Why Black America Still Doesn’t Own a Major National Bank

Walk into any Black neighborhood in any city in this country and you will find a check-cashing store. You will find a payday lender. You will find a money order counter at the corner bodega and a wire transfer service at the gas station. What you will almost certainly not find is a bank — a real bank, with a vault and a lending officer and a sign that says it will hold your money and lend it back to your neighbor to start a business, buy a home, or send a child to college. There are eighteen Black-owned banks left in the United States. Eighteen. In 2001, there were forty-eight. In 1994, there were fifty-four. The number has been falling for decades, and each closure removes not just a financial institution but the only institution in many Black communities that would lend to the people who live there. The combined assets of all eighteen Black-owned banks total less than $5 billion — an amount that JPMorgan Chase, the largest bank in America, generates in profit approximately every three weeks.

This is not merely a statistic about banking. It is a statement about power. A community that does not control its own financial institutions does not control its own economic destiny. It cannot decide who receives a loan and who does not. It cannot determine which businesses are funded and which are starved. It cannot invest its own deposits in its own neighborhood. It is, in the most fundamental economic sense, a colony — a territory whose wealth is extracted, processed, and deployed elsewhere by institutions that have no stake in its survival. And Black America, the richest Black population on earth, has been a colony in this sense for its entire history.

The Freedman’s Bank: The Wound That Never Healed

The story of Black banking in America begins with a betrayal so complete that its effects are still visible 150 years later. In March 1865, Congress chartered the Freedman’s Savings Bank, a financial institution designed to serve the newly emancipated Black population. Frederick Douglass endorsed it. The federal government backed it. Tens of thousands of formerly enslaved people, many of them illiterate, deposited their meager savings in an institution they were told was as safe as the government itself.

By 1874, the bank held approximately $57 million in today’s dollars, deposited by roughly 70,000 Black savers. And then it collapsed. The bank’s white trustees had made a series of speculative and self-dealing investments that violated the bank’s charter. Real estate loans to white borrowers, railroad bonds that defaulted, and outright embezzlement drained the reserves. When the bank closed its doors, the depositors — washerwomen, soldiers, field hands, and formerly enslaved people who had been told their money was safe — lost everything. The federal government refused to make them whole. Half the depositors received partial payments averaging less than sixty percent of their balances. The rest received nothing.

The Freedman’s Bank collapse did not merely destroy savings. It destroyed trust. Mehrsa Baradaran, in her essential work The Color of Money, argues that the collapse created a generational distrust of financial institutions in Black communities that persists to this day. When a grandmother tells her grandchild to keep cash in the house rather than in a bank, when a Black family is more likely to be unbanked or underbanked than a white family at any income level, when the sight of a bank building produces wariness rather than confidence, the ghost of the Freedman’s Bank is speaking. The first significant financial institution that Black Americans trusted was a fraud, and the government that chartered it walked away from the wreckage.

“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”
— James Baldwin, Nobody Knows My Name

Why Black Banks Stay Small

The fundamental challenge facing Black-owned banks is structural, not managerial. A bank’s ability to lend is constrained by its deposits, and its deposits are constrained by the wealth of the community it serves. Black-owned banks serve communities where median household income and median net worth are significantly lower than the national average. Lower deposits mean a smaller lending pool. A smaller lending pool means fewer loans. Fewer loans mean less revenue. Less revenue means less capacity to invest in technology, branches, marketing, and the infrastructure that attracts more deposits. The cycle is self-reinforcing, and it operates independent of the competence or commitment of the bank’s management.

The FDIC reports that approximately 11.3% of Black households are unbanked — meaning they have no checking or savings account at any bank — compared to 2.1% of white households. An additional 27% of Black households are underbanked, meaning they have a bank account but rely on alternative financial services like check cashers, payday lenders, and money orders for some of their financial needs. Together, nearly 40% of Black households are partially or entirely outside the formal banking system. These are deposits that Black-owned banks never receive, customers they never serve, and lending capacity they never build.

