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The Color of Money: Black Banks and the Racial Wealth Gap
“Read this book. It explains so much about the moment…Beautiful, heartbreaking work.”
―Ta-Nehisi Coates
When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States’ total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over time, Mehrsa Baradaran challenges the myth that black communities could ever accumulate wealth in a segregated economy. Instead, housing segregation, racism, and Jim Crow credit policies created an inescapable, but hard to detect, economic trap for black communities and their banks.
The catch-22 of black banking is that the very institutions needed to help communities escape the deep poverty caused by discrimination and segregation inevitably became victims of that same poverty. Not only could black banks not “control the black dollar” due to the dynamics of bank depositing and lending but they drained black capital into white banks, leaving the black economy with the scraps.
Baradaran challenges the long-standing notion that black banking and community self-help is the solution to the racial wealth gap. These initiatives have functioned as a potent political decoy to avoid more fundamental reforms and racial redress. Examining the fruits of past policies and the operation of banking in a segregated economy, she makes clear that only bolder, more realistic views of banking’s relation to black communities will end the cycle of poverty and promote black wealth.
―Ta-Nehisi Coates
When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States’ total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over time, Mehrsa Baradaran challenges the myth that black communities could ever accumulate wealth in a segregated economy. Instead, housing segregation, racism, and Jim Crow credit policies created an inescapable, but hard to detect, economic trap for black communities and their banks.
The catch-22 of black banking is that the very institutions needed to help communities escape the deep poverty caused by discrimination and segregation inevitably became victims of that same poverty. Not only could black banks not “control the black dollar” due to the dynamics of bank depositing and lending but they drained black capital into white banks, leaving the black economy with the scraps.
Baradaran challenges the long-standing notion that black banking and community self-help is the solution to the racial wealth gap. These initiatives have functioned as a potent political decoy to avoid more fundamental reforms and racial redress. Examining the fruits of past policies and the operation of banking in a segregated economy, she makes clear that only bolder, more realistic views of banking’s relation to black communities will end the cycle of poverty and promote black wealth.
371 pages, Hardcover
First published September 14, 2017
About the author
Mehrsa Baradaran
6 books335 followersMehrsa Baradaran is Professor of Law at UC Irvine Law and a celebrated authority on banking law. In addition to the prizewinning The Color of Money, she is author of How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy. She has advised US senators and representatives on policy and spoken at national and international forums including the World Bank.
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February 19, 2019
I mean, don't act surprised cause I wrote it!
July 26, 2020
"to be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships."
- W.E.B. DuBois
Every few years there is a book that is so powerful it turns me into a book nerd, policy evangelical. I go out and buy several copies and press them into friends hands with the fervor of a recent convert and tell them they "NEED" to read it. I think the last nonfiction book to do this for me was Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right or maybe The Big Short: Inside the Doomsday Machine. Usually, the book has both a financial angle and a policy tint. It usually also explores unfairness. That makes sense. In my previous life I was a policy analyst and I now work in the finance industry as a financial planner. Most days, I'm a pretty mellow guy. I meditate, read, drink tea, Netflix and chill. But reading about inequality and unfairness, for me, catalyzes me for action.
If the last few political cycles have taught us anything, it is America still struggles with its "original sin" of slavery and the ugly descendants of slavery: discrimination, segregation, inequality, despair. We have seen, just this week (actually for the last few years), protests about the way Black Americans are treated by police officers. That subject deserves its own space, so I wont dwell too much on that here, other than to say the interaction of Black Americans and police officers ISN'T simple. It isn't a subject that can easily be explained just by saying police are racists, or unarmed Black Americans should behave differently (different from whom?). There are structural, geographic, economic, historical, and political forces that all contribute to awful outcomes.
Just like blue on black violence isn't easily explained in a tweet or a FB post, the interaction between Black Americans and banks has a long, ugly, and painful history. It is a history that is important to understand if one REALLY wants to explore topics like income inequality, segregation, credit, crony capitalism, corruption, exploitation, state power, wealth, etc... Mehrsa's book explores the policies, laws, programs, politics, economics, and history of black banks AND the history of Black Americans with banks. She points a fairly bleak picture of the fault/chasm that exists between the two financial markets that exist in America. One is the banking structure that exists for a majority of Americans and doesn't need to be explored. But for years that economic structure, that allows people to save (AND BORROW) didn't exist for a large segment of Americans. And when it eventually did, it was skewed heavily. Separate was never equal in banking. Blacks paid a heavy price to save, to borrow (if they could). Even laws that were designed to help pull Americans out of poverty, accumulate wealth and avoid taxes through home ownership, benefited one segment of America while ignoring or fleecing the other.
It is a painful read. It is also necessary. Unlike Mehrsa Baradaran's* previous book, How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy, this one spends little/less time on prescriptions. She is laser focused on what is wrong, what went wrong, and why. It is a dense (without ANY of the negative connotations typically associated with that word) book. One that required me to open THREE different post-it flag packages. I was marking things that were new, quotes that amazed, items I didn't want to forget and I often found myself marking 3 or 4 times a page.
A few caveats before I end. This isn't a perfect book. It isn't as exciting as a Michael Lewis book (this probably won't get made into a movie) and the prose isn't as pretty as Robert Caro's LBJ series. But it is important. It is a labor of both love and skill. Reading some chapters in it, I could tell Mehrsa spent months in presidential libraries. Well researched books give me a thrill. Especially when you recognize that a certain nugget of data or quote may never have seen the light of day if it wasn't for the doggedness of a skilled lawyer/historian. 'The Color of Money' deserves to be in the library of anyone who deals with or seriously thinks about income inequality, race, banking, inner cities, etc.
As a white, upper-middle, male who has benefited from educated parents, stability, wealth, and every advantage American history and politicians have blessed me with, it is difficult and humbling to realize just how many of the economic realities I take for granted every day weren't available to the parents of my black friends. Hopefully, more of these same financial realities WILL be available to the children of ALL my friends. Hopefully we can begin to cover both the scars of the disadvantaged, and the economic and social chasms that separate (unfairly) us. This book is both a bridge and a battle cry.
* It is probably appropriate here to say that I'm friends with Mehrsa. Friends in the sense of exchanged books (I've sent her a couple audiobooks, etc. and she signed one of her books and sent it to me AFTER I reviewed it. Each of her books were purchased, often multiple copies, by me.) and know a lot of similar people and interact and went to the same college. We are not friends in the sense that she's ever fed my kids, or I've ever watched her pets. So there's that. I have other friends who are writers, but usually they are friends first. I don't typically "read" friends books unless I would normally read these books without being friends. Romance novels written by "friends" or self-help weight-loss books, I'll never read no matter how often someone feeds my kids. She is one of a handful of people that read more than me (even in my best years). I'm not sure where she gets her energy.
- W.E.B. DuBois
Every few years there is a book that is so powerful it turns me into a book nerd, policy evangelical. I go out and buy several copies and press them into friends hands with the fervor of a recent convert and tell them they "NEED" to read it. I think the last nonfiction book to do this for me was Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right or maybe The Big Short: Inside the Doomsday Machine. Usually, the book has both a financial angle and a policy tint. It usually also explores unfairness. That makes sense. In my previous life I was a policy analyst and I now work in the finance industry as a financial planner. Most days, I'm a pretty mellow guy. I meditate, read, drink tea, Netflix and chill. But reading about inequality and unfairness, for me, catalyzes me for action.
If the last few political cycles have taught us anything, it is America still struggles with its "original sin" of slavery and the ugly descendants of slavery: discrimination, segregation, inequality, despair. We have seen, just this week (actually for the last few years), protests about the way Black Americans are treated by police officers. That subject deserves its own space, so I wont dwell too much on that here, other than to say the interaction of Black Americans and police officers ISN'T simple. It isn't a subject that can easily be explained just by saying police are racists, or unarmed Black Americans should behave differently (different from whom?). There are structural, geographic, economic, historical, and political forces that all contribute to awful outcomes.
Just like blue on black violence isn't easily explained in a tweet or a FB post, the interaction between Black Americans and banks has a long, ugly, and painful history. It is a history that is important to understand if one REALLY wants to explore topics like income inequality, segregation, credit, crony capitalism, corruption, exploitation, state power, wealth, etc... Mehrsa's book explores the policies, laws, programs, politics, economics, and history of black banks AND the history of Black Americans with banks. She points a fairly bleak picture of the fault/chasm that exists between the two financial markets that exist in America. One is the banking structure that exists for a majority of Americans and doesn't need to be explored. But for years that economic structure, that allows people to save (AND BORROW) didn't exist for a large segment of Americans. And when it eventually did, it was skewed heavily. Separate was never equal in banking. Blacks paid a heavy price to save, to borrow (if they could). Even laws that were designed to help pull Americans out of poverty, accumulate wealth and avoid taxes through home ownership, benefited one segment of America while ignoring or fleecing the other.
It is a painful read. It is also necessary. Unlike Mehrsa Baradaran's* previous book, How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy, this one spends little/less time on prescriptions. She is laser focused on what is wrong, what went wrong, and why. It is a dense (without ANY of the negative connotations typically associated with that word) book. One that required me to open THREE different post-it flag packages. I was marking things that were new, quotes that amazed, items I didn't want to forget and I often found myself marking 3 or 4 times a page.
A few caveats before I end. This isn't a perfect book. It isn't as exciting as a Michael Lewis book (this probably won't get made into a movie) and the prose isn't as pretty as Robert Caro's LBJ series. But it is important. It is a labor of both love and skill. Reading some chapters in it, I could tell Mehrsa spent months in presidential libraries. Well researched books give me a thrill. Especially when you recognize that a certain nugget of data or quote may never have seen the light of day if it wasn't for the doggedness of a skilled lawyer/historian. 'The Color of Money' deserves to be in the library of anyone who deals with or seriously thinks about income inequality, race, banking, inner cities, etc.
As a white, upper-middle, male who has benefited from educated parents, stability, wealth, and every advantage American history and politicians have blessed me with, it is difficult and humbling to realize just how many of the economic realities I take for granted every day weren't available to the parents of my black friends. Hopefully, more of these same financial realities WILL be available to the children of ALL my friends. Hopefully we can begin to cover both the scars of the disadvantaged, and the economic and social chasms that separate (unfairly) us. This book is both a bridge and a battle cry.
* It is probably appropriate here to say that I'm friends with Mehrsa. Friends in the sense of exchanged books (I've sent her a couple audiobooks, etc. and she signed one of her books and sent it to me AFTER I reviewed it. Each of her books were purchased, often multiple copies, by me.) and know a lot of similar people and interact and went to the same college. We are not friends in the sense that she's ever fed my kids, or I've ever watched her pets. So there's that. I have other friends who are writers, but usually they are friends first. I don't typically "read" friends books unless I would normally read these books without being friends. Romance novels written by "friends" or self-help weight-loss books, I'll never read no matter how often someone feeds my kids. She is one of a handful of people that read more than me (even in my best years). I'm not sure where she gets her energy.
