Black Banking Institutions

Updated: Feb 25, 2020


African American owned banks are dying! Not to be dramatic, but there was a time in our history in this country where there were many financial institutions that provided financial shelter for the Black community. Due to discrimination and practices such as redlining, Black owned banks served as a source of credit for businesses and consumers, providing jobs and education on personal money management, supported economic development in the Black community and most importantly, instilled pride in our people. Less than 20 years ago there were 48 banks that were African American owned or at least 51% owned by African Americans. As of 2019 there are only 21 remaining in the country. And it seems to dwindle down every few years. 

Black owned banks have been in existence since before the Civil War. After the Emancipation was signed, their importance was still very obvious. Pre slavery sentiments still abounded in the minds and hearts of people in America. The first Black bankers in the 1800s overcame constant obstacles to provide financial support to their communities. And for more than a century, in Black communities, these institutions provided finances for homes, businesses, automobiles and much more. Maggie Lena Walker who was the first Black female president of a banking institution said it best when she said, and I'm paraphrasing: “Let us put our money together. Let us use our money; let us put our money's out at usury among ourselves and reap the benefit ourselves. Let us have a bank that will take the nickels and turn them into dollars.” 

Unfortunately the decline of Black owned financial institutions has been ongoing. Many have been shut down and many of us stopped using them in favor of bigger more well known establishments with billions of dollars in assets. In 2009 there were 25, which is nearly half of what it was in 2001, but in 2019 it dropped to 21. Depending on where you look it may say 22 banks remain, but regardless the number is dropping almost annually. Black Enterprise stated some startling news on the state of Black owned banks, in that seven of the top ten largest banks had less assets in 2018 than in 2017. It’s disconcerting when you look at the fact that Black Americans will more likely be denied a home loan or small business loan from mainstream banks than White Americans. Many Black Americans often rely on check cashing places or worst payday lenders which charge high interest rates, and provide not even basic financial education to its customers. Thus showing the importance of banks that are run by African Americans. 

In 1989 there were Federal laws put in place to preserve minority owned institutions and to provide technical help to prevent these same institutions from dissolving. There were even provisions for new minority owned banks to be founded. But as we can see these federal laws have failed and failed the communities in which these banks served. Economists say that Black owned banks are simply not in the same league as Chase or Bank of America. In an article for Black Enterprise, William Michael Cunningham an African American financial strategist says: OneUnited Bank, No. 1 on the BE Banks list with assets of around $656 million, is much smaller than banks serving other racial groups. He pointed to Asian-owned East-West Bank based in Pasadena, California, with assets of nearly $40 billion as an example. And, of course, America’s largest bank, New York-based JPMorgan Chase, which caters to multiple races, has assets exceeding $2.7 trillion.

He further states: “Banking regulators have a policy of keeping black banks small and of keeping new black entrants out,” Cunningham says “Without assets and scale, black banks are limited in the amount of lending they can do. No lending means no significant economic development. They are useless in this regard, except as window dressing.”

All these facts just prove how important it is for us to support our own. In the last few years there have been many initiatives to help build up Black owned banks or to “Bank Black.” People such as Kevin Cohee, CEO of One United Bank, rapper/activist Killer Mike, Bank Black USA, even certain congressmen initiated bills in January of 2019, such as the “Rescue Act for Black and Community Banks” to bring regulatory relief for Black Banks from Congress, help save Black banks from failing and boost wealth building amongst Black consumers and businesses. But we can’t rely solely on Congress to help save our banks, we have to put our money into these establishments and help it grow organically. But the issue is, most people don’t know where to bank or which establishments are in fact, Black owned. 

Our next several posts are gonna talk about the remaining Black owned financial institutions and you can look into which one can best serve your financial needs. In the words of Maggie Lena Walker, if we put our money together, we can reap the benefits ourselves and turn nickels into dollars. 




Capital Savings Bank of Washington DC, 1888

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