There are stark contrasts in access to credit for African Americans, research shows.
Interest rates on business loans, bank branch density, local banking concentration in the residential mortgage market, and the growth of local businesses are markedly different in majority-Black neighborhoods.
Damon Jenkins is the senior vice president of First Independence Bank, the first Black-owned bank in the Twin Cities.
“I still have people in my family who flat out still don't trust banks," Jenkins said. "I work for a bank, and I still have people like, 'I’m not going there.'”
Historians say there were once more than 100 Black-owned banks in the early 20th century. By the start of this century, that number had dropped to 41. In the last two decades, it’s fallen again to 16.
First Independence makes 17.
“I’ve been in banking for 15 years. I'm not trying to put another feather in my cap, nor having another dollar,” Jenkins said. “This is really about power and the potential of others and really righting a wrong that we all see.”
Access to banks helps access to housing, which means access to wealth, which means access to generational wealth. White Americans are far more likely to use banks than Black Americans. Because of that and other systemic factors, white Americans average ten times as much wealth as Black Americans.
Kristen Broady recently co-wrote a report for Brookings on banks in majority Black communities.
“We know that Black-owned banks are more likely to give loans to African Americans and other minorities,” she said. “More capital certainly would be helpful, and more access would be helpful. More locations would be helpful.”
A 2019 study found the biggest bank chains are closing branches disproportionately in majority-Black neighborhoods. Bank executives said it was about not race but activity. They said customers were “voting with their feet.”
Jenkins says he can’t think that way.
“When you come from a marginalized space, then you can understand why or why not marginalized people do or do not do some of the things that are expected," he said.
Jenkins adds, “It's no different than people supporting Walmart or Target, right? That's a very diverse customer base, but that enables Target to be successful and sustain and extend the reach of resources.”
The same neighborhoods that work to get Walmart or Target to open near them need banks for the same reason: opportunity.
“I know within my own culture that if you give people a chance and you give them the support, you'll be surprised with their outcomes,” Jenkins said.