Summary of recent news articles on black-owned banks 09/12/16-09/23/16

Boosting A Black Bank. By Karen Morales, Bay State Banner. September 21, 2016.

In less than a month, $10 million in deposits were added at OneUnited, and customer activity “continues to be at elevated levels,” said Teri Williams, President of OneUnited Bank. She said the movement is a way to create change by not only moving your money but also moving your mind or changing your mindset. Williams believes that the #BankBlack movement can be a public reminder that black-owned banks and businesses offer the same quality service as any other company.

Past & Present: The 'Black Money Matters' Movement. By Robert E. Weems Jr., KMUW 89.1 Wichita Public Radio. September 20, 2016.

While the Black Money Matters Movement is a favorable development in the context of African American business history, the past several decades have been disastrous for many historic black enterprises. As recently as the 1960s, there were more than 50 viable black insurers in the United States. Today, that number has dwindled to just two, and will be zero by the end of this decade based upon recent trends.

A Letter of Appreciation to All Who Decided to Open Accounts in Black Banks: This Might Prove to Be a Game-Changer. By Michael Grant, The AFRO. September 16, 2016.

The president of the National Bankers Association Michael Grant says opening accounts in Black banks is a great first step for African Americans to achieve financial independence. And next, the Black bankers have a responsibility to teach banking 101 to the masses. The more home equity loans are used to create new businesses or to expand existing ones, the more jobs (and job training) these businesses can provide. The bank’s increased lending capacity is how we begin growing the collective wealth of the community.

How #BankBlack Could Help Narrow the US Wealth Gap. By Eliza Lambert, The Takeaway, Public Radio International. September 15, 2016.

The #BankBlack hashtag revolution has grown black-owned banks’ assets by about $6 million. The President of OneUnited Bank Teri Williams says, “What it really has meant is that the black community is finally coming to recognize the power of our spending dollars.” Mehrsa Baradaran, the author of the book “The Color of Money: A History of Black Banking”, calls black-owned banks “the engines of wealth growth in the black community”, and the only ones trying to make a dent in the wealth gap.

Some Residents Support Black-owned Bank. By Alva James-Johnson, Ledger-Enquirer. September 13, 2016.

The local organizing committee of the Justice Or Else! Millions More March formed last year to promote the importance of supporting black businesses in the Columbus community. They put the next spotlight on the Columbus branch of Citizens Trust Bank, encouraging black residents to open accounts with the only black-owned bank in the city.

The Promise and Challenge of Moving Money Into Black-Owned Banks. By Gillian B. White, The Atlantic. September 12, 2016.

#Bankblack’s successes are certainly impressive, but making black-owned banks economically viable in the long term will require larger and more systemic change. Less than 50 years ago, legislation mandated that white banks serve black customers, exposing black-owned banks to far more powerful competitors. Since the Great Recession, smaller banks have objected to stricter compliance reporting and heightened capitalization standards. John Robinson said the revival of black-owned banks would require a massive change to the American banking system, which still favors the largest banking operations over community-based banks and credit unions.

Summary of recent news articles on black-owned banks 08/31/16-09/11/16

Black-owned Banks See Surge in Deposits. By Akilah Johnson, The Boston Globe. September 10, 2016.

The #bankblack movement has brought OneUnited Bank more than $10 million in deposits in less than a month. Black-owned banks across the country have struggled in recent years to keep pace with a changing world. William Michael Cunningham thinks having another #bankblack event with a failing black-owned bank won’t make a long-term difference. “The question becomes: How do you harness and channel the spending of the $1.1 trillion black buying power so you’re actually benefiting from it?” says Darnell Williams.

What’s Next if Payday Loans Go Away? By Tara Jeffries, Morning Consult. September 7, 2016.

