MinorityBank Blog

Bidenomics: A Pragmatic Approach to Economic Growth, Equity, and Competition

Since assuming office, President Joe Biden has implemented an economic agenda known as Bidenomics, aiming to replace the dominant Chicago-school approach to the American economy with a more effective and inclusive set of economic principles. The link below is to an article that examines key elements of Bidenomics, comparing it to past policies and exploring its potential to drive job growth, address income inequality, and promote competition.

For more, see: https://www.impactinvesting.online/2023/07/bidenomics-pragmatic-approach-to.html

Challenges Persist as Cryptocurrencies Inch Closer to Traditional Finance

Recent developments in the global financial landscape, including the resurgence of digital currencies and the first inclusive global financial summit in Paris, have undeniably captured the attention of the finance world. These developments, which seemingly promise a new era of integration, transformation, and collaboration, hold significant implications for the future of finance and international economic dynamics. However, amidst the excitement, it is crucial to recognize the formidable obstacles that still stand in the way of realizing these lofty ambitions.

The resurgence of Bitcoin, with its staggering surge year-to-date from a low of $16,486 to a high at $31,392, is often hailed as a testament to its enduring relevance. It would, however, be remiss to overlook the inherent risks and uncertainties that accompany such a volatile digital asset. The unprecedented support from influential financial institutions like Blackrock and Fidelity adds an air of legitimacy to Bitcoin as an investment asset. Still, it is essential to approach this endorsement with caution, considering the ever-present specter of market manipulation and the regulatory challenges that continue to cast doubt on the long-term sustainability of cryptocurrencies.

Similarly, the exploration of a digital pound by the United Kingdom’s central bank, while reflective of the need to adapt to a digital future, raises fundamental questions about the stability, security, and privacy of central bank digital currencies (CBDCs). While the digital pound holds promise for greater efficiency in domestic transactions and international payments, it also poses complex regulatory and technological challenges. The Bank of England’s ambition to stay at the forefront of financial technology must grapple with concerns regarding data privacy, cybersecurity, and the potential concentration of economic power that digital currencies may exacerbate.

Moreover, the discussions surrounding a BRICS digital currency, potentially expanded to include African countries, may signal a desire to reduce reliance on dominant global currencies. It would be foolish to fail to recognize that the road to challenging the long-standing dominance of the US dollar in international trade and finance is fraught with geopolitical complexities, technical hurdles, and economic disparities. The creation of a digital currency within this influential economic bloc necessitates overcoming deeply entrenched political rivalries, differing economic priorities, and the intricate task of establishing interoperability and trust among participating nations.

Furthermore, while the recently convened Summit for a New Global Financing Pact, held in Paris on 22-23 June 2023, with its noble aim of addressing pressing global challenges and fostering international collaboration, deserves commendation, the reality remains that racism, greed, the legacy of colonialism, and the inertia derived from the status quo continue to impede meaningful progress. The world’s history is replete with instances where lofty aspirations have succumbed to self-interest and the perpetuation of existing power structures. The question of whether this summit will be a true inflection point or merely a symbolic gesture hinges on the ability to confront these deep-rooted obstacles and dismantle systemic barriers on the way to genuine financial inclusion, sustainable development, and equitable economic growth.

Even as the introduction of FedNow by the US Federal Reserve promises faster and more efficient payment options, the stark reality is that the benefits of such innovations often accrue disproportionately to those already in positions of privilege. The digital divide, income inequality, and the exclusion of marginalized communities remain persistent challenges. Reshaping the payment landscape and the enhancement of financial inclusivity must be accompanied by deliberate efforts to address these inequalities and ensure that the benefits of digital transformation are shared equitably across society.

In conclusion, while recent developments in the global financial landscape portend the integration of cryptocurrencies into traditional finance, the push toward digital transformation, and the imperative of international collaboration must be approached with caution. We must temper optimism with a sober understanding of the formidable challenges that lie ahead. Racism, greed, the legacy of colonialism, and the inertia derived from the status quo continue to cast a long shadow.

