We Don’t Need Another Basketball Court in NYC

As a native New Yorker, a formerly middle-class African American, and professional in the finance industry, I often find that my opinions on various topics differs from that of my close friends and colleagues. The continued portrayal of African Americans in popular culture is one of those topics.

Growing up on basketball courts

I grew up in Hollis, Queens, a working-class neighborhood with working-class ambitions. The people around me used to say that when someone made it, they’d gone “from Hollis to Hollywood.” In many ways, despite the enormous strides African Americans have made since the 1960s, this remains the only option for most black youth—the path of entertainment.

Of course, this isn’t the only path for working-class black Americans. I would know, since that’s exactly where I started out, too. I used to play sports all day long. In fact, I was recruited to play football in college. But that wasn’t the path I stayed on, because I was shown other options.

What NYC looked like in the 60s and 70s

When I was a teenager, the city was a radically different place. New York City through the 80s wasn’t the kind of place people visited. Outside the skyscrapers and highrises, it was a city of abject poverty, drug addiction, poor education, and gang violence.

It was also my city, the only place I knew. It was where I grew up playing basketball and football. Although Hoop Dreams was shot in Chicago, the documentary is a close proxy for the experience of a young African American man growing up in an inner city community surrounded by overwhelming negativity.

Basketball court as sanctuary

One of the few places where I found solace was on the courts, playing pickup basketball with my friends. On TV, before rap and hip hop exploded onto the scene, all of our role models were ballplayers. All my friends wanted to be ballplayers. At one point, so did I. Getting recruited for football was one of my proudest achievements.

But, as I’m sure you already know, the odds of a teenager “going pro” from the inner city are next to nothing. The chance of a high school football player getting recruited for football at the college level and then getting picked for the NFL is .007% (about 1 in 14,000). High school basketball players have a slightly better chance of getting into the NBA at .01% (1 in 10,000).

When hoop dreams continue to be so dominant in the inner city, perhaps we shouldn’t be surprised that most middle-class black kids grow up to become poor black adults. Black Americans have a higher unemployment rate and a higher poverty rate. For comparison, white Americans have a poverty rate of 9.6 percent, while black Americans have a poverty rate of 27.2 percent. The gap between the wealth of white and black families is currently at its highest point since 1989.

Better, more realistic options for our children

The reality facing most black children today frustrates and disheartens me because I’ve seen the metaphorical light at the end of the tunnel with my own eyes. From what I see on a daily basis, most of the black kids in NYC continue to hold onto the same unrealistic hoop dreams I had decades ago as a child. This shouldn’t be the case.

Fortunately, there are plenty of programs in NYC and across the country for black youth who don’t realize they have options. That’s why I’m proud to support various youth empowerment programs across the country, including Boys Hope Girls Hope, the Bridge Golf Foundation, College of the Holy Cross, and the historic Apollo Theaterin Harlem.

At the end of the day, the future of children of color is whatever we make of it. It all comes down to what we reinvest into our communities ourselves. So if we don’t want our kids growing up with unrealistic dreams and want to guide them instead to useful, practical after school initiatives, we have to be the ones willing to take the leap and make those investments.

This article was originally published by at HuffPost


How Structured Products Secure the American Dream


It’s 9 years later, and we can still feel the impact of the 2008-2009 financial downturn. Many people blamed structured products for the crisis.  In reality, the real fault lies within loose underwriting standards and corporate greed. The lingering association, while no longer completely accurate in the here and now, is a large hurdle to overcome.

The reality is that structured products have changed. Rules and regulations have been set to mitigate the risk of the financial crisis, while the benefits (that always existed) are being rediscovered and repurposed.

Part of this shift comes from the increasing focus on providing investors with more transparency. Another part comes from being able to look at the crisis (and by extension, structured products) in hindsight.

Let’s take a look at the past, present, and future of structured products in America.

