Fund Launched to Invest $250 Million in Black Owned Banks

Today’s Philanthropy News Digest is reporting that Black financial services and regulatory experts have announced the launch of a new fund aimed at creating tens of millions in tier 1 capital for Black-owned banks.

With support from Lending Tree, Dentons, KPMG, Comer Capital, and other institutions, the Black Bank Fund will purchase $250 million in non-cumulative, non-voting, preferred stock in Black-owned financial institutions — purchases that will immediately translate into tier 1 capital, enabling the banks to make $2.5 billion in new loans to underserved borrowers. In addition, a National Black Bank Foundation will be created to raise public awareness about the critical role these Black-owned banks play in providing financial literacy and wealth-building programs for underbanked people of color. 

The Digest quotes the FDIC as stating that since 2011, the number of Black-owned banks has declined by more than half so that today only eighteen such institutions remain. The resulting lack of access to basic financial services has forced many African-Americans to rely on costly alternatives such as check-cashing services, payday loans, money orders, and prepaid credit cards.  

According to Tishaura Jones, National Black Bank Foundation co-founder and treasurer for the City of St. Louis, “Black families can’t build wealth through home equity and Black entrepreneurs can’t create jobs because they can’t access capital from their neighborhood bank. In cities like St. Louis, just like in New Orleans and Washington, D.C., the work of uplifting Black banks is both urgent and vital.”

Brandon Comer, Black Bank Fund co-founder and managing partner of Comer Capital Group, had this to add: 

We’ve spent the last year speaking candidly with leaders of Black banks to understand the structural and specific challenges facing the sector, and each of them pointed to their comparatively small assets. The Black Bank Fund and [National Black Bank] Foundation provide a holistic solution that addresses the banks’ ability to extend credit to Black borrowers meaningfully while fostering sustainability and growth.

I fully support this project and look forward to its success.

Prof. Vaughn E. James, Texas Tech University School of Law