The proposed Consumer Financial Protection Bureau regulation aims to prevent borrowers from being stifled by high interest rates and monthly payments. Stronger regulation of payday lending could increase the use of financial technology such as online marketplace lending, said William Michael Cunningham. He also suggested, “CFPB should take some of that fine money that they’re getting from these financial institutions and create a fund to create responsible depository institutions serving some of these communities.”

How U.S. Backed Banks Robbed Ex-Slaves of $66 Million. By Admin, Huewire. September 1, 2016.

The Freedmen’s Savings and Trust Company was established and run by white men in 1865 for ex-slaves. Due to fraud, mismanagement, and discriminatory lending, the bank closed in 1874, and 61,144 black depositors were robbed of the modern equivalent of $66 million. The failure of the bank left many African Americans distrustful of the white banking community. And it’s still harder for African Americans to get mortgages or small business loans compared to whites with the same variables. Usher and Booker T. Washington call on people to bank black. “Empowerment starts with ownership,” said Usher.

The Rise and Fall of Black Wall Street. By Alexia Fernández Campbell, The Atlantic. August 31, 2016.

The Jackson Ward neighborhood of Richmond, once dubbed America’s “Black Wall Street”, was one of the most prosperous black communities in the United States at the turn of the 20th century. Richmond is where the first black banks opened. The first black bank, the St. Luke Penny Savings Bank opened here. But due to troubled loans and lack of capital, the bank was taken over in 2011, renamed as Premier Bank, and lost its African American majority ownership. The bank still mainly serves black community and gained preference of black entrepreneurs.

What’s Next if Payday Loans Go Away?

Tara Jeffries from Morning Consult wrote about the payday loans regulation after her interview with William Michael Cunningham from Creative Investment Research, Inc.

"As the Consumer Financial Protection Bureau prepares to finalize proposed rules cracking down on payday lenders, critics and proponents alike are speculating on what would fill the need for short-term, small-dollar loans. The proposed Consumer Financial Protection Bureau regulation aims to prevent borrowers from being stifled by high interest rates and monthly payments. Stronger regulation of payday lending could increase the use of financial technology such as online marketplace lending, said William Michael Cunningham. He also suggested that CFPB should take some of that fine money that they’re getting from these financial institutions and create a fund to create responsible depository institutions serving some of these communities. Dennis Shaul, chief executive of the Community Financial Services Association of America, took aim Tuesday at the CFPB, saying it “buried and ignored” a slate of positive testimonials about payday loans. ”

Click on https://morningconsult.com/2016/09/07/whats-next-payday-loans-go-away/ to read the full story.

William Michael Cunningham to deliver fourth consecutive Texas Economic Forecast

WASHINGTON - Sept. 1, 2016 - PRLog -- The Texas Association of African American Chambers of Commerce (TAAACC) will host its 16th Annual Conference in Austin, Texas on September 22-23.

"We are especially pleased that William Michael Cunningham will deliver his Texas Economic Forecast for the fourth consecutive year," said TAAACC President Charles O'Neal. Mr. Cunningham is a Washington, DC-based economist, author and business expert. "William's analysis and understanding of the dynamic Texas marketplace is always remarkably insightful, and he never makes his observations without offering solutions for the benefit of Texas Black-owned businesses. We are thrilled to be able to provide this invaluable presentation to conference attendees."

Mr. Cunningham's update follows his 2016 forecast, delivered at the Texas Association of African American Chambers of Commerce (TAAACC) previous Annual Conference in Austin, Texas September 24-25, 2015. As he noted at the time,

"Economic conditions in Texas are strong. Our research indicates that the economic recovery is finally getting to the most difficult to reach population segment, African Americans, those hardest hit by the crisis to begin with."

As reported in The Dallas Weekly on August 18, 2015. a presentation by Mr. Cunningham at TAAACC sparked successful Texas crowdfunding legislation.

RSVP at: http://taaacc.org/event-2295166

Summary of recent news articles on black-owned banks 08/21/16-08/30/16

Black-owned banks tend to serve communities with weaker repaying ability that have been hardest hit by the financial crisis. This has led to black bank losses, and as larger banks expand to take market share in black communities, black-owned banks need to develop new business models to balance social mission and profitability.

