Norman B. Rice: Technology and the Economically Disadvantaged

Norman B. Rice is president and chief executive officer of the Federal Home Loan Bank of Seattle. The mission of the Federal Home Loan Bank of Seattle is to expand housing and economic opportunities in the region by providing banking services essential to community-based financial institutions. The Seattle bank is privately owned and managed, and has total assets of more than $36 billion. It serves financial institutions in Alaska, American Samoa, Guam, Hawaii, Idaho, Montana, Oregon, Utah, Washington, and Wyoming.

He joined the bank as executive vice president in March 1998.

Previously he had served two terms as mayor of Seattle (1990-1997) before declining to run for re-election. During his tenure, he also served as president of the U.S. Conference of Mayors.

Prior to his election as mayor, Rice served three terms as a member of the Seattle City Council, two years as council president. Before entering public life, he was manager of corporate contributions and social policy at Rainier National Bank (now a part of Bank of America).

Rice holds a bachelor of arts degree in communications and a master’s degree in public administration from the University of Washington. The title for his master’s thesis in 1974 was “Minority Access to the Electronic Media — an Action Plan.” He holds honorary doctorates from the University of Puget Sound and Whitman College.

He is a member of the Brookings Institution’s Advisory Committee for Sustainable Communities, and the Bretton Woods Committee. He serves on the board of directors for the YMCA, Fred Hutchinson Cancer Research Center, SAFECO Corporation, Seattle Urban League and is a member of the National League of Cities’ Council on Youth, Education and Families.

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Ethix: Normally, the boundary between public service and banking, your two “careers,” is sharp, but it seems like there is some commonality to your mission in both offices.

Norman B. Rice: That’s true. What would draw a guy in politics to this job? The fact that banks are going to be critical to sustain our communities in the future. As federal and state assistance slows down, banks can make a real difference, especially in smaller communities.

How can a bank do this? Are you part of the micro-lending movement to help stimulate small business and job creation?

Not right now. We work with community development corporations. There are more and more small economic development groups cropping up in communities all over the United States. How we use them is our challenge in the next millennium. Are they one-time-only operations — or are they sustainable over time and able to meet multiple goals? Sometimes these groups become their own worst enemy because they do their project and disappear — or they just want to stay on without a good idea of what to do next.

As mayor you were concerned about neighborhood renewal and it sounds like your bank has a similar commitment. Do you see any movement in the broader business and banking sector to embrace such social concern? Profitability and shareholder value often seem like the only things driving business decisions today.

It’s just the old “enlightened self-interest” to see that in order to be profitable you’ve got to invest in the community. All of the financial institutions involved in recent mergers have insisted that they are going to maintain their community commitments. Bank of America, Washington Mutual, and the others, are pledging hundreds of millions of dollars to community investment. This is not just because of the Community Reinvestment Act mandate but a way of doing business. The inner city is being recognized as an amazing market, a place to do economic development. Michael Porter of Harvard, Bill Goodyear from Bank of America, and others, have done major studies showing how inner city markets should be approached in the same way as global markets and capitalized for opportunities.

The big question is what are you investing in those communities? Are you looking merely to take from these places? Or, are you empowering these communities for growth? That’s where I think there may be some disconnect. Some see inner-city markets as great places to sell cell phones but will they also be seen as great places to build cell phones?

Now clearly we’re talking about these issues in a robust economy. What happens when the crunch comes? Will we have put ourselves in a position to ride that out and still maintain empowerment and opportunity in the inner city — and, just as importantly, in rural areas?

How do we prepare for a down-time? How do we build that kind of ethos and mission?

It’s about education, about the total community, about investment in the whole community rather than just one piece of it. There needs to be a re-weaving of community with long-term investment in job opportunities and growth, not just coming in, taking the money, and running. That’s the difference. More and more people are recognizing the importance of long-term investment rather than short-term gain.

How do you see technology in all of this? It seems to have the capability both to empower communities and to divide people into haves and have-nots.

More and more communities, rural and urban, recognize the importance of technology. Two years ago I met with some former timber workers looking at how to get them retrained for other jobs. We need to use technology to bring educational opportunities to rural areas; otherwise these guys would have to drive 200 miles to get to school.

Access to technology is a big issue. There is a difference between rich and poor, but that doesn’t mean the poor have to be totally left out. Computer technology can be made available to the public at libraries, community centers, and churches. Ultimately there ought to be technology in every home but, in the meantime, providing public access is both possible and necessary.

The biggest challenge is how to use and manage information technology effectively, not only in government and business but in the family. We haven’t done it with radio or television so I’m not sure we’re going to be as successful in managing the computer as we would like. There is a commercial side to computer technology that is far more powerful than the educational and community-building aspects it can deliver.

In the 1930s experts predicted that only the finest of television programs would survive the public’s discriminating taste! And look at television today!

In my 1974 master’s thesis I argued that cable television could be the panacea for building community and helping people grow. But of a hundred cable channels today, how many are for education and how many are purely commercial? There are probably more home buying channels than there will ever be educational ones.

