Two Black-owned banks announced their merger Aug. 26, to create a bank worth $1 billion in assets. The merger of these banks will create opportunities for the Black community that are not granted by most commercial banks today.
Broadway Federal Bank, founded in 1946 out of Los Angeles, will combine with City First Bank, which has been in operation out of Washington, D.C. since 1998. This new banking corporation will break barriers in not only Black banking, but also Black business by having enough capital to make real change for Black communities.
Black banks have had a history of obstacles that have made making real change difficult to accomplish, with one of the main challenges being a lack of resources and money. Argrett told the LA times bank plans to fund multifamily affordable housing, small businesses and upstarting nonprofits in the Black community.
The first Black-owned bank was created in 1849 by former slave William Browne in Richmond, Virginia. The bank was originally created because white banks refused to keep the savings of “The Grand Fountain United Order of True Reformers,” Browne's Black fraternal organization. He made a bank of his own so their money would not be monitored by whites.
Many of the same problems occur today. Black people do not get the same amount of opportunities for business, car and mortgage loans from major American banks.
This disparity is why Black banks are critical. Black people are rejected twice the amount as white people for all loans. The overall denial for mortgage applications for Black people was 18.4% in 2018, while it was 8.8% for white people.
The wealth of Black-owned banks are largely disproportional to Latino- and Asian-owned or led banks. There are 73 Asian American banks with $121 billion in assets, 33 Hispanic American banks worth $104 billion in assets and 23 African American banks with only $5 billion in combined assets. Wells Fargo, one of the country's major banks, has $1.9 trillion.
Black banks need to provide more checking accounts, business loans, mortgages and other loans to create an increase in overall Black wealth. Without a major increase in Black wealth, it will continue to be difficult to create more successful businesses and banks.
The work that will be done by this bank is an example for other Black institutions with power, money and resources.
They must use resources to support and uplift Black people in the community. This will create greater wealth, and ultimately more opportunity for those who might not have had it otherwise.
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