Credit Claims For Kansas Finance And Banking Professionals: Protecting Financial Independence With Attorneys

Credit Claims For Kansas Finance And Banking Professionals: Protecting Financial Independence With Attorneys – Since the founding of the Bank of North America in 1781, banking has played a critical role in facilitating the American dream. These institutions provide indispensable monetary services, ranging from accepting deposits to offering loans. Credit is king in the United States, and without high-quality financial institutions, many Americans would struggle to afford vehicles, homes, and other essentials.

However, like almost all of the nation’s oldest institutions, banks have also played a role in America’s racist past. Racial discrimination in the banking and financial system has targeted African Americans, and challenges to ending discrimination persist today. Black-owned banks emerged as an alternative to larger institutions, to provide greater access to banking services as well as an opportunity to support local communities.

Credit Claims For Kansas Finance And Banking Professionals: Protecting Financial Independence With Attorneys

According to the Federal Deposit Insurance Corp. (FDIC), a minority depository institution (MDI) is “… a federally insured depository institution for which (1) 51 percent or more of the voting stock is owned by minority persons; or (2) the majority of the board of directors is minority and the community served by the institution is predominantly minority. Ownership must be by U.S. citizens or legal permanent residents of the United States to be counted in the minority ownership determination.” Of the 20 black-owned banks featured in this article, four fall into the latter category.

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For the purposes of this article, black-owned and operated credit unions serving the black community were included to provide the most complete picture of black financial institutions in the United States. The article uses the term “black ownership” in this broad sense, recognizing that shareholders own for-profit banks and members own credit unions.

Black-owned banks did not exist until more than a century after the Bank of North America first opened its doors. Prior to the establishment of the first black-owned bank in 1888, the Freedman’s Savings Bank was established by the United States Congress and then-President Abraham Lincoln in 1865. As part of the Freedman’s Bureau, this institution was designed to help newly freed African Americans navigate the U.S. united financial system.

Although Congress voted to close the Freedman’s Bureau in 1872, the bank continued to operate. In 1874, Frederick Douglass took over as manager of the bank’s Washington, D.C. branch, and found the place rife with corruption and risky investments. Although Douglass invested $10,000 of his own money in the bank in an attempt to save it, Freedman’s Savings went bankrupt later that year. Although Freedman’s Savings Bank does not fit the modern criteria of a black-owned bank, it represents a critical first step.

The first official black-owned bank, the True Reformers Bank, was founded on March 2, 1888 by Reverend William Washington Browne. A former slave and Union Army officer, Browne was the founder of the fraternal organization of the United Order of True Reformers of Grand Fountain. The True Reformers Bank came about when Browne and his organization faced financial difficulties trying to establish a new branch in Virginia. Unable to manage the order’s money without arousing suspicion from paranoid and aggrieved residents, Browne founded the True Reformers Bank so that the organization’s finances would be free from white scrutiny.

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The bank opened in 1889 and grew from a small operation in Browne’s home to an institution strong enough to survive the financial panic of 1893. Although the True Reformers Bank continued to operate after Browne’s death in 1897, the problems were beginning to develop in 1900. Under its new president, the Reverend William Lee Taylor, branches were poorly regulated, unsecured loans were made, and an embezzlement scandal cost most account holders their savings. In 1910, the State Corporation Commission had ordered the closing of the bank.

While the story of the True Reformers Bank was unfolding, other black-owned banks were also beginning in the U.S. capital (spelled Capitol by some accounts) Savings Bank of Washington, DC, opened its doors in October 1888, approximately six months before True Reformers Bank. Capital Savings also managed to survive the financial panic of 1893, although it later closed in 1902.

From 1888 to 1934, more than 134 black-owned financial institutions were founded, located predominantly in southern states. Their numbers dwindled during the Great Depression, leaving nine in 1930. It wasn’t until the civil rights movement that a resurgence took place, raising their numbers to 50 in 1976.