Structured products are still doing reputational damage control

Structured products are not flawless; there are valid concerns about liquidity band complexity. However, there are also many positive aspects to structured products that make them a viable offering.

Recently, there has been a shift in rules and regulations. Now, laws dictate that investors receive more clarity prior to making the investment, for example having access to the estimated value disclosures. The goal here is simple: put rules in place to help prevent another disaster.

Most institutions have realized that the best defense on the reputation of structured products is a good offense. They are helping their customers understand exactly what structured products are, how they work, and why, when used correctly, they add depth to an investor’s portfolio.

Also, they stress that structured products serve an even greater purpose. Everyday customers can benefit from structured products (like CDOs) that allow pooling of debt. In this way, structured products not only help investors, but also the general public.

Even still, structured products remain a mystery to most Americans. To get a better understanding, we have to separate fact from fiction.

How Structured Products Help Everyday Americans

Nowadays, many Americans have a visceral reaction to certain acronyms: ABS, MBS, CDO, CLO. Once upon a time, these never used to mean anything to people outside of the financial world

But it’s important to keep in mind that it’s not just banks that benefit from structured products. At the time of the crisis, for instance, Americans were leveraging the lower rates (much lower than they would have otherwise paid) offered by banks to take on the underlying loans, mortgages, and credit card debt.

Structured products work on the principle that the cash flow depends on the performance of underlying assets. By definition, a structured product is any product that derives its value from an underlying asset.

What does this mean? In essence, structured products are like traditional option pricing methods. They start to get complicated is when we start talking about derivatives. These include swaps, forwards and futures, and other embedded features like downside buffers and leveraged upside participation.

This works for both the financial institution and the customer. Thanks to structured packages, banks had the ability to package and sell consumer and homeowner debt, among other things.

The model of structured products makes the banks more willing to lend out money in the first place. Without structured products, consumers would likely face significantly higher rates or perhaps not be considered for loans and mortgages at all.

The world has certainly learned many lessons about the risks of structured products, and those risks shouldn’t be taken lightly. But we must not forget that “structured product” encapsulates a huge range of varying products. They can give an investor customized exposure to assets that they might otherwise not have been able to access.

The risks are also better understood and managed now. In 2008, when certain companies became insolvent, many investors were caught off guard. They weren’t aware of the risks because they didn’t have the necessary information upfront.

Financial Benefits for Investors

Following the financial crisis, investors have been very pessimistic about structured products, believing there’s not much in it for them. Negative media has only exacerbated the situation. However, structured products have proven that when placed in the right hands, they can optimize the investor’s portfolios in numerous ways.

Structured investments can help investors tap into markets or asset classes they’d have otherwise not been able to access. Because structured products have predefined returns, we’re able to participate in emerging or overseas markets while shielding from risks. The variety of choice also offers flexibility to diversify the portfolio.

By nature, structured products are able to offer some form of capital protection, depending on the anticipated amount of return. Investors are typically able to protect their initial investment from any market downsides while still being exposed to upside potential.

A great example to this would be Structured Notes, which allow investors to commit their money for a certain term. As long as they hold the product to term, they’re guaranteed to retrieve their principal investment, provided that no default occurs. In addition to the principal, they will carry any upside movement of the value of the underlying asset.

Following full disclosure of underlying risks, investors know the full scope of potential risks that come with a structured note even before they throw in any investment. Thus, they can be prepared in terms of wealth management and planning for tax cuts.

The Future of Structured Debt: A Safer, Stronger Comeback

Initially, securitization was part of the problem. But that doesn’t mean it can’t be or hasn’t been part of the solution. *For instance, the Federal National Mortgage Association (FNMA), which is a Mortgage-Backed Security (MBS) is currently valued at approximately $100.*

Several years later, we can look back at the financial crisis with fresh eyes. That also means being in a better place to analyze the benefits and drawbacks of structured products. Now, we have to be sure to take advantage of the benefits while buffering against the risks.

This blog was originally posted on TroyDixon.com