Why American banks dedicated to black customers hit the stock market

Audio 4:15

By: Dominique Baillard Follow

In the United States, several banks dedicated to black customers had their quarter of an hour of celebrity last week, registering exponential increases on the stock market.

Publicity

Plus 95% for the course of Broadway Financial, a bank based in Los Angeles. + 850% for that of Carver Bank, one of the most venerable institutions of black finance, founded in Harlem, in New York, in the 1940s. Friday, the day of commemoration of slavery, the Nasdaq had to suspend these values ​​because their prices were climbing far too fast, well beyond the limits allowed on Wall Street. The surge continued in electronic exchanges. A very political craze. Speculators responded to the watchword "  buyblack  ", "  buy black  ", launched on social networks on the occasion of this day of commemoration. With the dynamics created by the Black Lives Matter movement , this call has been widely followed.

Is this market euphoria justified, and lasting?

The prices will undoubtedly quickly plunge judge analysts. Carver Bank's action, for example, which fell from 2 to 12 dollars in a few days last week, has already fallen back into the 8 dollar zone. This bullish frenzy is a passing phenomenon, it does not always reflect the fundamentals of these societies. The Carver Bank thus displays poor financial performances, its result is negative and it has suffered a sharp erosion in the volume of deposits since 2016. The most critical believe that this spectacular increase is due to market manipulation and that it will not benefit these companies or their clients but rather traders, most of them white, whose job is to make money by making the most of stock market movements.

The operation especially brought unexpected publicity to these community banks

They are very few in number, around twenty across the United States. They were created by blacks for blacks. And they still play a key role in access to credit for African-Americans, whose requests are still too often rejected by the big American banks. According to a 2018 survey of around 60 major cities, the credit reports of African Americans are more often refused than those of whites. Those who want to start a business get twice as many negative responses as white people according to data released by the Federal Reserve. A fact which is partly explained by the level of poverty of blacks: they therefore find it more difficult to meet the very strict solvency conditions required to obtain a loan. And a fact which is also explained by a rampant racism. Large American banking institutions have already paid millions of dollars to black customers who have filed racial discrimination complaints.

Some of these community banks are experiencing renewed interest at the moment

Because of the Covid-19, OneUnited, one of the largest, has seen tens of thousands of new customers flocking in a month, African Americans with astronomical health bills to pay or just need 'Fresh money to keep up with the shock and now it's the movement that sparked the murder of George Floyd that drives African-Americans to prefer community banks.

►In short

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• Finance
• United States
• Racism