By 1988, the savings and loan crisis had wiped out 35 black-owned banks. The start of the most recent decline occurred in 2001, during the recession of the early 2000s, which quickly accelerated once the Great Recession began. Today, 44 black-owned financial institutions remain, including credit unions.

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“You can’t separate black history from American history,” says Tyrone Ross, chief executive officer (CEO) of Onramp Invest, a crypto-asset integration platform solution for financial advisors. “We’ve always been very skilled and well versed in financial education and the ability to be entrepreneurs. It’s just been stripped away from us. So it’s fine to write these articles, or have panels or whatever, but first let’s start with the story so that people go, ‘Oh shit.’ It’s really been taken from them, and they’re just trying to get it back.'”

In 2019, the net worth of a white family was more than seven times greater on average than that of a black family. This is the result of inequality, discrimination, racism, and power and opportunity differences that have been compounded throughout American history. It’s also why the declining number of black-owned banks is especially troubling, given the role these institutions play in fighting modern systemic racism in the financial sector.

Consider the red line. This unethical and now illegal practice is used to block access to important services for residents of certain neighborhoods based on their race or ethnicity. The Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, religion, sex, and national origin, was a start. And yet, while the Fair Housing Act of 1968 and the Community Reinvestment Act (CRA) of 1977 were intended to eliminate redlining, this type of discrimination is still seen today.

For example, 68.1% of loans granted between 2012 and 2018 for the purchase of homes in Chicago went to predominantly white areas; 8.1% went to predominantly black areas. Banks also lent more money to predominantly white neighborhoods than to all predominantly black neighborhoods combined. This disparity is even starker when looking at individual lenders, with JPMorgan Chase lending 41 times more money in white neighborhoods than in black ones.

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Chicago is far from the only place where red is produced. From 2015 to 2020, the denial rate for black home loan applications in Boston was 15.3%, more than triple that of their white counterparts. And in 2018, people of color in 61 cities were more likely to be denied home loans than white residents. If homeowners don’t move in and invest in a neighborhood, it means that capital isn’t flowing into the community, leading to poverty and crime being an inescapable presence in the area.

“One in five African-Americans is now unbanked. When you look at our poverty rates, our lack of ownership, our lack of home ownership, it all goes back to economic empowerment,” Ross explains. “Economic Empowerment Begins with Banking.”

To understand why black-owned banks matter, it is critical to recognize the role banks play in financial life. A common service offered by banks is access to a checking account, which allows safe storage of an individual’s funds, usually in exchange for a minimal fee. In addition to accepting cash deposits, banks also offer loans to both individuals and businesses looking to finance crucial purchases. Banks also offer mortgages for the purchase of real estate. Many banks issue credit cards, which are valuable tools for building the credit history needed to qualify for most loans.

In addition to providing financial services, several banks have also launched financial education programs for low- and moderate-income communities. It is difficult, if not impossible, to imagine thriving in the modern economy without taking advantage of the help a bank can provide. And if access to these types of services is constantly denied to certain groups, it is easy to see how these groups can face more economic difficulties than others.

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Black-owned banks offer an alternative for residents who have been consistently discriminated against by other financial institutions. They typically provided more money to borrowers living in low- and moderate-income census tracts than other banks. Black-owned banks are also more willing to tolerate higher levels of risk than alternative institutions. Our research found that in 2016, 67% of mortgages made by black-owned banks were Federal Housing Administration (FHA) mortgages—which typically serve riskier borrowers—or mortgages held “in portfolio,” meaning that are exposed to the risk of the borrower’s default.

Additionally, black-owned banks tend to focus their lending on small businesses, nonprofits, and black home buyers. As of 2018, all black-owned banks are community banks; these institutions are dedicated to supporting the economies of the communities they serve. Even during hard times, black-owned banks held on to their customers. During the financial crisis of 2007-2008, despite a 69% drop in all mortgage loans to black borrowers, the number of mortgages provided by black-owned banks increased by 57%.

“So there is a lack of loans, there is a lack of financing,

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