At a recent forum where I was one of the participants, a question was asked regarding what each of us felt was the most pressing issue facing the black community. As we all gave different answers based on how we saw things, it became clear what the correct response is?”the 4 Es: Economics, Employment, Education and Ex-Offenders are our most important issues. If we solve the 4 Es throughout our community, 95 percent of the problems we have can be solved. Let’s start with Economics.
I once attended a lecture where the speaker compared water and money (both necessities for living) as identical cousins in this country. Water’s flow is referred to as its current whereas money is known as currency. Water is held in place by the banks of a river while money is placed in a bank. We lack banks in our community but have many “currency exchanges” that remove the money from us. I could not find a corresponding phrase for water with the same type of meaning.
You see, it is understood by all that without water you will surely die, but money that leaves our community is a slower and more subtle death for us. So labeling the place that does it as a “currency exchange” is a lot easier on the mind that calling it “a slow economic death location.” But the results are the same. Money is exchanged away from our community, and at some point there will be nothing left.
The solution is simple. We need our own banks! We need to have our own financial institutions where we place our money in savings accounts and those savings become the loans that business people and neighbors in our community can use to start a business, enhance their business or buy/maintain their homes. Are there any blacks who have done it? Yes. I wrote about it once before and now must write about it again.
The United Bank of Philadelphia (www.unitedbankofphiladelphia.com) was started in 1992 by Dr. Emma C. Chappell with 3,000 people depositing $6 million. That bank is now worth over $95 million with seven branch-banking offices. It is the largest African-American bank in the Delaware Valley region.
The Austin community must create its own bank. The 2000 census said that we had at least 110,000 people living in Austin. If each one of us put $100 into a savings account at that bank, that bank would immediately have $11 million to fund businesses.
So here’s the scenario: A businessman gets a loan from the bank to open up a deli. The businessman, as part of the agreement to accept the loan, agrees to display a sign stating, “This Business is Proudly Funded by [our community] Bank.” Now if you have a savings account at the bank, every time you shopped with that owner you are helping him to repay his loan. As he repays his loan, the bank pays you interest on your saving account. Your account after a year now has $105 dollars in it. The business owner has an automatic base of 110,000 customers because of the community bank they have in common.
Our community now has a deli where a person who only has $5 can buy “$3 worth of bologna, $1 worth of cheese and a $1 loaf of bread” without figuring out the poundage. The businessman’s relationship with the community is one of mutual respect. The community has funded him into business, and we also are his customers. The community gets a needed business where prices are fair because you cannot cheat the people who put you in business, in addition to a place for employment and an owner who is known because he lives here.
Another important aspect of having our own bank is having an institution to obtain funds to buy or rehab your property. Where else, other than in home ownership, can you buy a house for $100,000, live in it for years, write it off on your taxes and then sell it for 2 to 3 times more than what you paid for it? With our own bank, we wouldn’t be subject to the mortgage fraud that the Chicago Tribune reported on in November of 2005?”mortgage fraud, I might add, that targeted the black community, committed by companies whose goal was to make money with no regard for the people who lived in the community.
Many homeowners in our community who do own their own home could go to a bank and speak with a banker they knew rather than deal with those con artists who come to your home. As one banker told me, whenever a person comes to your house to make the loan, your red flag warning system should go up. Another banker who does business in Austin told me when I mentioned I was going to write about Westsiders starting a bank of our own, immediately said, “Competition is good.”
A bank is judged not only on the good loans it makes, but its willingness to work with you during the rough times?”a bank whose goal isn’t to foreclose on you at the first chance, a bank that will work with you if you lose your job or have a temporary layoff, a bank that is made up of people who don’t want to see your house become another “board-up” and therefore a place for the criminal element, a bank that understands in this community, we too want granite countertops, ceramic wall tiles and stainless steel appliances.
Our community cannot continue to advocate to our young the importance of school and getting a good education if, when they return from college, we haven’t created an environment in which they can excel. If we have our own banks, then our children can go to college and major in economics, banking, finance, etc. and then return to the community to put their knowledge to work at that bank.
A currency exchange has never helped to improve your credit score. Having an account at a bank will. And with credit scores becoming another tool that employers, lenders and even landlords depend on, we need our own bank more than ever.
If 95 percent of our community were employed, would 95 percent of our problems disappear?
Employment?”that’s the next “E” and my next column.