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Black-owned financial institutions are amplifying the call for racial justice by drawing more private capital into their communities. Could they help close America’s wealth gap?


“The bank is an instrument of social change”: CEO Kevin Cohee in OneUnited Bank’s Los Angeles offices. Photograph by Ryan Young

Kevin Cohee has a vivid memory—one of his earliest—from when he was about 4 years old, hanging out in the basement of his house in Kansas City, Mo. It was the early 1960s, and his uncles were there with some friends; some of them entrepreneurs (one uncle owned a pharmacy), all active in the civil rights protests of the era. As they plotted the future, one man pulled Cohee aside—he was the only kid present—and gave him a mandate: “That we didn’t need more Black men to fight on the streets; that we needed Black men to control institutions—like a bank,” recounts Cohee.

Cohee, who calls himself “a child of the Black Panther party,” ended up owning not just one bank, but several. After graduating from Harvard Law, his career took him from investment banking at Salomon Brothers to a successful leveraged buyout and turnaround of a financial services firm in the late ’80s. He and his wife, Teri Williams, a former exec at American Express, used their newfound riches to acquire the struggling Boston Bank of Commerce in 1995. Over the next seven years, they purchased three more banks in African-American communities in Florida and California, creating a chain that they rechristened OneUnited Bank in 2002. Today OneUnited is the largest Black-owned bank in the U.S. by number of customers. And with Kevin serving as CEO and Teri as president and COO, the Cohees are something akin to the industry’s first couple—at a pivotal time in its evolution.

Black community leaders have been advocating for Black-owned banking ever since Emancipation, even more so since the civil rights reforms of the 1960s. The thesis: Banks operated by Black people would help communities that left slavery with scratch build wealth, unimpeded by the prejudice and suspicion of white bankers. Black ownership would further ensure that profits made off of Black money would stay in the fold. And Black banks would extend credit to borrowers that the big national banks perceived as too risky owing to their modest means. In his very last speech before he was assassinated, Martin Luther King Jr. enjoined his followers to pull their money “out of the banks downtown” and deposit it in a Black-owned bank. “We want a ‘bank-in’ movement,” he said.

Black banks proliferated in the 1970s with encouragement from lawmakers and regulators. (The Federal Deposit Insurance Corp.’s definition of a minority depository institution includes Black-owned banks—51% or more of whose stock is held by Black individuals—as well as Black-led banks, which serve a minority demographic and have boards on which more than half the directors are Black.) But the money didn’t follow. The same systemic barriers that kept Black communities from accumulating assets before civil rights—real estate “redlining,” unequal access to education and jobs—kept the national wealth gap wide. And that created a vicious circle: Depressed income levels constrained deposits, limiting Black banks’ local impact. Black business owners and homebuyers might depend on a community bank for a lifeline, but the banks had only so much to loan; they also failed at a higher rate than their peers. Today, America’s 20 Black banks combined have fewer than $5.5 billion in assets—an infinitesimal fraction of the banking universe. (At the end of June, JPMorgan Chase alone had $3.2 trillionin assets.)

But the arrows may finally be pointing upward. Amid protests against systemic racism following the police killing of George Floyd, the “Bank Black” movement has gone mainstream, transforming Black financial institutions as it prompts individuals and even Fortune 500 companies to reconsider how they manage their money. At least a half-dozen companies have committed roughly half a billion dollars to Black banks, seeing them as an efficient, fiscally sustainable way to boost Black communities with relatively little risk. “We’re not asking you for contributions. We’re just asking you to put your money into a bank,” says Williams. “We lend it to the community in ways that build wealth. And we also use the platform to send a message to ourselves, and to the world.”

While the sum is small relative to corporations’ balance sheets, it’s a needle-moving amount for Black-owned banks. As online banking and racial-justice activism route deposits their way at an unprecedented rate, the Cohees and their peers envision reaching a critical mass of resources, anchoring the Black economy with more plentiful and affordable mortgages and small-business loans. “It’s an instrument of social change on a wide-scale basis,” Kevin says of his bank, adding emphatically: “And as a result, OneUnited Bank will solve the racial wealth gap.”

Owning a bank and joining the economic elite have not exempted the Cohees from the repercussions of the American racial minefield. Police once pointed a gun at Teri as she parked her car in Miami. In June, Kevin was pulled over in his Range Rover by the LAPD on his way to speak at a virtual Fortune event—a panel on the inherent dangers of “Banking While Black.” “Pretty much every aspect of the Black American experience, I’ve lived and experienced the negative outgrowth,” says Kevin, whose Los Angeles office is decorated with wall-size paintings of Dr. King and Malcolm X. “And that’s as a person who had lots of things.”

Nor has a social mission always been enough to keep OneUnited afloat, or to shield it from criticism. The bank received bailout funds in 2008 after its Fannie Mae and Freddie Macshares soured. Regulators reprimanded the bank for lavish perks it provided the Cohees, including a Porsche and a beachfront house allowance. OneUnited was then caught up in a barrage of bad publicity related to its ties to Rep. Maxine Waters, a controversy that brought to light Kevin’s past scrapes with the law. He had been arrested twice in a month in 2007, on suspicion of sexual assault and drug possession. No assault charges were ever filed, and the narcotics charge was dropped after he agreed to attend counseling. (Cohee has denied both accusations. “As most Black men in America, I have had interactions with law enforcement and have no convictions,” he told Fortune in a statement. “That said, I continue to strive to make better personal and professional decisions.”)

Burdened by these setbacks, it was only a few years ago that OneUnited perhaps began to hit its stride. It started with a wall, outside OneUnited’s Miami branch. Teri commissioned the artist Addonis Parker to paint something there to “reflect the authentic urban experience.” She didn’t see it until a couple of days before the unveiling, in July 2015; when she did, she was shocked. The mural featured portraits and names of Black men and boys who’d been killed by police or vigilantes—Trayvon Martin, Michael Brown, Tamir Rice—along with provocative symbolic images, such as a Black woman handwashing blood out of a Confederate flag in front of the Charleston, S.C., church where nine African-Americans had been massacred weeks earlier

https://fortune-com.cdn.ampproject.org/c/s/fortune.com/longform/black-owned-banks-banking-us-companies/amp/

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