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financial services

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The Racial Wealth Gap, Political Power vs Economic Power, and Reparations with Mehrsa Baradaran

Mehrsa Baradaran is the author of the best selling book, “The Color of Money: Black Banks and the Racial Wealth Gap”.

This book has become required reading for those who want to get a better understanding of how Black communities have been shut out of the banking system and how wealth creation in the Black community has been stagnated.

In this interview, we discuss the series of events that led to the racial wealth gap and how the gap can be closed.

We also discuss Black banks and their past and present role in creating Black wealth.

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Tony O. Lawson


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Two Black-Led Banks Just Merged to Form a $1 Billion Lender

Two Black-Led banks, City First in Washington, DC and Broadway Financial Corporation in Los Angeles, CA announced today that they have entered into a transformational Merger of Equals agreement to create the largest Black-Led bank in the nation with more than $1 billion in combined assets under management and approximately $850 million in total depository institution assets.

Combining the two institutions will increase their collective commercial lending capacity for investments in multifamily affordable housing, small businesses, and nonprofit development in financially underserved urban areas while creating a national platform for impact investors.

Brian E. Argrett, chief executive of City First, will be chief executive of the combined company, which will use City First as its banking brand but keep the publicly traded Broadway Financial Corporation as its bank holding company. Wayne-Kent A. Bradshaw, Broadway’s chief executive, will be the chairman of the combined company.

black owned banks
Brian E. Argrett

Broadway and City First are Community Development Financial Institutions (CDFIs), and have a longstanding history of advancing economic and social equity through the provision of capital in low- to moderate-income communities. The combined institution will maintain its CDFI status, requiring it to deploy at least 60% of its lending into low- to moderate-income communities

Wayne-Kent A. Bradshaw

Since the beginning of 2015, City First Bank and Broadway Federal Bank have collectively deployed over $1.1 billion combined in loans and investments in their communities

“Given the compounding factors of a global pandemic, unprecedented unemployment and social unrest resulting from centuries of inequities, the work of CDFIs has never been more urgent and necessary,” said Brian E. Argrett.“As part of this historic merger, we are demonstrating that thriving urban neighborhoods are viable markets that require a dedicated focus, long-term commitment and critical access to capital.”

“The new combined institution will strengthen our position and will help drive both sustainable economic growth and societal returns,” said Mr. Bradshaw. “We envision building stronger profitability and creating a multiplier effect of capital availability for our customers and for the communities we serve.”

The new institution will maintain bi-coastal headquarters and will continue to serve and expand in the banks’ current geographic areas, with a desire to scale to other high-potential urban markets.

Shares of Broadway Financial were up 17 percent on Wednesday afternoon. The transaction, which is expected to close early next year, will leave Broadway stockholders with 52.5 percent ownership of the new company and City First shareholders with 47.5 percent ownership.

Tony O. Lawson

Related: Black Banks That Are Still Operating In 2020


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Black Owned VC Firm in London Is Raising £100 Million to Invest in Black Founders

Recent reports have found that less than 1% of venture capital is invested in Black businesses in the US and the number for the UK is no better.

London based, Impact X Capital Partners is a Black owned venture capital firm that is raising £100 Million ($131 million) to support underrepresented entrepreneurs within the entertainment, media, tech, health, and digital industries.

We spoke with Ezechi Britton. Founding Member, Principal & CTO in Residence at Impact X Capital about several topics including:

  • The need for diversity in the tech industry
  • The importance of investing in Black founders
  • How entrepreneurs can position themselves to be attractive to investors

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Tony O. Lawson


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Black Owned Digital Banking Platform Rewards Users For Supporting Black Businesses

MoCaFi (Mobility Capital Finance) is a Black-owned digital banking platform that targets more than 50 million unbanked and underbanked people in the U.S.

Today, they have enrolled more than 25,000 users, raised more than $6M in seed rounds, collaborated with Fortune 100 companies, and established a presence in major U.S. cities. 

