Black-owned banks once offered financial credit and stability to the African American community. The Huffington Post found that the number of black-owned banks across the nation has decreased drastically. “In 1994, 54 such banks were identified by the FDIC; now there are just 28,” reports HuffPo.
One city where minority banks have been hit hard is Chicago. According to Chicago Business
Among those that have already failed are ShoreBank, which had $2 billion in assets and was one of the city’s most active lenders catering mainly to African Americans, and $1.6 billion-asset Mutual Bank of Harvey, an Indian-American-owned bank.
Besides the recession, other experts say minority banks are failing because they aren’t needed. “While most bankers and business leaders in minority neighborhoods of Chicago believe that loans are hard to obtain in those areas, both for businesses and consumers, they don’t all see the minority banks moving aggressively to provide that credit,” notes Chicago Business. During the 1960s and 1970s, non-white borrowers had trouble obtaining loans, so minority banks cropped up to fulfill these financial needs. But because of the federal Community Reinvestment Act, a 1977 law that requires banks to lend in less-advantaged areas of their communities, this is not as of much an issue anymore.
But Monique Morris, NAACP Vice President for Economic Programs, argues that black-owned banks are still necessary. “The role for black-owned financial institutions is the same as it has always been — to support the financial needs of the communities in which they are located. They leverage deposits and support the formation and development of emerging enterprises that will produce jobs and improve the economic landscape of our communities,” she writes in The Grio.