Recent black community economic empowerment efforts have encouraged many African Americans to bank at black-owned banks and patronize black-owned business. The question is how can black-owned banks make this movement sustainable?

What Can Be Done to Save Black-Owned Banks? By Kevin Wack, American Banker. August 30, 2016.

Today there are 23 African-American-owned banks -- a 58% decline since 1994, faster than the decline of U.S. commercial banks. Cunningham projects that only four or five African-American-owned institutions will remain open in 2028. And he criticizes the federal regulators for failing to take greater advantage of new tools under the Dodd-Frank Act that were designed to increase diversity in the financial sector.

Illinois Widens Playing Field for Chicago’s Black Entrepreneurs. By Johnny Magdaleno, Next City. August 26, 2016.

On August 24, Illinois Governor Bruce Rauner announced his state was widening the playing field for minority and women entrepreneurs by opening up applications for the first program aimed at business owners from disadvantaged communities, called Advancing the Development of Minority Entrepreneurship. The day after, he also held a ceremony to mark information technologies as Illinois’ first sheltered market. “African-American businesses are starting at an increasing rate, but the issue is they’re not profiting at an increasing rate,” Cate Costa, director of entrepreneurship at the Chicago Urban League says.

Is The Black Bank Movement A Fad Or Here To Stay? By Leoneda Inge, North Carolina Public Radio®-WUNC. August 26, 2016.

Mechanics and Farmers Bank, one of the oldest black-owned banks in the country is based in Durham, where bank officials report a rise in new accounts and in the #moveyourmoney movement to keep the momentum going. Maceo Sloan, who was the chairman and CEO of NCM Capital in Durham for many years, said “A hundred dollars is going to do nothing for their bank. What needs to happen, is that African Americans need to go take all their money out of all the other banks and put it in their black banks, that might make a difference.”

Another Black-Owned Bank Cements Over $1M in Deposits as #BankBlack Movement Continues. By Kiersten Willis, Atlanta Black Star. August 26, 2016.

Washington D.C.-based Industrial Bank crossed the $1 million mark when customers flocked to the institution. It earned $2.7 million in new deposits due to an increase in patronage by 1,500. Black Enterprise reported the surge is thanks to D.C.-area activists who launched #DivestToInvest. It encouraged African-Americans to support Black-owned banks. Industrial Bank’s achievement follows OneUnited Bank’s $10 million transfers in less than a month.

#BlackBizMatters: 3 Reasons to Bank Black. By Kali Wilder, Black Enterprise. August 25, 2016.

National Bankers Association President Michael Grant explains how banking black strengthens communities and small businesses. To bank black is a progressive way to vent frustrations. And more deposits in black-owned banks means more lending to small businesses in our community, therefore more jobs and more wealth. Finally it’s consciousness-raising. The movement is a great opportunity to teach people about economic education, how to spend and manage their money, and how to read contracts.

What Can Be Done to Save Black-Owned Banks? By Kevin Wack from American Banker

A longtime advocate for African-American-owned financial institutions argues that regulators should be taking more forceful action to keep them alive.

by  KEVIN WACK

AUG 30, 2016 1:40pm ET

Self-Reliance: "Nobody's going to protect you but you. And that's justification, rationalization enough for the creation, maintenance, expansion of black-owned banks," said William Michael Cunningham, a vocal supporter of the shrinking sector.

Community banks all over the country are disappearing fast, part of a well-known trend that stretches back several decades. The pattern at black-owned banks is even starker, though far less frequently discussed.

Today there are 23 African-American-owned banks -- a 58% decline since 1994. That is according to new research from Creative Investment Research, a Washington-based firm that specializes in community development and impact investing. For the sake of comparison, the total number of U.S. commercial banks declined by 49% between 1994 and 2015.

