The Color of Money Black Banks and the Racial Wealth Gap by Mehrsa Baradaran

The book, named The Color of Money: Black Banks and the Racial Wealth Gap by Mehrsa Baradaran, gives a glimpse into black communities' wealth status from the 1860s to today. In 1863, black communities were the owner of less than one percent of total US wealth. At present day, that number has not budged much at all. Mehrsa Baradaran pursues this gap in wealth by having a focus on black banks. Through this book, she challenges the myth that black banking can solve the racial wealth gap and argues that black communities will never accumulate wealth in a divided economy. 

"For black families, each dollar creates only sixty-nine cents in total wealth. This is why the wealth gap between blacks and whites can continue to grow, even when de jure discrimination ended decades ago." - Mehrsa Baradaran

Using a combination of a rich historical view of America with a detailed analysis of the mechanics of banking, Baradaran brings forth the brutal dilemma that black banks are facing. Her brilliant and mind-blowing analysis concludes that the racial wealth gap is the result of state law and public policy and can only be reversed when this governmental tool is deployed that created discrimination and segregation. 

This book's takeaways include a few notions like Black Americans live on the wrong side of the wealth gap. Banks that deal with black customers face an almost impossible task; America was founded on the basic belief of equality for all, but it was home to many enslaved Africans.

Baradaran through her book, pursues the persistence of the racial gap in wealth by focusing on the generation of wealth in black communities, i.e., the black banks. Analyzing these institutions in time, Baradaran has also challenged a myth that black communities would accumulate wealth in a divided economy. Instead, racism, housing segregation, and Jim Crow credit policies just created an inescapable and hard to detect economic trap structure for black communities. 

Wealth inequality in the US has started and lived for so long through banking legislation that has discriminated against being against African Americans since the end of slavery. The color of capital, property, commerce, trade, and money was all white. The author has also unpacked the role of black banking in thinning the long-standing economic division.

In the past, black banks have appreciated their potential to eliminate the racial wealth gap by extending economic opportunities for blacks. However, the black banks never came this close to ending practices that left the black community in a state of economic inferiority. The integral perspective is that the responsibility and burden of finding the solution to such a problem must not be placed on black banks alone because they are only a small factor in the bigger system. 

In the book, the eight chapters are covered from 1865 to the present with contemporary and historical observations. It starts in the early history of black banking and the aftermath of the Civil War that is Freedmen's Savings Bank. The bank took advantage of black depositors using a series of unscrupulous transactions by the white administrators. It failed, and its failure led the blacks into a distrust of banking as an option for wealth building. In 1888 and 1900, the earliest black banks were formed through mutual help and fraternal societies. 

An example is the True Reformers Bank in Richmond, Virginia, founded by Grand Fountain of the United Order of True Reformers. Just as Baradaran notes, black enterprises like banks lacked the necessary capital to broaden certain parameters. The rise of black banking over the first half of the 20th century just happened in tandem with Jim Crow segregation because blacks were relegated to a different economy that enforced them to build up their own parallel institutions. Over a hundred banks owned by blacks were established in this period, and the great overwhelming majority of them were existent in the South. Nevertheless, just a handful of these institutions survived the Great Depression.

Later in the book, Baradaran talks about the impacts of major economic policies that led from the Great Depression to civil rights movements. In these times, many Americans' economic opportunities expanded, and still, the prosperity of blacks was visually never even there. The programs were established by Franklin D. Roosevelt, the president. This time has a more significant impression on banking and credit markets than the laws passed at any other time in the country's history. 

Moreover, these reforms were giving an advantage to the whites, as they showed their affirmation actions. This was most true when it was the talk of legislation that related to home mortgages that significantly reinforced residential division. The most illustrative instances can be viewed with the creation of agencies like the Federal Housing Administrative.

The FHA became the most important New Deal agencies, but the blacks and black banks were hugely excluded from attaining the benefits. Despite the gains achieved by the civil rights movements, these reforms brought up a kind of wholesale economic policy thought necessary by leaders of civil rights to pass milestone legislation. Here the author pointed out Dr. Martin Luther King Jr.'s "I Have a Dream."

Baradaran has challenged the long-standing notion that black banks and community self-help is the only solution to the wealth gap in racial discrimination. These initiatives have worked as the potential political decoy to not bump into the more fundamental reforms and racial redress. Assessing the fruits of past policies and operation of banking in a divided economy, the author makes it clear that only bolder and more realistic views of the relation of banking to black people will end poverty and promote the wealth of blacks. 

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