THE UPRISING MARCHES ON

Black-Owned Banks Are Finally Getting the Attention They Deserve

Decades of government policies and systemic racism have often left Black banks unable to survive and thrive

This piece is part of The Uprising Marches On, a package on what’s next for the movement for Black lives.

After yet another moment of horrific police violence against Black Americans, Byron Brooks decided he’d had enough.

“The murders of both George Floyd and Breonna Taylor was the straw that broke the camel’s back for me,” says Brooks, 25, founder of From the Hood For the Hood, a Michigan-based nonprofit that, with its other community program, grants college scholarships to Black students across Michigan and recently started an initiative called the Road to Equity. “We’ve experienced over 400 years of oppression, but these two situations really made me look. They birthed the activism flame within me.”

That activism for Brooks has come in many forms: organizing Black Lives Matter rallies throughout the state, working to create a free legal clinic, and opening bank accounts for himself and his organization with First Independence Bank in Detroit, a Black-owned bank.

“If we say we’re fighting for equity, the Black dollar is very important within that,” Brooks says. “If our dollars are in a non-Black financial institution, at the end of the day we’re still putting dollars in pockets of maybe ‘the oppressor,’ of organizations and companies that do not support getting justice for George Floyd and Breonna Taylor.”

Since the killing of George Floyd by police, and now the shooting of Jacob Blake in Kenosha, Wisconsin, and as on-the-ground efforts and protests against racial injustice continue throughout the country, there have been calls within the Black community to control Black dollars to Black businesses, including Black-owned banks. While the number of Black-owned banks in the country has dwindled, over the summer, One United Bank boasted $50 million in new accounts. In August, One United encouraged its members to donate to #BlackLivesMatter. Earlier this week, Broadway Federal Bank, a Los Angeles–based commercial lender founded in 1946, entered into an agreement to merge with another Black-owned bank, City First Bank in Washington, D.C., creating the country’s largest Black-controlled federally insured commercial lender and the first with assets of more than $1 billion. With its expanded capacity, the combined bank plans to provide lending for multifamily affordable housing, small businesses, and nonprofit development in financially underserved communities while creating a national platform for impact investors.

This is a renewed move for an institution that has so often been left to languish behind. Though banking Black has been seen since Reconstruction as a way for African Americans to obtain financial shelter and build toward economic power, government policies and systemic racism have often rendered Black banks unable to thrive and survive. When the Emancipation Proclamation was signed in 1863, Black Americans owned less than 1% of the wealth in a country that they and their ancestors built and upheld. A few years later, Congress created the Freedman’s Bank, a savings and trust company, with deposits from formerly enslaved Blacks that at one time totaled $57 million. But Freedman’s Bank collapsed about a decade later, owed to mismanagement and corruption, with almost $3 million gone from tens of thousands of accounts. Yet other Black-owned banks rose throughout the country. Since then, Black-owned banks have maintained their place as a source of economic power and opportunity. They have long been a focus in the civil rights movement: Martin Luther King Jr. called for a “bank-in” movement in 1968, and generations later, Michael Santiago “Killer Mike” Render has urged people to #BankBlack.

Yet Black-owned banks remain uniquely vulnerable. Whereas there were 48 Black-owned banks two decades ago, now there are just 21. While big banks have grown by $2 trillion since 2008, Black-owned banks, which are based mostly in low- and middle-income communities, where deposits may be smaller, have seen their assets decline. Still, according to the Federal Reserve, the top five collectively hold $2.25 billion in assets and $1.8 billion in deposits. Today, Black families in the United States hold about one-tenth the amount of wealth of white families: $17,150 for a Black family, and $171,000 for a white family, according to the Brookings Institution. The rate of Black homeownership, considered by many to be the strongest indicator of wealth, remains virtually unchanged since 1968. The typical Black family has almost no wealth; more than a third have negative wealth. The Black community must also disproportionately contend with the economic devastation wrought by the coronavirus pandemic, which means the need for stable Black-owned banks has taken on a broader, renewed urgency.

“I know they respect me as a customer because of that shared experience.”

Racism and capitalism have kept Black Americans economically at the bottom of a socially constructed hierarchy. True economic empowerment, as well as efforts like “buy Black” days and “bank Black” movements, must include a bold political movement, says John Robinson, a sociology professor at Washington University in St. Louis who has studied the intersection of race and banking. “This is about raising our political voices. This is about getting in the streets. This is about laws and policies that will really affect the racial wealth gap and the redistribution of wealth in our society,” Robinson says. “Until we address the political problems of Black families and Black communities and understand that those are the same political problems that are affecting why we don’t have as many Black financial institutions, we won’t get as far. And we don’t get those laws and policies without fighting for them.”

Over the years, a number of the largest U.S. banks have been cited and fined and have settled lawsuits for racial discrimination in lending. According to a 2011 Federal Deposit Insurance Corporation study, Black-owned banks made about 67% of their mortgage loans to Black borrowers, compared with less than 1% made by community banks not run by people of color. Black-owned banks, on average, are five times as likely as to back mortgages for properties in low- to moderate-income neighborhoods, the Washington Post reported. A recent Northwestern University study found that racial discrimination in loan denials and interest rates has barely declined over the past four decades.

In the days after the death of George Floyd, DeShawn Jones joined his church in a rally. He also opened an account with a Black-owned bank. “It’s about standing up for our community,” says Jones, 49, a marketing business owner in Philadelphia and a father of three children, one in college. Black-owned banks lend money to Black people, businesses, and homeowners, he says, which he feels helps stabilize Black communities. Jones also feels a level of pride. “I know they respect me as a customer because of that shared experience,” he says, remarking that his new bank card features an image of an African king. “I’m a proud Black bank member.”

For some, banking Black is simply an act of protest. Others see it as a move of empowerment and community. “When I’m banking Black, I’m able to go into a financial institution and I’m talking to somebody that looks like me,” says Brooks, the From the Hood For the Hood founder, “and who understands the oppression of which our people have gone through.”

Kia Gregory is a journalist drawn to people living on the margins. More @ kia-gregory.com.

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