Vice President Kamala Harris and Secretary of the Treasury Janet Yellen announced at the Freedman's Bank Forum a plan to loan $9 billion of the previously secured $12 billion to underserved communities and those whose small businesses have been disproportionately damaged during the COVID pandemic.
Harris started the panel discussion by honoring Viola Fletcher and her younger brother Van Ellis, two living survivors of the Tulsa race massacre. She spoke about the intentionality of how Tulsa's Black Wall Street was formed, and the barriers to capital that not only existed then but present day as well. "Black entrepreneurs are three times more likely to report that a lack of access to capital negatively affects their profit margin," the Vice President said.
This appeared to be a grand moment for the Biden administration to announce a pathway for economic inclusion for those whose community was affected by the plunder of the Freedman's Bank, yet the devil is in the details.
The Freedman's Bank: A Brief History
The Freedman's Bank was specifically established as a financial institution to aid and assist the economic growth of the Freedmen — the emancipated slaves and their progeny. Approved by Congress and signed into law by President Abraham Lincoln in 1865, the U.S. established the Freedman's Savings and Trust Company with $200,000 of unpaid wages from deceased Black soldiers left in military banks.
"This bank is just what the Freedmen need." — President Abraham Lincoln, upon signing the act (1865)
The Freedman's Bank was not a lending institution — it was a savings bank to safely store money. The deposits were meant to be invested in safe government securities to generate land ownership and business enterprises for Freedmen.
"The bank was a magnificently constructed, highly regarded, and heavily advertised piggy bank." — Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap (2017, p. 24)
In 1867, John Alvord asked Henry Cooke, brother of investment banker Jay Cooke, to become the new financial chairman of the bank. The trustees decided to move headquarters from New York City to an upscale community in D.C., all paid for by Freedmen savings. On May 6, 1870, Congress allowed the bank's charter to be amended, deregulating the bank and allowing executives to make risky investments.
With zero oversight from Congress, the Freedman's Savings and Trust Company became a cash windfall for white speculative gamblers, whose criminal actions denied Freedmen communities their hard-earned savings. Before this theft became apparent to depositors, bank trustees nominated Frederick Douglass as bank president in March 1874. Douglass did all that he could to keep the bank afloat — but in just a few months, the bank's doors were closed for good.
The closing on June 29, 1874, left 61,131 depositors without access to nearly $3 million in deposits.
"More than half of accumulated black wealth disappeared through the mismanagement of the Freedman's Savings Bank." — Mehrsa Baradaran, The Color of Money
The 21st Century Forum: History Invoked, Freedmen Excluded
On January 7, 2016, Treasury Secretary Jacob Lew renamed the "Treasury Annex" the Freedman's Bank Building. The annual Freedman's Bank Forum was then held to discuss how the Biden administration could support financial institutions serving low-income minority communities. COVID's devastation on Black-owned businesses was emphasized: 41% of Black businesses went out of operation between February and April 2020, and 58% of Black-owned businesses were at significant risk of failure before the pandemic. While large banks approved 60% of white business loan applications, only 29% of Black loan applicants received approval — at higher interest rates.
Via the CARES Act, VP Harris celebrated $12 billion earmarked to Community Development Financial Institutions (CDFIs) and Minority Development Institutions (MDIs). However, not only Black Americans but all who meet a means test can apply for this money.
Unfortunately, you cannot fix systemic racism with class-based policy. If the aim is to meet the needs of all business owners with fragile enterprises, then do that and be honest about it. Do not anchor Freedmen history to gain political sympathy and then spread the solution to communities that do not share the Freedmen's story.
During Reconstruction, it was poor Black workers whose savings were stolen as white businessmen became ultra-wealthy. Now that same Freedmen legacy is being packaged with current Black business failures to promote loans for all "minorities" and low-income communities.
As Dr. William "Sandy" Darity Jr. and A. Kirsten Mullen wrote in From Here to Equality:
"An ethnic immigrant's ability to boost his or her status is based on the relative social standing of the majority of the members of an ethnic group in their country of origin." — William A. Darity Jr. & A. Kirsten Mullen, From Here to Equality
And Frederick Douglass said it plainly:
"Every hour sees the black man elbowed out of employment by some newly arrived emigrant, whose hunger and whose color are thought to give him a better title to the place." — Frederick Douglass
A Call to Action
The Freedmen's Forum was an egregious slap in the face to the community whose ancestors built the wealth of America through forced labor, then experienced emancipation under an order of systematic white economic plunder. If the Biden administration wanted to rectify America's history of shutting Black Americans out of the economy, it should have designated policies specifically for them.
A rising tide lifts all boats — except Black boats. These boats have been ravaged with holes from a legacy of slavery and Black Codes. We do not need to repeat this again.
This is a call to action from the United Sons & Daughters of Freedmen to take a stand against this blatant act of disrespect. Getting the administration and the Department of Treasury to either change its policy or discontinue the usage of the name of our Freedmen ancestors will play a major part in taking back our narrative.