Black-owned banks are worried about the future of community institutions as Republicans use dog whistles to influence and infuriate their supporters.
The Federal Deposit Insurance Co. estimates that of the more than 5,000 insured financial institutions in the United States, Black people own fewer than 25, according to Yahoo News.
Consumers are especially uneasy following the failures of Silicon Valley Bank and Signature Bank — two of the biggest American institutions serving the tech sector — representing the most extensive failures since 2008, Yahoo News reports.
Experts claim the failures pose an issue for all banks, but Black- and community-owned institutions are usually the most severely affected by such catastrophes.
“We are gravely concerned about the impact on the community bank system as a whole,” said Dominic Martin, chief executive officer and president of the Black-owned Optus bank, Yahoo reported. He called it “a crisis for Main Street.”
SVB considered itself a company committed to fostering diversity, equity, and inclusion (DEI) within its workforce, as its website touts. Since its failure, some Republican lawmakers, including Sen. Josh Hawley of Missouri and Florida Gov. Ron DeSantis, have cited “woke” initiatives and practices as the cause.
Experts disagree, however, with the contention that the banks’ failure was related to progressive hiring efforts.
“They failed because their CEO cashed out [millions],” law professor Mehrsa Baradaran, who authored “The Color of Money: Black Banks and the Racial Wealth Gap,” told Yahoo News. She assured its demise had nothing to do with being “woke.”
“It’s so offensive. They feel like they’re gods, so it must not be their fault,” added Baradaran, who contended the failed institutions’ CEOs are looking for others to blame and placing it on the wrong people.
Experts note that community-owned banks, which some people believe to be the “wokest” of all financial institutions, are frequently struck first during periods of economic instability or unrest in the market.
“As we’ve learned from history, when we have any hiccups, or any challenges in our financial system, underserved communities feel that impact first and recover last,” said Martin, Yahoo News reported. He said the crisis is already affecting his banks as customers migrate to institutions they believe to be more secure.
Experts believe a diverse financial ecosystem is required to close the gaps in minority communities. Still, BlPOC communities suffer the most when Black-owned banks are affected by market shifts.
President Joe Biden reassured Americans during a news conference Monday that the country’s banking system is secure after the failures.
“Americans can have confidence that the banking system is safe,” said Biden, Yahoo News reported. The president declared that “deposits are safe” and said taxpayers will bear no losses.
“Managers of these banks will be fired,” the president asserted. “Investors in these banks will not be protected.”
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