The geographic challenge compounds the deposit challenge. Black-owned banks are concentrated in urban areas where commercial real estate costs are high, where competition from national banks with billion-dollar marketing budgets is fierce, and where the lending environment is inherently riskier. A bank that lends primarily in a neighborhood with high unemployment, volatile property values, and limited commercial activity will have higher default rates than a bank that lends in a stable suburb — not because its lending standards are lower but because the economic environment it serves is more precarious. Higher default rates require higher capital reserves, which further limit lending capacity. The bank is punished for serving the community it was created to serve.

The Predatory Lending Vacuum

The absence of Black-owned banks does not create a financial vacuum. It creates a predatory lending ecosystem. Where legitimate banks will not go, payday lenders, title loan companies, rent-to-own stores, and check-cashing operations fill the void. The Financial Health Network has documented that Americans in underserved communities spend approximately $189 billion per year on fees and interest for alternative financial services — services that would be unnecessary if they had access to basic banking.

A payday loan that charges a $15 fee per $100 borrowed for a two-week term carries an annualized interest rate of approximately 400%. A title loan that uses a car as collateral charges similar rates and adds the risk of losing the only asset that allows the borrower to get to work. A check-cashing service that charges three to five percent to cash a payroll check extracts over $1,500 per year from a worker earning $30,000. These are the financial services available in neighborhoods where Black-owned banks once operated and no longer do. They are not alternatives to banking. They are the cost of not having a bank.

The cruelest irony is that the deposits Black communities make in national banks are not reinvested in those communities. Under the Community Reinvestment Act, banks are nominally required to lend in the communities where they collect deposits. In practice, enforcement is weak, and the lending that does occur often takes the form of high-cost products — subprime mortgages, high-fee credit cards, auto loans with inflated interest rates — that extract more wealth than they create. The deposits leave. The loans that return carry terms that would be rejected by any borrower with an alternative.

The OneUnited Story

OneUnited Bank, the largest Black-owned bank in America, illustrates both the promise and the limitations of Black banking in its current form. Founded in 1982, OneUnited holds approximately $680 million in assets — making it the largest Black-owned bank in the country and, by the standards of the banking industry, tiny. It operates branches in Boston, Miami, and Los Angeles, and it has been a vocal advocate for Black banking, launching the #BankBlack movement that gained significant traction after the killing of George Floyd in 2020.

The #BankBlack movement brought a surge of deposits to Black-owned banks across the country. OneUnited reported over $40 million in new deposits in the weeks following the 2020 protests. Other Black-owned banks reported similar surges. For a brief, hopeful moment, it appeared that Black America was finally directing its deposits toward its own institutions. But the structural challenges did not disappear with the new deposits. OneUnited and other Black-owned banks still operate with technology budgets that are a fraction of what national banks spend, with regulatory compliance costs that consume a disproportionate share of revenue, and with a lending market that carries higher inherent risk.

How Other Communities Built Financial Power

The contrast with other minority communities is instructive. Asian American communities, despite facing their own history of discrimination, have built a network of community banks and credit unions that serve as the financial backbone of ethnic enclaves across the country. Korean American banks like Hanmi Financial and Bank of Hope hold billions in assets and have become significant commercial lenders. Chinese American banks like East West Bank have grown into regional powerhouses. These institutions were built not by waiting for the majority financial system to be fair but by pooling community resources and directing them inward.

The credit union model is particularly relevant. Credit unions are member-owned cooperatives that can be chartered to serve a specific community, ethnicity, or geographic area. The National Credit Union Administration reports that there are approximately 500 minority credit unions in the United States, but relatively few serve predominantly Black communities. The credit union structure — with its lower capital requirements, its tax-exempt status, and its focus on member service rather than shareholder profit — is arguably better suited to building financial infrastructure in underserved communities than the traditional bank model. And yet Black communities have underutilized this tool while other communities have embraced it.

