The Congressional Black Caucus Foundation announced Sept. 17 that it will invest $5 million dollars in what it is calling a major investment in African American banking institutions.
The CBCF will purchase certificates of deposit at five Black banks in an effort at kickstarting lending to people of color, CBCF Chair and Rep. Chaka Fattah (D-Pa.) said.
“The pillars of power have to be both political and economical,” Fattah said. “We are leaning forward to say we are going to make an investment and expect others to follow.”
The financial institutions selected for the investment are City National Bank of Newark, Seaway Bank and Trust Company of Chicago, Mechanics and Farmers of Durham, N.C., Liberty Bank and Trust Company of New Orleans and Industrial Bank of Washington, D.C.
Fattah said the CBCF will monitor the CDs.
The effort, announced on the eve of the annual CBCF Legislative Conference, is being applauded by the National Bankers Association (NBA), the umbrella advocacy group for Black financial institutions. And it comes not a moment too soon, said Michael Grant, president of the National Bankers Association , “sending a message around the country to other national organizations… to other wealthy African Americans and to everyday consumers.
“‘Look, it is time for us to start investing in ourselves if we want to build our institutions, support our schools make sure our young people have jobs. We are going to have to do it.’”
The action comes at a time of declining fortunes for Black banks. Between 1888 and 1934, there were more than a 130 Black owned banks in the U.S. By the 1960s, said Grant, “We had 60 black banks. Now there are 30.”
Grant characterized the decline as an unintended consequence of the death of segregation in the U.S. As institutions that were once off-limits were open to Blacks, African American institutions suffered.
B. Doyle Mitchell, Jr., president and CEO of Industrial Bank. He spoke of working as a teenager in the bank that was founded 79 years ago by his grandfather.
“I realized how much the bank did everyday to help people that looked like you and me,” Mitchell said. “…as I got older, I saw how we did that, through loans, through waiting on people that were opening accounts…just helping and caring.”
Black banks are still relevant in the post-civil rights society, he said. “Black Banks are extremely relevant right now. Just take the church community. Most of the church loans from forever came from Black banks. When the Black churches grew large enough to build mega churches some of them started going to the larger banks, majority owned banks,” he said.
With the near-collapse of the global economy in 2008, he said, “some of these [White] banks started to pull back because these churches were struggling to pay. So, where are these churches turning to? The Black banks.”
Mitchell concurs and says more then 50 percent of their loans go to underserved communities.
The $5 million CBCF investment could trigger an upward surge for Black banks, Grant said.
“Five million dollars in five banks…the example is, multiply that by 50 national organizations,” he said. “Multiply that by 20 million African Americans, it’s leadership, they are stepping out there and they are saying we have confidence in these banks, we think feel as if they are safe and sound why you don’t?”
CEO of U.S. Black Chambers Ronald Busby said “Today’s announcement is truly historic in that we are showing what we can do with our own dollars.”