“I’m very self-conscious about it,” said B. Doyle Mitchell Jr., African-American president of the $390 million-asset Industrial Bank. “When you have 1,500 people in the room and three blacks, you know you’re one of only three.”
Describing his presence at a recent banking conference, Mitchell spoke to a larger issue: The continued plight of minority-owned and -operated banks, and — arguably, related — the squeeze on community banks that began nearly a decade ago.
This is paradoxical on many levels.
For one, the United States, as most recognize, is rapidly becoming a “minority nation.” It’s estimated that whites will be less than 50 percent of the population in a little more than a decade — sometime early in the 2030s.
By contract, non-minority-owned banks hold 99 percent of all US banking assets. And the Federal Deposit Insurance Corporation recognizes just 157 minority-owned community banks in the U.S. — out of 5,870 total. That’s about 3 percent.
The number of black-owned banks has declined to 20 (not a typo) in 2017, from 48 in 2001. (See table nearby. Source: FDIC.)
Regulation vs. Growth strategies
Another paradox is this: the lack of diversity in banking and financial services continues despite long-standing effort to regulate greater minority participation — in both ownership and management — into existence.
As Ellen Ryan notes in an article for Independent Banker, “The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 says regulated financial institutions are ‘strongly encouraged’ to disclose their diversity policies and practices online and submit self-assessments to their primary regulator. Each agency has developed standards for assessing these policies and practices.”
Would a strategy of attending to the growth and health of the community bank sector have softened this trend — or reverse it in the future?
It’s difficult to say; the United States hasn’t tried it.