November 30, 2020
Personal reading strategy for 'heavy' books: Always read the Acknowledgments first.
Three reasons.
One, easiest to read. No strenuous effort required. Work-shy readers ftw! :)
Two, puts paid to the notion of author as solitary warrior. In spite of the way books are packaged and sold, works of scholarship - even when there is only one named author - are always hives of collaboration. Takes a village, as they say. I love to read the names of the villagers as they tumble down the page / scroll up the screen.
Three, humanizes both the author and the reader. The tone is inevitably convivial and the mood relaxed. Eavesdropping on someone conveying gratitude is an instant tonic. No matter how dark or difficult the content of the book, or how impersonal and dispassionate the scholarly delivery, in the acknolwledgments section one is allowed a bit of emotion.
Mehrsa Baradaran goes through the usual routine of thanking family, friends, colleagues, and her editorial & research teams. All very cordial and proper. But there is a moment of vulnerability, something disarming that stayed with me throughout the long journey with this text. Shout-out to someone called Lucia "for assuring me that no one will read" the book.
As testified by the multiple print runs and huge critical acclaim (fans include Ta-Nehisi Coates, who calls it a "beautiful, heartbreaking work"), Baradaran needn't have worried about lack of readership. Maybe it's just good manners, but her remark about being reassured by obscurity reveals to me a deep-rooted humility. This isn't an academic superstar drunk on their own market value, nor a high-flying political apparatchik with scholarly credentials. Also missing is any sense of entitlement or its corollary, ressentiment. No chips on shoulders here!
Impressed? Wait, there's more.
I meant the phrase 'long journey' above as code for the degree of difficulty. The Color of Money: Black Banks and the Racial Wealth Gap isn't a doddle to read. The content makes certain demands on the reader, over and above the demands of time and attention. The betrayals, connivances, skullduggery, hypocrisy and relentless deceit visited upon the black communities of the United States - the lawless legality, to use Walter Lippmann's memorable phrase, painstakingly documented in these pages - demands a certain level of resilience.
Ashamed to admit that I found myself low on stocks of resilience. Every few pages, I put the book down and walked away, unable to cope with what I was reading. If simply running my eyes over this is so difficult, so spiritually demanding, what must it ask of those who have lived it for generations? And of those who descended into the archives and vaults, libraries and courthouses up and down the country to compile the tales told in this book?
In short, spiritual reserves. How well-defended her inner fortress must be for Baradaran to confront the abundant moral treachery on display, write about it calmly and with restraint, and not lose the last shred of hope in humanity! Because that's the thing about this book. Its unflinching gaze straight into the historical abyss. Page after page of sober, measured prose; carefully assembled evidence, extensively documented in the end notes; meticulously organised chronological narration based on both archival material and hundreds of conversations with actual bankers - through it all, Baradaran manages to keep the forces of despair at bay.
The greatest achievement of this book - also, ironically, its most devastating - is the location of the racial wealth gap in the structure of society. Not in the moral make-up of individuals, not in the spending habits of groups, not even in the fiscal behaviour of communities. Baradaran shows repeatedly that the wealth gap is created and maintained at the institutional level of policy and federal programs. The largesse of the state is distributed along racial lines, and the narrative plays out in complete contrast based on which side of the tracks one finds oneself. "The moral indictment of the poor by institutions complicit in their poverty," says Baradaran in a sentence typical of her restraint, "is a recurring theme" (79, my emphasis). And this one: "Banking does not beget control and power; rather, control and power beget sound banking" (206).
Whence the forces of despair? Well, it's still happening. As recently as last month, Jared Kushner said black people should stop complaining; they have to want to be successful! Not only does inequality show little sign of receding - trending all the while in the opposite direction - but the myths built up to explain it continue to defy well-reasoned and powerful arguments to the contrary.
I suppose that's what it comes down to. The extent to which one has internalised these myths. As a lay reader who harbours fond memories of his years in the States but remains ideologically agnostic, this book was a profoundly educational experience. I got to learn tons about banks and credit markets, legislation and its impacts, and historical personalities whose actions still reverberate in meaningful ways. Bit baffled by the lack of a proper bibliography though. Can't work out why the publishers decided to do away with this courtesy.
Three reasons.
One, easiest to read. No strenuous effort required. Work-shy readers ftw! :)
Two, puts paid to the notion of author as solitary warrior. In spite of the way books are packaged and sold, works of scholarship - even when there is only one named author - are always hives of collaboration. Takes a village, as they say. I love to read the names of the villagers as they tumble down the page / scroll up the screen.
Three, humanizes both the author and the reader. The tone is inevitably convivial and the mood relaxed. Eavesdropping on someone conveying gratitude is an instant tonic. No matter how dark or difficult the content of the book, or how impersonal and dispassionate the scholarly delivery, in the acknolwledgments section one is allowed a bit of emotion.
Mehrsa Baradaran goes through the usual routine of thanking family, friends, colleagues, and her editorial & research teams. All very cordial and proper. But there is a moment of vulnerability, something disarming that stayed with me throughout the long journey with this text. Shout-out to someone called Lucia "for assuring me that no one will read" the book.
As testified by the multiple print runs and huge critical acclaim (fans include Ta-Nehisi Coates, who calls it a "beautiful, heartbreaking work"), Baradaran needn't have worried about lack of readership. Maybe it's just good manners, but her remark about being reassured by obscurity reveals to me a deep-rooted humility. This isn't an academic superstar drunk on their own market value, nor a high-flying political apparatchik with scholarly credentials. Also missing is any sense of entitlement or its corollary, ressentiment. No chips on shoulders here!
Impressed? Wait, there's more.
I meant the phrase 'long journey' above as code for the degree of difficulty. The Color of Money: Black Banks and the Racial Wealth Gap isn't a doddle to read. The content makes certain demands on the reader, over and above the demands of time and attention. The betrayals, connivances, skullduggery, hypocrisy and relentless deceit visited upon the black communities of the United States - the lawless legality, to use Walter Lippmann's memorable phrase, painstakingly documented in these pages - demands a certain level of resilience.
Ashamed to admit that I found myself low on stocks of resilience. Every few pages, I put the book down and walked away, unable to cope with what I was reading. If simply running my eyes over this is so difficult, so spiritually demanding, what must it ask of those who have lived it for generations? And of those who descended into the archives and vaults, libraries and courthouses up and down the country to compile the tales told in this book?
In short, spiritual reserves. How well-defended her inner fortress must be for Baradaran to confront the abundant moral treachery on display, write about it calmly and with restraint, and not lose the last shred of hope in humanity! Because that's the thing about this book. Its unflinching gaze straight into the historical abyss. Page after page of sober, measured prose; carefully assembled evidence, extensively documented in the end notes; meticulously organised chronological narration based on both archival material and hundreds of conversations with actual bankers - through it all, Baradaran manages to keep the forces of despair at bay.
The greatest achievement of this book - also, ironically, its most devastating - is the location of the racial wealth gap in the structure of society. Not in the moral make-up of individuals, not in the spending habits of groups, not even in the fiscal behaviour of communities. Baradaran shows repeatedly that the wealth gap is created and maintained at the institutional level of policy and federal programs. The largesse of the state is distributed along racial lines, and the narrative plays out in complete contrast based on which side of the tracks one finds oneself. "The moral indictment of the poor by institutions complicit in their poverty," says Baradaran in a sentence typical of her restraint, "is a recurring theme" (79, my emphasis). And this one: "Banking does not beget control and power; rather, control and power beget sound banking" (206).
Whence the forces of despair? Well, it's still happening. As recently as last month, Jared Kushner said black people should stop complaining; they have to want to be successful! Not only does inequality show little sign of receding - trending all the while in the opposite direction - but the myths built up to explain it continue to defy well-reasoned and powerful arguments to the contrary.
I suppose that's what it comes down to. The extent to which one has internalised these myths. As a lay reader who harbours fond memories of his years in the States but remains ideologically agnostic, this book was a profoundly educational experience. I got to learn tons about banks and credit markets, legislation and its impacts, and historical personalities whose actions still reverberate in meaningful ways. Bit baffled by the lack of a proper bibliography though. Can't work out why the publishers decided to do away with this courtesy.
March 2, 2018
It's all unfair, I know that, you know that, but this book lays out all the hidden and complicated ways that money flows to white folks and away from black folks. They can work harder and smarter and never have a chance because the system disadvantages them at every turn, this book spells out those disadvantages in agonizing and depressing detail. Everyone needs to read this book. Especially free market libertarians ugh.
Favorite quote:
In speaking about the collapse of subprime loans, "This Market was not created by poor minority borrowers, but those at the bottom are most likely to be exploited by new credit innovations. Just as exploitative credit arrangements like share cropping was created by demand from the world-wide cotton market, sub-prime lending was connected to a world-wide demand for mortgage loans. That the black population was exploited in both situations speaks to their lack of wealth, political power, and their exclusion from the main channels of economic power. During reconstruction, black borrowers had no other options for credit, so they entered share cropping. A similar situation was created with contract selling when blacks were redlined out of the government loan market. Once again, during the sub-prime era, the market demanded more loans, and the black population was the most vulnerable population of borrowers, having had limited access to credit for generations.
THIS PARAGRAPH!!!!!
"Without malice, capital looking for yield can lead to exploitation if there are structural inequalities. Capitalism itself cannot overcome those inequalities because capital only seeks to accumulate unto itself. Without structural changes, the urban ghetto would never be a lure for wealth building capital, only a magnet for exploitation.
"There are two banking systems in America, one is the regulated and heavily subsidised main-stream banking industry, the other is the unregulated, costly, and often predatory fringe industry.
The black population has historically been unders the latter having historically been left out of the former. This has come at great expense to their community. "
Favorite quote:
In speaking about the collapse of subprime loans, "This Market was not created by poor minority borrowers, but those at the bottom are most likely to be exploited by new credit innovations. Just as exploitative credit arrangements like share cropping was created by demand from the world-wide cotton market, sub-prime lending was connected to a world-wide demand for mortgage loans. That the black population was exploited in both situations speaks to their lack of wealth, political power, and their exclusion from the main channels of economic power. During reconstruction, black borrowers had no other options for credit, so they entered share cropping. A similar situation was created with contract selling when blacks were redlined out of the government loan market. Once again, during the sub-prime era, the market demanded more loans, and the black population was the most vulnerable population of borrowers, having had limited access to credit for generations.
THIS PARAGRAPH!!!!!
"Without malice, capital looking for yield can lead to exploitation if there are structural inequalities. Capitalism itself cannot overcome those inequalities because capital only seeks to accumulate unto itself. Without structural changes, the urban ghetto would never be a lure for wealth building capital, only a magnet for exploitation.
