• Terry Banks

It’s no secret that Black people have a general distrust of US institutions. Banking is not an exception. One of the reasons is the rise and collapse of the Freedman’s Bank in 1874. Black people who have never heard of the Freedman’s Bank have inherited a legacy of distrust instead of generational wealth.

Slavery was abolished in the United States With the passage of the 13th Amendment and the end of the Civil War in 1865. 4 million men, women, and children were freed with most having no home, no money, and no work.

Because of the brutal practice of selling family members away, their relatives were scattered all over the country and nearly impossible to find. The Bureau of Refugees, Freedmen, and Abandoned Lands, commonly known as “the Freedmen’s Bureau,” was created by U.S. government. The Freedmen’s Bureau provided food, housing, and medical aid to tens of thousands of freed slaves.

During the Civil War, there were multiple attempts at establishing private banks in several states to help Black soldiers have a safe place to save their money. On January 27, 1865, John W. Alvord, a Congregational minister and abolitionist, proposed a plan to more than twenty philanthropists and leading members of the business community. This group decided that a bank charter should be secured from the federal government. A bill to incorporate the Freedman's Savings and Trust Company was brought before Congress on February 13, 1865. On March 3, 1865, Abraham Lincoln signed into law the Freedman’s Bank Act which authorized the organization of a national bank for recently emancipated Black Americans.

The objective and purpose of the Freedman’s Bank Act was to accept and safeguard deposits as a simple savings institution for former slaves and their descendants. Part of keeping it simple was that no loans would be made. The deposits were to be invested in stocks, bonds, Treasury notes, or other securities of the United States. A board of fifty trustees was authorized to manage the bank, and the company's books "were to open for inspection and examination to such persons as Congress would appoint."

In 1870 an amendment was made to its charter that changed its loan and investment policy. Loans and mortgages were now being authorized and they were usually given only to whites. Trustees made risky loans to friends, some without collateral. Some trustees ran other banks and offloaded bad loans to the Freedman’s Bank.

Using deposits for speculation in the railroads and property losses from the Great Chicago Fire in 1871 and the Great Boston Fire in 1872 in addition to mismanagement, abuse and fraud made the bank vulnerable. The Panic of 1873 then put further strain on bank reserves. For context, The Panic of 1873 was known as the Great Depression in the US before it was renamed after the devastation of the 1929 Great Depression.

Rumors and reports of corrupt practices by the white managers began to circulate. Sensing that the Freedman’s bank was in trouble depositors began to pull their money out of the bank. In an attempt to prevent further withdrawals, the management team was replaced with leaders from the black community. In March of 1874, Frederick Douglas was appointed president. To prove his faith in the bank, Douglas invested 10k of his own money. After a few months of leading the bank, Douglas soon found that he was "married to a corpse" and the bank was closed.

$83,317,376.56 is the amount in 2022 dollars ($3,299,201 in1874) of the total deposits over 10 years. These deposits were made in relatively minuscule amounts by people that went from making no money for their labors to people being poorly paid and yet they saved. Freedman's Bank opened 37 branches in 17 states and DC between 1865 and 1871. In less than a decade around 70,000 accounts had been opened and closed.

The deposits were not actually protected by the federal government as depositors were led to believe. The Black community was devastated financially and their hopes and dreams of what their money could have done for them were shuttered along with the bank. Feelings of betrayal, abandonment and deep distrust of the American banking system still remain. Half of the depositors recovered nothing while others received about ⅗ of the value of their accounts. ⅗ recovered for someone that up until a short time previously was considered ⅗ of a man is not lost on me.

According to Frederick Douglas, the Freedman’s Bank became “the Black man’s cow but the white man’s milk.” Much, much more than 83 million was lost by the Black community. The inability to participate in wealth-building activities then as well as many lost opportunities over generations. Nationwide at least 100 banks failed in the Panic of 1873. The Freedman’s bank did not have to be one of them.