BLACK BUSINESSES TO SEE $1B IN LOANS FROM THE SMALL BUSINESS ADMINISTRATION

Based on a calculated analysis by Creative Investment Research, the SBA’s 7(a) Loan Program, the agency’s main and most common lending program, is projected to lend Black firms and businesses $1 billion this year, a whopping jump from $599 million in 2017.

The Washington, D.C.-based firm figured 7.76% of SBA loans were issued to Black business owners from October 2022 through mid-June 2023, versus 3.86% in 2017. It reports the percentage of loan dollars to Black entrepreneurs in that time frame rose to 4.41% from 2.36%.

See: https://www.blackenterprise.com/analysis-sba-projected-to-supply-black-businesses-1-billion-in-loans-this-year/

The NFL And Minority-owned Banks: A Good Match

The National Football League (NFL) recently announced its plans to secure a loan worth $78 million from 16 Minority Depository Institutions (MDIs), Community Development Financial Institutions (CDFIs), and banks focused on minorities and women. This move is a small step in line with the League’s ongoing efforts to enhance business opportunities with diverse enterprises. The NFL is borrowing from the following banks:

  • Adelphi Bank – Columbus, OH (MDI, Black or African American owned)
  • Agility Bank, N.A. – Houston, TX (MDI, Women-owned and led)
  • Asian Bank – Philadelphia, PA (MDI and CDFI, Asian or Pacific Islander American owned)
  • Central Bank of Kansas City – Kansas City, MO (CDFI)
  • Citizens Savings Bank and Trust Company – Nashville, TN (MDI and CDFI, Black or African American owned)
  • Citizens Trust Bank – Atlanta, GA (MDI and CDFI, Black or African American owned)
  • City First Bank, National Association – Washington D.C. (MDI and CDFI, Board is majority African American)
  • First Independence Bank – Detroit, MI (MDI and CDFI, Black or African American owned)
  • FWBank, an Illinois Banking Institution – Chicago, IL (Women-owned, women-led and women-focused)
  • Industrial Bank – Washington D.C. (MDI and CDFI, Black or African American owned)
  • Mechanics and Farmers Bank – Durham, NC (MDI and CDFI, Black or African American owned)
  • Optus Bank – Columbia, SC (MDI and CDFI, Black or African American owned)
  • Ponce Bank – The Bronx, NY (MDI and CDFI, Board majority is Hispanic American)
  • Southern Bancorp Bank – Arkadelphia, AR (CDFI)
  • Texas National Bank – Mercedes, TX (MDI and CDFI, Hispanic American owned)
  • Unity National Bank of Houston – Houston, TX (MDI, Black or African American owned)

Three years after George Floyd’s murder, is America in a better place?

“After the initial excitement around the corporate pledges, they basically have petered out,” CIR chief executive William Michael Cunningham told Financial Times. “They haven’t really done anything that would lead one to believe that they are committed, with some exceptions.”

See: https://news.yahoo.com/george-floyd-three-years-anniversary-murder-america-minneapolis-police-090046153.html

Financing For Electric Vehicle Infrastructure

The  Asia-Pacific Economic Cooperation (APEC) Transportation Ministerial Meeting: Minority Bank EV Financing Roundtable took place in Detroit on May 15, 2023, and brought together industry leaders, government officials, and experts to discuss financing electric vehicle infrastructure development.

The event was organized by the Asia-Pacific Economic Cooperation (APEC) to be a platform to address key challenges and opportunities in the transportation sector. The meeting laid the foundation for continued cooperation among APEC economies and played a crucial role in advancing this year’s APEC theme of “Creating a Resilient and Sustainable Future for All.”

See: https://www.accesswire.com/757533/Dunamis-Charge-Founder-and-CEO-Natalie-King-Speaks-at-APEC-Transportation-Ministerial-Meeting-Minority-Bank-EV-Financing-Roundtable

Black Americans May Suffer a $132 Billion Dollar Loss

Offering a potentially stormy outlook, Black Americans could face an economic loss totaling a whopping $132 billion if the U.S. government goes into default for a protracted period.