"There are two banking systems in America, one is the regulated and heavily subsidised main-stream banking industry, the other is the unregulated, costly, and often predatory fringe industry.
The black population has historically been unders the latter having historically been left out of the former. This has come at great expense to their community. "
October 12, 2020
I learned a lot from Mehrsa Baradaran’s book about Black banks and the racial wealth gap. It covers Black economic/banking history from the end of slavery to our current moment. This was a history that I was mostly unfamiliar with especially when it dealt with the banks and the government policies that created the current environment we are now in. Baradaran has a way of writing complex topics and makes it understandable to someone who is not an expert on economic and banking issues. Highly recommend!!
December 8, 2017
The author explains the American banking system while walking the reader through Black American history in relation to wealth building. Since Emancipation, Black banking has been the hope of Black America for wealth creation but the banking system of yesteryear and currently will not produce the wealth it does for non Blacks. The author explains in terms everyone can understand why this will not happen and American Black wealth is essentially the same as it was at the time of Emancipation.
September 8, 2020
I've recently been reading a lot more non-fiction than I used to, but it's a strange field out there. The mixed bag is such that you can pick up one book and it feels like a bloated magazine article (because it usually is--that's how a lot of NF-publishing works), and sometimes it feels so diluted as to be written for an audience that wouldn't be interested in the book to begin with. But then, as is the case with Mehrsa Baradaran's The Color of Money: Black Banks and the Racial Wealth Gap, you have a work that does so much work on all fronts: enlightening with thorough reporting, deeply informative background on systemic/conceptual knowledge (in this case, banking) and inspiring into action to right the wrongs of social ills--I would find it hard to believe someone reading this would still think the government shouldn't do more to address wealth inequity and segregation in the US.
I work in the financial services industry and I learned more about how banks work in Baradaran's book than in my entire career at this company. Not only is the prose concise, clean and coherent, it's not condescending--Baradaran does not belabor the mechanics of banks, but she swiftly instructs while exposing the deep fault lines in how those mechanisms have consistently and constantly failed communities of color, even at times when their primary raison d'etre was to address their needs specifically.
She begins the history with abolition and how even the earliest promises for reparations were dangled in front of freedmen, then swiftly stolen away. This happens repeatedly throughout American history, and has most recently taken the form of neoliberal free market economics where the mere suggestion of establishing economic policies to address the needs of minorities and people of color is anathema to free-market theory. The concluding chapters where Baradaran discusses the earliest threads of the mass civil unrest we're seeing this summer are probably the most prescient, but come with the strongest warning--the system has failed people of color and minorities at every single turn, with every false promise, with every fairweather reform that essentially does nothing. Individual acts, like banking black, and buying from black-owned business can help, but until the underlying systems of our market economy take into balance the original sin of this nation, and make some real effort to create equity in wealth and opportunity to create it, then all those individual acts are just noise in the machine.
This is essential reading.
I work in the financial services industry and I learned more about how banks work in Baradaran's book than in my entire career at this company. Not only is the prose concise, clean and coherent, it's not condescending--Baradaran does not belabor the mechanics of banks, but she swiftly instructs while exposing the deep fault lines in how those mechanisms have consistently and constantly failed communities of color, even at times when their primary raison d'etre was to address their needs specifically.
She begins the history with abolition and how even the earliest promises for reparations were dangled in front of freedmen, then swiftly stolen away. This happens repeatedly throughout American history, and has most recently taken the form of neoliberal free market economics where the mere suggestion of establishing economic policies to address the needs of minorities and people of color is anathema to free-market theory. The concluding chapters where Baradaran discusses the earliest threads of the mass civil unrest we're seeing this summer are probably the most prescient, but come with the strongest warning--the system has failed people of color and minorities at every single turn, with every false promise, with every fairweather reform that essentially does nothing. Individual acts, like banking black, and buying from black-owned business can help, but until the underlying systems of our market economy take into balance the original sin of this nation, and make some real effort to create equity in wealth and opportunity to create it, then all those individual acts are just noise in the machine.
This is essential reading.
October 15, 2017
This is an excellent history of Black banking and economics in the USA. Showing that whilst African Americans have constantly sought control of their own economic independence since emancipation, the establishment has purposely kept Black communities and entrepreneurs out of the wider economy.
Whilst the author does not provide a specific solution, she highlights a pattern that despite everything, Black banking has over the past decades always managed to re-establish itself. And this might suggest positive outcomes for the future. I would definitely recommend reading "The Color of Money".
Whilst the author does not provide a specific solution, she highlights a pattern that despite everything, Black banking has over the past decades always managed to re-establish itself. And this might suggest positive outcomes for the future. I would definitely recommend reading "The Color of Money".
January 15, 2018
A fascinating and fast-paced history of banking, with a focus on more than 150 years of targeted *economic* discrimination against black Americans. I was shocked to learn some of the on-the-record statements made by blatantly racist politicians – including many who have occupied the Oval Office.
The author explains the incredible power of banking’s money multiplier effect, and how this power could not be realized in ghetto “savings & thrift” banks that were not also lending to their local customers. This book made me realize, for the first time, how important something so seemingly mundane as FDIC deposit insurance is to the entire banking system.
For decades black banks have found themselves caught in a complex double-bind (“Damned if we do, damned if we don’t”) of needing to run profitable businesses, coupled with implicit and explicit goals of acting as community institutions – functioning like quasi non-profits – to serve high-risk, high cost-to-serve customers in under-banked ghetto neighborhoods (customers with low deposit balances AND high transaction volumes).
I was hoping the last chapter was going to be, “And this is how modern black banks cleared the hurdles that led to the demise of all their predecessors…” Unfortunately, that happy ending is still a future event. The author left me significantly better informed about the systematic, historical causes of the racial wealth gap and sincerely hoping that viable solutions are on the near horizon to help close that wealth gap in America.
Well researched and well written. I recommend it.
The author explains the incredible power of banking’s money multiplier effect, and how this power could not be realized in ghetto “savings & thrift” banks that were not also lending to their local customers. This book made me realize, for the first time, how important something so seemingly mundane as FDIC deposit insurance is to the entire banking system.
For decades black banks have found themselves caught in a complex double-bind (“Damned if we do, damned if we don’t”) of needing to run profitable businesses, coupled with implicit and explicit goals of acting as community institutions – functioning like quasi non-profits – to serve high-risk, high cost-to-serve customers in under-banked ghetto neighborhoods (customers with low deposit balances AND high transaction volumes).
I was hoping the last chapter was going to be, “And this is how modern black banks cleared the hurdles that led to the demise of all their predecessors…” Unfortunately, that happy ending is still a future event. The author left me significantly better informed about the systematic, historical causes of the racial wealth gap and sincerely hoping that viable solutions are on the near horizon to help close that wealth gap in America.
Well researched and well written. I recommend it.
August 23, 2022
This is an important study but not necessarily the most compelling read. MB argues the black banks are a fundamentally flawed tool for closing the racial wealth gap, and that they haven't really worked since the Civil War. They sound like a great idea, which is why everyone from liberals to black nationalists to conservatives like Nixon and Reagan have endorsed the idea. But what they really are is a substitute for the integration of our society and our institutions, which would bring about a more fundamental equality. As James Baldwin put it, you can't operate around the ghetto or within the ghetto and expect equality; you have to erase the ghetto (MB uses that term appropriately to refer to a poorer area intentionally segregated from the rest of a city).
Ok, so why don't black banks really work? It has nothing to do with them being "black" and everything to do with them being segregated. Black banks have to draw on a vulnerable, marginalized, poorer community for their capital. This means people are more likely to take their money in and out, to put less in in the first place, and to suffer first and worst from economic crises. It means that these banks are not connected to larger financial networks that give other local banks the ability to weather financial storms. It means that these banks impose higher fees and interest rates, hurting an already vulnerable population. MB shows these dynamics at work over and over again throughout history, and she makes a compelling case that people prop up black banks in order to dodge the more fundamental question of how to integrate our society fully and remove the economic isolation of much of the black community. She shows how the problems of black banking have inhibited many African-Americans from accruing generational wealth, helping to create the massive wealth gap that exists today (along with gov't programs like the FHA that for their first several decades were only available to whites).
I am glad that I now understand the connection btw black banking and racial inequality, but I do have some criticisms of this book. First, she ends with a defense of reparations but never really explains why programs like Obamacare that are designed to help ALL of the marginalized aren't satisfactory (and doesn't explain how this could ever happen politically). Second, a lot of this book isn't about black banks specifically but the history of racism (especially its economic roots and effects) in the US. That's totally fine, it's just that I had gotten that history from a dozen other books; I think those sections where she was summarizing other people's work or just the standard historical narrative should have been condensed. Lastly, while she is good at explaining banking details, I happen to have a limit for remaining engaged in financial history/analysis. That's not really MB's fault, but it did make me a little bored from time to time. I think everyone should be aware of this argument, which is incredibly important, even if reading/listening to the whole book might not be the move for you unless you really like financial history.
Ok, so why don't black banks really work? It has nothing to do with them being "black" and everything to do with them being segregated. Black banks have to draw on a vulnerable, marginalized, poorer community for their capital. This means people are more likely to take their money in and out, to put less in in the first place, and to suffer first and worst from economic crises. It means that these banks are not connected to larger financial networks that give other local banks the ability to weather financial storms. It means that these banks impose higher fees and interest rates, hurting an already vulnerable population. MB shows these dynamics at work over and over again throughout history, and she makes a compelling case that people prop up black banks in order to dodge the more fundamental question of how to integrate our society fully and remove the economic isolation of much of the black community. She shows how the problems of black banking have inhibited many African-Americans from accruing generational wealth, helping to create the massive wealth gap that exists today (along with gov't programs like the FHA that for their first several decades were only available to whites).
I am glad that I now understand the connection btw black banking and racial inequality, but I do have some criticisms of this book. First, she ends with a defense of reparations but never really explains why programs like Obamacare that are designed to help ALL of the marginalized aren't satisfactory (and doesn't explain how this could ever happen politically). Second, a lot of this book isn't about black banks specifically but the history of racism (especially its economic roots and effects) in the US. That's totally fine, it's just that I had gotten that history from a dozen other books; I think those sections where she was summarizing other people's work or just the standard historical narrative should have been condensed. Lastly, while she is good at explaining banking details, I happen to have a limit for remaining engaged in financial history/analysis. That's not really MB's fault, but it did make me a little bored from time to time. I think everyone should be aware of this argument, which is incredibly important, even if reading/listening to the whole book might not be the move for you unless you really like financial history.
March 26, 2018
This book is a stunning achievement and sets a new bar for historical narratives of racial inequality in the United States. Perhaps no other metric captures the collective impact of centuries of anti-Black prejudice and discrimination across various domains of social life (including housing, education, and voting--to name a few) like the racial wealth gap. Accordingly, it should not be surprising that this metric frequently emerges in the everywhere from the writings of Ta Nehisi Coates to the pages of the Wall Street Journal.
