Banks Need to Deposit More in Our Communities
RICHMOND, Va. -- I moderated a town hall meeting here last week for the Urban Financial Services Coalition, formerly known as the National Association of Urban Bankers. Being around so many African American bankers inspired me to look at the industry and its relationship -- or lack of one -- with Black America.
It is not surprising that at such an august national gathering, all of the major financial institutions would be key sponsors: Citigroup, Bank of America, JP Morgan Chase, Wachovia Securities, Countrywide Financial, Sun Trust and Wells Fargo among them.
Research compiled by the Greenlining Institute, a Berkeley, Calif.-based multi-ethnic public policy organization, shows that banks are making insufficient investments in communities of color. The institute argues that the financial services industry should be at least as diverse as President Bush's cabinet, which has two Blacks (Secretary of State Condoleezza Rice and Alphonso Jackson, Secretary of Housing and Urban Development), two Latino members (Attorney General Alberto Gonzales and Carlos Gutierrez, Secretary of Commerce) and one Asian (Secretary of Labor Elaine Chao).
"Although the board of directors is only one segment of the banking management structure, it is a publicly available indication that most of America's banks have a long way to go to meet even President Bush's cabinet diversity," Greenlining stated in its annual report card issued in February. "Presently, one-third, or five of the president's 15 cabinet members, is a minority."
It continues, "Our report demonstrates that with one exception, no bank has diversity sufficient to reflect the U.S. population or President Bush's cabinet of one-third diversity achievement."
The Greenlining Institute gave Bush's cabinet an A-minus. Only Golden West Financial, a recent acquisition by Wachovia, and Citigroup earned top-grades of A-minus. Key Corp. earned a B and Wells Fargo was awarded a B-minus instead of a C-plus because, as of this year, it is the only major financial institution that has board members who are African American, Latino and Asian American. PNC Financial and Countrywide received grades of C-plus. Receiving Cs were: Sun Trust and Washington Mutual. BB&T, Bank of America and Capital One Financial earned a grade of C-minus.
Earning D-plus were Wachovia, Regions Financial and National City (Wachovia appointed a second minority, but he didn't join the board until this year). Ds were awarded to six institutions: Bank of New York, JP Morgan Chase, Metlife, US Bancorp, Fifth Third Bank and State Street.
Let's see how the financial institutions supported Urban Financial Services Corp., the nation's premier group of Black bankers.
The title sponsor of this year's convention was Wachovia Securities. Contributing more money than any other sponsor entitled Wachovia to have its name plastered on convention bags, get the inside cover of the program book and have its CEO publicly acknowledged. Despite such firm support, as can be seen above, Wachovia earned only a D-plus on the report card. Prior to being acquired by Wachovia, Golden West Financial was the only company that tied President Bush's diversity numbers of 33 percent.
"Wachovia declined to keep any of Golden West's minority board members," the Greenlining Institute report noted. "Had Wachovia retained all of the Golden West minority board members, it would have had the second best record among banks, second only to Citigroup."
The second most supportive sponsor, in the Diamond category, was JP Morgan Chase, which earned a C on the report card. Top-ranked Citigroup, with an A-minus, was in the third funding category, Sapphire, along with Bank of America (C-), Countrywide Financial (C+), Sun Trust Bank ( C) and Wells Fargo (B-minus).
Essentially, a bank with a D-plus diversity grade was the most generous convention sponsor. The top-rated diversity bank – Citigroup – was a third-tier sponsor.
It's not enough to lump all people of color into one category; it is crucial that the plight of each group be examined separately.
Research compiled by the Greenlining Institute show that only Citigroup, Sun Trust and PNC has as many as three African Americans on their board of directors. Wachovia has two. Everyone else except Regions Financial has only one Black on their board. Regions has no African Americans on its 21-member board, the largest of the major financial institutions.
It makes good business sense to have more representative boards.
"Many experts believe diversity at the upper levels of management, such as the board of directors, helps promote 'safety and soundness' at banking institutions," the institute states. "This occurs in part by attracting leaders who understand both the dangers and the profitable potential of underserved markets. In part, the present lack of diversity may help explain why there are still 56 million unbanked Americans despite often laudable, albeit futile, efforts by banks to reach out to the unbanked."
In other words, banks pay a price for not being diverse.
George E. Curry, former editor-in-chief of Emerge magazine and the NNPA News Service, is a keynote speaker, moderator, and media coach.