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Protocol: Robinhood’s Secret Weapon Could Also Be Its Undoing

Protocol, July 2, 2021, Robinhood’s Secret Weapon Could Also Be Its Undoing

Robinhood’s IPO filing confirmed what many analysts suspected: The online brokerage is growing fast. But the disclosures also underlined the precarious nature of that growth.

Now we know that Robinhood, which is going public under the ticker “HOOD,” makes a ton of money when customers make a ton of trades. And the startup is worried that that system could be upended by legislators and regulators. Ironically, the eye-popping financials it unveiled in its S-1 could fuel the calls for reform.

“We cannot stand by and allow algorithms to resurrect old biases in new packages, or introduce new forms of discrimination hidden in proprietary code.” —National Community Reinvestment Coalition CEO Jesse Van Tol, joining fintechs PayPal, Square and others in a call for more guidance on how AI should be used in lending.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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