On March 3rd 1865 Abraham Lincoln on signed the Freedman’s Bank Act. This authorized a national bank to serve previously enslaved peoples.
Of course, the depositors grew, African Americans started using the banking system immediately to save, move money around and improve their lives.
However, things didn’t quite work out as they had been presented. Black Enterprise (http://bit.ly/2bPsb0w) wrote:
And yet, thrifting and saving did not yield desired results. The dream of prosperity and abundance slowly spiraled into a nightmare of fraud, mismanagement, and discriminatory lending.
In 1871, Congress authorized banks to provide business loans and mortgages. Paradoxically, such mortgages and loans were usually administered to whites at the expense of black depositors. Risky investments and lending patterns, coupled with cronyism and corruption at the level of upper management, slowly undermined the stability of the bank. According to Black Past, “By 1874, massive fraud among upper management and among the board of director had taken its toll on the bank. Moreover, economic instability brought upon by the Panic of 1873, coupled with the bank’s rapid expansion, proved disastrous.”
The Freedmen’s Bank was officially closed on June 29, 1874. At the point of closing, 61,144 black depositors were robbed of the modern equivalent of $66 million. The failure of the bank left many black depositors and borrowers distrustful of the white banking community, especially since the Freedmen’s Bank was established and managed by white men.
Note: The image above is of the Freedman’s automated figure piggy bank toy, essentially a racist toy for the amusement of white kids! He would raise his fingers and shake his head showing determination to keep the deposit, after you put the money in!
Basically, the black community were screwed over by rich white men, as they have been again and again since.
Now, although this is history, the legacy of it is still alive and well in todays banking. Blacks are given higher interest rates, more often refused loans and are general racially profiled.
BUT there are options. In general black owned banks and credit unions have been established to serve the community they are based in, they loan to local black businesses and give back to the community through various initiatives.
We believe the Bank Black movement must be backed (We even have a t-shirt design dedicated to this here) and have made a list of all the black banks and credit unions state-by-state.
So, find you local black bank here and join the movement.
What do you think?
PUBLIC NOTE: The opinions expressed in this article are the author’s own and do not reflect the view of the Urban Intellectuals, affiliates or partners.