Is African America’s Financial System Collapsing? The Sale of First State Bank Reduces Black Banks To 19


“First we need a savings bank. Let us put our moneys together; let us use our moneys; let us put our money out at usury among ourselves, and reap the benefit ourselves. Let us have a bank that will take the nickels and turn them into dollars.” -Maggie L. Walker

The #BankBlack movement maybe moving, but quite simply it is not moving fast enough. After almost 100 years in business, First State Bank, the last African American owned bank in Virginia, has sold the majority of its ownership to Casey Crawford, CEO & Founder of Movement Mortgage (pictured above). The sell reduces the number of African American owned banks to 19 and represents an almost 20 percent decrease in the number of African American owned banks lost in the past two and half years.

It has been seen that with the absence of African American owned banks and credit unions comes much predatory behavior to the community. Banks like Wells Fargo and Citigroup have paid hundreds of millions for their behavior and payday loans are as rampant as ants at a picnic within the community. Since desegregation, African American institutions from neighborhoods to businesses and even schools that were inherent to the interest of African America have been in a struggle to stem the tide of a collapsing institutional fabric.

As recently as the early 1990s there were over 50 African American owned banks in the United States. First State Bank’s sale removes $32.9 million in assets from African America’s financial hold. Key states absent of an African American owned bank were already Florida, Mississippi, New York, and Ohio all of which have major African American populations. Now, add Virginia to that list which is a key state down the I-95 corridor and proximity to the nation’s capital. The loss of First State Bank truly echoes tears of frustration as Virginia was the home of Madam C.J. Walker’s St. Luke Penny Savings Bank, which she chartered in 1901 making her the first African American woman to charter and preside over a bank. Now, there are none in the state 116 years later. Is this what we call progress?

There has not been a new African American owned bank opened in seventeen years since Alamerica Bank was opened in Alabama. The #BankBlack movement is simply not enough if African American institutions like HBCUs, businesses, fraternal organizations, and the like are not willing to move their deposits into them. A harsh reality is that lending to the African American community is risky. We have lower median incomes, less assets, and more volatile working lives. The chance that we could become unemployed is a much higher probability than other Americans, therefore our banks are always at more risk for loan default from us. They need even more reserves than banks like JP Morgan and company who are being required to hold more because of their systemic importance. Our banks must look at themselves in the same light, they are systemic to our community’s financial health. If not, the candlelight of opportunity is going to quickly fade away into darkness when African America truly has no place to turn for its own financial well being.

First State Bank closing is more than just 100 years of financial stability to southeast Virginia’s African American community, it is another nail in the coffin of African American institutionalism which we so desperately need to revive.

 

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City Bus Stops: An Underutilized Force For Education


Users do not care about what is inside the box, as long as the box does what they need done. – Jef Raskin

By William A. Foster, IV

It was one evening some years ago that my father and I had a debate in my  parents living room about an article that I read in the New York Times concerning prep schools versus public schools and how much they spend per student. The New York Times stated that Philips Exeter Academy in 2008 spent $63,500 per student annually, while a report from the Organization for Economic Cooperation and Development shows that the U.S. as a whole spends about $12,000 per student annually. My father could not understand what PEA could possibly be spending over five times the amount on. I said to him it was the difference between showing a kid a map of India and taking them there. That being said, as someone who comes from a family of educators and being a community college professor for a period of time and seeing just what happens when an adult has had a weak K-12 experience, I often ponder ways in which communities can go about closing education gaps among groups and strengthening the education infrastructure.

Perhaps the worst kept secret is that groups who come from disadvantaged backgrounds have a chronic gap when it comes to education. By age three, children from lower income homes have heard 30 million fewer words. The national high school graduation rate for African Americans is 73 percent, which is almost 10 percentage points lower than the national average and 14 percentage points lower than European Americans. There have been calls for a universal Pre-K, which sounds good in theory but probably will ultimately do just as much harm as the current system. Many have argued that the U.S. does not spend enough on education, this despite the OECD saying that the U.S. actually spends more than any other country on education. The report according to CBS News that, “In 2010, the United States spent 7.3 percent of its gross domestic product on education, compared with the 6.3 percent average of other OECD countries.” This appears to be not a case of not spending too much, but spending it poorly. As an economist and investor myself, one of the most important things for my firm is capital allocation. It is not just a matter of how much we are spending, but where and how we are allocating that spending. Simply spending more is not always an answer to fixing problems as many on the political left suggest, but neither is allowing students to go to better schools through vouchers a sensible alternative as those on the political right suggest which would have devastating effects on the economics of poor and middle class communities. In essence, what is needed is a better creation of supplemental education for those communities. Supplemental education is the ability to access learning away from the four walls of a school.