Perhaps even more striking is the small size of those black-owned banks that remain in business. Nine of the remaining African-American-owned banks have less than $100 million in assets, and none of them has more than $700 million in assets.

These realities are distressing to William Michael Cunningham, chief executive of Creative Investment Research and a longtime advocate for black-owned banks. Cunningham and his colleague Crystal Liu project that only four or five African-American-owned institutions will remain open in 2028. In order to be included on their list of black-owned banks, at least 51% of the firm's common stock must be owned by African-Americans.

Cunningham says that black-owned banks are being hurt by some of the same factors that are leading to consolidation industrywide, including a merger-friendly regulatory environment and technological innovations that reward scale.

But he lays some of the blame at the feet of federal regulators, criticizing them for failing to take greater advantage of new tools under the Dodd-Frank Act that were designed to increase diversity in the financial sector. (When asked about those statutory changes during congressional testimony last year, Federal Reserve Board Chair Janet Yellen said: "We are very committed to doing what we can to facilitate inclusion of minorities and women.")

Cunningham, who was trained as an economist, has experienced his own frustrations with banking regulators, having tried and failed to launch a black-owned bank holding company during the financial crisis.

In the interview, Cunningham spoke about how black people were victimized during the subprime mortgage era, how majority-owned banks could support black-owned institutions, and the growing opportunities for banks to make money in black communities.

The interview has been edited for length and clarity.

What conclusion do you draw from the financial crisis and the impact it had on black households?

WILLIAM MICHAEL CUNNINGHAM: I think the conclusion I draw is that you can't rely on the financial system itself to protect your interests. Now that's a lesson that everybody learned, but it's especially relevant for African-Americans. Nobody's going to protect you but you. And that's justification, rationalization enough for the creation, maintenance, expansion of black-owned banks.

What have been the key factors driving consolidation?

In terms of factors in the decline of black banks, regulatory hostility masquerading as regulatory concern. Part of what happens is you get all these people at the regulatory agencies who say, "Oh yes, we're familiar with your black bank. And we're here to help you." Except when you really need the help. Then there's nothing they can do for you. Because basically, when you really need the help, what you're talking about is money. And they don't have anything for you.

I think you had hopes after Dodd-Frank was passed that these Offices of Minority and Women Inclusion inside the various regulatory agencies would have a positive impact, and you've been disappointed. Tell me about what you feel has gone wrong with those offices.

They were so frightened about getting called to the carpet by a right-wing Congress that they decided to take a super-cautious approach. They decided to slow-walk, in bureaucratic terms. Not do anything interesting. Do the very bare minimum that the law required, or asked for, as opposed to being expansive. As opposed to looking at the decline in the number of black-owned banks and using that as an excuse to get active.

Do you think there's an opportunity – if implemented in a more aggressive way – for those offices to help spur banking industry support for black-owned institutions?

There's a number of ways. Number one is of course money, funding. Some of the majority banks have invested in black-owned banks, and they've lost their money. But still, that is one potential core support of the black-owned banking sector.

Secondly, advisory and technical support. A lot of the black-owned banks don't have apps to engage with their customers. Well, why doesn't Bank of America simply give their app – they've got a pretty good app – why don't they simply give it to a bunch of black-owned banks? They could. But the regulators aren't pressing them on it. There's all kinds of security and liability issues. I get that. But at least look at the issue, talk about it. And they're not even doing that.

Despite the consolidation trend, you've argued that the potential market for black banks is growing. Tell me about what your research has found.

We found that [the] black percentage of the population has been growing, that black purchasing power has also been growing. Black education, high school graduation rates, as well as college graduation rates -- getting better. So the underlying demographics, they're actually good.

It's a double-edged sword. Because the numbers are getting better, that makes the sector more attractive to anybody -- majority banks, too. So part of what you're seeing is people, I don't want to say coveting the market, but at least not being afraid of it.

