This recent growth may be the result of increased funding for Black banks following the $71 billion corporations pledged for Black Lives Matter following the George Floyd incident. Longer term, even if we confirm the African American ownership of Tioga-Franklin and of Grand Bank for Savings, there are still only 21 Black banks, representing 4 tenths of one percent of 4,706 total commercial banks and savings banks in the US as of 12/2022, according to the Federal Deposit Insurance Corporation (FDIC).
Despite these positive developments, as I noted in 2019, banking regulators have a history of neglecting the needs of the Black community, and by extension, the country. Even now, black banks remain too small and too weak to have a significant economic impact.
Given recent activity, I still think it viable for the Federal Open Market Committee (FOMC) of the Federal Reserve Board to purchase mortgage-backed securities (MBS) originated by black banks as part of open market operations. I first suggested this in 1994 at the Federal Reserve Bank of Kansas City. Since the 2006 financial crisis and 2020 pandemic, the Fed has purchased trillions in securities, helping white-owned banks, broker-dealers, insurance companies auto companies, and investment banks survive.
The solution to the Black banking impact crisis is to have the Fed, via the FOMC, create a Black bank liquidity pool totaling at least $50 billion. The pool's focus should remain on purchasing Treasury, MBS securities and Small Business Administration (SBA) loan pools from Black ownership verified banks. To administer this new effort, I suggest having the Commerce Department’s Minority Business Development Agency help the Fed make loans to Black banks instead of simply making short and intermediate term loans to large non-minority banks, as is currently the practice of the FOMC. This would provide an estimated $450 to $500 billion dollar boost, positively impacting both the Black community and the US economy.