For many upper income families, museums, summer camps, and private tutors provide the moonshot to the education they receive during their K-12 matriculation. These experiences and building blocks add to a substantive educational gap between the haves and have nots and while there are always many fascinating high brow proposals of how to fix education for underserved communities, we often ignore the simplest. Two things of note should be focused on to that respect. First, provide supplemental education where the people you hope to reach spend their time. Secondly, keep it simple. Academics, again I come from a family of them, while I admire their ability to convey information, they are at times too smart for their own good. In other words, they can make one plus one into the next coming of Einstein’s theory of relativity if you give them enough time. For underserved communities though it is often at the foundational level where they are most deficient. An issue that then cascades and compounds year after year as they progressed through secondary and then into adulthood. It was the simple foundation that they missed and that their kids are missing that could have moved their trajectory. So how do cities both meet the people where they are and more importantly where their time is “hostage” and and also keep it simple? Bus stops.

1 Million Milestone

That is right, bus stops. New York City has 16,350 of them, Los Angeles has 15,967 bus stops, Chicago has 10,813 bus stops, and Houston has approximately 9,000 according to a Twitter inquiry. These are the four largest urban cities in the United States of America with a combined population of 17.5 million, a number equivalent to 5.4 percent of the entire U.S. population. The four cities ability to serve low income and middle class families is obviously magnified just by the probability of the sheer size of the populations they have that will fall within those confines. The poverty levels for the four aforementioned cities is also surprisingly inversely correlated to their public transpiration size with New York City’s 20.3 percent, L.A.’s 22 percent, Chicago’s 22.6 percent, and Houston’s 22.9 percent. According to Pew Research Center, “Americans who are lower-income, black or Hispanic, immigrants or under 50 are especially likely to use public transportation on a regular basis.” There is not enough research to show a correlation to public transportation’s reduction in poverty, but one can access that the easement of which labor can move farther distances allows for more economic opportunities to be gained. Therefore, if a low-income community has access to affordable public transportation and their own community lacks economic opportunity, the ease by which they can move into areas of stronger economic prowess may allow them work opportunities they may not otherwise have available. However, while there maybe no correlation, there is opportunity to educate and we know that correlates to reducing poverty.

Imagine for a moment that each bus stop, both children and adults, are introduced to a digital screen (think those annoying “commercials” at gas station pumps) that circulates a plethora of vocabulary words, basic mathematics problems,  and science and history clips. Just the basics, but again fundamental. If a city really wants to get out of the box, even introducing lessons in financial, health, and government literacy. If done in concert with the school districts in the city, teachers at the elementary through college levels could be featured in these videos and those teachers targeted in bus stops within their teaching area. This may also go a long way into reestablishing what many now complain about as the broken bond between parents, their children, and the teachers who educate them. The videos produce a familiarity for the teacher in the same way that people develop affinities for celebrities they have never met. Of course, in this age where municipals are tight on funds, just how does all of this get paid for? This is a financial journalism publication after all. The PPP (Private-Public Partnership) model would be most advantageous. Companies in the city, New York City, Houston, and Chicago have 143 Fortune 1000 companies combined, would foot the majority of the bill for the producing of the digital content and refitting of the bus stops. Just what those companies would receive in return beyond goodwill and basic advertising would be left up to the leadership of the city to negotiate.

I grew up in a household and family where education and learning was not only a family value and expectation, it was something I was immersed in as I reflect in what seemed like at all times. There were always books around, much of my life existed on a college campus as my mother has been a professor for almost four decades, trips to museums, engagement with the arts, and as a result me and my sister’s probability of succeeding was given a great advantage over many of our peers. Education is a wholistic lifestyle that one is immersed throughout their lives. The sooner that immersion, the more often that immersion, then probability of success is sure to follow. My sister and I were at an advantage, we were a privileged pair whose family can trace our educational heritage back four generations to my great-grandfather and great-grandmother who were college graduates. That is not the reality for most low income and middle class families. They are families trying to take that next step, even if they do not know which step to take often. In order to increase their probability towards that success, cities have to acknowledge that they are often in poor schools to begin with and that they need more, much more. The best return on investment is often achieved in using the infrastructure that already exist and that meets citizens where they are.

