Can Minority Deposit Institutions Close The Racial Investing Gap?
By Majella Mark
- As of 2020 there are 18 Black Minority Depository Institutions in the U.S.
- 67% of Blacks earning $50K or more invest money, compared to 86% of similar White households due to generational wealth gaps
Black people looking to invest should have confidence and trust in our communities financial institutions to do right by us with business loans, investment opportunities and a willingness to evolve. Specifically, Minority Deposit Institutions (MDI), which are federally insured depository institutions or banks with at least 51% of the voting stocks owned by the minority group it serves, including representation on the board of directors. These financial organizations that are providing business loans to Black entrepreneurs have connected the dots, and know exactly how to play the game to start closing the racial investing gap.
Why This Matters: As of 2020 there are 18 Black and African American MDIs compared to Asian or Pacific Islander Americans’ 61 MDIs in the United States. Regarding business loans from non MDIs, Black businesses with low credit risk are approved for loans at the same rate as White businesses with medium to high credit risk.
There are many financial institutions that have significant Black presence such as the Carver Federal Savings Bank, First Security Bank and Liberty Bank. These entities have the resources to support the Black community with business loans up to $20,000. Also, there are several think tanks that focus on progression and innovation within the Black community including the Hampton Institute (HI), Black Institute and Joint Center.
Today, 67% of Black American households earning $50K or more invest, compared to 86% of a similar White household, due to generational wealth gaps, along with the risk adverse mindset. This is part of the reason why Black people for a long time remained naively stagnant, playing investment Connect Four, while everyone else was playing Chess. In many instances we helplessly acted as pawns to benefit others, but there are many who evolved seeing the next move, even leaving the Chess board all together, now playing Go with the world.
Situational Awareness: Maggie Lena Walker was one of those people who left the chess board to strike out on her own. She was born enslaved and somehow became the first African American woman to charter a bank in Richmond, Virginia. Lena took what was the Independent Order of St. Luke with more than 1,000 members strategically focused on prosperity within. She was able to organize Black people, creating investment funds, business ventures and think tanks all with the ultimate goal of building Black wealth. Lena had vision, connected the dots and knew exactly how to play the game to close the racial investing gap!
CBx Vibe: “King Piece In The Chess Game” Slick Rick