When you open a MoCaFi account, your account number and routing number are immediately available for direct depositing approved payroll and government benefits checks. You can also use their Bill Pay feature to send check payments to your landlord and opt-in to report those payments to Equifax and TransUnion.

MoCaFi also partners with Black owned businesses to offer account holders discounts on everything from grooming to organic home goods.

We caught up with their CEO, Wole Coaxum, to discuss how he plans to use these financial services to empower the Black community.

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Tony O. Lawson


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Black Owned Credit Unions You Should Know

Black banks get all the love but what about Black-owned credit unions? They are also important and in some ways, a better option than a bank.

When you open an account at a bank, you’re a customer. When you deposit money in a credit union account, you’re both a customer and an owner. The credit union uses the money that you and other members deposit to make loans to other credit union members, much like a bank.

Since a credit union’s main goal is to serve their members, they take the money that would have been profit and instead use it to help credit union members. Credit unions often do this by offering better rates on savings products and lower interest rates on loan products.

Black Owned Credit Unions

FAMU Federal Credit Union (Tallahassee, FL)

black owned credit union

Credit Union of Atlanta (Atlanta, GA)

Omega Psi Phi Fraternity Federal Credit Union  (Toccoa, GA) 

black owned credit unions

South Side Community Federal Credit Union  (Chicago, IL) 

Southern Teachers & Parents Federal Credit Union (Baton Rouge/Thibodaux, LA) 

Hope Credit Union ( Jackson, MS)

black owned credit unions

St. Louis Community Credit Union  (St. Louis, MO)

Greater Kinston Credit Union  (Kinston, NC)

Concord Federal Credit Union (Brooklyn, NY)

Visions Federal Credit Union (Endicott, NY)

Urban Upbound Federal Credit Union  (Long Island City, NY)

Urban Upbound Federal Credit Union  (Queens, NY)

Faith Community United CU  (Cleveland, OH)

Toledo Urban Federal Credit Union  (Toledo, OH)

Hill District Federal CU  (Pittsburgh, PA)

Brookland Federal Credit Union  (West Columbia, SC)

Community Owned Federal Credit Union  (Charleston, SC)

Faith Cooperative Federal Credit Union  (Dallas, TX) 

Mt Olive Baptist Church FCU  (Arlington, TX)

Oak Cliff Christian Federal Credit Union  (Dallas, TX)

Hill District Federal CU  (Pittsburgh, PA) 

Howard University Employees Federal Credit Union  (Washington, DC)

Phi Beta Sigma Federal Credit Union (Washington, DC)

Virginia State University FCU  (Petersburg, VA)

black owned credit unions

 

– Tony O. Lawson

If you would like to add your credit union to the list, SUBMIT HERE.


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Minority Wealth Commission to raise $250 Million to boost Black Owned Businesses

The Minority Wealth Commission—a bi-partisan National Commission of diverse leaders representing a cross section of capital funding, procurement/contracting, economic development, and corporate/nonprofit leadership focused on minority businesses—announced today the launch of the FVLCRUM Fund.

The fund, with initial capital commitments of over $50 million, will raise a total of $250,000,000 to invest as a combination of equity and debt capital into proven, high-growth enterprises operated by people of color.

Clearinghouse CDFI—a national community development financial institution with a strong history of lending in communities of color—will help create and manage the FVLCRUM Fund. The fund brings together an exceptional team of private equity professionals with an established track record of investing in middle market minority owned businesses delivering strong investment returns. FVLCRUM Fund will make a sustainable and measurable impact towards closing the nation’s racial wealth gap by building wealth and business success for minorities.

“For too long minority businesses and communities have been disproportionately excluded from creating sustainable wealth,” said Henry Childs II, Executive Director of the Minority Wealth Commission and former National Director of the U.S Department of Commerce’s Minority Business Development Agency. “Lack of investment, ownership, and wealth in minority communities stifles income potential, school systems, job outlook, and business opportunities.

