Should You Be Banking Black?

Naeesa Aziz, BET, October 21, 2011

If you haven’t noticed lately, the country’s financial system has come under intense scrutiny by those who say that greed and unfair practices are contributing to the country’s economic problems. But while corporate giants like Bank of America are posting record profits amid rising public discontent, Black-owned banks that have supported minority and low-income communities for years are struggling to stay afloat. So the question is: should African-Americans return to Black-owned banks?

{snip} In his famous “I’ve Been to the Mountaintop” speech [Martin Luther] King said, ” . . . we’ve got to strengthen Black institutions. I call upon you to take your money out of the banks downtown and deposit your money in Tri-State Bank . . . Put your money there.”

Historically, Black-owned banks were important institutions in the African-American community that provided loans and services to Blacks when white institutions refused. Black banks allowed African-Americans to progress economically by allowing them to obtain loans to purchase homes and start businesses. Today, these banks remain relevant for many of the same reasons, but have been edged out by fierce competition from corporate rivals and economic losses brought on by the recession.

The push behind a Black-owned banking renaissance is a lot more than just a nod to yesteryear. According to the FDIC, Black households are 21.7 percent more likely than whites to be unbanked–meaning without a checking or savings account. Furthermore, nearly 32 percent of Black households more likely to be underbanked–meaning these households have a checking or savings account, but often rely on alternative financial services such as non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops–services that drain the household and the community of wealth in the long run. Advocates say that a return to reliance upon Black banks can help reverse these figures.

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  • Anonymous

    That is up to the blacks. As far as I am concerned, they can have their own banks, schools, facilities, buses, living districts, or better yet, their own country. Let them do what they want and be responsible for themselves.

  • madison grant

    The author laments the fact that white banks used to refuse to lend to blacks with bad credit. But fear not, the gov’t put a stop to that!

    In recent years the gov’t forced banks to make insanely risky subprime mortgage loans to blacks and hispanics. The result? The housing bubble and the subsequent economic meltdown.

    And now those same blacks and hispanics who lost their homes are suing the banks for “predatory lending” because they never should have gotten the loans in the first place!

  • Question Diversity

    The problem is, black owned banks have very few locations and poor service. (Wonder why).

    Black banks allowed African-Americans to progress economically by allowing them to obtain loans to purchase homes and start businesses.

    The only black owned and operated bank in St. Louis didn’t make any affirmative action mortgage loans.

    According to the FDIC, Black households are 21.7 percent more likely than whites to be unbanked—meaning without a checking or savings account.

    Part of that is because some of these “black households” don’t want assets in a place where they can be traced or frozen, because they’re trying to preserve welfare benefits or they’re dealing drugs. Part of that is that banks are getting more and more screwy about the fees they charge for this and that.

    Furthermore, nearly 32 percent of Black households more likely to be underbanked—meaning these households have a checking or savings account, but often rely on alternative financial services such as non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops—services that drain the household and the community of wealth in the long run.

    Again, non-bank money orders and non-bank check cashing joints are much more likely to be “off the grid,” if the person wants to avoid a transaction being caught by the welfare agency or the police or DEA. Payday loans, rent-to-own joints, pawn shops…these are the high interest places, the only ones that will in an honest economy give bad credit blacks any lines of credit. Other than the “legitimate” firms that will either as a result of government coercion, pandering to racial lobbies and community activists, or corporate pity.

  • Anonymous

    Here is the Federal Reserve’s list of minority and women owned banks. Keep informed about their presence near you.

    Pay special information to the column before the dates. It is the minority code. 1=black, 5=caucasian women, 10=Hispanic, 20=Asian, etc. (see key at bottom).

    http://www.federalreserve.gov/releases/mob/current/default.htm

  • LOUDMOUTH57

    Great idea!!!!!!!!! Blacks should bank at black owned banks and whites should bank at white owned banks.If a black bank fails and taxpayers are forced to bail them out the tax dollars should come exclusively from black citizens.

  • Anonymous

    I think I have read some studies that reported black owned banks as being less profligate with their loans than are guilt ridden white owned banks. I recall many years ago being involved in some business proposals to some blacks. One very savvy black woman confided to me that where a black has a choice, “The white man’s ice is always colder”. In my area, young blacks go to the “white man’s mall” to go shopping and to the movies. In some of these malls, as in other areas, the tide turns and the shopping/entertainment venues become dangerous; the whites move on out and the blacks then follow them again.

    Black owned banks, in my estimation, will not do particularly well.

  • Bernie

    Preferential loans aside, banks and most other institutions give millions to black activist groups, colleges and organizations (like BET). Bank of America was actually one of the worst culprits as far as handouts to blacks.

    I guess this is the thanks they get.

    By the way, love the way she capitalizes Black and keeps white lower case. No racism there at BET.

  • Anonymous

    All I hear from blacks and latinos and sometimes asians is how they want to segregate THEMSELVES because we white people are so uncaring, unfair and don’t give our money, country and service to them fast enough.

    Is anyone with me on this one?