As Jef Raskin alludes to in his quote, communities will not care where quality education happens be it in a school or at a bus stop, so long as it happens.  The ability to convert bus stops into head start and continuing education facilities for a city is something that truly does what needs to be done.

 

Craft Beer 101: Bourbon Zeppelin’s Della Fain Sips And Chats About Suds


Most of us have an early memory or story about our dad or uncle giving us our first taste of beer. Do you remember the first time you had beer of any sort?  If memory serves me, the first time I had a beer was probably the same as everyone else’s first time. A not so strict aunt that yells “it’s okay if she has one sip”. I do recall however that first sip being awful and every sip after that.

Many of us simply are wondering – what exactly qualifies to be considered a craft beer? A craft beer is in fact a brew crafted in a more traditional, non mechanized way. Usually, but not always by a small brew house or microbrewery.

What got you interested in trying out craft beers?  I initially steered clear of all things beer and beer like for most of my adult life. My grandfather and I had a long standing lunch date every birthday at our favorite steakhouse. He ordered beer and I wine. During one of our last lunches together a new hire at the restaurant was an expert at pairing beer with meals and suggested my pop pop try a beer different from his usual. He made it sound so good I followed suit and ordered the same, it was a winter lager. I’ve been hooked ever since.

For those who have a curiosity about craft beers, is there any advice you would give about how to introduce themselves to different beers? Anyone interested in trying out craft beer my suggestion to them would be my suggestion for life – try it all to see what you like and don’t like.

What do you believe are some qualities of a great craft beer? The qualities of a great craft beer for me is all about the layers. Aroma, mouth feel, how well it compliments and draws out the best part of a meal. How stouts can be savory, and sours refreshing. How a porter can satisfy your sweet tooth, and an IPA be the perfect addition to Taco Tuesday.

There are about six African American breweries we have found, but this is certainly underrepresented for the explosion that has occurred in the microbrewery space over the past decade. Why do you think more African Americans are not brewing beers? With the craft beer industry vastly rising and major breweries buying smaller brew houses we’re gonna see less craft in craft beer. So now’s a perfect time for African Americans to throw their hats into the collective breweries. I know a few African American home brewers who really have a love and passion for it. But like anything else they’ll need support from beer drinkers to get their artistry noticed.

What would be your theme music while drinking your favorite beer? Anything by Nujabes. 

Editor’s Note: Check out the album Modal Soul by Nujabes. Be sure you are having a cold one when you do and always drink responsibly.

Della Fain is an Chitown native Arizona resident. Married mother of 3. She’s also a contributor to Bourbon Zeppelin giving bourbon barrel aged beer reviews. You can follow her on Instagram at @sixfeetofdynamite. 

HBCU Money™ Business Book Feature – Innovation and Entrepreneurship


This is the first book to present innovation and entrepreneurship as a purposeful and systematic discipline that explains and analyzes the challenges and opportunities of America’s new entrepreneurial economy. Superbly practical, Innovation and Entrepreneurship explains what established businesses, public service institutions, and new ventures need to know and do to succeed in today’s economy.

The Finance & Tech Week In Review – 6/10/17


Every Saturday the HBCU Money staff picks ten articles they were intrigued by and think you will enjoy for some weekend reading impacting finance and tech.

3 ways to make rich #Africa work for poor Africans / WEF wef.ch/2t2glab

After replacing 90% of employees with robots, this company’s productivity soared / WEF wef.ch/2s93K5r

Does more financial development lead to more or less economic volatility? / St. Louis Fed bit.ly/2qWCaYq

Big animals, small budgets: why poorer countries are leading the conservation charge / WEF wef.ch/2qvnymv

What kind of financial challenges did small businesses face last year, & how did they address them? / St. Louis Fed bit.ly/2svCmic

China’s Clean Air Challenge: $3 Billion Air Pollution from Transport in Chengdu / Renewable Cities buff.ly/2s0xTX4

US Coral Reefs Not Likely To Last More Than A Few Decades / Clean Technica ow.ly/RmT930ctq9J

People’s blood sugar levels respond differently to different breads. / Science News ow.ly/i3x730ctq67

Study: Dogs understand fair play, and not because of humans / New Atlas newatl.as/2sMhWlx

Ripped-off ravens sure can hold a grudge / New Atlas newatl.as/2rVH752