I still believe in the wired city but I’m not as pollyannaish about it. The best we can hope for is to get individuals and families to understand technology, use it, and try to manage it somehow. Families need to work together in their efforts to learn, but I think the gap here between parents and children is getting wider.

Maybe the children need to teach the parents?

That is happening in some of our inner-city schools where parents are sitting side-by-side with their children to learn technology. This family learning often happens less in upper-class homes where there is greater distance between parents working and kids in their rooms playing games. Some good family bonding among poor people may result from limited access to technology!

Do you see a role for the church as a third player (with business and government) in community renewal, job creation, and technological development?

Many people see the church today as a viable institution for change and opportunity. In the black community, church is where all of us come together in one place most consistently. We are starting to see a lot of younger ministers doing some successful outreach to young men on the street. Once you bring them in, it’s important to have the tools. Tutoring, job training, self-esteem, and health programs are growing. If you are doing job training, almost every job today requires that you know the computer; even to access a job listing, or to complete a job application, computers are often necessary. Communications technology, using the church as a community center, is crucial.

Occasionally government gives financial grants to community organizations — to help the homeless, for example. Are businesses able or likely to do this also?

One thing I worry about is that as corporations merge into multinational entities, they might lose their connectedness and commitment to community investment. For example, Boeing has cut back its giving to Seattle and the Northwest because it must now think of Long Beach, St. Louis, and its other locations as well.

I would like to see all corporations and businesses adopt communities and organizations and make investments along local lines, whatever the specific form may be. Leadership help and expertise could be given to community organizations. Scholarships and personal mentoring can be provided to promising individuals in very effective ways. The linkage of a student with a caring adult working in a business has a great impact.
If you are doing job training, almost every job today requires that you know the computer; even to access a job listing, or to complete a job application, computers are often necessary.

Have you found that computerization in your government or banking offices enhanced communication, morale, and teamwork?

When I became mayor, we didn’t have e-mail. Some of my staff were shocked at how antiquated the communications system was. We spent a lot of time updating it. There are times when phones and memos just don’t get quick enough action. In moving information back and forth among people, faster is usually better. But I do think face-to-face meetings, somewhere along the line, are also crucial. There needs to be some interaction of one human being with another. We have a newsletter, e-mail and voice-mail, but I still like to have that one-on-one, eye-to-eye kind of contact. Even Bill Gates calls his troops together to rally them.

We all grew up playing with other kids and then later hanging out at coffee shops with friends. But what about our younger generation now growing up on video games with mom and dad both off at work? Maybe that need to be together will disappear.

The problem here is more with the parents than with the technology. Parents need to make sure that their children are well rounded. If they give up their responsibility and let the media raise their children, that isn’t the media’s fault. Developing time to share, time to sort and time to communicate broad ideas and concepts are essential for keeping the family together.

You were in banking until about 1978. After you left, deregulation happened, technology happened. Now you come back to banking. How have things changed.

I think many individual leaders of banks today are more enlightened about how to serve their communities. Banking in the 70s was kind of “siloed” in the business community, more “exalted” and less community-engaged. Today there is more ethical dialogue, more understanding of who we are, more people understanding, less separation from the communities we serve. There is less ideological rigidity to people’s thinking, and more readiness to listen and get engaged. That’s where I think things are better.

With new technologies enabling access to banking information, and with all that people can do with such information, do you worry about security and privacy issues?

Yes, it’s been a concern of mine for a long time but I’m not sure that we’ll ever be able to solve the problem. The very nature of information technology doesn’t lend itself to having walls around it; it is an open kind of thing. In order to guarantee privacy, we would have to have some authority sitting over the whole system and that in itself is a worrisome thing. Who should be the regulator of all, who should retain access to all information to ensure its security? We might be better off not having anyone in this God-like role.
Computer technology challenges the individual’s ability to sort information… Our minds have not increased as fast as technology. Instant decisions made without a chance to pause and reflect are worrisome. Instant polls of reactions to a politician’s speech, for example, do not allow for depth or wisdom in democratic decisions.
Similar issues arise around free-speech, including pornography. It’s a tough medium and it’s going to get even harder. This is one time I’m glad I’m not a politician! Again, I think the biggest issues facing us is parental and community responsibility. That’s really where the regulation is going to have to happen.

We do have carefully-defined, legally-enforced repression of sexual harassment in the workplace — at the very same time that almost anything whatsoever goes on the internet. Apparently we can and do draw some lines and insist on their observance.

In my mind, I’m speaking about my values now, you can review and read anything you want in the privacy of your own home but once you decide to send material, let’s say in the office, I think you then violate the appropriate use of an office.

The problem is not just with something at that extreme. In my office recently, someone made a comment on e-mail that reflected on one of our customers. I told him not to e-mail comments like that. He said it wasn’t a problem — he only sent it to eight people. Within two days he got it back on a circulation list of thousands of people! This is a different communications world and we haven’t figured out exactly how to manage it carefully.

