U.S. banks need to improve financial services to Black Americans, many of whom have avoided financial institutions because of a history of racism, Federal Reserve Bank of Atlanta President Raphael Bostic said.
“Many people in African American communities have not had very positive experiences with the mainstream banking and financial system,” he said in a virtual discussion sponsored by the Fed bank.
Just as Blacks may be reluctant to enter vaccine trials “because of a history of abuse in testing and health care, that history of abuse is exactly the same thing that people feel when it comes to financial institutions,” Bostic said.
Bostic, who is the first Black Fed president in the central bank’s 106-year history, said systemic racism was an economic as well as a moral issue. He cited a Citigroup study released this week finding that during the past 20 years, race-based inequalities shaved about $16 trillion from gross domestic product.
“We need to be thinking really hard about raising this issue with all banking institutions across the sector,” Bostic said.
The Atlanta Fed leader described community banks as vital to many smaller localities, especially Black-owned banks that are “the trusted source” for minorities.
While consolidation has shrunk the number of banks, he said, “we all need to be thinking hard about how do we preserve them because they play a very special role in so many communities —
certainly in African American and Latino communities, but also in rural places.”
