How #BankBlack could help narrow the US wealth gap

Another hashtag revolution is drawing attention to the wealth gap experienced by the African American population: #BankBlack.

#BankBlack encourages those protesting police brutality to move their money to black-owned banks. After trending over the summer, black-owned banks have reported that thousands of new accounts have been opened and that their assets have grown by about $6 million.

Rapper Killer Mike is credited with popularizing the hashtag earlier this summer. In an interview with Hot 107.9, he urged listeners to take immediate action.

“You can go to your bank tomorrow and you can say, 'Until you as a corporation start to speak on our behalf, I want all my money. And I'm taking all my money to Citizens Trust.' I'm saying take your money, out of this dog's hand, out of its paws," the artist told listeners.

Now, those protesting police brutality don’t have many black-owned banks to choose from. Killer Mike’s bank, Citizens Trust, is one of only 23 black-owned credit unions or savings and loan associations in the country

The largest black-owned bank in the United States is OneUnited Bank. President Teri Williams says there are far fewer black-owned banks now than before the 2008 financial collapse. But the collapse and subsequent recession aren’t the only factors in the decrease.

“A lot of the black-owned banks were small and just didn’t have the resources to invest in online banking or mobile banking and bill pay," she says. "But I think the ones that are remaining, that do have that technology, are here to stay."

Mehrsa Baradaran is a professor of law at the University of Georgia and author of “How the Other Half Banks” and the forthcoming book, “The Color of Money: A History of Black Banking.” She says the first black-owned bank, the Freedmen’s Bank, was signed into existence by Abraham Lincoln a month before he was assassinated. Frederick Douglas served as one of its presidents.

Baradaran says today we’re seeing a historically low number of black-owned banks in the U.S. “Before the Great Depression, there were 130 black banks across the country," she says.

But activism can often fuel the growth of such institutions. “Often, you see the industry rise after there is a significant hardship," Baradaran says. "If you’ve got, say, the Great Migration or some of the civil rights movements, you see this rise in black banks.”

That seems to be the case again. With the ongoing #BlackLivesMatter and #SayTheirNames movements, Williams’ bank has certainly been more flush. “There has been a significant infusion in terms of deposits,” she says.

Williams adds: “What it really has meant is that the black community is finally coming to recognize the power of our spending dollars.”

Williams says the African American population spends about $1.2 trillion a year, and yet only 2 percent is spent in black communities. “Which makes it very difficult for us to build wealth and grow black-owned businesses,” she says.

“There’ve been studies to show that if we could increase the amount of business that we give to black-owned businesses, we could create a million jobs in the black community," she says. "That’s something we can do on our own, without government support.”

Black-owned banks used to help circumvent practices like redlining, housing discrimination and predatory lending. Today, they help underserved, low-income communities by providing affordable loans.

Baradaran calls black-owned banks “the engines of wealth growth in the black community.” She asks, “Will these banks make a dent in the wealth gap? I think the answer is they will try. They are the only ones trying.”

The hashtag #BankBlack is not intended to encourage charity. “As we always say to people, 'It is still your money.'” Williams laughs. “It’s not like it’s a contribution, it’s a deposit. But what it does is it provides lower-cost funding to black-owned banks and allows us to offer the lending services that we need to offer to these communities.”

This story is based on a segment that aired on PRI's The Takeaway, a public radio program that invites you to be part of the American conversation.