We had a story back in July about something called the Black Money Matters Project, urging African-Americans to open accounts at black-owned and black-operated banks and credit unions. Do you think there's much promise in those types of efforts, or is it going to take action by the government to really make a difference?

I'm pleased to see them. But remember, we've seen them before. We saw them after the L.A. riots. My hope is that with the right set of circumstances, the right set of partners, some government and regulatory assistance, using social media and technology to enhance the impact, that you could see this movement make a difference. So I like it. I'm optimistic – cautiously optimistic, I should say, because I have seen this before.

Click on http://www.americanbanker.com/news/national-regional/what-can-be-done-to-save-black-owned-banks-1091012-1.html to read the story.

ShoreBank successor Urban Partnership seeks a reboot

Steve Daniels from Crain's Chicago Business wrote about the capital raise of Urban Partnership Bank after his interview with William Michael Cunningham from Creative Investment Research, Inc.

"After burning through the capital from Goldman Sachs and Morgan Stanley, Urban Partnership Bank turns to Chicago headquartered banks this time to raise at least $15 million in fresh equity. One challenge UPB faces is to convince local banking chiefs that it won’t need further investment in the future, and the other is to be innovative enough to have a small-scale business model different from ShoreBank, said William Michael Cunningham."

Click on http://www.chicagobusiness.com/article/20160820/ISSUE01/308209991/shorebank-successor-urban-partnership-seeks-a-reboot to read the full story.

When it Comes to Black Financial Institutions, Representation Matters

Arionne Nettles from Chicago Defender wrote about the importance of supporting black-owned banks after his interview with William Michael Cunningham from Creative Investment Research, Inc. 

As the importance of Black banks comes back into the spotlight, seeing the bigger picture is essential, an expert says.

The long-term benefit is protecting and building the Black community’s financial interests, according to William Michael Cunningham, an economist and impact investing specialist at Creative Investment Research. If there are no more Black-owned banks, he says, Blacks will lose power, and that past instances show how certain groups can be targeted for profit.

“I would tell [anyone who questions the importance of Black banks] to think about the recent financial crisis and how a lot of the large, non-minority financial institutions did not represent or protect their financial interests,” Cunningham said. “They put a lot of them, their neighbors, friends, and family members into loans that were inappropriate.”

During the Great Recession, a disproportionate number of Black Americans were advised to take out mortgages that they could not afford to pay off. Federal Reserve studies show that there were more subprime loans in low-income areas in which unemployment rates were high.

Wells Fargo — the largest home mortgage lender in the U.S. — eventually settled a discrimination suit in Baltimore in 2012 after the city alleged it targeted minorities, and just this year, it agreed to pay the U.S. government $1.2 billion for hiding bad loans. Being at the mercy of these banks, Cunningham says, is not ideal for the community.

If we’re in trouble without Black banks, then the situation is becoming a serious one. In 1994, the U.S. had 55 Black-owned banks compared to today’s 23. The number of Black banks in Chicago dropped from 6 to two during that period. Only Seaway Bank and Trust Company and Illinois –Service Federal Savings and Loans.

Recent police brutality cases brought along a surge in new accounts at Black banks across the country to build up Black buying power and banks like Seaway saw a surge. In July, 574 new accounts were opened at Seaway, which brought in $2 million in deposits. It was the most the bank ever received in a single month. Bank officials are hoping that the momentum continues.

“One of the reasons Chicago is important, because of the long history that Chicago has had with the strong Black middle class out of Chicago,” Cunningham said. “Chicago had more Black banks than any other major city back in 1994. You had Black disposable income, strong Black wages, and strong Black employment in Chicago.”

Those Black banks mean inclusion and representation, Cunningham says.

“We’d be pretty much shut out and at the mercy of others to represent our financial interests within this global community,” he said. “So, there might be things that are culturally specific to our community are going to go unknown and unrecognized in the broader community.”

Culturally-specific understanding can support small business lending and generate employment.