According to an analysis from Creative Investment Research, the largest financial blow for Black Americans could come from the nation’s housing market totaling $60.9 billion. The findings are from the firm’s Projected Impact of Federal Government Default on Black Americans: Dire Report.

https://www.blackenterprise.com/report-u-s-default-could-bring-132-billion-economic-loss-for-black-americans/

Closing the Gap: Black Unemployment Reaches Lowest Rate Ever

The latest employment data released by the Labor Department on Friday, May 5, shows the U.S. job market growing at a strong pace. Employers added 253,000 jobs in April on a seasonally adjusted basis. The overall unemployment rate also decreased to 3.4 percent, down from 3.5 percent in March, matching the lowest since 1969. 

Black unemployment hit a historic low. The unemployment rate for Black workers fell to 4.7 percent in April, the lowest on record since the Labor Department began collecting Black unemployment data in 1972. This is a significant achievement for the Black community, which has historically faced much higher levels of unemployment relative to other ethnic groups. 

The unemployment data creates challenges for the Federal Reserve, complicating monetary policy and the potential pause in interest rate increases. The strong labor market could lead to an increase in wages and inflation, making it more difficult to reach current monetary policy goals.

Another challenge is the increasing concentration of market share among the largest banks resulting from the closure and sale of several sizeable institutions. This has adverse effects on society by reducing competition, stifling innovation, and potentially leading to redlining, higher fees, and less favorable lending terms. Additionally, a highly concentrated banking system hinders the effective transmission of monetary policy and slows down the implementation of changes to interest rates, another impediment to the Fed’s efforts to control inflation.

Despite these challenges, the latest employment data is a positive sign for the U.S. economy. The strong labor market and historic low unemployment rates for Black and Hispanic workers are a testament to the resilience of the American workforce. As the economy continues to improve, policymakers will need to find ways to balance the growth with inflation control and maintain a healthy and competitive banking system.

Impact of Regional Bank Troubles on Black People

The impact of regional bank troubles on Black people will likely be multifaceted, since this is a group with a higher proportion of underbanked and unbanked individuals. Some potential consequences include:

  1. Reduced access to banking services: If regional banks close or consolidate, it may lead to a reduction in the number of bank branches in communities with a high proportion of Black residents. This could make it more difficult for people in these communities to access banking services, leading to a higher reliance on alternative financial services, such as check-cashing outlets and payday lenders, which often have higher fees.
  2. Credit availability: As regional banks face financial troubles, they may become more risk-averse, tightening their lending standards. This could make it harder for Black individuals and businesses to obtain credit, potentially exacerbating the existing racial wealth gap.
  3. Impact on local businesses: Many small and local businesses, including those owned by Black entrepreneurs, may rely on regional banks for financing and other services. The financial troubles faced by these banks could lead to a reduction in loans and financial support for these businesses, further impacting the local economy and employment opportunities.
  4. Loss of jobs: Regional banks employ a significant number of people, and the financial troubles faced by these institutions may lead to job losses. This could disproportionately affect Black workers, who are already more likely to face higher unemployment rates.
  5. Economic ripple effects: The banking sector is interconnected, and the troubles faced by regional banks may have broader economic implications, including reduced consumer confidence and spending, which can affect Black communities. 
  6. Impact on 401(k)s and investment portfolios: Many people, including Black individuals, have retirement savings and investment portfolios that are exposed to the stock market, including stocks of regional banks. Shares of PacWest Bancorp (PACW.O) declined Thursday. Zion Bancorp (ZION.O) fell by 12% and Comerica (CMA.N) was down 11%. KeyCorp (KEY.N) and Valley National Bancorp (VLY.O) fell by 7% and 4%, respectively. The decline in stock prices of these banks can negatively affect the value of these investments, leading to potential losses or reduced returns. This could be particularly concerning for those nearing retirement or already retired, as they may have less time to recover from market downturns. Moreover, it can also hamper the ability of younger investors to build wealth over time. For Black people who may already be facing a racial wealth gap and lower retirement savings, the decline in stock prices of regional banks could exacerbate these disparities, making it even more challenging to achieve financial stability and security. Efforts to minimize the impact of such declines and promote greater financial education and access to affordable investment opportunities can help mitigate these potential negative effects on the financial well-being of Black individuals and communities.

It is crucial for policymakers and financial institutions to address the challenges faced by regional banks to minimize the potential negative consequences on Black individuals and communities.