The Untold History of Black Banking in America

Make Change ^ | February 5, 2018 | Michael Taylor

[re_tail20]

Professor Mehrsa Baradaran is the author of The Color of Money: Black Banks and the Racial Wealth Gap, a history of black-owned and black-oriented banks in the United States. It’s not a happy story.

Baradaran’s narrative spans the post-Civil War Reconstruction years to the present day and in it she tracks the government’s basic failure to equip former slaves with trustworthy wealth-building institutions in the 1800s, the disastrous effect poverty and racist economic segregation had on black banks’ ability to serve their community, the cynical use of “black capitalism” rhetoric by mainstream politicians (particularly Richard Nixon) to diffuse demands for meaningful economic justice reforms, and the impossible situation many black financial institutions found themselves in as a result of the Great Recession.

Throughout, Baradaran doesn’t shy away from tough questions about whether economic success is meaningful without corresponding political power, whether banks created only to serve black communities could ever succeed, and what white America’s current responsibility is to an entrenched and growing racial wealth gap.

As a student of history and finance myself, I was fascinated by her book (read my review here), which exposed a side of capitalism and finance about which I know very little. Baradaran and I had a great discussion recently.

Interview has been condensed and edited for clarity.

Make Change: I want to have you explain some of the history of the Freedman's Savings Bank, which I had never heard of, and which is maybe the most awful story you tell. But I suspect, unless you were a scholar of black banking, most people don't know this story.

Mehrsa Baradaran: It's surprising that we don't know this story…

The Freedmen's Bureau was created by [President Abraham] Lincoln. It is meant to help freed slaves transition into capitalism. You've gone from being capital to becoming...

[re_tail20]

I saw this article on my Facebook feed, which said that 60% of African Americans in the South don’t have checking accounts. I don’t know how true this is. If it is, I don’t know any practical ways of remedying it.

[dfwgator]

Loan Officer: Now, let me get this straight, Mr., ..uh.. Mr. White. You'd like to borrow $50,000 from our bank, but you have no collateral, you have no credit. You don't even have any I.D. Is that correct?

Eddie Murphy: That's right.

Loan Officer: Mr. White, I'm sorry. This is not a charity. This is a business...

White Loan Officer: Uh, Harry, why don't you, uh, take your break now? I'll take care of.. uh.. Mr. White.

Loan Officer: Well.. okay. Thanks, Bob. [ exits ]

White Loan Officer: [ laughs, then sits ] That was a close one, wasn't it?

Eddie Murphy: It certainly was.

White Loan Officer: We don't have to bother with these formalities, do we, Mr. White? Huh?

Eddie Murphy: What a silly Negro!

White Loan Officer: Just take what you want, Mr. White. Pay us back anytime. Or don't. We don't care.

Eddie Murphy: Tell me, do you know of any other banks like this in this area?

[I want the USA back]

I do not want to pay for the injustices committed by other people. So stop trying to take my money.

[dsc]

“the cynical use of “black capitalism” rhetoric by mainstream politicians (particularly Richard Nixon)”

FU both.

[ilovesarah2012]

Banks are so 20the century.

[ClearCase_guy]

I get the feeling that half of the problems were due to the failure of the government to create black-focused economic institutions which could have helped this troubled community.

And I get the feeling that the other half of the problems were due to segregation and the unfortunate reality that blacks had to help their own trouble communities do the best they could within their own world through black-focused economic institutions.

Damned if you do/damned if you don’t?

[PIF]

I don’t know how true this is. If it is, I don’t know any practical ways of remedying it.

—
Beginning steps:

Step 1. Teach them to write
Step 2. Teach them to read

[Ruy Dias de Bivar]

***The Freedmen’s Bureau was created by [President Abraham] Lincoln.***

I posted a 150 year old cartoon about the Freedman’s Bureau here several years back. The Mods pulled it so fast it did not even leave a shadow.

[nopardons]

Stupid, extremely RACIST, POS book and article!

Major DEPRESSIONS, BUBBLES, and white owned banks going under, went on for over 100 years prior to THE GREAT DEPRESSION and hit whites very hard too.

I don't know if it is true, or not, that a vast number of today's Southern blacks don't have a checking account; however, I bet that they have credit cards.

[Buckeye McFrog]

Should not come as a surprise. Blacks were forced to create their own parallel institutions for nearly everything during Jim Crow.

[Buckeye McFrog]

My credit union allows me to have a checking account so long as I maintain at least a fifty dollar balance.

Just sayin’.

[Avalon Memories]

I didn’t know the act of banking had a color.

[goodnesswins]

Could it be that they don’t want to deal in anything except CASH.....hhhhmmmmmm???? And, why would that be?

[semaj]

"I do not want to pay for the injustices committed by other people."

No, I understand, really. You'll be content to just sit back and do nothing and continue to reap the collective benefits, that's all.

[abb]

I’m a banker. That is, I’m a volunteer loan officer for a small credit union. Nowhere on our applications for membership or loans is there a place where the race or sex of the applicant is noted.

If the applicant has a good credit history, has sufficient collateral, and enough income to float the loan, we lend the money every time.

[VietVet876]

It does. Green. Many whites like to earn it and put it to work. Some blacks like to smoke it put themselves to sleep on it.

[Myrddin]

The simple truth is that you can't expect to have credit extended if you fail to repay your debts. It's a character flaw. It's theft. Projecting your failure onto others and labeling them racist to deflect your own faults is not a winning strategy.

[wally_bert]

When SNL was funny.