Baradaran's central innovation is telling the story about this well-known metric in a wholly new way: through charting the history and balance sheets of Black banks. In prose that is detailed yet accessible, she shows how these institutions designed for racial uplift were fatally handicapped by the Jim Crow economies where they operated. Rather than build wealth within the Black community, the broader segregated economies made these banks function like sieves and actually drew money out of Black communities. She additionally brings to light the (largely untold) story of how the Nixon administration used the notion of "Black Capitalism" as a cynical ploy to avoid addressing the central issues and policy goals of the Civil Rights Movement. Baradaran doesn't offer any easy solutions, but her exhaustive research makes a compelling case that, since broad government interventions (from land grants to FHA loans) created the racial wealth gap, we will need similarly broad kinds of government intervention to end it. I highly recommend this book
Baradaran's central innovation is telling the story about this well-known metric in a wholly new way: through charting the history and balance sheets of Black banks. In prose that is detailed yet accessible, she shows how these institutions designed for racial uplift were fatally handicapped by the Jim Crow economies where they operated. Rather than build wealth within the Black community, the broader segregated economies made these banks function like sieves and actually drew money out of Black communities. She additionally brings to light the (largely untold) story of how the Nixon administration used the notion of "Black Capitalism" as a cynical ploy to avoid addressing the central issues and policy goals of the Civil Rights Movement. Baradaran doesn't offer any easy solutions, but her exhaustive research makes a compelling case that, since broad government interventions (from land grants to FHA loans) created the racial wealth gap, we will need similarly broad kinds of government intervention to end it. I highly recommend this book
January 6, 2018
This book is a serious achievement - a history of black banking and the role of racism in banking institutions in the US, with lots of examples of policies and businesses initiatives and the harm they’ve wrought on black communities. In particular, the author documents the wily ways of racism and capitalism, and how they adapt to appropriate movements. I was especially interested in the sections about Nixon and how he appropriated the messaging of black power and packaged it into black capitalism initiatives that divided radical black organizing with the carrot of black business support structures that were actually ways to segregate and economically crush black communities.
Though the book ends on a slightly upbeat note about what could be possible. But this is otherwise a thoroughly bleak study of the impacts of American capitalism on black communities and the failures (because of white supremacist capitalism) of institutions that have tried to fix it.
Though the book ends on a slightly upbeat note about what could be possible. But this is otherwise a thoroughly bleak study of the impacts of American capitalism on black communities and the failures (because of white supremacist capitalism) of institutions that have tried to fix it.
June 27, 2018
Very good. If you're like me, you’ve probably read a number of books on the African-American experience spanning the gamut, from historical to present day perspectives. Here's another for your bookshelf from a economic standpoint, covering: black banking, corporate & government malfeasance, and their persistent adherence to a financial policy intended to keep black communities in a state of financial disrepair.
Professor Baradaran ranges from the beginning when “...the currency of the South was the slave” and the government’s underhanded dealing of the Freedman’s Savings Bank, to President Nixon and his approach (Black Capitalism) to counter Black radicalism of the 70’s, to the FDIC’s unscrupulous behavior in handling the failure of the Freedom National Bank of Harlem. All this, and more, revealing how these deliberate actions, behavior and strategies are meant to maintain economic inequality.
Professor Baradaran ranges from the beginning when “...the currency of the South was the slave” and the government’s underhanded dealing of the Freedman’s Savings Bank, to President Nixon and his approach (Black Capitalism) to counter Black radicalism of the 70’s, to the FDIC’s unscrupulous behavior in handling the failure of the Freedom National Bank of Harlem. All this, and more, revealing how these deliberate actions, behavior and strategies are meant to maintain economic inequality.
Read
May 6, 2021“the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person.” —MLK
A fantastic book!
Come for the analysis of black disparity in America, stay for the striking analysis of how the doctrine of bootstraps laissez faire has been used to deny people in need (blacks, primarily) access to capital—during reconstruction this was denied while simultaneously distributing land and capital for railroad construction. During the depression this was denied while simultaneously subsidizing loans for white homeowners. And today, our money is used to prop up corrupt lenders who willingly take advantage of desperate borrowers for the purpose of short term speculative gain. All the while we are told that those who are successful got their by way of their own initiative, and that losers loose for a reason. Instead of the economy being ruined by speculation of the elite, blame is placed upon the unwise “unlearned” borrowers. Commentators wax moral as they accuse them of being complicit in their own ruin, thus justifying their apathy towards the most desperate. Never mind that with wage stagnation, borrowing is often the only way to have access to funds!
It’s a truism to most intelligent people nowadays that the mismanagement of funds is often attributed to natural market functions rather than the actions of human beings. If the 2008 financial crisis teaches us anything, it’s that banks manage not to fail because we save them from doing so—if a bank fails (as Binga’s did in the Depression) it is usually because we didn’t care to save it. Never mind that hard working persons’ savings are wiped out in the process while those with more speculative appetites are the ones who weather the storm they themselves created. To add insult to injury, Baradaran mentions that Binga was the only banker that was sent to prison for financial crime in the Great Depression.
Baradaran’s analysis lies within a tradition of housing scholars such as Kenneth Jackson and Thomas Sugrue. There were other ways of boosting ownership—Harold Ickes saw a future that would recover America’s cities through low cost apartment housing. Instead, ownership came through the vehicle of the single family mortgage market, leaving cities and their infrastructure in decline as a result of a waining tax base—this, during the Great Migration, a time when blacks were moving to the cities in great numbers. A concentration of segregated neighborhoods of tremendous disadvantage was the result. Community control of wealth was supposed to be the answer.
The problem with black “community control” banking is that most depositors are poorer than depositors of white banks—therefore their capital for loans is limited. On top of this, as whites are usually asset holders due to the generations of financial hardship suffered by blacks, whites tend to be the the “sellers” by-and-large. What results is the same old thing—only the white banks have the ability to lend and multiply their money rapidly, while black banks conservatively invest in government securities whose money ends up in the mainstream white economy anyway. “New” money would always end up in the white banking sector. As Baradaran puts it, “once in the banking system, money flows toward more money.” What was needed was an *actually integrated* economy wherein blacks enjoyed the same advantages and subsidies as whites. But this cannot happen if asset holders are persistently white.
Basically, what was needed was not community banking, but a recalibration of ownership of assets. Whites have benefitted from schemes which increase ownership, while blacks are demonized from receiving mere transfer payments such as welfare.
Because of poor credit histories due to lack of access to capital, blacks living in major cities often had to resort to installment credit at higher interest. The exorbitant interest often led to a state of affairs where lenders had to incur costs of repo personnel and other expenditures, often leading to… increased rates of lending! In this case, the adage that “the poor pay more” very much holds true. What ends up happening is that lenders need to lend at ridiculous rates of interest just to stay in business. The “evils of white lenders” is of course very illustrative in a poetic sense, but does not articulate the root of the problem—lack of reasonable access of blacks to capital, assets, and their attendant resources.
Baradaran points out that solutions to these problems often take the lukewarm point of view that problems can be solved through a “job training” approach… this, despite the fact that there are usually no jobs in the first place. Naturally, government stimulus can invest in the economy through the creation of jobs in needy areas, but this would go against the ethos of laissez faire which, again, is constantly trotted out to absolve policy makers from addressing a crisis.
The moment we’ve just come up from has been one of rabid “color blindness” which, ironically, co-opted the separationist language of black power movements that advocated for community control. MLK’s legacy has been used to justify an ahistorical approach to redress of black disadvantage. This, despite the fact that MLK was very aware of the historical roots of black disadvantage. What resulted was the “decoy of black capitalism” as Baradaran calls it. This was a moment where the black entrepreneur was being celebrated as income disparity between blacks, whites, and even the black middle class, was increasing. An interruption coalition of the poor was discarded in the name of black business and self-determination. Instead of capitalism as the problem, it was cited by intellectuals such as Harold Cruse no less that there was *not enough* capitalist development in black America. This statement can only come at the cost of recognizing the gains white America has made through social programs that were deliberately denied to blacks… which requires that one accept that, well, blacks just lack that entrepreneurial drive that makes capitalism work for them(!). Segregating the black economy from the white economy is not the answer.
What I like about Baradaran’s book is that it challenges “easy” answers to complicated questions that arise when talking about disparity. Ravitch’s book on the educational system in New York also does a great job of this. The fact of the matter is that “community control” is often used to prop up approaches which merely treat the symptoms of a much greater problem. It’s just busy work. Wast’s more, “community control” is often wielded to make very conservative arguments, as Baradaran brilliantly shows. This book ought to be required reading for anyone not just looking to understand who we ended up in this mess, but for anyone who wishes to sincerely come to terms with the difficulties we face in the future, and what the future ought to look like. Call it “reparations” or “socialism” (ha!) if you like, but some sort of government led financial restitution is needed to bring the poor into the fold. After all, there are precedents—whites have enjoyed the benefits of government led restitution and intervention for generations…
A fantastic book!
Come for the analysis of black disparity in America, stay for the striking analysis of how the doctrine of bootstraps laissez faire has been used to deny people in need (blacks, primarily) access to capital—during reconstruction this was denied while simultaneously distributing land and capital for railroad construction. During the depression this was denied while simultaneously subsidizing loans for white homeowners. And today, our money is used to prop up corrupt lenders who willingly take advantage of desperate borrowers for the purpose of short term speculative gain. All the while we are told that those who are successful got their by way of their own initiative, and that losers loose for a reason. Instead of the economy being ruined by speculation of the elite, blame is placed upon the unwise “unlearned” borrowers. Commentators wax moral as they accuse them of being complicit in their own ruin, thus justifying their apathy towards the most desperate. Never mind that with wage stagnation, borrowing is often the only way to have access to funds!
It’s a truism to most intelligent people nowadays that the mismanagement of funds is often attributed to natural market functions rather than the actions of human beings. If the 2008 financial crisis teaches us anything, it’s that banks manage not to fail because we save them from doing so—if a bank fails (as Binga’s did in the Depression) it is usually because we didn’t care to save it. Never mind that hard working persons’ savings are wiped out in the process while those with more speculative appetites are the ones who weather the storm they themselves created. To add insult to injury, Baradaran mentions that Binga was the only banker that was sent to prison for financial crime in the Great Depression.
Baradaran’s analysis lies within a tradition of housing scholars such as Kenneth Jackson and Thomas Sugrue. There were other ways of boosting ownership—Harold Ickes saw a future that would recover America’s cities through low cost apartment housing. Instead, ownership came through the vehicle of the single family mortgage market, leaving cities and their infrastructure in decline as a result of a waining tax base—this, during the Great Migration, a time when blacks were moving to the cities in great numbers. A concentration of segregated neighborhoods of tremendous disadvantage was the result. Community control of wealth was supposed to be the answer.
