Racism in the financial industry and what you can do about it
Now that white people’s eyes are open, we see that racism is everywhere.
As a white person, I am imperfectly educating myself about truths and history that have been white-washed, engaging in uncomfortable conversations, and working to acknowledge, own and eradicate racism from within. And I am making choices that support the more just world I am committed to co-creating.
A friend recently brought it to my attention that if you do a search for “interest rates for black people,” you will find startling information that shows significant racism in the financial industry. While shocking on some level, I’m also not surprised, knowing the industry.
This is a multilayered topic with lots of history in which I’m not an expert, and this article is more about one clear thing we can do right now. There are many articles on the topic, including these two I found helpful: “Racial Predatory Loans Fueled U.S. Housing Crisis,” “Many minorities avoid seeking credit due to generations of discrimination.”
The evolution out of the dark ages of a country built on the backs of people of color, is no small task. While educating ourselves and others, protesting, engaging, voting, and donating are important aspects of this evolutionary marathon, the financial industry is one critical piece of the puzzle to dismantle injustice and support progress toward fair financial practices and equal opportunity for all.
Corruption is often revealed when we simply follow the money. After the big bank bail out of 2008, I heard a lot of talk about moving our money out of the big banks. Some of us did. Some of us still haven’t done it yet.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -Henry Ford
You may not want to hear this, but if you bank with one of the big banks, you are feeding the monsters (the level of the monstrosity would be another article).
When we make conscious choices with our money, we redirect the flow of energy and power. This is impact. If you do not want to stay silent, act. Move your money to a credit union or a bank that has fair practices.
When I moved to Asheville, NC seven years ago, I researched financial institution options, searching for something that was aligned with my values.
I joined Self-Help Credit Union, whose tagline is “Economic Opportunity for All.” This organization is affiliated with the Center for Responsible Lending and has been advocating for fair practices for decades. Here’s part of their mission statement: “While our work benefits communities of all kinds, our focus is on those who may be under served by conventional lenders, including people of color, women, rural residents and low-wealth families and communities.” They fight against predatory lending practices and are part of the reason North Carolina doesn’t have those horrible payday advance places. In 2019, 82% of their borrowers were low income, and 63% of borrowers were people of color.
I love banking there and supporting their mission and I no longer have lingering guilt and shame plaguing my relationship with money. Instead, I know my money is in one of the best places it could be, supporting the front line of fair practices in the financial industry.
“You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.”
― Buckminster Fuller
Think about how much money goes through your account in a year or in 10 years. Now consider the impact of the domino effect if people redirected the flow of their money away from large banks through their banking choices. Reallocating money and power.
We talk about this often with our spending; not buying out of convenience and pricing, but instead from companies with integrity and quality. (I’m still stretching into this one imperfectly. This helps.) Those who hold the money, and the power to lend it to whoever they deem worthy on their own terms, are shaping our economy and our culture to a large degree.
If we all move our money, it could have huge impact.
I know it’s a pain. One friend who is one of the biggest advocates of anti-racism that I know recently confessed that she still uses one of the big banks and that she even tries to hide her card sometimes. The reason she hasn’t switched is because there are a lot of moving parts in the process.
If you feel stressed out by the logistics of the move, do it gradually. It took me a while to figure out how to make the transition work for me.
Here’s a step-by-step breakdown of one way to transition your money from the big banks to the champions of the financial industry.
5 Steps to Leaving a Big Bank for Good
1) Ask your friends where they bank and research alternatives to the big banks. Look for institutions that have fair practices (even act as advocates) and are established enough to have it together in all ways, including on-line banking (because if it’s not practical, it’s not sustainable.) Consider your needs, including geography if it’s relevant to you, and don’t let the slickness of the big banks (no fees) stop you. Although it was a stretch at first, I pay for my business account monthly knowing that it’s going to a good cause and I receive excellent service.
2) Open your account(s) at the new bank institution (with at least the minimum required to open the account(s).)
3) Make a list of all of your auto-pay and deposit transactions. You can do this by looking at a full 30–60 days of transactions. You may be able to do a search for specific types of transactions(e.g. ACH, Credits, Payroll, Dividend, etc.) There may be some that happen quarterly, semi-annual, or annually. Double check for these or leave some money in your account for a few months until you’ve had time to do a full investigation. This process also includes your accounts like Venmo, PayPal, and if you have a business, anything attached to your business like Square, Quickbooks, etc. Take a deep breath and start making a list. You don’t have to do it all at once.
4) Start moving your money and/or deposits over to the new institution as you gradually transition your automated transactions and connected accounts. If you use checks, order them for your new account(s).
5) When you have fully transitioned, move all of your money out of the big bank and close your big bank account(s). Watch your accounts more than usual for a while to make sure things are going smoothly.
Bonus: Once you fall in love with your new institution, when you have stepped into (even in this small way) unity for fair and just practices, tell your friends about it and encourage them to do the same.
Allow your relationship with money to take a deep breath. It just joined the protest.
“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.” ― Margaret Mead