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Black-owned banks in America and the plan to prosper

GROWTH: Employees from Citizens Trust Bank in Atlanta, Georgia,
in the US (image credit: Black Main Street)

MANY SUPPORTERS of the #BankBlack movement have expressed the belief that the economic empowerment of a community involves management of their financial resources to be conducted within their own banking establishments; a belief which a large group of African-Americans are fighting to keep a reality.

Closures of black-owned banks have been highlighted by the movement, which has been gaining considerable momentum since 2016.

African-American owned banks were established at the end of the 19th century with the opening of the Capital Savings Bank in 1888 in Washington. They were mainly meeting the needs of the freed slaves who were excluded from the mainstream financial system. From 1888 to 1934, more than 134 banks were founded by African-Americans. Often located in the heart of black districts such as Harlem in New York, they aim, first and foremost, to help and support families and entrepreneurs.

In 2014, 47% of black entrepreneurs benefited from funds borrowed from banking institutions compared with 76% of their white counterparts.

Today, more than 53% of the community members are either unbanked or underbanked.

WALL STREET

In light of these statistics, black financial bodies can present a solution for people who often have restricted access to credit.

However, such organisations are becoming scarce. Indeed, there were 44 in 1986, then 41 in 2007 and the number has fallen to 23 today. But, how can those closures be explained?

These banks were severely impacted by the mortgage crisis of 2008 as their customers were the first ones affected by job losses and foreclosures. Furthermore, a handful of them benefited from the federal funds provided to save big Wall Street institutions.

This decline is also due to the anti-segregation laws of the 1970s which urged traditional financial bodies to open their doors to the African-American community. Consequently, many members of the middle class closed their bank accounts in black owned organisations.

This current situation may prevent the poorest members of the community from having access to banking services. Some experts even predict the disappearance of these institutions by 2030.

To cope with this tragedy, some artists have joined forces. Among them, rapper Killer Mike who posted a video on social media in which he recommended opening savings accounts in black-owned financial bodies - watch the video, which was also published on BET's website, below:

The response to Killer Mike's video was immediate. Since July 2016, the #BankBlack movement has resulted in more than 60 million dollars being transferred to black-owned banks.

Teri Williams, president of the One United Bank, one of the largest black-owned financial institutions in the United States, revealed in an interview that African-Americans spend on average 1.2 trillion dollars a year and that 98% of that funding happens outside the community.

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