The problem with black “community control” banking is that most depositors are poorer than depositors of white banks—therefore their capital for loans is limited. On top of this, as whites are usually asset holders due to the generations of financial hardship suffered by blacks, whites tend to be the the “sellers” by-and-large. What results is the same old thing—only the white banks have the ability to lend and multiply their money rapidly, while black banks conservatively invest in government securities whose money ends up in the mainstream white economy anyway. “New” money would always end up in the white banking sector. As Baradaran puts it, “once in the banking system, money flows toward more money.” What was needed was an *actually integrated* economy wherein blacks enjoyed the same advantages and subsidies as whites. But this cannot happen if asset holders are persistently white.
Basically, what was needed was not community banking, but a recalibration of ownership of assets. Whites have benefitted from schemes which increase ownership, while blacks are demonized from receiving mere transfer payments such as welfare.
Because of poor credit histories due to lack of access to capital, blacks living in major cities often had to resort to installment credit at higher interest. The exorbitant interest often led to a state of affairs where lenders had to incur costs of repo personnel and other expenditures, often leading to… increased rates of lending! In this case, the adage that “the poor pay more” very much holds true. What ends up happening is that lenders need to lend at ridiculous rates of interest just to stay in business. The “evils of white lenders” is of course very illustrative in a poetic sense, but does not articulate the root of the problem—lack of reasonable access of blacks to capital, assets, and their attendant resources.
Baradaran points out that solutions to these problems often take the lukewarm point of view that problems can be solved through a “job training” approach… this, despite the fact that there are usually no jobs in the first place. Naturally, government stimulus can invest in the economy through the creation of jobs in needy areas, but this would go against the ethos of laissez faire which, again, is constantly trotted out to absolve policy makers from addressing a crisis.
The moment we’ve just come up from has been one of rabid “color blindness” which, ironically, co-opted the separationist language of black power movements that advocated for community control. MLK’s legacy has been used to justify an ahistorical approach to redress of black disadvantage. This, despite the fact that MLK was very aware of the historical roots of black disadvantage. What resulted was the “decoy of black capitalism” as Baradaran calls it. This was a moment where the black entrepreneur was being celebrated as income disparity between blacks, whites, and even the black middle class, was increasing. An interruption coalition of the poor was discarded in the name of black business and self-determination. Instead of capitalism as the problem, it was cited by intellectuals such as Harold Cruse no less that there was *not enough* capitalist development in black America. This statement can only come at the cost of recognizing the gains white America has made through social programs that were deliberately denied to blacks… which requires that one accept that, well, blacks just lack that entrepreneurial drive that makes capitalism work for them(!). Segregating the black economy from the white economy is not the answer.
What I like about Baradaran’s book is that it challenges “easy” answers to complicated questions that arise when talking about disparity. Ravitch’s book on the educational system in New York also does a great job of this. The fact of the matter is that “community control” is often used to prop up approaches which merely treat the symptoms of a much greater problem. It’s just busy work. Wast’s more, “community control” is often wielded to make very conservative arguments, as Baradaran brilliantly shows. This book ought to be required reading for anyone not just looking to understand who we ended up in this mess, but for anyone who wishes to sincerely come to terms with the difficulties we face in the future, and what the future ought to look like. Call it “reparations” or “socialism” (ha!) if you like, but some sort of government led financial restitution is needed to bring the poor into the fold. After all, there are precedents—whites have enjoyed the benefits of government led restitution and intervention for generations…
December 21, 2020
This book was fantastic. I've always disliked learning about finance and economics, probably because I took one Econ class in college that was thoroughly capitalist/neoliberalist, and I hated it, and I assumed all of Econ was that way. But Mehrsa Baradaran has totally turned me into a "finance/banking is a social justice issue" policy nerd, and I love it so much. This book is a comprehensive study of the racial wealth gap, and it methodically shows how policies affecting the accumulation of wealth in the US were deliberately and systemically implemented to privilege white people and disenfranchise Black people. And it's all laid bare for the reader, not hidden or glossed over in a way that could be dismissed or ignored or explained away. The deliberate, racist policies about who has access to money/power have been there for so long, and it would do us all well to know this history so that we are careful and critical about our policy and political choices going forward. This is a fabulous book, and should be part of the racial justice canon.
May 21, 2022
So basically Black capitalism is not the answer because you can't be capitalist and try to serve a community with limited resources and no access to the larger economy at the same time. It's more complicated than that of course, but basically whatever we've tried hasn't work. Plus the fact that people take advantage of our limited options with exploitative finanical practices.The author makes a comment at the end about how convincing the majority that helping the Black community will ultimately help everyone absolutely will not work, as evidenced in the Sum of Us book.
December 21, 2022
When the Emancipation Proclamation was signed in 1863, the black community owned 0.5% of the total wealth in the US. How much does the black community own today? 1% of the total US wealth. We were taught about slavery in the South, but not that at the same in the North, blacks were segregated from whites …or as Alexis de Tocqueville wrote, “The prejudice of race appears to be stronger in the states that have abolished slavery, and nowhere is it so intolerant as in those states where servitude has never been known.” Lincoln dies and President Johnson takes over; instead of defeated southern rebels being hanged, they got welcomed and got back their confiscated land. That crushed the hope of blacks. Instead of being given land, freedmen were instead told they would have to pay for land. Blacks would now have to fend for themselves. At the same time the US government was handing out millions of acres of land for railroad expansion to whitey, but “giving blacks land was politically unpopular.”
So, at the end of Reconstruction, you have landless, voteless freedmen with one choice left open: growing cotton. “Physical bondage was replaced by debt bondage.” An owner of a post-Civil War plantation explained, “making money there is a simple question of being able to make the darkies work.” Keep them from subsistence farming, and you could get them growing cotton. Plantation owners knew in Haiti after the revolution, ex-slaves stopped growing sugar and started growing crops to eat; US plantation owners wanted to stop that change from happening. Many states prohibited freedmen from hunting and fishing. Good luck then accruing capital. “We’ve liberated them from the land – and delivered them to the bosses.” We know that many freedmen were arrested for any reason in the South and sent to hard work, but did you know “half of all labor prisoners died within the year they were arrested?” The Freeman’s Savings Bank lost ½ of its wealth due to mismanagement. Counterfeit capitalism – “the bank was an effective decoy.” Sharecroppers ended by hook and crook in debt which made them plant even more cotton. Wow fact: “The new system produced even more cotton than before the war.” Sharecroppers got “perpetual debt and perpetual poverty”. The intent of white supremacy was “economic strangulation.”
Booker T. Washington’s Uncle Tom impersonation appealed to Carnegie and Rockefeller with his “gospel of prosperity” and saying that Jim Crow would somehow not apply to a black man who had gained wealth. The author calls Booker “tragically naïve.” Booker wouldn’t tell you that Jim Crow kept black businesses away from white customers, while white businesses often did business with black customers. Booker was the opposite of WEB DuBois, who knew blacks would instead have to mobilize and fight for what they’d get. Undertakers and funeral homes became viable businesses for blacks then. Two places in the US got close to being self-sustaining black economies: Durham, North Carolina, and Tulsa Oklahoma. Before its destruction, Tulsa was “a regular Monte Carlo” and “Negro Wall Street”. After the torching the Black zone in Tulsa called Greenwood, 18,000 black homes were destroyed, and 300 murdered. Displaced blacks the next day had to be marched through town with their hands above their heads. As you can imagine, lots of blacks left Tulsa after such a demo. For months before the fire, blacks had seen printed cards saying to leave the state. Poor whites there couldn’t handle there being blacks doing just fine, let alone being successful. Wilmington was also destroyed by a riot. Luckily, Durham residents didn’t feel threatened by black advancement.
Teddy Roosevelt got in a lot of trouble as President for merely having Booker T. Washington to dinner. Senator Tillman of South Carolina then said, “Now that Roosevelt has eaten with that nigger Washington, we shall have to kill a thousand niggers to get them back to their places.” “In 1925, 40,000 hooded members of KKK marched in front of the White House.” Woodrow Wilson prohibited employ of any blacks for federal office. There was money to be made because of discrimination and white flight, through buying homes from whites desperate to sell, fixing them them up, and selling them to blacks.
Black Banks: Their deposits were smaller and more frequently withdrawn. That makes such a bank riskier, and they held double the capital ratios of white banks which further decreased their performance - fewer loans, means less revenue. Black homes didn’t get the same increase in value as white homes, so black middle class wealth creation through owning property was thwarted. Retaining property value is white privilege.
New Deal reforms were in fact “white affirmative action”. New Deal programs couldn’t help blacks because FDR’s progressive platform had to overcome southern Democrats, by sending funds not to relieve the inner city, but to create suburbs that would reinforce segregation. To appease southern Democrats, FDR choose “large scale social reforms” at the expense of “equal treatment of the races”. Southern senators drafted bills that excluded blacks “otherwise a bill would never reach the floor for a vote.” Think of it as policy apartheid. And blacks were “left out of union membership.” Aside from southern senators intentionally screwing the blacks, the New Deal was “The closest Americans came to democratic socialism.” The Norman Rockwell vision was a “manufactured prosperity” that was sadly achieved at the expense of blacks. Realtors dealt in upgraded properties that didn’t threaten property values for whites; see “redlining”. The Federal Housing Administration prevented whites from buying homes in racially mixed neighborhoods.
The defining feature of the US racial divide is economic, the wealth gap. The racial wealth gap was “created by state law and policy.” Black banks historically helped rather than hindered that. “Segregated communities could not segregate their money. In fact, black banks became the very mechanism through which black money flowed out of the black community and into the white mainstream economy.” Think of government credit (mortgage loans) as white, blacks were excluded. That left many blacks open to exploitation by sharks. “60% percent of the black population is unbanked or underbanked, while only 20% of whites are in the same category.”
Blacks thus paid higher interest and higher fees at fringe banks and were more likely to be taken to court for owing small amounts.” The higher the interest rate for a loan, the higher the chance for default. It was low-cost credit for whites, and an extractive inescapable debt trap for blacks. Blacks were excluded from the credit card market, consumer loans and they paid more for household items. Lower sales by black businesses led to lower profit and higher costs. Many black communities are still “opportunity deserts”. Note that Obama in office did nothing to address the racial wealth gap – a big reason he got big donors for his campaign. Note that the Bank of Italy (for Italian immigrants) became remarkably mainstream (you know it now as Bank of America) while black banks didn’t. Italians got to become American. Italians loved the GI Bill, but black veterans got only mild advantages from it.
