Six CEOs of black-owned banks locked themselves in a New Orleans conference room for more than a day in late 2016. Surrounded by papers, drawing boards and PowerPoints, the group strategized ways to reverse a trend 15 years in the making: the decline of their own banking sector.
As The Wall Street Journal reports, the number of black-owned banks operating in the U.S. has been dropping steadily for the past 15 years and fell to 23 this year, the lowest level in recent history, according to the Federal Deposit Insurance Corp. That has left many black communities short of access to capital and traditional financial services, according to some banking experts.
“We have a crisis among black banks,” says Doyle Mitchell, CEO of Washington-based Industrial Bank. “We met…to save the industry. To save ourselves.”
The 2008 recession hit the black banking sector especially hard, and if the current rate of closures of about two a year, as well as the industry-wide reluctance or inability to start banks, continues, black-owned banks could disappear entirely within the next eight to 12 years.
The trend is worrisome to some analysts who argue fewer banks serving low-income, minority groups could expand “financial deserts”—communities with few or no banking institutions—and increase the likelihood that black and Hispanic communities could become susceptible to redlining, a discriminatory practice that excludes poorer minority areas from financial services.
Most black-owned banks typically have a few branches in one city, although one of the category’s largest players, New Orleans-based Liberty Bank, has a multistate presence. Such banks comprise just a sliver of the overall U.S. financial sector, with collective assets of $5.5 billion, versus $16.3 trillion in the industry overall.
Read the full story (subscription may be required).
