If you have read my last couple of blogs, you know that I am firmly rooted in the belief that the Black community cannot progress unless we learn to invest in ourselves. Today, I felt that position received some reinforcement when the investors from Carver Bancorp announced that the bank will no longer be community owned as a majority of the shares are now owned by a Wall Street consortium including Goldman Sachs Group Inc, Morgan Stanley and CitiGroup and the Federal Government. In fact, the Wall Street consortium now owns 73% of the bank, the Federal Government 25% and the previous shareholders own the remaining shares. (yeah that's only 2% but I do like how all of the media outlets won't list the number... Like they think Black people can't add or subtract and figure out the number)
Now if you're scratching your head and wondering what Carver Bancorp is and how this takeover affects the Black community. Here's the scoop. Up until today, Carver Bancorp was the LARGEST Black owned financial institution in the country and one of only eleven (uh that's no typo I meant ELEVEN) Black managed, publicly traded companies. The company was founded in 1949 in Harlem, NY and has been active in helping Harlem residents become homeowners and dispensing small business loans.
The entire economy has been hard hit in recent years with foreclosures at an all time high and unemployment rates steadily rising. As we have often discussed on the Savvy Sista radio show, when everyone else is doing bad, Black people seem to somehow still be doing worse and that's exactly what happened to Carver. The bank reported that they had 120 million dollars in outstanding overdue loans which was almost 6 times the bank's reserve amount of 24 million. Earlier this year, the Federal Government warned Carver that they had to raise more capital or lose their FDIC status which would ultimately force closure of the bank.
In the end, the deal with the Wall Street consortium and the Federal Government netted the bank 55 million dollars in much needed capital. And that simple number brings me to the point of my post today. I doubt seriously, that I will ever see 55 million dollars in my lifetime BUT 55 million dollars doesn't seem like a lot of money to raise to me. Now, I am not trying to Monday morning quarterback, because I have never raised 55 million dollars before and I believe that Carver Bancorp CEO Deborah Wright tried frantically to raise the money in the community but it really floors me that in 2011, this money could not be raised to keep the bank for us by us.
So my question becomes two-fold: Why is Black wealth spent but not invested and how do we let the Black community know that a particular Black business is here and needs the support. On the first question, I have to say that I am saddened that this bank could not have been saved by wealthy Black celebrities/businessmen/athletes. I mean I read the Forbes list all of the time. Beyonce and Jay-Z could have invested in this bank with a just a portion of their this year's earnings. What about all of the wealthy Black athletes?? What about mogul and philanthropist Russell Simmons??? Now, I have no idea if any one reached out to these or any Black one percenters but I am saying that it seems to me that at some point we have to decide it is wise to invest in ourselves. And before you lecture me on how some people don't feel it's their job to "care" for the Black community, let me say that a) most of these people would not be wealthy if it was not for the support that the Black community gave them and b) we're not talking about a handout here, banks are a business and they make money which is why the CEO of Morgan Stanley will make almost 14 million this year in salary, perks and benefits. So investing in this bank would be a much wiser investment than dropping 500,000 dollars on a Maybach... #Imjust saying
Secondly, most of my friends who do not live in the New York area had never even heard of Carver Bancorp until I started harping on this deal. And the bank was not well publicized to people outside of NY, I just happen to be a stock market junkie and so I can name the mere ELEVEN publicly traded companies that we own. I can't help but wonder if part of the reason for this shift in ownership is the fact that many Black Americans who might have supported the bank didn't even know about it. And in defense of those who didn't know about the bank, they do have a website but other than that the only real visible presence of this bank was in the NY area. Still, I would like to think that in this age of technology, you could simply have your pay check direct deposited into the account and use your debit/check card for ATM deposits, etc. I mean there are some banks that are located solely online so I don't think it's that far-fetched an idea. Did Carver Bancorp essentially contribute to its own demise by not advertising/marketing itself more? Was that even possible when larger banks and corporations can afford to drive advertising costs up so much that smaller companies cannot afford to compete?
I know some of you will say the bank was simply a victim of the economy but I just think that answer is just too simplistic. I think that it should have been possible to raise the 55 million dollars needed without a corporate buyout. So my question to you Savvy Sista readers is how should Black businesses get the word out to you that they exist and need your support? If you know about a Black business, how likely are you to spend money with them?
Honestly, your advice and comments might keep another Black business from going under. I really feel as though we had a death in the Black community today and I think the repercussions will be felt for many years in the future.