How can you counter centuries of institutional unfairness when a 2016 Marist poll found that 81% of US whites oppose reparations? Meanwhile, 58% of US blacks support them. Whitey’s financial answer seems to be putting Harriet Tubman’s face on the twenty-dollar bill in the distant future and calling it a day. Never mind that the racial wealth gap was only created through “racist public policy.” While on this subject of slavery reparations (which is ignored by both US parties), in 1952, West Germany agreed to pay the new nation of Israel three billion marks as reparations for the Holocaust.” Within ten years of its crimes Germany coughs up the cash, yet since the Civil War, US leadership can still only heave a collective “meh” regarding reparations. The conscience of a rogue state.
MLK’s assassination ends the Civil Rights Era. “By 1966, a poll found that 85% of whites believed that ‘the pace of civil rights was too fast’.” Really? When does fairness need a timetable? Legal changes didn’t suddenly pay off in fairness, credit, job options; equality demands full opportunity. As black anger increased, even the amazing Bayard Rustin (who once commanded audiences of hundreds of thousands) found himself shouted down as an Uncle Tom by a crowd of a few hundred.
Next stop, delegitimizing black poverty simply by equating it with welfare. Hey, don’t look at insanely large corporate welfare, or white welfare, see welfare only as a black thing. “The War on Poverty morphed into the War on Crime; The War on Poverty doesn’t put black bodies in jail but the War on Crime sure does. And so, “Law and order became the language of the former white supremacists.” The Ghetto: “White institutions created it, white institutions maintain it, and white society condones it.” To deflect from his own inaction, Reagan called inner-city ghettos “enterprise zones”. But for actual enterprise zones to exist, you’d need a New Deal just for blacks. Like Reagan, Clinton comically held that libertarian free-market private enterprises would somehow be the answer to black poverty. Out of 234 banks in Chicago, only one would issue mortgages to blacks buying in a white neighborhood.
Black Banks: “the biggest appeal of black capitalism was that it cost very little – financially and especially politically. Nixon embraced black capitalism as a band aid; poverty had to be seen as “a moral failure.” Black capitalism meant capitalism without the government intervention help that whites got. “Nixon’s southern strategy was effective because he used race as a wedge issue without actually talking about race.” Nixon said civil rights is no longer an issue and blacks should focus on “dignity” – a codeword for relying on yourself and your own bootstraps – no handouts. People who championed black banking: Fredrick Douglas, Booker T. Washington, President Lincoln, WEB DuBois, Marcus Garvey, MLK, Malcolm X, Presidents Johnson, Nixon, Carter, Reagan, Clinton and Obama, Jesse Jackson and the Black Panthers. They all said that successful black banks “would lead to prosperity for black regardless of external circumstances.” A SNCC manifesto demanded that blacks “form our own institutions, credit unions, co-ops, political parties…” Affirmative action was attacked by whites and was called “reverse discrimination.” A study of US commercial banks in 1967 found that investments in black businesses accounted for only one twentieth of 1% of bank assets. And “banks were also one of the last industries to integrate their staff.” Closet racists couldn’t deal with the thought of black tellers counting their white deposits.
Black banks had higher operating costs than white banks, and they paid lower interest (by 1 to 2%) to their customers. They made fewer loans and suffered higher losses. They couldn’t keep their money only in the ghetto. “Black college graduates owe an average of $53,000 more than their white counterparts in student debt.” “Black borrowers are 150% more likely to get high-cost loans.” Black capitalism was a decoy, at best it was “state paternalism” while blacks were excluded from American capitalism. Adam Smith wrote in the “Wealth of Nations” that such exclusion was antithetical to capitalism. The father of neoliberalism however, douchebag Milton Friedman, wrote that civil rights laws were a violation of free-market capitalism. During the 2008 financial crisis, the government bailed out the asses of cracker banks Citigroup and Goldman Sachs 100% so that their shareholders lost nothing.
Only 4% of Americans approved of interracial marriage in 1958; by 2013, that percentage was up to 87%. Goldwater said Stokely Carmichael should have been charged with high treason (which means death penalty). By 1969, most whites blamed blacks primarily for loss in Law & Order (most commonly Negroes who start riots) in the US. Strange how concern for US Law & Order is NEVER allowed to discussed about the much more damaging white-collar crime. Fun fact: “whites received the large majority of welfare benefits and welfare fraud was rare”, Reagan had the balls to attack black “welfare queens” eating steak. As JFK’s speechwriter said, “If we blame crime on crack, out politicians are off the hook.” Not-So-Fun Fact: By 2000, there were more black men in prison than had been held under slavery in 1850.” “In 1984, black middle-class families had only twenty cents for every dollar of wealth held by white middle-class families.” White banks say they aren’t discriminating, it’s just that loans made to black communities are riskier and less chance of being profitable.
How smart are Republicans? In 2015, 43% of them believed President Obama was a Muslim. By 2016, almost half of whites surveyed believed that discrimination against whites was just as bad or an even bigger problem than discrimination against blacks. In 1981 Republican strategist Lee Atwater explained the game: “You start out in 1954 saying %$#@ (the N word freely), By 1968, you can’t say that anymore – that hurts you, backfires. So, you say stuff like, uh, forced busing, state’s rights, and all that stuff and you’re getting so abstract. A by-product of that (those code phrases) is that blacks get hurt more than whites.”
Credit cards used to be for the affluent, a sign of wealth, but credit card companies don’t want the wealthy today because they pay off their cards monthly and thus escape the crazy interest charges. Credit card companies prefer “revolvers”, those who don’t pay the full amount monthly and thus accrue big interest. Blacks are targeted by credit card companies because “blacks are three times more likely as whites to revolve their debts.” Revolvers mean profits. Subprime mortgage lenders engage in “reverse redlining”. “Laissez faire racism” is when you blame the poor for your own predicament. “Today, one in three black children grows up in poverty compared to one out of ten white children.” Black aren’t frivolous spenders; “blacks save an average of 11% of their annual income while whites save only 10%”. A 2016 census found that 70% of whites own homes while only 40% of blacks do so. Blacks earning 75K annually usually live in a poorer community than whites earning 40K. “By 2009, 35% of black families had zero or negative wealth.”
Great book, as you can see, I learned a lot. I recently realized you can’t study US warfare critically without also focusing on US financial warfare. And now with this book I see how you can’t really study racism today without also focusing on systemic economic racism. Kudos to the author.
So, at the end of Reconstruction, you have landless, voteless freedmen with one choice left open: growing cotton. “Physical bondage was replaced by debt bondage.” An owner of a post-Civil War plantation explained, “making money there is a simple question of being able to make the darkies work.” Keep them from subsistence farming, and you could get them growing cotton. Plantation owners knew in Haiti after the revolution, ex-slaves stopped growing sugar and started growing crops to eat; US plantation owners wanted to stop that change from happening. Many states prohibited freedmen from hunting and fishing. Good luck then accruing capital. “We’ve liberated them from the land – and delivered them to the bosses.” We know that many freedmen were arrested for any reason in the South and sent to hard work, but did you know “half of all labor prisoners died within the year they were arrested?” The Freeman’s Savings Bank lost ½ of its wealth due to mismanagement. Counterfeit capitalism – “the bank was an effective decoy.” Sharecroppers ended by hook and crook in debt which made them plant even more cotton. Wow fact: “The new system produced even more cotton than before the war.” Sharecroppers got “perpetual debt and perpetual poverty”. The intent of white supremacy was “economic strangulation.”
Booker T. Washington’s Uncle Tom impersonation appealed to Carnegie and Rockefeller with his “gospel of prosperity” and saying that Jim Crow would somehow not apply to a black man who had gained wealth. The author calls Booker “tragically naïve.” Booker wouldn’t tell you that Jim Crow kept black businesses away from white customers, while white businesses often did business with black customers. Booker was the opposite of WEB DuBois, who knew blacks would instead have to mobilize and fight for what they’d get. Undertakers and funeral homes became viable businesses for blacks then. Two places in the US got close to being self-sustaining black economies: Durham, North Carolina, and Tulsa Oklahoma. Before its destruction, Tulsa was “a regular Monte Carlo” and “Negro Wall Street”. After the torching the Black zone in Tulsa called Greenwood, 18,000 black homes were destroyed, and 300 murdered. Displaced blacks the next day had to be marched through town with their hands above their heads. As you can imagine, lots of blacks left Tulsa after such a demo. For months before the fire, blacks had seen printed cards saying to leave the state. Poor whites there couldn’t handle there being blacks doing just fine, let alone being successful. Wilmington was also destroyed by a riot. Luckily, Durham residents didn’t feel threatened by black advancement.
Teddy Roosevelt got in a lot of trouble as President for merely having Booker T. Washington to dinner. Senator Tillman of South Carolina then said, “Now that Roosevelt has eaten with that nigger Washington, we shall have to kill a thousand niggers to get them back to their places.” “In 1925, 40,000 hooded members of KKK marched in front of the White House.” Woodrow Wilson prohibited employ of any blacks for federal office. There was money to be made because of discrimination and white flight, through buying homes from whites desperate to sell, fixing them them up, and selling them to blacks.
Black Banks: Their deposits were smaller and more frequently withdrawn. That makes such a bank riskier, and they held double the capital ratios of white banks which further decreased their performance - fewer loans, means less revenue. Black homes didn’t get the same increase in value as white homes, so black middle class wealth creation through owning property was thwarted. Retaining property value is white privilege.
New Deal reforms were in fact “white affirmative action”. New Deal programs couldn’t help blacks because FDR’s progressive platform had to overcome southern Democrats, by sending funds not to relieve the inner city, but to create suburbs that would reinforce segregation. To appease southern Democrats, FDR choose “large scale social reforms” at the expense of “equal treatment of the races”. Southern senators drafted bills that excluded blacks “otherwise a bill would never reach the floor for a vote.” Think of it as policy apartheid. And blacks were “left out of union membership.” Aside from southern senators intentionally screwing the blacks, the New Deal was “The closest Americans came to democratic socialism.” The Norman Rockwell vision was a “manufactured prosperity” that was sadly achieved at the expense of blacks. Realtors dealt in upgraded properties that didn’t threaten property values for whites; see “redlining”. The Federal Housing Administration prevented whites from buying homes in racially mixed neighborhoods.
The defining feature of the US racial divide is economic, the wealth gap. The racial wealth gap was “created by state law and policy.” Black banks historically helped rather than hindered that. “Segregated communities could not segregate their money. In fact, black banks became the very mechanism through which black money flowed out of the black community and into the white mainstream economy.” Think of government credit (mortgage loans) as white, blacks were excluded. That left many blacks open to exploitation by sharks. “60% percent of the black population is unbanked or underbanked, while only 20% of whites are in the same category.”
