It has nothing to do with ethnicity. It's a reference to someone being a dumber, less capable brother. I mean, it's definitely an insult. And the guy who said it shouldn't be accosting Cuomo in public. But it's not a racial slur.
"Only punk **s bitches from the right call me Fredo," Cuomo said. "Fredo is from 'The Godfather.' He was a weak brother. And they use it as an Italian aspersion. Any of you Italian? It's a f***ing insult to the people. ... It's like the N-word for us."