 figures to 2018 dollars using the CPI-U-RS price index. This is what the Federal Reserve also does to adjust wealth figures overtime in its Survey of Consumer Finances reports.
What the final product reveals is 2018 where the top 1 percent owns nearly $30 trillion of assets while the bottom half owns less than nothing, meaning they have more debts than they have assets. This follows from 30 years in which the top 1 percent massively grew their net worth while the bottom half saw a slight decline in its net worth.
For starters, a much higher allocation of global savings held by institutional and private investors will be needed. According to the OECD, “Institutional investors (investment funds, insurance companies, and pension funds) are major collectors of savings and suppliers of funds to financial markets.” In OECD countries alone, institutional investors represent nearly $100 trillion of assets under management. Distributed ledger technologies (DLTs) will play an increasingly important role in unlocking such capital by providing efficient, secure, and liquid investment vehicles.
Funding infrastructure with smart contracts and distributed ledgers
Digital securities built on a DLT can expand access to potential investors across jurisdictions, using smart contracts to programmatically enforce compliance and provide access to liquidity via 24/7 global markets, providing investors secondary liquidity and instant settlement. Digital securities provide all of the same features and protections of traditional security, with added security and compliance.
DLT-enabled investment vehicles and trading platforms will transform infrastructure project finance by surfacing not only more potential investors but also those with varying risk/return thresholds. This allows more efficient discovery, investment, and trading among investors across the infrastructure lifecycle, from development through to operation.
This is important because greenfield infrastructure projects do not generate revenue and the highest face risk of delay during planning and construction. Digital securities provide a means for investors willing to enter early-stage greenfield projects, potentially capturing higher returns while tolerating higher risk. Unlike traditional private securities, such risk can be partially mitigated because digital securities investors can access secondary liquidity via regulated alternative trading systems. For example, a family office or hedge fund can get involved early in a project during the primary offering when the equity risk premium is highest. Access to secondary liquidity important because it then allows such an investor to exit by trading to an institutional investor in search of long-dated assets and stable cash flows.
In the United States, SEC-regulated Alternative Trading Systems such as Tzero, OpenFinance, and Templum provide secondary liquidity for digital securities investors by enabling the trading, clearing, and settlement. Not only does this further broaden the pool of available investors, but it also allows for a smoother transfer of securities from higher- to lower-risk investors.
Programmable compliance-awareness
Through smart-contract-enforced business and compliance rules, digital securities can provide access to a global pool of potential investors at a lower cost. For example, a smart contract governing the issuance of digital securities to US investors can auto-enforce restrictions on their transfer to non-accredited investors, in line with local securities regulations. Additional requirements can be encoded into the smart contract ensuring compliance with similar jurisdiction-specific regulations applied around the world.
Fewer intermediaries and lower costs
Digital securities are “located” on a distributed ledger across thousands of computing nodes and are not physically stored like a paper stock certificate. In many ways, distributed ledger technology removes the need for legacy market structures organized around storing, moving, and insuring physical assets. As a result, the potential to significantly reduce costs and intermediaries presents additional benefits.
Longer-term, distributed ledger technology allows us to reimagine how capital can work. It will take a concerted and collaborative effort by the public and stakeholders to build the next generation of capital markets from the ground up. Though the theoretical benefits can offer us hope, the urgency of global systemic risk we face requires inspired and concerted action today.
Despite our obsession with digitally rendered realities, the foundations of modern civilization cannot long stand without the physical infrastructure providing access to water, energy, food, transport, and communications. While the sheer resilience and adaptability of our species are remarkable, not addressing widening poses a grave systemic risk for both the developing and developed world. Source: Peter Lyons is Chief Innovation Officer at Atomic Capital a digital investment bank uniting growth capital and exceptional investments across the infrastructure, software, and life sciences sectors.https://www.weforum.org/agenda/2019/01/digital-securities-trillion-dollar-infrastructure-gap/
Contract With Black America:
For qualified Black Americans, Federal Reserve to allow a one-time interest-free loan for homeownership. Federal Reserve currently provides corporations with free or 1% loans and is flooding the market with liquidity. Instead of it all going to prop up the stock market, help create Black family wealth through property ownership. • Federal Reserve to adopt a view employing Modern Monetary Theory with the goal of maximizing employment, housing, and educational opportunities, as well as improving quality of living for Black and poor Americans. Spending will be constrained only when ACTUAL inflation appears. • Federal plan of “Baby Bonds” proposed by Darrick Hamilton will provide every child born into lower-wealth families with accounts that will start with $1,000 and would continue to funded by the government based on family wealth up to $46,500 as proposed by Senator Booker and Representative Pressley. Accounts to be managed by the Treasury and use of funds restricted to asset enhancing actions such as buying homes, starting businesses, and funding education. • Change the decades-old credit scoring model to mandate consideration of consumer data on rent, utility, and cellphone bill payments
Venture Capital and Private Equity funds that take money from police unions or other public entities must invest 13.4% of their total funds in Black-owned businesses. According to Axios, only 1% of VC-backed founders were Black between 2013–2018. • Government Pension Funds. Federal and State pension funds control over a trillion dollars. They must allocate 13.4% of their investments into Black-owned enterprises and businesses.
