New bank for Black, Latinx consumers starts as Fed seeks to equalize credit access
By David Pendered
The new bank announced Thursday by Andrew Young, Killer Mike and Ryan Glover illustrates the purpose behind the nation’s first sweeping update in 25 years of rules that govern banking in minority communities – a review that aims to address inequities in access to credit.
The three Black icons announced the formation of Greenwood. The institution begins with $3 million in seed funding from private investors, according to a statement. The bank is a virtual enterprise, with zero physical structures, that intends to serve Black and Latinx causes and businesses.
The founders contend their virtual bank will fill a void in financial services in minority communities. As Glover said in the statement:
- “It’s no secret that traditional banks have failed the Black and Latinx community. We needed to create a new financial platform that understands our history and our needs going forward, a banking platform built by us and for us, a platform that helps us build a stronger future for our communities. This is our time to take back control of our lives and our financial future. That is why we launched Greenwood, modern banking for the culture.”
The Federal Reserve cited interests similar to those named by Glover in its new effort to evaluate and modernize the Community Reinvestment Act. Congress passed the CRA in 1977, and it remains the landmark law to ensure that banks and other depository institutions meet the credit needs of all communities, regardless of income.
Federal Reserve Board Governor Lael Brainard said in a Sept. 21 statement that systemic equities are a specific target of the CRA revisions. Brainard is widely viewed as a candidate for Treasury secretary in a potential Biden administration. Brainard is a Harvard-trained economist appointed to the Fed board in the Obama administration, and she is among the few Democrats who worked on responses to the financial crises of 2008 and 2020.
Brainard observed in the statement:
- “The CRA is a seminal piece of legislation that remains as important as ever as the nation confronts challenges associated with racial equity and the COVID-19 pandemic. We must ensure that CRA continues to be a strong and effective tool to address systemic inequities in access to credit and financial services for LMI [low- and moderate income] and minority individuals and communities.”
Brainard spoke specifically of virtual banks, such as the new Greenwood institution, in an Oct. 1 speech during the fall meeting of the Independent Community Bankers of America:
- “We know that banking has evolved over the past 25 years, so we also sought to update standards in light of changes to banking over time, including mobile and internet banking….
- “In closing, we look forward to modernizing the CRA in a way that strengthens the regulations to advance the core purposes of the statute, while providing greater certainty, tailoring regulations, and minimizing burden.”
The name of the new bank, Greenwood, recognizes a Black financial mecca in Tulsa, Ok., according to the bank’s statement. The Greenwood financial district was destroyed in the Tulsa Race Massacre in 1921, according to a report by history.com.
The bank’s three high profile founders are:
- Young, a civil rights legend, former U.S. ambassador to the U.N., and former Atlanta mayor;
- Michael “Killer Mike” Render, a rapper and support of Black financial empowerment;
- Glover, founder of Bounce TV network and Greenwood’s chair.