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Since the 19th Century, African-American-owned banks have played a vital role in the economic development of our communities. Between 1888 and 1934, there were more than 130 U.S. banks owned by African-Americans, which is believed to have been the force behind the explosion of African-American businesses, which grew from 4,000 in 1867 to approximately 50,000 by 1917. While the 1960s produced a growing number of African-American banks, by the 1980s, many of them had failed. Today, according to a March 2010 Federal Reserve Board report, only 30 U.S. banks are owned by African-Americans.

The structural exclusion of African-Americans from the mainstream economic sphere led black entrepreneurs to build their own financial infrastructure to support the economic development of our communities, but the dramatic decline in the number of black-owned banks has led many to question the role of African-American-owned banks in revitalizing our neighborhoods today.

According to Dr. Brooks Robinson, economist and director of, black banks are critical to creating loans for black businesses. “Black-owned banks in black communities can even draw the traditionally unbanked poor into the formal economy,” Dr. Robinson states. “And [they can] push egregiously exploitative pay-day and check-cashing operations out of business.”

Indeed, African-American owned banks and other opportunity financial institutions, including Community Development Financial Institutions, tend to serve low-income communities and communities of color. Their strength and appeal is that they have the power to alter African-Americans’ relationship with the financial industry, offering a promise of trust and accountability when others are content to exploit or neglect. Their reach is into the neighborhoods — and blocks — where the alternative is often the abusive “pay-day” structure that locks too many of our households into the cycles of economic harm from mounting, uncontrollable debt.

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