Blacks thus paid higher interest and higher fees at fringe banks and were more likely to be taken to court for owing small amounts.” The higher the interest rate for a loan, the higher the chance for default. It was low-cost credit for whites, and an extractive inescapable debt trap for blacks. Blacks were excluded from the credit card market, consumer loans and they paid more for household items. Lower sales by black businesses led to lower profit and higher costs. Many black communities are still “opportunity deserts”. Note that Obama in office did nothing to address the racial wealth gap – a big reason he got big donors for his campaign. Note that the Bank of Italy (for Italian immigrants) became remarkably mainstream (you know it now as Bank of America) while black banks didn’t. Italians got to become American. Italians loved the GI Bill, but black veterans got only mild advantages from it.
How can you counter centuries of institutional unfairness when a 2016 Marist poll found that 81% of US whites oppose reparations? Meanwhile, 58% of US blacks support them. Whitey’s financial answer seems to be putting Harriet Tubman’s face on the twenty-dollar bill in the distant future and calling it a day. Never mind that the racial wealth gap was only created through “racist public policy.” While on this subject of slavery reparations (which is ignored by both US parties), in 1952, West Germany agreed to pay the new nation of Israel three billion marks as reparations for the Holocaust.” Within ten years of its crimes Germany coughs up the cash, yet since the Civil War, US leadership can still only heave a collective “meh” regarding reparations. The conscience of a rogue state.
MLK’s assassination ends the Civil Rights Era. “By 1966, a poll found that 85% of whites believed that ‘the pace of civil rights was too fast’.” Really? When does fairness need a timetable? Legal changes didn’t suddenly pay off in fairness, credit, job options; equality demands full opportunity. As black anger increased, even the amazing Bayard Rustin (who once commanded audiences of hundreds of thousands) found himself shouted down as an Uncle Tom by a crowd of a few hundred.
Next stop, delegitimizing black poverty simply by equating it with welfare. Hey, don’t look at insanely large corporate welfare, or white welfare, see welfare only as a black thing. “The War on Poverty morphed into the War on Crime; The War on Poverty doesn’t put black bodies in jail but the War on Crime sure does. And so, “Law and order became the language of the former white supremacists.” The Ghetto: “White institutions created it, white institutions maintain it, and white society condones it.” To deflect from his own inaction, Reagan called inner-city ghettos “enterprise zones”. But for actual enterprise zones to exist, you’d need a New Deal just for blacks. Like Reagan, Clinton comically held that libertarian free-market private enterprises would somehow be the answer to black poverty. Out of 234 banks in Chicago, only one would issue mortgages to blacks buying in a white neighborhood.
Black Banks: “the biggest appeal of black capitalism was that it cost very little – financially and especially politically. Nixon embraced black capitalism as a band aid; poverty had to be seen as “a moral failure.” Black capitalism meant capitalism without the government intervention help that whites got. “Nixon’s southern strategy was effective because he used race as a wedge issue without actually talking about race.” Nixon said civil rights is no longer an issue and blacks should focus on “dignity” – a codeword for relying on yourself and your own bootstraps – no handouts. People who championed black banking: Fredrick Douglas, Booker T. Washington, President Lincoln, WEB DuBois, Marcus Garvey, MLK, Malcolm X, Presidents Johnson, Nixon, Carter, Reagan, Clinton and Obama, Jesse Jackson and the Black Panthers. They all said that successful black banks “would lead to prosperity for black regardless of external circumstances.” A SNCC manifesto demanded that blacks “form our own institutions, credit unions, co-ops, political parties…” Affirmative action was attacked by whites and was called “reverse discrimination.” A study of US commercial banks in 1967 found that investments in black businesses accounted for only one twentieth of 1% of bank assets. And “banks were also one of the last industries to integrate their staff.” Closet racists couldn’t deal with the thought of black tellers counting their white deposits.
Black banks had higher operating costs than white banks, and they paid lower interest (by 1 to 2%) to their customers. They made fewer loans and suffered higher losses. They couldn’t keep their money only in the ghetto. “Black college graduates owe an average of $53,000 more than their white counterparts in student debt.” “Black borrowers are 150% more likely to get high-cost loans.” Black capitalism was a decoy, at best it was “state paternalism” while blacks were excluded from American capitalism. Adam Smith wrote in the “Wealth of Nations” that such exclusion was antithetical to capitalism. The father of neoliberalism however, douchebag Milton Friedman, wrote that civil rights laws were a violation of free-market capitalism. During the 2008 financial crisis, the government bailed out the asses of cracker banks Citigroup and Goldman Sachs 100% so that their shareholders lost nothing.
Only 4% of Americans approved of interracial marriage in 1958; by 2013, that percentage was up to 87%. Goldwater said Stokely Carmichael should have been charged with high treason (which means death penalty). By 1969, most whites blamed blacks primarily for loss in Law & Order (most commonly Negroes who start riots) in the US. Strange how concern for US Law & Order is NEVER allowed to discussed about the much more damaging white-collar crime. Fun fact: “whites received the large majority of welfare benefits and welfare fraud was rare”, Reagan had the balls to attack black “welfare queens” eating steak. As JFK’s speechwriter said, “If we blame crime on crack, out politicians are off the hook.” Not-So-Fun Fact: By 2000, there were more black men in prison than had been held under slavery in 1850.” “In 1984, black middle-class families had only twenty cents for every dollar of wealth held by white middle-class families.” White banks say they aren’t discriminating, it’s just that loans made to black communities are riskier and less chance of being profitable.
How smart are Republicans? In 2015, 43% of them believed President Obama was a Muslim. By 2016, almost half of whites surveyed believed that discrimination against whites was just as bad or an even bigger problem than discrimination against blacks. In 1981 Republican strategist Lee Atwater explained the game: “You start out in 1954 saying %$#@ (the N word freely), By 1968, you can’t say that anymore – that hurts you, backfires. So, you say stuff like, uh, forced busing, state’s rights, and all that stuff and you’re getting so abstract. A by-product of that (those code phrases) is that blacks get hurt more than whites.”
Credit cards used to be for the affluent, a sign of wealth, but credit card companies don’t want the wealthy today because they pay off their cards monthly and thus escape the crazy interest charges. Credit card companies prefer “revolvers”, those who don’t pay the full amount monthly and thus accrue big interest. Blacks are targeted by credit card companies because “blacks are three times more likely as whites to revolve their debts.” Revolvers mean profits. Subprime mortgage lenders engage in “reverse redlining”. “Laissez faire racism” is when you blame the poor for your own predicament. “Today, one in three black children grows up in poverty compared to one out of ten white children.” Black aren’t frivolous spenders; “blacks save an average of 11% of their annual income while whites save only 10%”. A 2016 census found that 70% of whites own homes while only 40% of blacks do so. Blacks earning 75K annually usually live in a poorer community than whites earning 40K. “By 2009, 35% of black families had zero or negative wealth.”
Great book, as you can see, I learned a lot. I recently realized you can’t study US warfare critically without also focusing on US financial warfare. And now with this book I see how you can’t really study racism today without also focusing on systemic economic racism. Kudos to the author.
August 29, 2020
READ THIS.
Seriously. Read it.
This book was filled with historical information that I didn't know (including some fascinating tidbits about George Romney), insight into the financial & banking sectors, and sharp diagnosis of the failures (intentional and unintentional) of people and movements seeking to address racial inequality in the United States. Every chapter brought new information about historical events and figures, always coupled with clear analysis and explanation of what the effects of those events and figures were. The book does deal with a lot of dense, nitty-gritty policy details and elements of the financing and banking industries, which I don't have a ton of experience with, so I need to revisit this to really get a handle on what Baradaran describes. But she always walks through the implications and effects of the details in a way that I could grasp.
If you're interested in racial equality and justice for all, you've gotta read this. It's seriously incredible.
Seriously. Read it.
This book was filled with historical information that I didn't know (including some fascinating tidbits about George Romney), insight into the financial & banking sectors, and sharp diagnosis of the failures (intentional and unintentional) of people and movements seeking to address racial inequality in the United States. Every chapter brought new information about historical events and figures, always coupled with clear analysis and explanation of what the effects of those events and figures were. The book does deal with a lot of dense, nitty-gritty policy details and elements of the financing and banking industries, which I don't have a ton of experience with, so I need to revisit this to really get a handle on what Baradaran describes. But she always walks through the implications and effects of the details in a way that I could grasp.
If you're interested in racial equality and justice for all, you've gotta read this. It's seriously incredible.
January 15, 2021
A must-read. It talks about the domineering and persistent racial wealth gap and masterfully weaves the history of America into the pursuit. The focus is on black banks, ostensibly a site of wealth for black communities -- but are we as hoodwinked by the assumption that it's a good thing as bad-faith purveyors of them like Richard Nixon made them out to be? Baradaran's narrative has power and is essential reading so that we don't repeatedly make mistakes that seem to solve so-called problems when they tend to be mere bandaids. What I'm saying is we need to abolish Capitalism. The self-destructive contradictions of capitalism are a horror to live through, and I'm in a very privileged position.
October 2, 2018
Excellent read. This book was not so much about the black banking industry itself as it was about the history of racial and economic discrimination against blacks in the U.S. through government policies that benefited whites at the expense of blacks and created the deep racial wealth gap of the present day. Still, all information was relevant and necessary to the discussion, and the research was very thoroughly cited. Dr. Martin Luther King, Jr., as quoted in the book, said it best, "the inseparable twin of racial justice was economic justice." This book greatly details how that came to be and how that continues today, with a glimmer of hope for possible political remedies in the future.
March 12, 2018
If you’re a history, banking or economist nerd then this book is for you. I tend to fall into the first category, as my how banking works and economy knowledge is pretty much zilch. That being said I found the history angle tough because the subject is so frustrating, but informative and well researched. The author knows her stuff.
March 14, 2020
Baradaran expertly details how the banking industry has failed African Americans, and has contributed to the persistence of a significant racial wealth gap. In a well functioning banking system, wealth is created through a “multiplier effect,” but this multiplier effect can only function properly if loans stay within the community. She shows how banks that serve customers in a poor segregated community are thus unable to create wealth, but instead only end up exploiting the very people that need help. And she shows how generations of discrimination in jobs and housing has prevented black families from accruing wealth, which in turn makes it exceptionally difficult to escape from poverty in segregated areas.
Baradaran contends that the white middle class was created through federal investments such as the GI Bill and FHA home loans, which deliberately excluded blacks. I would give more credit to free enterprise than she would, but she is certainly correct that these programs benefitted whites and harmed black people. And she makes a compelling case that the chronic harmful effects of this long history of oppression cannot be reversed through “color-blind” methods alone.
People of a conservative mindset (like myself) tend to believe that in a free country a person’s station in life is largely determined by the quality of their decisions and their quantity of hard work. But if you believe that the people who live in a ghetto do so mostly because of some personal failing, then you need to read this book.
This book makes an excellent companion to Richard Rothstein’s “The Color of Law.” Neither is intended to be an argument for reparations, but I would have to agree that grave injustices have been committed, and if a practical remedy could be designed, I could certainly get on board.
