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Economic history : Opening the vault

Authors
Disciplines
  • Economics
  • Political Science

Abstract

Opening the Vault: Black-owned Banks Have a Long History of Providing Finacial Services to Underserved Communities 46 R e g i o n F o c u s • S p r i n g 2 0 0 7 ECONOMICHISTORY PH OT OG RA PH Y: C OU RT ES Y OF M EC HA NI CS A ND F AR M ER S BA NK Robert Johnson, America’s firstblack billionaire, decided toget into the financial services industry last year. He purchased a majority stake in a struggling minority- owned bank in Orlando, Fla., infusing millions of dollars into the institution to position it for a future national expansion. Named Urban Trust Bank, the firm will target urban residents who don’t already have accounts and have limited access to capital, particularly blacks. In addition to using capital from Johnson and his network of CEOs, bank officials want to join the Treasury Department’s Minority Bank Deposit Program, which encourages corporations, federal agencies, and state and local governments to put their savings in banks owned by women and minorities. Still, the bank’s officers make it clear that Urban Trust isn’t all about the black community. They want to make money by attracting customers of all races and backgrounds. Single mothers and people with questionable credit records will be served alongside minority students and small-business owners applying for loans. More than a century ago, the economic realities imposed by segrega- tion required blacks to pool their resources and help each other. Black- owned banks are part of this long tradition. During their peak between the end of the Reconstruction era and the start of the Great Depression, more than 130 of these institutions opened for business, providing capital to black entrepreneurs and prospective home- owners at a time when it was expensive or impossible to get elsewhere. Not surprisingly, most of these banks were in the South, where 90 percent of blacks lived. The Fifth District accounted for one-third of the total, with Virginia having the most of any

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