Tag Archives: #racialjustice

The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran – My five lessons and takeaways

The Color of Money“America has given the Negro people a bad check, a check which has come back marked ‘insufficient funds.’” — Martin Luther King Jr, I Have a Dream, August 28, 1963

Yet despite a century of honest toil, the check has continued to be marked “insufficient funds.”

As Martin Luther King Jr. echoed a century later, “the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person.”

President Kennedy urged Congress to pass a sweeping civil rights bill in 1963, “not merely for reasons of economic efficiency, world diplomacy and domestic tranquility—but above all because it is right.”

Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap


This year, at both the First Friday Book Synopsis, and the Urban Engagement Book Club (sponsored by CitySquare), I have presented synopses of a number of books dealing with issues of race:  racial history; racial injustice;  systemic racism.

Last week, I presented my synopsis of The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran at the Urban Engagement Book Club.  One participant said it best:  “it’s almost as though white people just kept finding new ways to harm Black people.”

Just a few days after I presented my synopses, our local ABC Dallas affiliate, WFAA, ran a story about banking practices that treated predominantly Black South Dallas in quite an unequal manner compared to how they treat the more affluent, more predominantly white neighborhoods in Dallas.  Read it and watch it here: They underestimate what we can do’: WFAA finds banks exclude Blacks, Hispanics in Southern Dallas from access to loans.

So, in other words, this is a long-term, nationwide story.  But it is also a very local story, still ongoing.

This book is a story about how Black people were promised genuine help through Black banks. That help never actually materialized.

In my synopses, I ask: What is the point?  Here is the point for this book:  Black banks alone cannot provide the wealth needed for Black people. Though they are excellent tools, they cannot overcome all the other systemic tools that are used to keep Black people poor.

And I ask Why is this book worth our time?  Here are my three reasons for this book:

#1 – This book is another good overarching look at racism in America; throughout the centuries, and decades. It is a good history read. 
#2 – This book provides a needed history of the Black banking struggles throughout our history.
#3 – This book is an indictment of the ways that Black banking has almost been a misdirection tool of those who want to maintain a racial hierarchy.

In my synopsis handouts, I always include a few pages of my “best” highlighted passages.  Here are quite a few from this hook:

• Banks are the drivers of wealth creation for any society. What this history reveals is that black and white Americans have had a separate and unequal system of banking and credit.
• So politically successful was the promise of black capitalism that every administration since President Nixon has adopted it in one form or another. 
• The very circumstances that created the need for these banks—discrimination and segregation—permanently limited their effectiveness and would ultimately cause their demise.  
• In fact, the dilemma faced by black banks is highlighted when contrasted with the viable banks created by Italian, Jewish, German, Irish, and Asian immigrants. None of them was systematically, uniformly, and legally segregated to the extent and for the length of time the black community was. What was formerly the Bank of Italy is now the Bank of America.
They left the ghetto first. And they did so only after being accepted as “white.” 
• Slavery, “America’s original sin,” according to James Madison, created the foundation of modern American capitalism.
• The effects of the institution of slavery on American commerce were monumental—3.2 million slaves were worth $ 1.3 billion in market value, almost equal to the entire gross national product.  
• They (enslaved people) were liquid assets that could be exchanged on markets more easily than other forms of property. Slavery’s unparalleled bounty is what caused many Americans to tolerate such a barbarous institution. 
• Between 1820 and the Civil War, banks across the South issued notes with images of slaves printed on the money.
• The currency of the South was the slave. 
• The Freedmen’s Bureau Act of 1865 formalized Sherman’s field order into a law “providing that each negro might have forty acres at a low price on long credit.” Some families even received leftover army mules. 
• As Du Bois said of Reconstruction, “the slave went free; stood a brief moment in the sun; then moved back again toward slavery.” 
• The myth that free-market principles were guiding political choices was further exposed as hypocrisy because blacks could not even pay “market prices” for land. White southerners simply refused to sell land to blacks.  …Southern states even passed laws that forbade white sellers to sell land to blacks.
• An 1865 South Carolina law declared that “no person of color shall pursue or practice the art, trade, or business of an artisan mechanic or shopkeeper, or any other trade, employment or business … on his own account and for his own benefit until he shall have obtained a license which shall be good for one year only.” 
• By the end of the Reconstruction era, most freedmen were left landless, voteless, and with practically every profession blocked to them—their only choice was to grow cotton.
• Freedmen were prohibited in many states from hunting or fishing, which prevented them even from exploiting natural resources for survival.
• Southern entrepreneurs used the criminal justice system to re-enslave thousands of black men and work them, usually to death, in abhorrent labor camps.
• Blacks would be arrested under “vagrancy violations,” which could be used to arrest any free black man in the course of doing any activity at all except working for a white landlord.
• W. E. B. Du Bois, who conducted extensive interviews and data collection on sharecropping arrangements, called it “a system of peonage that kept [blacks] in debt virtually from cradle to grave.”
• “The segregated practices in the South are kind of public butchery,” noted Saul Alinsky. “It’s visible. There’s bleeding all over the place. Up here [in the North] we use a stiletto, it’s internal bleeding, it’s not visible, but it’s just as deadly.” 
• By the year 2000, almost 800,000 black men were in prison, compared to 600,000 who were in college.  Thus, there were more black men in prison than had been held under slavery in 1850.
• Today, black families have an average net wealth of $11,000 compared to a white family’s average of $141,900. The wealth gap exists at every income and education level. On average, white families with college degrees have over $300,000 more wealth than black families with college degrees.
• For example, JPMorgan Chase marketed its “no doc” and “liar loans” (where the lender did not verify any of the information provided on the application), claiming to investors, “It’s like money falling from the sky!”
• So profitable was the subprime market in the years preceding the crisis that banks chose not to give prime loans (those insured by the GSEs) and focused instead on subprime loans. The Wall Street Journal reported that more than 50 percent of borrowers who were sold subprime loans could have qualified for prime loans.

Here are a few other principles and points I highlighted in my synopsis handout:

  • an observation from Randy:
  • though this book is about the racism behind the push for “Black capitalism,” it is also a book about the profit motive and outright greed…
  • Black people were excluded; time and time again; from benefit after benefit…
  • The bootstraps they were given were government-guaranteed mortgage loans, from which black people were excluded.
  • the hand that drives black poverty is not a natural and invisible one, but rather the coercive hand of the state that has consistently excluded blacks from full participation in American capitalism.
  • The Homestead Acts gave out millions of acres of government land to white settlers for years.
  • For example, most blacks in the South were farmworkers and domestic workers. In devising legislation that regulated work hours, enabled unions, set minimum wages, and established Social Security, the southern bloc excluded both groups, and thus the majority of black southerners, from the protective legislation.
  • Capitalism, specifically “black capitalism,” became yet another rhetorical weapon used to rationalize economic inequality.
  • Thus…unequal (“separate; but unequal”)
  • Black capitalism and its subsequent iterations became the modern era’s justification for wealth inequality.
  • It used the materials available—commerce, credit, money, and segregation—to regenerate inequality. 
  • “They” don’t stay within the Black community…
  • Mechanics and Farmers Bank was the oldest and strongest black-owned bank in the country.mAnd for almost a century, its insurance affiliate, the North Carolina Mutual Life Insurance Company, was the largest black-controlled business institution in the world.
  • (Now) the more modern “M& F,” and announced that it would start going after a broader customer base. 
  • First…Black people are significantly unbanked and underbanked
  • As a group, blacks are more unbanked than any other race—60 percent of the black population is unbanked or underbanked, while only 20 percent of whites are in the same category. 
  • And, Black people are poor…
  • What is staggering is that more than 150 years later, that number has barely budged—blacks still own only about 1 percent of the wealth in the United States. 
  • A theory of “Racial Hierarchy” was (is) behind it all
  • A theory of racial hierarchy was used to explain away the dissonance. Blacks had to be seen as subhuman.
  • Not only were slavery and white supremacy condoned by God, but it was seen as God’s will that white men exploit the labor of the black race.
  • And since slavery was premised on white supremacy in a racial hierarchy, an ideology avowed across the country and not just in the slaveholding South, even freed blacks were restricted from full participation in commerce.
  • the 1857 Dred Scott case, which held that no black individual, free or enslaved, could claim American citizenship.
  • Unfortunately, most of the significant New Deal policies were administered in such a way as to maintain the South’s racial hierarchy, which meant an almost categorical exclusion of blacks from government subsidies.
  • Note this: Black banks are very expensive to run…
  • e.g., small deposits; needed counseling
  • About Nixon, and Reagan, and…
  • As the radical black movement gained momentum, it was met with a strong white backlash, which President Nixon rode into office.mFaced with a political quagmire, the politically savvy Nixon was able to neutralize black resistance without sacrificing the Republican coalition built on the “southern strategy.”mThe strategy included opposing all forms of legal race discrimination while rejecting any government effort at integration.mThe black militants would be met with “law and order,” and antipoverty efforts were curtailed on the grounds that they were costly and created dependence on the state. 
  • About the subprime lending crisis
  • Black people that were eligible for better loans were marketed to and sold subprime loans (especially by Countrywide, owned by Bank of America)

