The Freedman’s Savings and Trust Company, founded in 1865 by President Abraham Lincoln, was chartered as a private corporation to help newly freed African Americans as they worked to become financially independent. However, it shuttered two years later due to the transfer of bad loans at the hands of its white trustees.
Nearly two centuries later, the bank’s legacy is taking on a new meaning through the Freedman’s Bank Forum.
As part of the Investing in America Agenda, the Freedman’s Bank Forum is uplifting Black, Brown and under-resourced federal suppliers and small businesses, along with the communities where Black and Brown people live, work and raise their families.
Vice President Kamala Harris recently announced this effort, which the Biden-Harris administration is coordinating in conjunction with the U.S. Treasury Department.
“To bridge the financial disparities that hold so many of our communities back, we must continue to work together to combine the capacity of the private sector with the reach and the scale that only the government can provide.” Harris said on Tuesday, Oct. 25 at the Department of the Treasury during the Freedman’s Bank Forum 2023.
“When we do, we create opportunity and prosperity for millions of Americans,” Harris added.
Since the fall of the Freedman’s Savings and Trust Company in 1867, Black people and Black businesses have faced systemic discrimination in access to capital and banking. While the 20th century and 21st century have ushered in significant improvements in access to capital, a 2023 Brookings report found that Black people, 14.2% of the U.S. population, represented only 2.4% employer businesses.
This was primarily due to lack of access to capital, credit and investments.
While expanding Black and Brown business ownership and ensuring federal government supplier diversification are critical steps in making America’s supply chain more resilient and competitive in a globalized economy, the moves taken by the Biden-Harris administration are the first of their kind and historic.
Christopher Weaver, executive director of the Economic Opportunity Coalition (EOC), heralded the Freedman’s Bank Forum as such. EOC is a group of nearly 30 private sector companies and foundations that are investing in underserved communities across the United States. This historic public-private partnership catalyzes public and private investments to address economic disparities and accelerate economic opportunities.
In June, the coalition reached its milestone accomplishment of more than $1 billion of deposits to community development financial institutions and minority depository institutions. Shortly before the forum, EOC announced its commitment to secure $3 billion in deposits.
“Historically, community development finance has operated under the assumption that a rising tide lifts all boats. Today’s announcement represents a vehement commitment by the nation’s financial behemoths to reach and help those people with holes in their boats,” Weaver said during the forum.
“Instead of over-relying on government programs or philanthropy, the EOC seeks to align the public sector, private sector, and social sector to prove stakeholders can have both mission and margin when investing in underserved communities,” he added.
Beyond EOC, the Biden-Harris administration alone has awarded a record-breaking $70 billion in federal contracts to small and disadvantaged businesses, according to the Small Business Administration. It also invested $12 billion in community lenders, including Black and Brown banks and financial institutions.
These moves, by Treasury Department estimates, could result in more than an $80 billion increase in lending to Black communities throughout the U.S. and $50 billion in Latino and Latina communities.
“The new private sector commitments announced today will maximize the Biden-Harris administration’s investments in expanding access to capital in low-income, rural, and other underserved communities, which increase long-term productivity and economic growth,” Treasury Secretary Janet Yellen said at the Oct. 25 forum.
With the Treasury Department and Small Business Administration leading the way, other cabinet-level agencies are stepping up to the plate to close the gap for Black and Brown small business owners and federal suppliers.
In early October, the Environmental Protection Agency closed an application for the $27 billion Greenhouse Gas Reduction Fund, which mobilizes capital for clean energy projects in low-income neighborhoods and Black and Brown communities. In the coming weeks, the agency will announce the Climate Justice Community Change Grant Competition, which dedicates $2 billion to reduce pollution and build climate resilience.
A recent Department of Energy Inclusive Energy Innovation Prize saw 40% of its overall benefits flow toward communities the federal government defines as disadvantaged, including neighborhoods with Black and Brown residents.
Harnessing the federal government’s power as a tool to make wise investments in Black and Brown business owners and their communities is a project that U.S. Senator Mark Warner, an entrepreneur, believes is necessary.
“I’m thrilled to see, along with the EOC’s continued efforts on deposits, a focus on ensuring small and disadvantaged businesses are reaping the benefits of the seismic legislation we have passed under the Biden administration,” Warner said.
While many Americans still struggle to wrap their head around the exact meaning of Bidenomics, forums like the one hosted at the Treasury Department could serve as a reminder of just how impactful the federal government can be for its residents when it identifies a problem and utilizes a whole-of-government approach to addressing it.