Mandatory funding of “Black Studios” by the largest Hollywood studios, record companies, and Television studios and Networks to compensate for years of lack of support, stereotyping, and damage to black culture. Each will be required to fund an amount yearly. Black Studios will own and produce content by Black creators and will be run primarily by Black leadership. Content can be licensed to major studios. For a race to thrive, it must be able to create art that reflects its own views of the world. Racism still runs rampant through our society and Hollywood is providing the instruction manual. • Licensing of public airwaves to broadcast networks such as NBC, FOX, CBS, and ABC MUST require Black produced content equal to 20% of the total content on the network as measured by time. Time slots MUST be of similar quality to other content. The same applies to radio stations and any other media that were given access to publicly licensed airwaves by the FCC. • Minimum 13.4% Black cast and crew on all major Television and Film productions. The crew requirement cannot be waived but casts that are overwhelmingly White, Black, Hispanic,
According to the real estate app Redfin, African American families have lost out on at least $212,000 in personal wealth over the last 40 years because their home was redlined. The results of these policies leave African American families with 10% of the net wealth of white families.
Economic Impact Through the institution and racist enforcement of laws and policies such as The Homestead Act of 1862, the Social Security Act of 1935, the GI Bill of 1944, and the Federal Housing Administration loans — and its related “redlining’’ — of the 1930s-1960s, White Americans were granted advantages and opportunities that African Americans were not. All but 2 percent of the $120bln of government-backed mortgage loans that were awarded were given to whites. This reality undeniably helped create the incredible wealth gap between blacks and whites today. According to the Federal Reserve, the median white household ($171k) has nearly 10 times more wealth than the median black household ($17.6k). A white person without a high school diploma has nearly as much wealth as a household led by a black person with a bachelor’s or advanced degree. A household led by a white person with a high school diploma has more wealth than a household led by a black person with a bachelor’s or advanced degree
Lingering Costs of Race-Based Policy According to the real estate app Redfin, African American families have lost out on at least $212,000 in personal wealth over the last 40 years because their home was redlined. Because of these historic wrongs, masses of African Americans need economic revitalization and relief, including though not limited to more homeownership, less debt, better credit, and higher incomes.
Recognizing that the GDP of the overall US economy is $20.5trln, we are not suggesting the above amounts be disbursed as a one-time lump sum payment which could adversely affect the American economy and treasury functions, not to mention cause staggering inflation. Instead, the above-calculated amounts could be distributed in several forms including annual cash installments over a 10-year period, tax breaks, tax credits, interest-free loans to spur homeownership, and/or funding the additional proposals made below.
Mandate that descendants of African-American veterans of WWII who were unable to capitalize on the opportunities afforded by the GI Bill of 1944–1956 should receive the NPV of those benefits today calculated at a 5% interest rate
Start Trust fund for asset-building grants for homeownership, education, business start-up funds, or vouchers for the purchase of financial assets along with a governing body to establish rules and protections for proper allocation of capital for long-term development
Create a pension system for purposes of investment and growth where only interest payments are currently accessible (a variation of this was earlier suggested by Callie House and the 1898 Mutual Relief, Bounty, and Pension Association)
Make a significant capital investment in financial infrastructure, as currently 70% of African-American communities don’t even have a branch or bank of any type and are subject to predatory lending
Mandate private equity, pension funds, mutual funds, and venture capital firms to divest from privatized prisons and to be accountable for increasing black venture capital allocation from the current 1% to one closer to equality with the black population (13%) within a given number of years
Mandate corporations through tax incentives or law to spend a percentage of their profits with black-owned businesses over a predetermined period of time. For Example: If the tech and banking sectors were to spend just 2% of their net profits for the next 10 years, that would equate to $25bln and $19.4bln respectively. (Forbes “The 2% Solution Inside Billionaire Robert Smith’s Bold Plan” June 19, 2020)
Lotteries were used not only as a form of entertainment but as a source of revenue to help fund the colonies. Each of the 13 original colonies established a lottery system to raise revenue • Two major lottery games, Mega Millions and Powerball, are both offered in nearly all jurisdictions that operate lotteries and serve as de facto national lotteries • Mandate using the set-aside proceeds for black communities educational empowerment initiatives/programs as opposed to the current system where most state legislatures use the lottery money to pay for a portion of the state public education budgets and spend the money that would have been used had there been no lottery cash on other things • All colleges and universities with an endowment above $1 billion that benefitted from slavery must give a government-mandated percentage of their endowment to HBCUs
Institute S.P.U.R.S. (Summer Program for Underrepresented Students) initiative at major colleges and universities primarily in the STEM/STEAM disciplines for under-represented students from predominantly minority communities. Often during summer periods, disadvantaged students fall behind their wealthier peers. • Lotteries were used not only as a form of entertainment but as a source of revenue to help fund the colonies. Each of the 13 original colonies established a lottery system to raise revenue • Two major lottery games, Mega Millions and Powerball, are both offered in nearly all jurisdictions that operate lotteries and serve as de facto national lotteries • Mandate using the set-aside proceeds for black communities educational empowerment initiatives/programs as opposed to the current system where most state legislatures use the lottery money to pay for a portion of the state public education budgets and spend the money that would have been used had there been no lottery cash on other things • All colleges and universities with an endowment above $1 billion that benefitted from slavery must give a government-mandated percentage of their endowment to HBCUs • Many first-generation college students come from socially or economically disadvantaged backgrounds. In order for these students to succeed and for society to benefit, it is crucial that we provide the means for these students to gain access to the same careers as their white counterparts • This program will play a pivotal role in advancing education for underrepresented and economically disadvantaged African American students. Additionally, SPURS will create a diversity of representation among the future ranks of doctors, investigative scientists, technologists, and design experts • Funded by the Federal Department of Education as renewable grants • Findings suggest that racial diversity matters for learning, the core purpose of a university. Increasing diversity is not only a way to let the historically disadvantaged into college, but also to promote sharper thinking for everyone • American colleges and universities contribute at least 1 percent of their total endowment market value (~$6–10 billion) to fund this Freedom Grants Guaranteed Set-Asides I Source: https://contractwithblackamerica.us/wp-content/uploads/CWBA-Full-Contract.pdf