Baradaran contends that the white middle class was created through federal investments such as the GI Bill and FHA home loans, which deliberately excluded blacks. I would give more credit to free enterprise than she would, but she is certainly correct that these programs benefitted whites and harmed black people. And she makes a compelling case that the chronic harmful effects of this long history of oppression cannot be reversed through “color-blind” methods alone.
People of a conservative mindset (like myself) tend to believe that in a free country a person’s station in life is largely determined by the quality of their decisions and their quantity of hard work. But if you believe that the people who live in a ghetto do so mostly because of some personal failing, then you need to read this book.
This book makes an excellent companion to Richard Rothstein’s “The Color of Law.” Neither is intended to be an argument for reparations, but I would have to agree that grave injustices have been committed, and if a practical remedy could be designed, I could certainly get on board.
June 9, 2020
"A 2016 study glibly predicted that, based on the current racial wealth gap, it would take 228 years for blacks to have as much wealth as whites do today." In The Color of Money, Mehrsa Baradaran outlines the ways the racial wealth gap came to be and lays out potential for fighting it head on.
In the aftermath of slavery, the US government, for about 9 months, gave reparations to ex-slaves in the form of land that had once belonged to their Southern masters. But then Lincoln was killed and Southerner Andrew Johnson came to power. Thus started the first wave of government attacks on black wealth accumulation by the taking back of the land that had been given to ex-slaves. From this point, Baradaran's historical telling of blacks and the American economy is a story of white American consciously placing black Americans as the buffer group to keep white safely middle class. Victims of government-appointed bankers that misused deposits, FHA policies that ensured the impossibility of black home ownership, and predatory subprime mortgages spawned by bank greed and racism, blacks have systemically been excluded from wealth accrual by state and private action.
And this is the reason why blacks only own 1% of all the wealth in the United States.
At times Baradaran takes too expansive a scope for her book by giving mere (and unnecessary) glosses on the civil rights movement and other socio-political topics that didn't directly relate to the question of banks or the wealth gap. Nonetheless, this is an important book on little studied subject and one you should certainly read.
In the aftermath of slavery, the US government, for about 9 months, gave reparations to ex-slaves in the form of land that had once belonged to their Southern masters. But then Lincoln was killed and Southerner Andrew Johnson came to power. Thus started the first wave of government attacks on black wealth accumulation by the taking back of the land that had been given to ex-slaves. From this point, Baradaran's historical telling of blacks and the American economy is a story of white American consciously placing black Americans as the buffer group to keep white safely middle class. Victims of government-appointed bankers that misused deposits, FHA policies that ensured the impossibility of black home ownership, and predatory subprime mortgages spawned by bank greed and racism, blacks have systemically been excluded from wealth accrual by state and private action.
And this is the reason why blacks only own 1% of all the wealth in the United States.
At times Baradaran takes too expansive a scope for her book by giving mere (and unnecessary) glosses on the civil rights movement and other socio-political topics that didn't directly relate to the question of banks or the wealth gap. Nonetheless, this is an important book on little studied subject and one you should certainly read.
October 22, 2023
Without any contest, this is the best and most important book I've read this year.
It's also, without contest, the most difficult book I've read this year. It is a grueling history of Black Banks in America, and how a complex mixture of overtly racist policy and the organic trends of Capitalism have perpetuated a socioeconomic divide that has doggedly persisted since before Emancipation. It's a book filled with more than a century of governmental apathy, misguided legislation, and so many dreams of financial stability and growth dashed.
There's also a lot of dense explanations on how the American financial system works in general, which required several read-overs from me to fully understand. It took me a two-year hiatus between read attempts and constant cutting back-and-forth between more lighthearted fare to get through this one, and even now I feel like I've gleaned maybe 80% of everything discussed here.
But if I could convince people to read any of the books I've read this year, I'd choose this one. This one carries with it an argument - with a mountain of evidence - for reparations, true integration, and a means of addressing the racial wealth gap that doesn't put the onus of change on the Black community as so much of previous attempts have. It's a call to action to address an issue that acutely burdens the Black community, but systemically burdens the whole of the nation.
It's also, without contest, the most difficult book I've read this year. It is a grueling history of Black Banks in America, and how a complex mixture of overtly racist policy and the organic trends of Capitalism have perpetuated a socioeconomic divide that has doggedly persisted since before Emancipation. It's a book filled with more than a century of governmental apathy, misguided legislation, and so many dreams of financial stability and growth dashed.
There's also a lot of dense explanations on how the American financial system works in general, which required several read-overs from me to fully understand. It took me a two-year hiatus between read attempts and constant cutting back-and-forth between more lighthearted fare to get through this one, and even now I feel like I've gleaned maybe 80% of everything discussed here.
But if I could convince people to read any of the books I've read this year, I'd choose this one. This one carries with it an argument - with a mountain of evidence - for reparations, true integration, and a means of addressing the racial wealth gap that doesn't put the onus of change on the Black community as so much of previous attempts have. It's a call to action to address an issue that acutely burdens the Black community, but systemically burdens the whole of the nation.
December 25, 2020
I initially felt bad about such a low rating, but I had to accept this book, while easy to read and decently footnoted, ultimately lacks any real profound ideas or deep analysis. The premise is stated in the Introduction, and, while accurate, leaves little reason to read the remainder. It is just that simple to state:
Black People lack wealth because White Supremacist America denies them reparations for over two centuries of slavery and more than a century of structural racism post-slavery. Simply put, there is absolutely no way Black Americans will EVER have comparable wealth to White Supremacist Americans unless there are reparations paid for slavery, at the very least. After that, the White Supremacist Government can address Jim Crow and lynching. There is till more after, of course, but we can start there. A Truth and Reconciliation, like the White Supremacist US Government supported for South Africa, would be another great idea. Let's just put all the lies of the founding of the "land of the free..." out in the open for all the world to see.
Yep, it won't ever happen, probably. But unless or until it does, Black Americans will continue to have a mere fraction of the wealth of White Supremacist Americans.
Black People lack wealth because White Supremacist America denies them reparations for over two centuries of slavery and more than a century of structural racism post-slavery. Simply put, there is absolutely no way Black Americans will EVER have comparable wealth to White Supremacist Americans unless there are reparations paid for slavery, at the very least. After that, the White Supremacist Government can address Jim Crow and lynching. There is till more after, of course, but we can start there. A Truth and Reconciliation, like the White Supremacist US Government supported for South Africa, would be another great idea. Let's just put all the lies of the founding of the "land of the free..." out in the open for all the world to see.
Yep, it won't ever happen, probably. But unless or until it does, Black Americans will continue to have a mere fraction of the wealth of White Supremacist Americans.
May 16, 2021
Tough but important read about the racial wealth gap in the US, its past and its present. The book is well-written, dense, the footnotes and bibliography are a wealth of information.
One of the main ideas I took with me is that the current situation, where 60% of black Americans are unbanked or underbanked and the median white family has 13 times more wealth than the median black family, was created and upheld through racist policies, laws and legislation on the local, state and federal levels. This means everything from the raiding of the Federal Savings Bank (the first bank for newly freed slaves) to the New Deal (that primarily benefited white folks) to political rhetoric promoting Black Capitalism without providing actual tools, policies and cash flow to make that happen. If these inequalities were created through those avenues, it will be virtually impossible for black Americans to make up this difference without real, substantive changes in policies, laws and legislation.
I'd recommend this book for anyone who wants to read about racism in the US, economics, or US history.
One of the main ideas I took with me is that the current situation, where 60% of black Americans are unbanked or underbanked and the median white family has 13 times more wealth than the median black family, was created and upheld through racist policies, laws and legislation on the local, state and federal levels. This means everything from the raiding of the Federal Savings Bank (the first bank for newly freed slaves) to the New Deal (that primarily benefited white folks) to political rhetoric promoting Black Capitalism without providing actual tools, policies and cash flow to make that happen. If these inequalities were created through those avenues, it will be virtually impossible for black Americans to make up this difference without real, substantive changes in policies, laws and legislation.
I'd recommend this book for anyone who wants to read about racism in the US, economics, or US history.
May 3, 2022
When someone tells you systemic racism isn't real, point them straight to this book. The first currency of America was black people who weren't allowed the same financial abilities as whites once they were freed. How could systemic racism *not* exist when the system began at the expense of blacks?
This book is the end-all for learning about our nation's history of racism. Through each war, each president's handling of civil rights, and each failed black bank, the author gives an incredibly thorough historical account of America from the Civil War to today. There are thousands of examples of how people of color were never given a chance to catch up, and as much as people don't want to admit it, there is much work to be done to ever achieve equity.
This book is the end-all for learning about our nation's history of racism. Through each war, each president's handling of civil rights, and each failed black bank, the author gives an incredibly thorough historical account of America from the Civil War to today. There are thousands of examples of how people of color were never given a chance to catch up, and as much as people don't want to admit it, there is much work to be done to ever achieve equity.
August 4, 2020
Wow reading this summer is hard and slow going. As usual loved Mehrsa Baradaran’s writing. Incredibly detailed summary of the (intellectual) history of Black banking and Black capitalism (and all its woes). This book functioned well as a survey more so than a really deep dive into any particular bank/policy. Her closing chapter about possible policies for reparations as a means to close the wealth gap leaves you with the useful litmus test that [paraphrasing] “if the policy doesn’t cost white people anything, it probably isn’t going to work”. This summarizes the book nicely. Hopefully we will see another push for some form of reparations in our lifetime.
February 19, 2021
Phenomenal! I found this book to be incredibly digestible despite the fact that I can barely do my own taxes and still don’t understand wtf happened with GameStop. The book clearly articulates the deep history of Black Americans being excluded from the economic system while also explaining how most government policies have fell short in offering support or relief. An important book and one that provides key context for understanding social injustices in the United States.
June 22, 2021
Long wanted to read this book by Mehrsa. An avid-reader herself, this book was powerful, well-researched, fascinating - all this while exploring an otherwise sombre area of law - Banking Law. Stylistically, each chapter could be read as a self-contained piece, so it read like an academic work or one that could go into courseworks.
This is a sizzling visitation of history (poring through records in presidential libraries) to explain the relationship between wealth inequity and racial discrimination. Everyone who is interested in knowing how financial structures can create and maintain inequality even when civil and political rights may be guaranteed should definitely read this. It contains rich material on political economy, the role of land ownership in perpetuating inequality and the practicality of self-help as an alternative to structural change.
This is a sizzling visitation of history (poring through records in presidential libraries) to explain the relationship between wealth inequity and racial discrimination. Everyone who is interested in knowing how financial structures can create and maintain inequality even when civil and political rights may be guaranteed should definitely read this. It contains rich material on political economy, the role of land ownership in perpetuating inequality and the practicality of self-help as an alternative to structural change.
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