The COVID-19 pandemic and the ensuing economic crisis has hurt millions of Americans but perhaps none more than the Black and Brown communities. Aron Betru, managing director of the Milken Institute Center for Financial Markets, joined Yahoo Finance Live to discuss a recent report focused on building an equitable post-COVID recovery via opportunity zones, minority depository institutions (MDIs), and community development financial institutions.

According to The National Bureau of Economic Research (NBER), Black and Latino businesses have dropped 41% and 32%, respectively between February and April of 2020.

Betru believes that community-based financial institutions play a role in addressing some of these disproportionate economic effects that the pandemic has had on minority communities.

“Prior to 2020, African-American wealth disparity versus white American was significant, and we’re talking essentially by 2053, Black wealth median was going to hit zero. And so that means we were projected toward where nearly 50% of ... the Black American population by that time frame was going to end up having negative zero wealth.”

According to Milken, COVID-19 cases are significantly higher in designated Opportunity Zones.

Betru told Yahoo Finance that mobilizing wealth creation and small business support is crucial for minority communities, and minority depository institutions can help do just that.

“And so when you think of what it is actually going to take to mobilize wealth creation, small businesses, a critical part of that, they need money to be able to, to grow. We’ve had a long history of financial institutions, the banking sector essentially missing an opportunity to support this group due to everything from unconscious bias on one end of this, all the way to systemic and explicit racism that happens in the banking sector. So when we want to make sure that wealth increases, we want to make sure that the group that has been serving this and to in particular community development, financial institutions, minority depository institutions, have the tools they need to mobilize capital.”

Betru also notes that even with the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, much more is needed to be done to reverse the economic damage done to minority communities.

“I think we’re looking at the precipice of something that needs to be much bigger, a much bolder look at how to address this. And in the beginning, I mentioned addressing the African-American and minority joblessness and essentially ability to bounce back from this COVID crisis. It wasn’t just good for that community. We’re talking about a very large part of this country’s economic potential … If we address these problems, you end up moving one to $1.6 trillion of economic productivity in this country. That’s 6% us GDP. So It’s good for the country at large. And that requires a much bigger, bolder look.”

Betru tells Yahoo Finance that the onus cannot solely be on the federal government to get business capital to minority communities. He believes that state and local governments must also play their part.

“Whether it be local regulations and zoning rules, or whether it be effectively, some of the state and local stimulus that’s coming from the federal government and thinking about distributing it into a co-investment that might happen with the local financial institutions. These things ended up being kind of a critical way to localize the bounce-back that’s necessary,” he said.

“Taking that a step further, the executive order that President Biden signed in terms of racial equity and support for underserved communities that gives you a playbook for what essentially at the state and local government … We saw a definition of equity that was necessary, that we haven’t seen that level of specificity. We saw essentially a recognition that we needed to be evidence-based and data-driven was a requirement in that executive order. I think that can help both state and local governments.”

Reggie Wade is a writer for Yahoo Finance. Follow him on Twitter at @ReggieWade.

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