Why #BlackBanksMatter, Now More Than Ever

Why #BlackBanksMatter, Now More Than Ever

On Monday, Nov. 11, it was announced that a Black Bank Fund would invest $250 million into Black-owned banks across the country. This was a huge move, considering that there are only 18 Black-owned banks left in the U.S. Historically, Black banks have been pillars in their communities providing job opportunities, supporting businesses, and helping to establish community pride, noted Black Enterprise.

Yet, over time, they have faced hardships.

The Wall Street Journal stated that the disappearance of Black banks is due to certain causes, such as “the burden of soured loans, bigger competitors created by mergers and financial downturns that hit small lenders hard.” Additionally, Black banks have had to reckon with America’s history of racism.

The True Reformers Bank, established on March 2, 1888, was the first officially chartered Black-owned bank, according to Investopedia. Reverend William Washington Browne founded the bank as a way to manage his organization’s finances free from the “scrutiny of white people.”

The bank grew from a small institution in Browne’s home to an institution strong enough to survive a financial panic of 1893. Although the bank survived Browne, who died in 1897, it began to falter under new management. Due to poor regulation and risky financial moves, the bank was ordered too close.

This would not be the first time a Black-owned bank would be forced to close. Instead, it would signal a sordid history for Black-owned financial institutions. As the years passed, more and more Black institutions would pop up, namely in the South, and these institutions would face challenges resulting from racism, said Investopedia.

In Chicago, JPMorgan Chase lent “41 times more money in white neighborhoods than Black ones,” they further state. This issue of redlining is one of many issues that has led to Black Americans being unbanked.

These issues highlight the importance of Black-owned financial institutions. Yet, the emphasis on investing in Black-owned institutions is not new.

In his speech “I’ve Been to the Mountaintop,” the late Reverend Dr. Martin Luther King Jr. discussed putting money into Black banks. By banking Black, he said, “We begin the process of building a greater economic base.”

Really, banking plays a vital role in our everyday lives – from providing financial literacy to protecting vulnerable customers from predatory practices like Payday Loans and pawn shops. This is why the movement to support Black banks has gained so much traction over the years, especially this past summer.

With the country in the middle of a social justice reawakening, naturally, the issue of Black financial stability has arisen once more. Answering these national calls to support the livelihoods of Black people, some major corporations like Netflix and PayPal have pledged to invest in Black-owned banks.

The Wall Street Journal notes that “Netflix has committed $100 million to the effort, including $25 million to a community development nonprofit that will help deploy the funds via loans and deposits in Black-owned banks.”

As for PayPal, they deposited $50 Million into Optus Bank, a promising Black Bank in Columbia, South Carolina. This was part of a $350 million effort to support Black businesses.

So, while Black banks have had many ups and downs, this could potentially be a turnaround period for them. If you wish to join the movement to support Black banks, here is a list of Black-owned banks across the country: