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When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States' total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States' total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over time, Mehrsa Baradaran challenges the myth that black communities could ever accumulate wealth in a segregated economy. Instead, housing segregation, racism, and Jim Crow credit policies created an inescapable, but hard to detect, economic trap for black communities and their banks. The catch-22 of black banking is that the very institutions needed to help communities escape the deep poverty caused by discrimination and segregation inevitably became victims of that same poverty. Not only could black banks not "control the black dollar" due to the dynamics of bank depositing and lending but they drained black capital into white banks, leaving the black economy with the scraps. Baradaran challenges the long-standing notion that black banking and community self-help is the solution to the racial wealth gap. These initiatives have functioned as a potent political decoy to avoid more fundamental reforms and racial redress. Examining the fruits of past policies and the operation of banking in a segregated economy, she makes clear that only bolder, more realistic views of banking's relation to black communities will end the cycle of poverty and promote black wealth.


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When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States' total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States' total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks. Studying these institutions over time, Mehrsa Baradaran challenges the myth that black communities could ever accumulate wealth in a segregated economy. Instead, housing segregation, racism, and Jim Crow credit policies created an inescapable, but hard to detect, economic trap for black communities and their banks. The catch-22 of black banking is that the very institutions needed to help communities escape the deep poverty caused by discrimination and segregation inevitably became victims of that same poverty. Not only could black banks not "control the black dollar" due to the dynamics of bank depositing and lending but they drained black capital into white banks, leaving the black economy with the scraps. Baradaran challenges the long-standing notion that black banking and community self-help is the solution to the racial wealth gap. These initiatives have functioned as a potent political decoy to avoid more fundamental reforms and racial redress. Examining the fruits of past policies and the operation of banking in a segregated economy, she makes clear that only bolder, more realistic views of banking's relation to black communities will end the cycle of poverty and promote black wealth.

30 review for Color of Money: Black Banks and the Racial Wealth Gap

  1. 5 out of 5

    Mehrsa

    I mean, don't act surprised cause I wrote it! I mean, don't act surprised cause I wrote it!

  2. 5 out of 5

    Darwin8u

    "to be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships." - W.E.B. DuBois Every few years there is a book that is so powerful it turns me into a book nerd, policy evangelical. I go out and buy several copies and press them into friends hands with the fervor of a recent convert and tell them they "NEED" to read it. I think the last nonfiction book to do this for me was Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Rig "to be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships." - W.E.B. DuBois Every few years there is a book that is so powerful it turns me into a book nerd, policy evangelical. I go out and buy several copies and press them into friends hands with the fervor of a recent convert and tell them they "NEED" to read it. I think the last nonfiction book to do this for me was Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right or maybe The Big Short: Inside the Doomsday Machine. Usually, the book has both a financial angle and a policy tint. It usually also explores unfairness. That makes sense. In my previous life I was a policy analyst and I now work in the finance industry as a financial planner. Most days, I'm a pretty mellow guy. I meditate, read, drink tea, Netflix and chill. But reading about inequality and unfairness, for me, catalyzes me for action. If the last few political cycles have taught us anything, it is America still struggles with its "original sin" of slavery and the ugly descendants of slavery: discrimination, segregation, inequality, despair. We have seen, just this week (actually for the last few years), protests about the way Black Americans are treated by police officers. That subject deserves its own space, so I wont dwell too much on that here, other than to say the interaction of Black Americans and police officers ISN'T simple. It isn't a subject that can easily be explained just by saying police are racists, or unarmed Black Americans should behave differently (different from whom?). There are structural, geographic, economic, historical, and political forces that all contribute to awful outcomes. Just like blue on black violence isn't easily explained in a tweet or a FB post, the interaction between Black Americans and banks has a long, ugly, and painful history. It is a history that is important to understand if one REALLY wants to explore topics like income inequality, segregation, credit, crony capitalism, corruption, exploitation, state power, wealth, etc... Mehrsa's book explores the policies, laws, programs, politics, economics, and history of black banks AND the history of Black Americans with banks. She points a fairly bleak picture of the fault/chasm that exists between the two financial markets that exist in America. One is the banking structure that exists for a majority of Americans and doesn't need to be explored. But for years that economic structure, that allows people to save (AND BORROW) didn't exist for a large segment of Americans. And when it eventually did, it was skewed heavily. Separate was never equal in banking. Blacks paid a heavy price to save, to borrow (if they could). Even laws that were designed to help pull Americans out of poverty, accumulate wealth and avoid taxes through home ownership, benefited one segment of America while ignoring or fleecing the other. It is a painful read. It is also necessary. Unlike Mehrsa Baradaran's* previous book, How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy, this one spends little/less time on prescriptions. She is laser focused on what is wrong, what went wrong, and why. It is a dense (without ANY of the negative connotations typically associated with that word) book. One that required me to open THREE different post-it flag packages. I was marking things that were new, quotes that amazed, items I didn't want to forget and I often found myself marking 3 or 4 times a page. A few caveats before I end. This isn't a perfect book. It isn't as exciting as a Michael Lewis book (this probably won't get made into a movie) and the prose isn't as pretty as Robert Caro's LBJ series. But it is important. It is a labor of both love and skill. Reading some chapters in it, I could tell Mehrsa spent months in presidential libraries. Well researched books give me a thrill. Especially when you recognize that a certain nugget of data or quote may never have seen the light of day if it wasn't for the doggedness of a skilled lawyer/historian. 'The Color of Money' deserves to be in the library of anyone who deals with or seriously thinks about income inequality, race, banking, inner cities, etc. As a white, upper-middle, male who has benefited from educated parents, stability, wealth, and every advantage American history and politicians have blessed me with, it is difficult and humbling to realize just how many of the economic realities I take for granted every day weren't available to the parents of my black friends. Hopefully, more of these same financial realities WILL be available to the children of ALL my friends. Hopefully we can begin to cover both the scars of the disadvantaged, and the economic and social chasms that separate (unfairly) us. This book is both a bridge and a battle cry. * It is probably appropriate here to say that I'm friends with Mehrsa. Friends in the sense of exchanged books (I've sent her a couple audiobooks, etc. and she signed one of her books and sent it to me AFTER I reviewed it. Each of her books were purchased, often multiple copies, by me.) and know a lot of similar people and interact and went to the same college. We are not friends in the sense that she's ever fed my kids, or I've ever watched her pets. So there's that. I have other friends who are writers, but usually they are friends first. I don't typically "read" friends books unless I would normally read these books without being friends. Romance novels written by "friends" or self-help weight-loss books, I'll never read no matter how often someone feeds my kids. She is one of a handful of people that read more than me (even in my best years). I'm not sure where she gets her energy.

  3. 5 out of 5

    krn ਕਰਨ

    Personal reading strategy for 'heavy' books: Always read the Acknowledgments first. Three reasons. One, easiest to read. No strenuous effort required. Work-shy readers ftw! :) Two, puts paid to the notion of author as solitary warrior. In spite of the way books are packaged and sold, works of scholarship - even when there is only one named author - are always hives of collaboration. Takes a village, as they say. I love to read the names of the villagers as they tumble down the page / scroll up t Personal reading strategy for 'heavy' books: Always read the Acknowledgments first. Three reasons. One, easiest to read. No strenuous effort required. Work-shy readers ftw! :) Two, puts paid to the notion of author as solitary warrior. In spite of the way books are packaged and sold, works of scholarship - even when there is only one named author - are always hives of collaboration. Takes a village, as they say. I love to read the names of the villagers as they tumble down the page / scroll up the screen. Three, humanizes both the author and the reader. The tone is inevitably convivial and the mood relaxed. Eavesdropping on someone conveying gratitude is an instant tonic. No matter how dark or difficult the content of the book, or how impersonal and dispassionate the scholarly delivery, in the acknolwledgments section one is allowed a bit of emotion. Mehrsa Baradaran goes through the usual routine of thanking family, friends, colleagues, and her editorial & research teams. All very cordial and proper. But there is a moment of vulnerability, something disarming that stayed with me throughout the long journey with this text. Shout-out to someone called Lucia "for assuring me that no one will read" the book. As testified by the multiple print runs and huge critical acclaim (fans include Ta-Nehisi Coates, who calls it a "beautiful, heartbreaking work"), Baradaran needn't have worried about lack of readership. Maybe it's just good manners, but her remark about being reassured by obscurity reveals to me a deep-rooted humility. This isn't an academic superstar drunk on their own market value, nor a high-flying political apparatchik with scholarly credentials. Also missing is any sense of entitlement or its corollary, ressentiment. No chips on shoulders here! Impressed? Wait, there's more. I meant the phrase 'long journey' above as code for the degree of difficulty. The Color of Money: Black Banks and the Racial Wealth Gap isn't a doddle to read. The content makes certain demands on the reader, over and above the demands of time and attention. The betrayals, connivances, skullduggery, hypocrisy and relentless deceit visited upon the black communities of the United States - the lawless legality, to use Walter Lippmann's memorable phrase, painstakingly documented in these pages - demands a certain level of resilience. Ashamed to admit that I found myself low on stocks of resilience. Every few pages, I put the book down and walked away, unable to cope with what I was reading. If simply running my eyes over this is so difficult, so spiritually demanding, what must it ask of those who have lived it for generations? And of those who descended into the archives and vaults, libraries and courthouses up and down the country to compile the tales told in this book? In short, spiritual reserves. How well-defended her inner fortress must be for Baradaran to confront the abundant moral treachery on display, write about it calmly and with restraint, and not lose the last shred of hope in humanity! Because that's the thing about this book. Its unflinching gaze straight into the historical abyss. Page after page of sober, measured prose; carefully assembled evidence, extensively documented in the end notes; meticulously organised chronological narration based on both archival material and hundreds of conversations with actual bankers - through it all, Baradaran manages to keep the forces of despair at bay. The greatest achievement of this book - also, ironically, its most devastating - is the location of the racial wealth gap in the structure of society. Not in the moral make-up of individuals, not in the spending habits of groups, not even in the fiscal behaviour of communities. Baradaran shows repeatedly that the wealth gap is created and maintained at the institutional level of policy and federal programs. The largesse of the state is distributed along racial lines, and the narrative plays out in complete contrast based on which side of the tracks one finds oneself. "The moral indictment of the poor by institutions complicit in their poverty," says Baradaran in a sentence typical of her restraint, "is a recurring theme" (79, my emphasis). And this one: "Banking does not beget control and power; rather, control and power beget sound banking" (206). Whence the forces of despair? Well, it's still happening. As recently as last month, Jared Kushner said black people should stop complaining; they have to want to be successful! Not only does inequality show little sign of receding - trending all the while in the opposite direction - but the myths built up to explain it continue to defy well-reasoned and powerful arguments to the contrary. I suppose that's what it comes down to. The extent to which one has internalised these myths. As a lay reader who harbours fond memories of his years in the States but remains ideologically agnostic, this book was a profoundly educational experience. I got to learn tons about banks and credit markets, legislation and its impacts, and historical personalities whose actions still reverberate in meaningful ways. Bit baffled by the lack of a proper bibliography though. Can't work out why the publishers decided to do away with this courtesy.

  4. 5 out of 5

    Lisa Butterworth

    It's all unfair, I know that, you know that, but this book lays out all the hidden and complicated ways that money flows to white folks and away from black folks. They can work harder and smarter and never have a chance because the system disadvantages them at every turn, this book spells out those disadvantages in agonizing and depressing detail. Everyone needs to read this book. Especially free market libertarians ugh. Favorite quote: In speaking about the collapse of subprime loans, "This Mar It's all unfair, I know that, you know that, but this book lays out all the hidden and complicated ways that money flows to white folks and away from black folks. They can work harder and smarter and never have a chance because the system disadvantages them at every turn, this book spells out those disadvantages in agonizing and depressing detail. Everyone needs to read this book. Especially free market libertarians ugh. Favorite quote: In speaking about the collapse of subprime loans, "This Market was not created by poor minority borrowers, but those at the bottom are most likely to be exploited by new credit innovations. Just as exploitative credit arrangements like share cropping was created by demand from the world-wide cotton market, sub-prime lending was connected to a world-wide demand for mortgage loans. That the black population was exploited in both situations speaks to their lack of wealth, political power, and their exclusion from the main channels of economic power. During reconstruction, black borrowers had no other options for credit, so they entered share cropping. A similar situation was created with contract selling when blacks were redlined out of the government loan market. Once again, during the sub-prime era, the market demanded more loans, and the black population was the most vulnerable population of borrowers, having had limited access to credit for generations. THIS PARAGRAPH!!!!! "Without malice, capital looking for yield can lead to exploitation if there are structural inequalities. Capitalism itself cannot overcome those inequalities because capital only seeks to accumulate unto itself. Without structural changes, the urban ghetto would never be a lure for wealth building capital, only a magnet for exploitation. "There are two banking systems in America, one is the regulated and heavily subsidised main-stream banking industry, the other is the unregulated, costly, and often predatory fringe industry. The black population has historically been unders the latter having historically been left out of the former. This has come at great expense to their community. "

  5. 4 out of 5

    Raymond

    I learned a lot from Mehrsa Baradaran’s book about Black banks and the racial wealth gap. It covers Black economic/banking history from the end of slavery to our current moment. This was a history that I was mostly unfamiliar with especially when it dealt with the banks and the government policies that created the current environment we are now in. Baradaran has a way of writing complex topics and makes it understandable to someone who is not an expert on economic and banking issues. Highly reco I learned a lot from Mehrsa Baradaran’s book about Black banks and the racial wealth gap. It covers Black economic/banking history from the end of slavery to our current moment. This was a history that I was mostly unfamiliar with especially when it dealt with the banks and the government policies that created the current environment we are now in. Baradaran has a way of writing complex topics and makes it understandable to someone who is not an expert on economic and banking issues. Highly recommend!!

  6. 5 out of 5

    Alicia (PrettyBrownEyeReader)

    The author explains the American banking system while walking the reader through Black American history in relation to wealth building. Since Emancipation, Black banking has been the hope of Black America for wealth creation but the banking system of yesteryear and currently will not produce the wealth it does for non Blacks. The author explains in terms everyone can understand why this will not happen and American Black wealth is essentially the same as it was at the time of Emancipation.

  7. 5 out of 5

    Andrew

    This is an excellent history of Black banking and economics in the USA. Showing that whilst African Americans have constantly sought control of their own economic independence since emancipation, the establishment has purposely kept Black communities and entrepreneurs out of the wider economy. Whilst the author does not provide a specific solution, she highlights a pattern that despite everything, Black banking has over the past decades always managed to re-establish itself. And this might sugge This is an excellent history of Black banking and economics in the USA. Showing that whilst African Americans have constantly sought control of their own economic independence since emancipation, the establishment has purposely kept Black communities and entrepreneurs out of the wider economy. Whilst the author does not provide a specific solution, she highlights a pattern that despite everything, Black banking has over the past decades always managed to re-establish itself. And this might suggest positive outcomes for the future. I would definitely recommend reading "The Color of Money".

  8. 5 out of 5

    Ian Scuffling

    I've recently been reading a lot more non-fiction than I used to, but it's a strange field out there. The mixed bag is such that you can pick up one book and it feels like a bloated magazine article (because it usually is--that's how a lot of NF-publishing works), and sometimes it feels so diluted as to be written for an audience that wouldn't be interested in the book to begin with. But then, as is the case with Mehrsa Baradaran's The Color of Money: Black Banks and the Racial Wealth Gap, you h I've recently been reading a lot more non-fiction than I used to, but it's a strange field out there. The mixed bag is such that you can pick up one book and it feels like a bloated magazine article (because it usually is--that's how a lot of NF-publishing works), and sometimes it feels so diluted as to be written for an audience that wouldn't be interested in the book to begin with. But then, as is the case with Mehrsa Baradaran's The Color of Money: Black Banks and the Racial Wealth Gap, you have a work that does so much work on all fronts: enlightening with thorough reporting, deeply informative background on systemic/conceptual knowledge (in this case, banking) and inspiring into action to right the wrongs of social ills--I would find it hard to believe someone reading this would still think the government shouldn't do more to address wealth inequity and segregation in the US. I work in the financial services industry and I learned more about how banks work in Baradaran's book than in my entire career at this company. Not only is the prose concise, clean and coherent, it's not condescending--Baradaran does not belabor the mechanics of banks, but she swiftly instructs while exposing the deep fault lines in how those mechanisms have consistently and constantly failed communities of color, even at times when their primary raison d'etre was to address their needs specifically. She begins the history with abolition and how even the earliest promises for reparations were dangled in front of freedmen, then swiftly stolen away. This happens repeatedly throughout American history, and has most recently taken the form of neoliberal free market economics where the mere suggestion of establishing economic policies to address the needs of minorities and people of color is anathema to free-market theory. The concluding chapters where Baradaran discusses the earliest threads of the mass civil unrest we're seeing this summer are probably the most prescient, but come with the strongest warning--the system has failed people of color and minorities at every single turn, with every false promise, with every fairweather reform that essentially does nothing. Individual acts, like banking black, and buying from black-owned business can help, but until the underlying systems of our market economy take into balance the original sin of this nation, and make some real effort to create equity in wealth and opportunity to create it, then all those individual acts are just noise in the machine. This is essential reading.

  9. 4 out of 5

    Richard

    A fascinating and fast-paced history of banking, with a focus on more than 150 years of targeted *economic* discrimination against black Americans. I was shocked to learn some of the on-the-record statements made by blatantly racist politicians – including many who have occupied the Oval Office. The author explains the incredible power of banking’s money multiplier effect, and how this power could not be realized in ghetto “savings & thrift” banks that were not also lending to their local custom A fascinating and fast-paced history of banking, with a focus on more than 150 years of targeted *economic* discrimination against black Americans. I was shocked to learn some of the on-the-record statements made by blatantly racist politicians – including many who have occupied the Oval Office. The author explains the incredible power of banking’s money multiplier effect, and how this power could not be realized in ghetto “savings & thrift” banks that were not also lending to their local customers. This book made me realize, for the first time, how important something so seemingly mundane as FDIC deposit insurance is to the entire banking system. For decades black banks have found themselves caught in a complex double-bind (“Damned if we do, damned if we don’t”) of needing to run profitable businesses, coupled with implicit and explicit goals of acting as community institutions – functioning like quasi non-profits – to serve high-risk, high cost-to-serve customers in under-banked ghetto neighborhoods (customers with low deposit balances AND high transaction volumes). I was hoping the last chapter was going to be, “And this is how modern black banks cleared the hurdles that led to the demise of all their predecessors…” Unfortunately, that happy ending is still a future event. The author left me significantly better informed about the systematic, historical causes of the racial wealth gap and sincerely hoping that viable solutions are on the near horizon to help close that wealth gap in America. Well researched and well written. I recommend it.

  10. 5 out of 5

    Eric Bybee

    This book is a stunning achievement and sets a new bar for historical narratives of racial inequality in the United States. Perhaps no other metric captures the collective impact of centuries of anti-Black prejudice and discrimination across various domains of social life (including housing, education, and voting--to name a few) like the racial wealth gap. Accordingly, it should not be surprising that this metric frequently emerges in the everywhere from the writings of Ta Nehisi Coates to the p This book is a stunning achievement and sets a new bar for historical narratives of racial inequality in the United States. Perhaps no other metric captures the collective impact of centuries of anti-Black prejudice and discrimination across various domains of social life (including housing, education, and voting--to name a few) like the racial wealth gap. Accordingly, it should not be surprising that this metric frequently emerges in the everywhere from the writings of Ta Nehisi Coates to the pages of the Wall Street Journal. Baradaran's central innovation is telling the story about this well-known metric in a wholly new way: through charting the history and balance sheets of Black banks. In prose that is detailed yet accessible, she shows how these institutions designed for racial uplift were fatally handicapped by the Jim Crow economies where they operated. Rather than build wealth within the Black community, the broader segregated economies made these banks function like sieves and actually drew money out of Black communities. She additionally brings to light the (largely untold) story of how the Nixon administration used the notion of "Black Capitalism" as a cynical ploy to avoid addressing the central issues and policy goals of the Civil Rights Movement. Baradaran doesn't offer any easy solutions, but her exhaustive research makes a compelling case that, since broad government interventions (from land grants to FHA loans) created the racial wealth gap, we will need similarly broad kinds of government intervention to end it. I highly recommend this book

  11. 5 out of 5

    Audacia Ray

    This book is a serious achievement - a history of black banking and the role of racism in banking institutions in the US, with lots of examples of policies and businesses initiatives and the harm they’ve wrought on black communities. In particular, the author documents the wily ways of racism and capitalism, and how they adapt to appropriate movements. I was especially interested in the sections about Nixon and how he appropriated the messaging of black power and packaged it into black capitalis This book is a serious achievement - a history of black banking and the role of racism in banking institutions in the US, with lots of examples of policies and businesses initiatives and the harm they’ve wrought on black communities. In particular, the author documents the wily ways of racism and capitalism, and how they adapt to appropriate movements. I was especially interested in the sections about Nixon and how he appropriated the messaging of black power and packaged it into black capitalism initiatives that divided radical black organizing with the carrot of black business support structures that were actually ways to segregate and economically crush black communities. Though the book ends on a slightly upbeat note about what could be possible. But this is otherwise a thoroughly bleak study of the impacts of American capitalism on black communities and the failures (because of white supremacist capitalism) of institutions that have tried to fix it.

  12. 4 out of 5

    Eddie

    Very good. If you're like me, you’ve probably read a number of books on the African-American experience spanning the gamut, from historical to present day perspectives. Here's another for your bookshelf from a economic standpoint, covering: black banking, corporate & government malfeasance, and their persistent adherence to a financial policy intended to keep black communities in a state of financial disrepair. Professor Baradaran ranges from the beginning when “...the currency of the South was t Very good. If you're like me, you’ve probably read a number of books on the African-American experience spanning the gamut, from historical to present day perspectives. Here's another for your bookshelf from a economic standpoint, covering: black banking, corporate & government malfeasance, and their persistent adherence to a financial policy intended to keep black communities in a state of financial disrepair. Professor Baradaran ranges from the beginning when “...the currency of the South was the slave” and the government’s underhanded dealing of the Freedman’s Savings Bank, to President Nixon and his approach (Black Capitalism) to counter Black radicalism of the 70’s, to the FDIC’s unscrupulous behavior in handling the failure of the Freedom National Bank of Harlem. All this, and more, revealing how these deliberate actions, behavior and strategies are meant to maintain economic inequality.

  13. 5 out of 5

    Andrew Fairweather

    “the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person.” —MLK A fantastic book! Come for the analysis of black disparity in America, stay for the striking analysis of how the doctrine of bootstraps laissez faire has been used to deny people in need (blacks, primarily) access to capital—during reconstruction this was denied while simultaneously distributing land and capital for railroad construction. During the depression this was denied while simu “the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person.” —MLK A fantastic book! Come for the analysis of black disparity in America, stay for the striking analysis of how the doctrine of bootstraps laissez faire has been used to deny people in need (blacks, primarily) access to capital—during reconstruction this was denied while simultaneously distributing land and capital for railroad construction. During the depression this was denied while simultaneously subsidizing loans for white homeowners. And today, our money is used to prop up corrupt lenders who willingly take advantage of desperate borrowers for the purpose of short term speculative gain. All the while we are told that those who are successful got their by way of their own initiative, and that losers loose for a reason. Instead of the economy being ruined by speculation of the elite, blame is placed upon the unwise “unlearned” borrowers. Commentators wax moral as they accuse them of being complicit in their own ruin, thus justifying their apathy towards the most desperate. Never mind that with wage stagnation, borrowing is often the only way to have access to funds! It’s a truism to most intelligent people nowadays that the mismanagement of funds is often attributed to natural market functions rather than the actions of human beings. If the 2008 financial crisis teaches us anything, it’s that banks manage not to fail because we save them from doing so—if a bank fails (as Binga’s did in the Depression) it is usually because we didn’t care to save it. Never mind that hard working persons’ savings are wiped out in the process while those with more speculative appetites are the ones who weather the storm they themselves created. To add insult to injury, Baradaran mentions that Binga was the only banker that was sent to prison for financial crime in the Great Depression. Baradaran’s analysis lies within a tradition of housing scholars such as Kenneth Jackson and Thomas Sugrue. There were other ways of boosting ownership—Harold Ickes saw a future that would recover America’s cities through low cost apartment housing. Instead, ownership came through the vehicle of the single family mortgage market, leaving cities and their infrastructure in decline as a result of a waining tax base—this, during the Great Migration, a time when blacks were moving to the cities in great numbers. A concentration of segregated neighborhoods of tremendous disadvantage was the result. Community control of wealth was supposed to be the answer. The problem with black “community control” banking is that most depositors are poorer than depositors of white banks—therefore their capital for loans is limited. On top of this, as whites are usually asset holders due to the generations of financial hardship suffered by blacks, whites tend to be the the “sellers” by-and-large. What results is the same old thing—only the white banks have the ability to lend and multiply their money rapidly, while black banks conservatively invest in government securities whose money ends up in the mainstream white economy anyway. “New” money would always end up in the white banking sector. As Baradaran puts it, “once in the banking system, money flows toward more money.” What was needed was an *actually integrated* economy wherein blacks enjoyed the same advantages and subsidies as whites. But this cannot happen if asset holders are persistently white. Basically, what was needed was not community banking, but a recalibration of ownership of assets. Whites have benefitted from schemes which increase ownership, while blacks are demonized from receiving mere transfer payments such as welfare. Because of poor credit histories due to lack of access to capital, blacks living in major cities often had to resort to installment credit at higher interest. The exorbitant interest often led to a state of affairs where lenders had to incur costs of repo personnel and other expenditures, often leading to… increased rates of lending! In this case, the adage that “the poor pay more” very much holds true. What ends up happening is that lenders need to lend at ridiculous rates of interest just to stay in business. The “evils of white lenders” is of course very illustrative in a poetic sense, but does not articulate the root of the problem—lack of reasonable access of blacks to capital, assets, and their attendant resources. Baradaran points out that solutions to these problems often take the lukewarm point of view that problems can be solved through a “job training” approach… this, despite the fact that there are usually no jobs in the first place. Naturally, government stimulus can invest in the economy through the creation of jobs in needy areas, but this would go against the ethos of laissez faire which, again, is constantly trotted out to absolve policy makers from addressing a crisis. The moment we’ve just come up from has been one of rabid “color blindness” which, ironically, co-opted the separationist language of black power movements that advocated for community control. MLK’s legacy has been used to justify an ahistorical approach to redress of black disadvantage. This, despite the fact that MLK was very aware of the historical roots of black disadvantage. What resulted was the “decoy of black capitalism” as Baradaran calls it. This was a moment where the black entrepreneur was being celebrated as income disparity between blacks, whites, and even the black middle class, was increasing. An interruption coalition of the poor was discarded in the name of black business and self-determination. Instead of capitalism as the problem, it was cited by intellectuals such as Harold Cruse no less that there was *not enough* capitalist development in black America. This statement can only come at the cost of recognizing the gains white America has made through social programs that were deliberately denied to blacks… which requires that one accept that, well, blacks just lack that entrepreneurial drive that makes capitalism work for them(!). Segregating the black economy from the white economy is not the answer. What I like about Baradaran’s book is that it challenges “easy” answers to complicated questions that arise when talking about disparity. Ravitch’s book on the educational system in New York also does a great job of this. The fact of the matter is that “community control” is often used to prop up approaches which merely treat the symptoms of a much greater problem. It’s just busy work. Wast’s more, “community control” is often wielded to make very conservative arguments, as Baradaran brilliantly shows. This book ought to be required reading for anyone not just looking to understand who we ended up in this mess, but for anyone who wishes to sincerely come to terms with the difficulties we face in the future, and what the future ought to look like. Call it “reparations” or “socialism” (ha!) if you like, but some sort of government led financial restitution is needed to bring the poor into the fold. After all, there are precedents—whites have enjoyed the benefits of government led restitution and intervention for generations…

  14. 5 out of 5

    Liz

    This book was fantastic. I've always disliked learning about finance and economics, probably because I took one Econ class in college that was thoroughly capitalist/neoliberalist, and I hated it, and I assumed all of Econ was that way. But Mehrsa Baradaran has totally turned me into a "finance/banking is a social justice issue" policy nerd, and I love it so much. This book is a comprehensive study of the racial wealth gap, and it methodically shows how policies affecting the accumulation of weal This book was fantastic. I've always disliked learning about finance and economics, probably because I took one Econ class in college that was thoroughly capitalist/neoliberalist, and I hated it, and I assumed all of Econ was that way. But Mehrsa Baradaran has totally turned me into a "finance/banking is a social justice issue" policy nerd, and I love it so much. This book is a comprehensive study of the racial wealth gap, and it methodically shows how policies affecting the accumulation of wealth in the US were deliberately and systemically implemented to privilege white people and disenfranchise Black people. And it's all laid bare for the reader, not hidden or glossed over in a way that could be dismissed or ignored or explained away. The deliberate, racist policies about who has access to money/power have been there for so long, and it would do us all well to know this history so that we are careful and critical about our policy and political choices going forward. This is a fabulous book, and should be part of the racial justice canon.

  15. 5 out of 5

    Conor Hilton

    READ THIS. Seriously. Read it. This book was filled with historical information that I didn't know (including some fascinating tidbits about George Romney), insight into the financial & banking sectors, and sharp diagnosis of the failures (intentional and unintentional) of people and movements seeking to address racial inequality in the United States. Every chapter brought new information about historical events and figures, always coupled with clear analysis and explanation of what the effects READ THIS. Seriously. Read it. This book was filled with historical information that I didn't know (including some fascinating tidbits about George Romney), insight into the financial & banking sectors, and sharp diagnosis of the failures (intentional and unintentional) of people and movements seeking to address racial inequality in the United States. Every chapter brought new information about historical events and figures, always coupled with clear analysis and explanation of what the effects of those events and figures were. The book does deal with a lot of dense, nitty-gritty policy details and elements of the financing and banking industries, which I don't have a ton of experience with, so I need to revisit this to really get a handle on what Baradaran describes. But she always walks through the implications and effects of the details in a way that I could grasp. If you're interested in racial equality and justice for all, you've gotta read this. It's seriously incredible.

  16. 5 out of 5

    Tina

    Excellent read. This book was not so much about the black banking industry itself as it was about the history of racial and economic discrimination against blacks in the U.S. through government policies that benefited whites at the expense of blacks and created the deep racial wealth gap of the present day. Still, all information was relevant and necessary to the discussion, and the research was very thoroughly cited. Dr. Martin Luther King, Jr., as quoted in the book, said it best, "the insepar Excellent read. This book was not so much about the black banking industry itself as it was about the history of racial and economic discrimination against blacks in the U.S. through government policies that benefited whites at the expense of blacks and created the deep racial wealth gap of the present day. Still, all information was relevant and necessary to the discussion, and the research was very thoroughly cited. Dr. Martin Luther King, Jr., as quoted in the book, said it best, "the inseparable twin of racial justice was economic justice." This book greatly details how that came to be and how that continues today, with a glimmer of hope for possible political remedies in the future.

  17. 4 out of 5

    Leslie

    If you’re a history, banking or economist nerd then this book is for you. I tend to fall into the first category, as my how banking works and economy knowledge is pretty much zilch. That being said I found the history angle tough because the subject is so frustrating, but informative and well researched. The author knows her stuff.

  18. 4 out of 5

    Barry

    Baradaran expertly details how the banking industry has failed African Americans, and has contributed to the persistence of a significant racial wealth gap. In a well functioning banking system, wealth is created through a “multiplier effect,” but this multiplier effect can only function properly if loans stay within the community. She shows how banks that serve customers in a poor segregated community are thus unable to create wealth, but instead only end up exploiting the very people that need Baradaran expertly details how the banking industry has failed African Americans, and has contributed to the persistence of a significant racial wealth gap. In a well functioning banking system, wealth is created through a “multiplier effect,” but this multiplier effect can only function properly if loans stay within the community. She shows how banks that serve customers in a poor segregated community are thus unable to create wealth, but instead only end up exploiting the very people that need help. And she shows how generations of discrimination in jobs and housing has prevented black families from accruing wealth, which in turn makes it exceptionally difficult to escape from poverty in segregated areas. Baradaran contends that the white middle class was created through federal investments such as the GI Bill and FHA home loans, which deliberately excluded blacks. I would give more credit to free enterprise than she would, but she is certainly correct that these programs benefitted whites and harmed black people. And she makes a compelling case that the chronic harmful effects of this long history of oppression cannot be reversed through “color-blind” methods alone. People of a conservative mindset (like myself) tend to believe that in a free country a person’s station in life is largely determined by the quality of their decisions and their quantity of hard work. But if you believe that the people who live in a ghetto do so mostly because of some personal failing, then you need to read this book. This book makes an excellent companion to Richard Rothstein’s “The Color of Law.” Neither is intended to be an argument for reparations, but I would have to agree that grave injustices have been committed, and if a practical remedy could be designed, I could certainly get on board.

  19. 5 out of 5

    Erik

    "A 2016 study glibly predicted that, based on the current racial wealth gap, it would take 228 years for blacks to have as much wealth as whites do today." In The Color of Money, Mehrsa Baradaran outlines the ways the racial wealth gap came to be and lays out potential for fighting it head on. In the aftermath of slavery, the US government, for about 9 months, gave reparations to ex-slaves in the form of land that had once belonged to their Southern masters. But then Lincoln was killed and Southe "A 2016 study glibly predicted that, based on the current racial wealth gap, it would take 228 years for blacks to have as much wealth as whites do today." In The Color of Money, Mehrsa Baradaran outlines the ways the racial wealth gap came to be and lays out potential for fighting it head on. In the aftermath of slavery, the US government, for about 9 months, gave reparations to ex-slaves in the form of land that had once belonged to their Southern masters. But then Lincoln was killed and Southerner Andrew Johnson came to power. Thus started the first wave of government attacks on black wealth accumulation by the taking back of the land that had been given to ex-slaves. From this point, Baradaran's historical telling of blacks and the American economy is a story of white American consciously placing black Americans as the buffer group to keep white safely middle class. Victims of government-appointed bankers that misused deposits, FHA policies that ensured the impossibility of black home ownership, and predatory subprime mortgages spawned by bank greed and racism, blacks have systemically been excluded from wealth accrual by state and private action. And this is the reason why blacks only own 1% of all the wealth in the United States. At times Baradaran takes too expansive a scope for her book by giving mere (and unnecessary) glosses on the civil rights movement and other socio-political topics that didn't directly relate to the question of banks or the wealth gap. Nonetheless, this is an important book on little studied subject and one you should certainly read.

  20. 5 out of 5

    Jim

    I initially felt bad about such a low rating, but I had to accept this book, while easy to read and decently footnoted, ultimately lacks any real profound ideas or deep analysis. The premise is stated in the Introduction, and, while accurate, leaves little reason to read the remainder. It is just that simple to state: Black People lack wealth because White Supremacist America denies them reparations for over two centuries of slavery and more than a century of structural racism post-slavery. Simpl I initially felt bad about such a low rating, but I had to accept this book, while easy to read and decently footnoted, ultimately lacks any real profound ideas or deep analysis. The premise is stated in the Introduction, and, while accurate, leaves little reason to read the remainder. It is just that simple to state: Black People lack wealth because White Supremacist America denies them reparations for over two centuries of slavery and more than a century of structural racism post-slavery. Simply put, there is absolutely no way Black Americans will EVER have comparable wealth to White Supremacist Americans unless there are reparations paid for slavery, at the very least. After that, the White Supremacist Government can address Jim Crow and lynching. There is till more after, of course, but we can start there. A Truth and Reconciliation, like the White Supremacist US Government supported for South Africa, would be another great idea. Let's just put all the lies of the founding of the "land of the free..." out in the open for all the world to see. Yep, it won't ever happen, probably. But unless or until it does, Black Americans will continue to have a mere fraction of the wealth of White Supremacist Americans.

  21. 5 out of 5

    Aimee

    Wow reading this summer is hard and slow going. As usual loved Mehrsa Baradaran’s writing. Incredibly detailed summary of the (intellectual) history of Black banking and Black capitalism (and all its woes). This book functioned well as a survey more so than a really deep dive into any particular bank/policy. Her closing chapter about possible policies for reparations as a means to close the wealth gap leaves you with the useful litmus test that [paraphrasing] “if the policy doesn’t cost white pe Wow reading this summer is hard and slow going. As usual loved Mehrsa Baradaran’s writing. Incredibly detailed summary of the (intellectual) history of Black banking and Black capitalism (and all its woes). This book functioned well as a survey more so than a really deep dive into any particular bank/policy. Her closing chapter about possible policies for reparations as a means to close the wealth gap leaves you with the useful litmus test that [paraphrasing] “if the policy doesn’t cost white people anything, it probably isn’t going to work”. This summarizes the book nicely. Hopefully we will see another push for some form of reparations in our lifetime.

  22. 5 out of 5

    Magen

    I'm not sure whether to rate this as a 4 or 5 star read, so I'm going with 4.5 stars. This book was really impactful and it brought light to another area of American history where discrimination has been devastating to the Black community. But, it was also a bit dry and sometimes repetitive. The most interesting aspect of this book is the systematic analysis of the concept of Black capitalism's ability to pull Black people out of poverty. This book makes a convincing argument that only governmen I'm not sure whether to rate this as a 4 or 5 star read, so I'm going with 4.5 stars. This book was really impactful and it brought light to another area of American history where discrimination has been devastating to the Black community. But, it was also a bit dry and sometimes repetitive. The most interesting aspect of this book is the systematic analysis of the concept of Black capitalism's ability to pull Black people out of poverty. This book makes a convincing argument that only government involvement will reduce the wealth gap, which continues to widen. I definitely think it's worth a read, but if you are short on time, I think an article or academic paper by Mehrsa Baradaran, if one exists, would be sufficient to understand the obstacles to closing the wealth gap.

  23. 5 out of 5

    Kenna

    A deeply important book. This book is dense but in a good way, one where you know the author knows her stuff. This is the book that I wished I had in my high school U.S. history class.

  24. 5 out of 5

    Nicola

    I thought this would be a book about black-owned banks, but it's really about years of U.S. economic policy that has stacked the decks against black Americans. I knew about red lining and predatory subprime mortgages during the financial crisis, but there's so much more. A well-written, really accessible, and important read* (*for me, a listen because it was my first audio book!). I thought this would be a book about black-owned banks, but it's really about years of U.S. economic policy that has stacked the decks against black Americans. I knew about red lining and predatory subprime mortgages during the financial crisis, but there's so much more. A well-written, really accessible, and important read* (*for me, a listen because it was my first audio book!).