Cunningham uses this as an example: if a Black person requested a business loan from a majority bank in the 1980s to buy turntables, it would likely not work out. But, a Black bank, with representatives that know of Run DMC and the potential of hip-hop culture would know that his loan request was valid.

“If you don’t have that hook into the culture, it’s going to sound silly,” he said.

That connection to your needs is why Cunningham recommends that every Black person opens up an account at a bank “run by people who look like you and where you have the expectation that they will look out for or at least be sensitive to both your issues and your culture.”

This need is increasingly important for Blacks who are unbanked (not using any financial institution) or underbanked and (using mostly check cashers). For Black America, these percentages lie around 21 and 33 percent, respectively, according to Federal Deposit Insurance Corporation.

Cunningham says staying away from check cashing companies is a way to keep money circulating within the community.

“Another thing that a lot of Black people know is that so many check cashers and all of these other vampires are in our community is because they’re making money,” Cunningham said. “They wouldn’t be there if they weren’t. So, they are after that $1.2 trillion in spending power, and this is another way that spending power is siphoned out of the Black community. You have to have a long-term perspective.”

Click on https://chicagodefender.com/when-it-comes-to-black-financial-institutions-representation-matters/ to read the full story.

Summary of recent news articles on black-owned banks 08/14/16-08/20/16

Black-owned banks tend to serve communities with weaker repaying ability that have been hardest hit by the financial crisis. This has led to black bank losses, and as larger banks expand to take market share in black communities, black-owned banks need to develop new business models to balance social mission and profitability.

Recent black community economic empowerment efforts have encouraged many African Americans to bank at black-owned banks and patronize black-owned business. The question is how can black-owned banks make this movement sustainable?

Black-owned Banks are Disappearing at an Alarming Rate. By Rob Wile, Fusion. August 17, 2016.

The number of black-owned financial institutions fell by 24% from 2007 to 2009, partly due to the consolidation trends taking place in the banking industry, but more importantly the lack of commitment from federal bank regulators to supporting minority banking institutions. A rep for the FDIC says they are particularly focused on this issue and how it relates to MDIs and are eager to work with interested parties.

Nonprofit BMe Deposits $1,000,000 in Black-Owned Bank, Calls on Others to #BankBlack. By Breanna Edwards, The Root. August 18, 2016.

BMe Community, a national network dedicated to strengthening communities with the help of black men, is redirecting $1 million of its deposits into OneUnited, the nation’s largest black-owned bank, making BMe the “preferred nonprofit” for the bank, while OneUnited has become the “preferred bank” for the organization.

As #BankBlack Moves Money, Black Credit Unions are Ready. By Zenobia Jeffries, Yes!Magazine. August 20, 2016.

While the number of Black-owned banks is down to only 22, there are 318 Black credit unions uniquely positioned to invest in their communities. Supporting African American institutions and businesses, particularly credit unions can directly help close the wealth gap between Black families and White families. Any time a credit union does well, a community does well, said Jim Nussle, head of the Credit Union National Association.

ShoreBank Successor Urban Partnership Seeks a Reboot. By Steve Daniels, Crain’s Chicago Business. August 20, 2016.

After burning through the capital from Goldman Sachs and Morgan Stanley, Urban Partnership Bank turns to Chicago headquartered banks this time to raise at least $15 million in fresh equity. One challenge UPB faces is to convince local banking chiefs that it won’t need further investment in the future, and the other is to be innovative enough to have a small-scale business model different from ShoreBank, said William Michael Cunningham.

Whenit Comes to Black Financial Institutions, Representation Matters. By Arionne Nettles, Chicago Defender. August 20, 2016.

Chicago has the strong Black middle class, but the number of Black banks in Chicago has dropped from 6 to 2 since 1994. William Michael Cunningham, a social investing advisor at Creative Investment Research said that the long-term benefit of preserving black-owned banks is protecting and building the Black community’s financial interests. Non-minority financial institutions did not represent the best financial interests of blacks.