The Historic Betrayal of Banks
The Historic Betrayal of Banks
by Alyx Goodwin & Anthony Williams
"Then in one sad day came the crash,--all the hard-earned dollars of the freemen disappeared; but that was the last of the loss,--all the faith in savings went too, and much of the faith in men, and that was a loss that a Nation which to-day sneers at Negro shiftlessness has never yet made good." -- W.E.B. DuBois, The Souls of Black Folk
While the conversation among young Black people is often focused around criminal justice and education reform, organizers like the Black Youth Project reminds us that economic inequality is rooted in the same racist systems that created structural inequalities. In order to tackle these varying forms of oppression, we must fund Black futures. Economically, Black families in America have 12 times less wealth than white American families. It’s important that we widely acknowledge that despite inaccurate stereotypes, the lack of Black wealth is not rooted in financially irresponsibility.
The lack of Black generational wealth is rooted in a system created by and for white men, as seen through our Constitution, chattel slavery, redlining, and intentionally biased resource allocation. These factors make it difficult to build and maintain wealth. The conservative white rebuttal states that Black poverty isn’t caused by racism, but instead that Black people just need to do better for ourselves in order to “catch up.” What these rebuttals fail to acknowledge is that Black people have subscribed to this same American Dream, yet American institutions have gone out of their way to enforce practices that negatively impact our progress toward it. We cannot forget that the American Dream was built on a capitalistic system made possible only by the economic and racialized institution of slavery. So what happened to Black wealth after slavery? The Freedmen’s Bank.
In March of 1865, Congress established Freedmen’s Savings & Trust Company, a bank specifically for newly freed Black people and their descendants to give them a chance at financial independence in a “post-slave” society. At its peak there were 37 branches in 17 states, with deposits totaling $57 million from thousands of Black depositors. This did not last long, however. The Freedmen’s Bank wasn’t protected nor insured under the same regulations as white banks, meaning that the bank lacked proper oversight. Congress provided no checks and balances until it was too late.
This lack of protection and oversight allowed White bank officials to take advantage of newly emancipated Black people and our money. The Freedmen’s Bank provided unsecured loans to railroad and business firms, politicians, alleged KKK members, and for speculative investments in local real estate. Black Americans were putting their money into the Freedmen’s Bank, but we didn’t know that it would not be coming back out. Not even a full ten years later--the Freedmen’s Bank was crumbling and finally closed. The Freedmen’s Bank’s mismanagement was never properly addressed, leaving only $31,000 to be split up 61,000 former customers. Black people were lucky if they even got a third of their money back and many of them were left with nothing.
Harpers Weekly, March 29, 1879
Fast forward to 2004-2009 “housing crisis” in the U.S. During this time period, Black Americans that took out housing loans with Wells Fargo were 2.9 times more likely than whites with the same credit rating to have been led to mortgages with higher interest rates. In 2012, Wells Fargo settled out of court for more than $175 million, presumably to maintain their image. The effects of these mortgages were felt through prepayment penalties and increasing interest rates that eventually led many Black and brown people into defaulting on the loan or unforeseen foreclosures.
When comparing these two instances of Black history, we see how the ideologies of the American Dream were never made for Black people in America. The Freedmen's Bank and Wells Fargo have not just affected individuals, but generations of Black people that are now forced to play catch-up with the resources we don’t have or can’t readily access. Racism is complicated. The only evidence of where one arena of systemic oppression ends and another begins is that they start with Black individuals and their families.
We are erroneously taught that we are American, and upward mobility is possible if we work hard. That if we strive to better ourselves and our families, the American Dream is not just within our reach, but it is obtainable. But how is a community of people supposed to obtain a Dream upheld by institutions that have intentionally pushed them out of this vision? From the Freedmen’s Bank to the obliteration of Black Wall Street to Wells Fargo’s bankrolling of the private prison industry, products of White America are not to be trusted.
Alyx Goodwin is a staff writer for the Afrikan Black Coalition, with her own blog coming soon. You can find more information on that plus her daily musing about race, culture, politics and whatever else floats through her timeline on Twitter @AGtheGiant
Anthony Williams is the editor-in-chief for the Afrikan Black Coalition and the Prison Divestment Communications Director.