Minority businesses represent less than 1.3% of the overall assets under management by the investment industry. It is time for us to address the racial wealth gap, invest in minority businesses and to take full advantage of the value, innovation, and competitiveness they bring to our overall economy.”

According to a study by the W.K. Kellogg Foundation on Racial Equity, the U.S. stands to realize an $8 trillion gain in GDP just by closing the U.S. racial equity gap. This is more than the current GDP of every country in the world except the U.S. and China.

The Minority Wealth Commission has three key objectives: (1) to raise a series of minority wealth investment funds targeted toward creating wealth in minority communities, (2) to reduce the startup capital gap for entrepreneurs of color, and (3) to increase Assets Under Management (AUM) for diverse fund managers and increase the number of diverse fund managers in the industry.

“The United States Hispanic Chamber of Commerce (USHCC) joins the Minority Wealth Commission in recognizing and highlighting the importance of creating wealth in our minority business community,” said Ramiro A. Cavazos, President and CEO of the U.S. Hispanic Chamber of Commerce. “As we know, there are 8 million minority-owned small businesses that form the backbone of our American economy. We must create real change to transform our minority entrepreneurs by investing in our businesses through increased corporate procurement, federal contracting, access to capital, and private equity, in order to prioritize more businesses for our African-American, Hispanic, Asian, and more minority entrepreneurs.”

To facilitate investment in minority communities, the Minority Wealth Commission is focused on strategies that stimulate economic opportunity and mobility, encourage entrepreneurship, expand quality educational opportunities, and ultimately eradicate the racial wealth gap. The MWC is leading an effort to level-set capital investment parity for minority businesses and next-generation entrepreneurs of color that can expand our economy and impact our communities.

“Closing the RACIAL WEALTH GAP is an overriding issue of the NATION,” said Marc Morial, President of the National Urban League. “Lifting a generation of BLACK entrepreneurs by linking them to capital, connections, and contracts is a viable wealth gap closing strategy.”

“This fund represents transformative opportunities for minority-owned businesses, many disproportionately struggling from the devastating impacts of the pandemic,” said Delores Brown—Chairperson of the Clearinghouse CDFI Community Advisory Board—who also runs a nonprofit in South Los Angeles. “There is much work to be done to build a more equitable society. We hope to inspire other organizations and investors to take action.”

The Minority Wealth Commission and FVLCRUM Fund have already established a broad base of institutional and community partners dedicated to fundamental change for wealth creation in communities of color. This includes the National Urban League, the U.S. Hispanic Chamber of Commerce, and the U.S. Black Chambers, Inc., among several other organizations throughout the U.S.

Source: PrWeb.com

Tony O. Lawson


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Netflix is investing $100 Million in Black Owned Financial Institutions

Netflix on Tuesday announced plans to deposit 2% of its cash, or an estimated $100 million, into Black owned financial institutions and community development organizations, which have a better track record of lending to minority borrowers than mainstream consumer banks.

“We believe bringing more capital to these communities can make a meaningful difference for the people and businesses in them, helping more families buy their first home or save for college, and more small businesses get started or grow.
According to the FDIC, banks that are Black-owned or led represent a mere one percent of America’s commercial banking assets,” Netflix said in a statement.

As the first step in this $100 million commitment, Netflix will be holding $35 million of our cash in two vehicles:

  • $25 million will be moved to a newly established fund called the Black Economic Development Initiative. It will be managed by the Local Initiatives Support Corporation (LISC), a non-profit with a track record of developing underinvested communities. They will invest the funds into Black financial institutions serving low and moderate-income communities and Black community development corporations in the U.S.
  • $10 million will go to Hope Credit Union in the form of a Transformational Deposit to fuel economic opportunity in underserved communities across the Deep South. Bill Bynum, CEO of HOPE, has spent the last three decades advancing economic mobility in distressed communities.

“This capital will fuel social mobility and opportunity in the low- and moderate-income communities these groups serve. We plan to redirect even more of our cash to Black-led and focused institutions as we grow, and we hope others will do the same.”

 

-Tony O. Lawson


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