  • Jeddermann.

    Well, this is a good idea. Have Oprah, the estate of Michael Jackson, Michael Jordan, Bill Cosby, all these wealthy black celebrities and athletes pool their money and start their own Internet bank to loan money to other black that want to start a business, want to buy a home, etc. I am sure the brothers will be most generous with their money in a way that the whitey banker is not.

  • Bon, From the Land of Babble

    Black columnist Larry Elder writes:

    Black banks reject black applicants at a greater rate than do non-black-owned banks.

    One study in Houston found that white-owned banks as a whole were approving black loan applicants 50 to 60 percent of the time, while the city’s only black-owned bank was approving just 17 percent of black applicants.

    This is because black banks are insulated from charges of racism.

    Bon

  • Howard W. Campbell

    If you drive through your local “hood”, what are you likely to see in the way of businesses? Fast food, liquor stores, barber & beauty shops, rent to own, check cashing, convenience stores and a few other places. Most of these are essentially on life support from welfare money. What non-nefarious thing exists in the “hood” that I want to risk life and limb to partake of? (In high school, we used to go find the local drunk and have him buy us booze for a pack of smokes and a bottle of ripple.) Why would areas that can barely support marginal businesses that deal almost exclusively with low-rent people support prosperous banks? I may want a mansion, but I am not entitled to it.

    I’m not aware of any banking innovations that occurred in Africa. The same could probably be said for Australia prior to 1800. How many Aborigine owned banks are in the Land down Under? You can’t build supply chains if people are stealing all of the links.

  • Tim Mc Hugh

    I`m apprehensive that a Black owned bank would be similar to a Roach Motel in that my money would go in but it wouldn`t come out…

  • white is right, black is whack

    1 — Anonymous wrote at 5:59 PM on October 25:

    That is up to the blacks. As far as I am concerned, they can have their own banks, schools, facilities, buses, living districts, or better yet, their own country. Let them do what they want and be responsible for themselves

    I agree, although I want us whites to have the same rights they do. We should be able to keep our banks, schools, facilities, buses, living districts and countries all white without being forced to accept others.

  • Paul

    Shoud I be banking black? Me? Heck no!

    First Commandment: Thou shalt not submit thyself to receive medical treat from a black person, lest thou in an effort to improve thy health, greatly worsen it. For thou knowest not whether the medical licensure was bestowed as an act of Affirmative Action.

    Second Commandment: Thou shalt not board any plane or ship that has as it’s captain or navigator or other high-ranking officer a person that is black. Better for thee to remain on solid ground than to be cast to the bottom of the sea to become food for the fishes.

    Third Commandment: Thou shalt not entrust any thing of value to anyone who is black. For what gaineth a man from being politically correct if he thereby hast no money for bread?

    There are at least 7 more such commandments I am sure. I just haven’t thought them up yet.

  • Anonymous

    To PAUL and your commandments:

    1. Thou shalt NEVER get in a line, at any store, where the check out person is black..if you do thou shalt wait forever

    2. Thou shalt NEVER get in a line where blacks are in front of you, if you do thou shalt wait forever.

  • voter

    Should I be banking black?

    Do we have any choice?

    It’s been years since I’ve seen a white teller or officer in my local bank, or any of the local banks. Do they still hire whites? You wouldn’t guess it.

  • Anonymous

    Does this mean using black-only deposits to lend to black-only borrowers? With the bank protected, not by the FDIC, but by the black community? Despicable, as it would be if it were a white only bank. That said, give it a try and see how long you stay in business. And if you do, that the cost of loans to cover the credit loses from the clientele will be higher than average.

  • MAJ

    Black banks sound almost like an oxymoron.

    What are black banks anyway? Are there different rules?

    Like, deposits only stay in the bank for 30 minutes?

    Do I get free rims for opening a checking account?

    Do they have a “drive by” window?

    This is really simple. How would you answer a friend or relative who asks, hey, do you think I should put all my money in a financial institution run by black people?

  • Hunter Morrow

    To here people talking about blacks’ stricter standards or something you’d all think they were excellent places to park your money. I’ve got a nice black bank for you, if you are so inclined. It used political connections to get unwarranted TARP bailout money. OneUnited. Try it out if you want to “bank Black” but don’t so I didn’t warn you.

    http://www.amren.com/mtnews/archives/2011/07/zombie_update_o.php

  • Anonymous

    I’m looking at sandwich franchises on the web. Interesting that Subway has the lowest loan default rate 7 percent. Subway has almost no SBA loans. Blimpie’s has a 46 percent loan default rate. Blimpies has the highest rate of SBA loans.

    Whites are banned from SBA loans because they are White. SBA falls all over itself lending to non Whites.

    Interesting.

  • Anonymous

    Let’s take this idea that blacks should be patronizing black-owned banks one step further.

    I would suggest that ALL taxpayers pull their money out of any “financial institution” or company that received a government (taxpayer) bailout.

    Let’s bankrupt the SOBs (which should have been done in the first place). NO organization should be considered “too big th fail” . . .