Black-owned banks in the U.S. were once a financial haven for African-Americans at a time when discrimination in the industry was common. Today, these banks function as engines for economic revitalization in often-distressed communities. But their numbers are in decline, and some people are trying to change that.
In recent months, some black banks reported a rush of new customers after a video circulated on social media of a TV appearance by rapper Killer Mike in which he called on individuals to open savings accounts in black-owned institutions. The #BankBlack movement was credited with bringing $20 million in new deposits to OneUnited, says a representative for the black institution. It had total assets of about $646 million as of September, according to the latest data from the Federal Deposit Insurance Corp.
Justin Garrett Moore was among those who heeded the call after receiving multiple texts from friends about #BankBlack in July. He said he also was motivated by distressing news of racially charged killings that dominated national headlines. The Killer Mike video “surely directed my motivation to look into it more,” he says, “particularly with the overall climate with police violence [and] the Black Lives Matter movement.”
Feeling he had to act, the New York urban planner opened savings accounts at two banks, Liberty and OneUnited, that are majority-owned by African-Americans. He first withdrew $1,000 from his account at a national bank and deposited half in each account. Over a few months, he gradually transferred a total of about $12,000 to the black banks. He later closed his account at the national bank and started spending time urging others to join the #BankBlack campaign.
Why black-owned banks matter
Black-owned banks “have a human and historical connection to Reconstruction, when newly freed slaves had nowhere to go but these banks,” says Michael A. Grant, president of the National Bankers Association, a Washington, D.C.-based organization of minority- and women-owned banks.
In recent years, black-run banks have struggled financially. They took a bigger hit from the housing crisis than the banking industry at large, as communities they served suffered higher-than-average job losses and home foreclosure rates.
In 2007, prior to the recession, there were 41 banks with majority African-American ownership. There were 44 in 1986, the year Congress passed a law designating February as National Black History Month. Today, the number of black-owned banks has fallen to just 23 institutions.
At the same time, the need for these institutions has grown. African-Americans as a group are underserved by financial services. More than 53% of blacks are either unbanked or underbanked, meaning they supplement their bank account with alternatives such as check cashers. That’s nearly double the percentage of the population as a whole, according to the FDIC.