America’s Last Black- Owned Banks Are Fighting To Survive
yourblackworld | 5/11/2017, midnight
The first bank organizes and operated by black Americans; Capital Savings Banks was founded on October the 17th, 1888 in Washington DC. This was at a time when the mere notion of offering financial services to the African American community was an idea in Utopia. Now African-American-run banks are in a fight for survival, even though many advocates argue that many blacks remain starved for banking services. 25 black-owned banks were counted by the Federal Deposit Insurance Corp remaining in the country last year, which is a significant decline from 48 in the year 2001. That decline came even as the overall number of banks owned by the minority’s increased slightly, going from 164 to 174. Moreover, the majority of African American-owned banks that remain open are on shaky ground and struggling to hold on in the face of the economic turmoil that has ravaged many of their customers. Financial analysts say 60 % of black-run banks, in 2013 lost lots of money.
For years, black run banks have been struggling, as their competitive mainstream institutions were picking their best-heeled customers. The increased competition came amid what some call a string of strategic blunders. Historically, the banks headquartered in the middle of traditional African American communities such as Chicago’s South Side, New York’s Harlem and Washington, D.C.’s Shaw, failed to modernize their services. Few offered the branch networks, electronic banking and other automated services that have come to dominate the business. And many of the banks failed to follow the black middle class to the continental suburbs.
Still a small fraction overall
African American banks are taken together just control 5 billion dollars’ worth of assets, which is a subtle portion compared to America’s banking behemoths, such as JP Morgan and Chase or Wells Fargo. Wells Fargo by itself has some 1.7 trillion dollars’ worth of assets. Even by the standard of minority banks, black banks tend to be small. Minority banks as a group had some 181 billion dollars in assets combined at the end of 2013. The economic shock continues to harass the African American community, upending black business and even churches, which historically have been the best customers for black banks.
Eat your dog food
More African American consumers should make a priority to the bank with the institutions that would serve their communities when others would not according to the National Bankers Association’s grant. “The African American community itself is going to have to do more to support its businesses, which includes the banks,” Grant said. “Why are we boycotting our businesses? These are the banks that were there for us before integration. We should be there for them now.”