And here are my five lessons and takeaways:

#1 – White people need to care; and they need to find a way to make other/all white people care about the real-world struggles of Black people; especially the economic struggles.
#2 – Stronger Black banking would be a really good thing to bring about.  But, it alone will not be enough.
#3 – Greed and the profit motive have led people to use and abuse poor people to build greater fortunes; especially poorer Black people.
#4 – The problem of wealth inequality, especially as it relates to Black people, is a complex problem.  Good intentions are not enough.  We need systemic solutions to a systemic problem.
#5 – And, maybe, we just need to be a little more vocal with the phrase:  “That is racist.”

Here’s my current thinking.  I have read, and presented, a number of books dealing with issues of racial injustice and inequality.  This is not an imaginary problem.  It is a very real problem, with very real consequences.

Each book I read teaches me another way of looking at this ongoing problem.  This book certainly did.  It is worth reading; I encourage you to do so.

And after reading, and pondering, we need to act in ways to change things for the better.

A couple of other excerpts from the book, for a reminder of the ghastly history:

Senator James K. Vardaman of Mississippi, justifying the disenfranchisement of the black vote, explained, “I am just as much opposed to Booker Washington as a voter, with all his Anglo-Saxon re-enforcements, as I am to the coconut-headed, chocolate-colored, typical little coon, Andy Dotson, who blacks my shoes every morning. Neither is fit to exercise the supreme function of citizenship.”

Senator Benjamin Tillman of South Carolina bragged in a public lecture that he did not know how many black men he had killed himself, and even advocated the extermination of the 30,000 blacks in his state.


I video-recorded my Zoom presentation of this session.  Click here to watch the video.  You can also download my multi-page, comprehensive synopsis handout.

Here is the video of my synopsis presentation of The Color of Money: Black Banks and the Racial Wealth Gap from the November Urban Engagement Book Club

The Color of Money


Here is the video of my synopsis presentation of The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran.  I presented this at the Urban Erngagement Book Club, sponsored by CitySquare, in November, 2020.

This is a very good, very important book.

(Scroll through this blog for videos from other months, with other book synopsis presentations).

Before you watch, click here to download the synopsis handout.

My Synopsis of The Color of Money by Mehrsa Baradaran is today, Nov. 19, 2020, on Zoom – Come join us!

The Color of MoneyIf you have an open window, I am presenting my synopsis of The Color of Money: Blank Banks and the Racial Wealth Gap today, November 19, 2020 at 12:30 (CST) for the Urban Engagement Book Club, sponsored by CitySquare, on Zoom.

(We conclude shortly after 1:30).

Click here to download the handout.

Here is Zoom login info:


Meeting ID: 839 0193 8136
Passcode: 911528

Click here to get more information.

Come join us.