A Letter to My White Friends and Colleagues

CHAPTER FOURDeposit Money into Black-Owned Banks

I am asking you to deposit at least 8.46% of your bank savings in Black-owned banks and leave it there for at least three years. Up to $250,000 will be fully guaranteed by the FDIC. Therefore, just as when you use a white bank, NO RISK!

“The banking system can create money through the process of making loans.”¹

THE ABSENCE OF banks in the Black community is akin to the canary in the coal mine. The death of the canary signifies that there is human danger due to a lack of oxygen in the area. Black communities without banks are also starved of metaphorical oxygen in the mines of financial resources needed for people to live healthy lives. The primary role of a bank is to lend money, which helps individuals improve their quality of life. The money is used to buy homes, pay for education, and finance businesses. Most communities bereft of this wonderful financial machine are private enterprise deserts, and such communities are not healthy because they lack a low-cost financial services ecosystem.

In contrast, one of the indicators of a healthy, thriving community is the presence of banks with the ability to lend a far greater amount of money to residents than was deposited. This phenomenon is called the “money multiplier” and works in the following way:

1. Martin deposits $100 in Chase Bank.
2. Chase engages in “Fractional Reserve Lending,” whereby they hold $10 in reserves and lend $90 to Rosa.
3. Rosa uses $90 to buy a house from Malcolm. ...