On the eve of the grand opening of the new National Museum of African American History and Culture, the U.S. Treasury Department held a forum that examined the role of Black banking in the history of the nation. Linking financial inclusion to citizenship and social stability, the Treasury Department’s Freedman’s Bank Forum, hosted by Operation HOPE founder John Hope Bryant, opened a critical dialogue about continuing the legacy of Black financial vigor for a new generation.
Freedman’s Savings and Trust Company, commonly known as Freedman’s Bank, was established in 1865 as the first establishment for free Blacks to bank in. (Photo courtesy of U.S. Department of Treasury)
Speakers for the Sept. 23 forum included Amias Gerety, acting assistant secretary of the Department of the Treasury, Financial Institutions; Kim Saunders, president and CEO of the Eads Group; and U.S. Treasury Secretary John Lew, who noted that while the importance of economic stability among Blacks has always been at the crux of social mobility, the banking system has not always offered fair, balanced, or necessary participation.
“As we honor the legacy of the Freedman’s Bank, it reminds us of the need for effective regulation and oversight, and symbolizes our commitment to ensuring more Americans have the financial tools and education they need to build a secure future,” Lew told the crowd. “I hope they take a moment to contemplate what it meant for freed men and women to have a bank at all, and what it means for Americans from every community to feel fully part of our country with the tools to build their own future.”
Established as a private corporation by John W. Alvord, a Congregational Minister, and A. M. Sperry, an abolitionist, the Freedmen’s Savings and Trust Company opened in 1864 to eliminate individual bank mismanagement and bring Black deposits under central control in a single large institution. After Congress passed legislation incorporating the bank on March 3, 1865, President Abraham Lincoln immediately signed the bill into law. Deposits were received only “by or on behalf of persons heretofore held in slavery in the United States, or their descendants.” Up to 7 percent interest was allowed for deposits, and any unclaimed accounts were to be pooled into a charitable fund that was used to educate the children of ex-slaves. The bank went bankrupt following a financial scandal and closed its doors in 1874.
With its untimely shuttering, many Black families abandoned America’s banking systems, turning instead to home safes, benevolent societies, and informal savings clubs. Generations of Black families, simply opted out of being involved with banks altogether. The U.S. Treasury is working to get the descendants of those depositors back.
“The real challenge is on a personal level. We work with students who get their first summer jobs and with their first paycheck we convince them to open a bank account and introduce them immediately to the banking system,” Lew said. “The alternative is the money sits in their pockets or a shoe box. It will ultimately lead to them either spending the money or losing the money. We all know that if you put the money in the bank, it is different than if you are treating it as something more casual. It becomes more than a casual-relationship when the money is saved or invested.”
The forum aligned the historical significance of Freedman’s bank and its original mission – to promote economic integration and financial inclusion – with the immediate need for strong Black investments in education, investment, and retirement plans. The reality, according to Saunders, is that too many Blacks, especially low-income families, have little or no access to the financial systems, credit or banking histories, and subsequently, limited access to loans or other financial anchors.
“We have to be familiar with the person sitting across from us as we roll up our sleeves and are showing teens how to balance checkbooks, and senior citizens how to write their first checks, whatever is necessary,” Saunders said on the panel. “We have to do whatever is necessary to help them become engaged, involved, and successful in the financial market.”