March 14, 2023
National Bankers Association Assures Consumers Their Money Is Safe At Minority Banks Amid Financial Meltdown
The NBA trade group issued a statement after federal regulators on Sunday revealed New York-based Signature Bank was being closed to safeguard consumers and the nation’s banking system following the downfall of Silicon Valley Bank based in California on Friday.
SVB’s collapse is the second-largest bank failure in U.S. history, while Signature Bank’s was the third-largest. Washington Mutual’s failure in 2008 remains the biggest bank failure in America.
Several NBA banks are ranked on the most recent BE Banks list. The NBA list of MDIs includes Black, Hispanic, Asian, Pacific Islander, Native American, and women-owned and operated banks. As of the fourth quarter of 2022, Federal Deposit Insurance Corp. data showed 21 Black banks in that category.
As of the second quarter of 2022, those banks had deposits of just over $6.1 billion and slightly over $7.7 billion in assets, according to Creative Investment Research. Those deposit figures were the latest available. Deposits are crucial as they help justify a bank’s existence, and viability, along with helping attract customers.
All told, the FDIC reported there were 147 MDIs with combined assets of roughly $330 billion as of
December. But a deposit figure was not available, based on BLACK ENTERPRISE research.
“In light of recent industry events, the National Bankers Association wants to assure consumers that your money is safe with minority banks. Minority depository institutions are very different from both SVB and Signature Bank, which had high concentrations in crypto deposits and volatile venture capital,” stated Nicole Elam, the NBA’s president and CEO.
“Minority banks are not exposed to riskier asset classes and have the capital and strong liquidity to best serve consumers and small businesses. If you’re looking for a place to bring your deposits and have greater impact, bring your deposits to minority banks.”
Robert James, II, the NBA’s chairman and president/CEO of Carver Financial Corp., stated, “The Biden-Harris Administration, FDIC, and Federal Reserve worked hard this weekend to make sure that these bank failures are the exception, not the rule, and that all Americans can continue to have confidence in our banking system. I also applaud bipartisan leaders in Congress for keeping stakeholders informed about how hard-earned deposits are being kept safe.”
The NBA cited several reasons MDIs are in the “strongest position ever” to support their customers here.
Banking analyst William Michael Cunningham, owner of Creative Investment Research, says his firm thinks the NBA statement is smart. He explained the specific technical reasons that Black banks are not affected by SVB. He noted the Fed’s new Bank Term Funding Program (BTFP), a key protection (or bailout) for depositors, sounds like the fund his firm suggested for Black banks in October 2019: See more details here.
“What the NBA statement leaves out is that racism and anti-Black discrimination are prevalent in Silicon Valley and that one group not affected by SVB are the victims of this racism, perhaps the only fortuitous and unexpected benefit of Anti-Blackness there ever was,” says Cunningham.
The financial upheaval has put some Black business owners in a difficult situation.