When your email address appears on a message you send, it is then easily added to other lists. Our telephone and credit card numbers are being sold and distributed to many different people; now our e-mail address is in the same category. Ethics in technology is going to be a hot subject for a long while. The Bill of Rights was not designed with internet communications in view! Common sense and personal responsibility are keys to how we manage these issues in the future.

One of our challenges is the pace of change in technology. Forecasters say that in the next ten years the change will be even greater than it has been in the past ten.

Computer technology challenges the individual’s ability to sort information. Before the modern telecommunications revolution began in the mid-19th century, if someone was shot it might take three months for the family to find out that the person died. Your reaction to that is a whole lot different than when you know within seconds that something has happened. Our minds have not increased as fast as technology in sorting information. Instant decisions made without a chance to pause and reflect are worrisome. Instant polls of reactions to a politician’s speech, for example, do not allow for depth or wisdom in democratic decisions.

Jacques Ellul used to say that our technological society requires us to live by reflex rather than by reflection. If you’re driving your car in traffic, you must not drive by reflection, you don’t have time; you must learn to drive by reflex.

I used to have a staff associate who would sometimes look over a letter I had quickly dashed off and say “this is a two-day-er. Take it back, and give it a little more attention and time.” But today, once you send an e-mail message it is gone! You might send a follow-up e-mail but sometimes damage is already done. We may not be communicating exactly what we think we are. I often type in all caps for the sake of simplicity but one time I did this and the recipient thought because I used caps I was angry! It was interpreted in an entirely different mode than how I sent it. We need strategies to help us cope with our new communications world. If a message is longer than two paragraphs, I ask the sender to call me or see me. If it’s longer than a page, I’ll hard copy it before I respond because I want to read it more carefully.

Two of my staff members were going back and forth electronically on an issue and they weren’t getting anywhere so I called them up and said I want you to sit down in a room together and talk about this. Different communications problems require different media.

I’d like to get your opinion on executive compensation today. Despite our economic boom the bottom 30% or so of Americans are losing ground in terms of real income, while the top 10% have done well, and the top 1% have done hugely well. Our German and Japanese competitors seem to be competing quite well without allowing executive compensation to skyrocket in the same way.

We all have to feel that we’re pulling together. We must reward people for working together to produce quality products. The closer we can bring the pay-scale of executives and line workers to represent their contributions the better off we’re going to be.

Are you saying that all the people, not just the CEO, need to have the incentive of a stake in the success of the product?

The more that we can get employees back into sharing profit and productivity gains the better off we’re going to be. I don’t want to say the union doesn’t already have a stake, but what it is protecting is different. The worker on the line is protecting a certain amount of job security in the short-term — whereas the executive is looking at long-term returns that are built up over time. The shareholders or the board of directors have to understand that difference. More and more corporations have union and employee representatives on their boards to bring a general degree of understanding to both sides.

On matters of compensation or any other business, technology, or ethics challenge, I think leaders must be guided by their core goals and values. For me, it’s all about social equity, economic opportunity, and environmental stewardship. If we keep our core goals and values in focus, our ethical decisions and leadership will be consistent. These goals need to be constantly articulated to our employees and colleagues. Then people know how to deal with us, how to communicate, how to work on the things that we care about, and how to build something together.

Leaders may personally be very inclusive and fair — but their institutions may retain structures and practices that are embedded with prejudice and unfairness. What about such systemic ethical issues?

Right, but institutions can be led. They can rise to high levels. Just the other day at our annual meeting. we celebrated a community partnership by our banks in Missoula, Montana. Some may not think of Missoula as a promising location for community housing, battered women shelters, or those kinds of things. But there they were: dealing with such social and economic challenges in the same ways that we tried when I was mayor. So people are getting it. If you don’t bring a lot of ideology into it, if you really tap into the community’s strength, there seems to be a spirit still abounding that I feel very good about.

The compensation issue is still a bugaboo, but I think it’s about America and opportunity as much as anything else. Economic class separation exists; compensation can be unfair and inconsistent. I think that some of this may be tied up in the American Dream: there is a compensation gap but many still aspire to reach the top and believe that they’re going to get there. When they get there they don’t want to find the compensation prize taken away!
…institutions can be led. They can rise to high levels.
Yes, there is a problem and a lack of movement in the bottom twenty percent. In the middle, however, there is movement. A Newsweek report has just shown how African-Americans are better off financially than they have ever been in the past. The bigger questions concern whether this improvement is sustainable over time and the degree to which this is real change rather than marginal, artificial, or merely cosmetic change.

You were quoted not long ago as saying that you sometimes weren’t sure why you stepped out of politics because the city of Seattle was thriving and doing really well. How do you look at that decision at this point?

Clearly, with the prosperity, it would have been fun to spend some of the money! That’s what I meant. I think the hardest thing in politics is knowing when to leave. I’m comfortable with my decision to leave when I did. Being mayor was the best job I’ll ever have, but it was never something I felt I wanted for the rest of my life. I believe in public service — not public servitude or staying forever. You can wear out your welcome in public service. And the longer you stay the less you make decisions based on the right thing to do, and the more on what will keep you in office. Once you start making decisions to keep yourself in office, you’re not the same person or leader anymore.