The rotating savings and credit association — known as a sou-sou in Caribbean communities, tanda in Mexican communities, chit fund in Indian communities, and susu in West African communities — represents the most basic form of community financial institution. A group of people contributes a fixed amount to a common pool on a regular basis, and each member takes a turn receiving the full pool. No bank is needed. No interest is charged. No credit check is required. The system runs on trust, and it has funded homes, businesses, and educations in immigrant communities around the world. Black Americans, whose ancestors invented the susu system in West Africa, have largely abandoned it in favor of institutions that do not serve them.

“If they give you lined paper, write sideways.”
— Juan Ramón Jiménez, quoted by William Carlos Williams

The Digital Revolution: A New Path

For the first time in the history of Black banking, technology may be able to solve the problem that capital alone could not. Digital banking platforms eliminate the need for physical branches — the single largest cost center for community banks. They allow a bank to serve customers across the entire country rather than in a single geographic market. They reduce the regulatory cost per customer by spreading compliance expenses across a larger base. And they offer the tools — mobile deposit, peer-to-peer payment, budgeting software, automated savings — that younger consumers expect and that traditional Black-owned banks have struggled to provide.

Greenwood, the digital banking platform founded by Killer Mike, Andrew Young, and Ryan Glover, was designed explicitly to serve as the national Black bank that has never existed. Named after the Tulsa district destroyed in 1921, Greenwood launched with a waitlist of over 500,000 potential customers and a mission to aggregate Black deposits at a scale that could support significant lending back into Black communities. The path from digital banking platform to full-service bank is complex and requires regulatory approvals that have historically been difficult for Black-owned institutions to obtain. But the demand is clear, and the model — a digital-first bank with national reach, no branch overhead, and a culturally specific mission — addresses many of the structural constraints that have limited Black banking for a century.

Black fintech companies are also emerging in adjacent spaces. Companies like Wealth.com, which provides estate planning tools targeted at Black families, and Goalsetter, a children’s savings app designed with financial education for Black youth, are building the digital financial literacy infrastructure that complements banking services. The ecosystem is growing. The question is whether Black consumers will support it with their deposits, their patience, and their loyalty — the same loyalty they currently extend to institutions that have never returned it.

What Must Be Done

The path to a Black-owned national bank requires three things that are within the reach of Black America today, without waiting for legislation, without asking permission, and without depending on the goodwill of institutions that have never demonstrated any. First: deposits. If even ten percent of Black households moved their primary checking account to a Black-owned bank or credit union, the resulting deposit base would be sufficient to support lending at a scale that would transform Black communities. This is not a charitable act. Black-owned banks offer the same FDIC insurance, the same interest rates, and increasingly the same digital tools as their larger competitors. The only thing they lack is customers.

Second: patience. A Black-owned bank that begins with $5 billion in combined assets cannot compete with JPMorgan Chase on day one. It does not need to. It needs to serve its community, build trust, grow its deposit base, and reinvest in the neighborhoods that fund it. The Asian American banks that now hold billions in assets started small. They grew because their communities deposited, borrowed, and deposited again, creating the cycle of financial circulation that builds institutional strength. The same cycle is available to Black America. It requires only the decision to begin.

Third: innovation. The digital banking revolution has eliminated the historical barriers to Black banking — the branch costs, the geographic limitations, the technology gaps — that made it impossible for small community banks to compete. A Black-owned digital bank with national reach, modern technology, and a culturally specific mission has the potential to do what 150 years of traditional banking could not: aggregate Black deposits at scale, deploy them in Black communities, and build the financial infrastructure that every other community in America takes for granted.

The money is there. It has always been there. What has been missing is the institution that can hold it, the infrastructure that can deploy it, and the collective will to direct it. Eighteen banks remain. That number will either grow or shrink to zero. The outcome depends on a decision that every Black person with a bank account will make — or avoid making — in the years ahead: whether to continue depositing our wealth in institutions that extract it, or to finally build the one institution that has the power to keep it where it belongs.