  25. 5 out of 5

    Jack Waters

    A must-read. It talks about the domineering and persistent racial wealth gap and masterfully weaves the history of America into the pursuit. The focus is on black banks, ostensibly a site of wealth for black communities -- but are we as hoodwinked by the assumption that it's a good thing as bad-faith purveyors of them like Richard Nixon made them out to be? Baradaran's narrative has power and is essential reading so that we don't repeatedly make mistakes that seem to solve so-called problems whe A must-read. It talks about the domineering and persistent racial wealth gap and masterfully weaves the history of America into the pursuit. The focus is on black banks, ostensibly a site of wealth for black communities -- but are we as hoodwinked by the assumption that it's a good thing as bad-faith purveyors of them like Richard Nixon made them out to be? Baradaran's narrative has power and is essential reading so that we don't repeatedly make mistakes that seem to solve so-called problems when they tend to be mere bandaids. What I'm saying is we need to abolish Capitalism. The self-destructive contradictions of capitalism are a horror to live through, and I'm in a very privileged position.

  26. 5 out of 5

    Dumdi

    Very informative. I listened to it on Audiobook and I liked the narrator. It was a lot of information all at once but it was educational—there were some things I didn’t know about and I’ve read several books on Black history. I’m glad I gave this one a shot!

  27. 5 out of 5

    Laura

    4.5. Very interesting look at why the system has always - whether intentionally or not - blocked progress for large groups of people. No answers, just more heartbreak.

  28. 4 out of 5

    Fraser Kinnear

    A lot of this book is 20th century civil rights history. Very valuable context if you haven't read it anywhere else, but ends up being a mile wide and an inch deep if you haven't. The more one reads about the history of blacks in America, the more examples one finds of how thoroughly the odds have been stacked against him. Where Baradaran does go deep is the particulars of how the structure of our economy disadvantaged poor black communities. Part of this Baradaran diagnoses as being by design, w A lot of this book is 20th century civil rights history. Very valuable context if you haven't read it anywhere else, but ends up being a mile wide and an inch deep if you haven't. The more one reads about the history of blacks in America, the more examples one finds of how thoroughly the odds have been stacked against him. Where Baradaran does go deep is the particulars of how the structure of our economy disadvantaged poor black communities. Part of this Baradaran diagnoses as being by design, while other parts are clearly just inevitable economic results of market psychology. There is a long history of black-owned and operated banks, and they have had the misfortune of catering to parties on both sides of their balance sheet who limit their pofitability, relative to banks in the mainstream. On the liability side of their balance sheet, their deposit holders either only maintain small balances, or high transaction volume, or both. Part of this is the fact that black customers are poor, but also interestingly there are a lot of federal agencies who bank this way, and they have high transaction volume and stifling reserve requirements that have kept the banks from making use of the capital in more profitable ventures. On the addet side of their balance sheet, these banks found frequently had to chase yeld by lending the funds to banks operating in the mainstream economy, effectively pulling capital and it's money multiplier effect out of black communities. Sometimes, this the fault of there not being any credit-worthy debtors in black business. At other times, this is because it's very difficult to find enough black real-estate borrowers. Regarding real estate: also disturbing is the economic phenomenon of white flight, and its impact on black banking. White folk have resisted black folk's entry into predominately white neighborhoods. I had normally chalked that up to simple racism (which it is), but there's also a game-theoretical element here that makes the phenomenon far more pernicious. Even if a white home-owner did not identify as racist, because they believed their neighbors (or future buyers in their market) were, they were incented to move out of a neighborhood that was becoming desegregated, because that desegregation was believed to reduce the asset value of their home. A lot of the history of 20th century social welfare programs that black folk were alienated from, is also covered in "When Affirmative Action Was White" in more detail (maybe too much more).

  29. 4 out of 5

    Diane

    This book is particularly relevant right now on the eve of the potentially disastrous Tax Reform Bill as it dismantles not only the myths used to explain the racial wealth gap but also the fallacy of trickle down economics. Tax cuts of the past have consistently undermined black economic autonomy and this current crop of cuts will potentially undermine the entire middle class. It seems inevitable that having pillaged the black community for centuries and bled it dry, the wealthy elite who have t This book is particularly relevant right now on the eve of the potentially disastrous Tax Reform Bill as it dismantles not only the myths used to explain the racial wealth gap but also the fallacy of trickle down economics. Tax cuts of the past have consistently undermined black economic autonomy and this current crop of cuts will potentially undermine the entire middle class. It seems inevitable that having pillaged the black community for centuries and bled it dry, the wealthy elite who have taken over our democracy should look to the white middle class as fresh meat. One can only hope this will ultimately lead to a watershed moment in our history where whites will finally understand how easily outside forces such as government policies can devastate their communities, something blacks have known since Reconstruction.

  30. 4 out of 5

    Winmonroe

    A very thorough, well-researched, and engagingly written history of racial inequality, using the development of black banks as a unifying thread. The statistical facts and historical incidents are informative, but by weaving them together in the broader historical story Mehrsa Baradaran makes a compelling case that racial inequality will not go away naturally and the need for more transformational policy and action. Along the way she debunks common myths and misunderstandings and offers a new ec A very thorough, well-researched, and engagingly written history of racial inequality, using the development of black banks as a unifying thread. The statistical facts and historical incidents are informative, but by weaving them together in the broader historical story Mehrsa Baradaran makes a compelling case that racial inequality will not go away naturally and the need for more transformational policy and action. Along the way she debunks common myths and misunderstandings and offers a new economic and financial perspective on the history of race in America. Recommended for those interested in racial inequality and systemic racism in the US, but also for anyone in economics and finance so that we can better understand the importance of our field for contributing to and hopefully addressing these critical issues.

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