In 1899, the DC headquarters of the Freedman’s Bank was demolished. About 20 years later, the US Treasury Department built its new Annex building on the same spot. For me, this is yet another example of white wealth being built on Black demise. On January 7, 2016, the Treasury Department renamed the Treasury Annex the Freedman’s Bank Building to commemorate the 150th anniversary of the Freedman’s Bank.

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if a mentor, accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.

  • Terry Banks

Last June when I began working on an article for my local trial lawyer association magazine, The Verdict, I found myself drawn to learn more about institutional racism and its adverse effect on building generational wealth.

June is National Homeownership Month and homeownership is a common way create and protect wealth. I love using my financial coaching services to prepare clients for purchasing their property. I’m not just a budget coach that gives debt elimination advice so that my clients can experience debt free living. I know firsthand how homeownership protected my family from rising rents. The 1 bdr apt that we last rented in 2009 for $950 is currently $2550. That savings provided us the flexibility to continue to contribute to our emergency fund and boost our retirement savings while building equity in our tax-advantaged home. This is just one of the many reasons that I am an advocate of financial literacy.

The murder of George Floyd became the catalyst for many people in the US and around the world to learn about the historic and current treatment of Black people and their financial stability. One of the events that became more widely known is the Tulsa Race Massacre because of the recent 100-year anniversary. The Tulsa Race Massacre resulted in unquantifiable economic losses in the area known as Black Wall Street. There were nearly 100 other massacres in the U.S. as well as countless documented and undocumented terroristic acts committed by the government, corporations and individuals that stole, diminished or prevented wealth from being created and/or passed down.

Considering National Homeowner Month and the ever-present battle for Black people in the US to take advantage of the primary strategy of homeownership to build wealth, my focus of this post is on EQUITY.

In society, equity is the fair treatment, access, opportunity, and advancement for everyone while identifying and eliminating the barriers that prevent full participation by some groups.

Home equity is the value of a homeowner’s interest in their home which means that the lower your mortgage balance, the higher your equity.

After WWII the middle class was emerging and growing in large part due to the influx of veterans using their GI benefits to buy their homes with government subsidized financing. The home equity created from these friendly mortgage terms went on to help those families and their descendants pay for college, fund down payments, set up businesses and allow for a dignified retirement.

For all homeowners, equity is created through time, money and improvement projects. For Black homeowners, protecting equity has its challenges. That equity can be erased by racist appraisers not assigning full value to a home if they perceive that it’s owned by Black people or if it’s in a Black neighborhood.

Our capitalistic culture has taught us that time equals money. Juneteenth becoming a national holiday highlights another example of stolen time which affects the opportunity to build wealth. It took about 2.5 years for the news to reach the enslaved because enslavers chose to ignore the law so that they could continue to build their own wealth.

Compound interest can’t work its magic if every generation is starting over or not able to start at all.

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if a mentor, accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.

The past year has been challenging and eye-opening in many ways including financially. As these experiences get added to our collection of lessons learned, we can use the new knowledge to be prepared for the future. Here are 3 ways to celebrate Financial Literacy Month to help get you out of the paycheck to paycheck budget begrudging mindset and into taking pleasure from adulting.

Create a Spending Plan that honors your true priorities.

It’s likely that self-reflection increased during this time of reduced access to theatres, concerts, eating out and frolicking in general. What questions did you ask during those times when you wondered how to support yourself financially if your income was affected by the pandemic? What did you realize had more meaning than you thought? What did you find that no longer brought you as much joy as you once thought. Only you can know what is true for you. Use these revelations to design a budget that supports living a life that’s in alignment with your true priorities.

“Create and use a budget.” is one of the answers to the question, “How do I start being financially responsible”? Actually knowing when and how much money is coming in and when and how much is going out provides clarity. A key piece of the cash flow puzzle is using the difference between income and expenses to your advantage. The difference can be used for many things that propel you like an Emergency Fund, paying down debt or saving for things on your bucket list.

Create a Savings Plan that unlocks your dreams.

Now that you have a grasp on the flow of your income and expenses, use your new budget to do more than live paycheck to paycheck. Beyond the Emergency Fund that can replace a loss of income, you can also save for things that bring you joy. Cabin fever may have you feeling like you need to go outside and play. Vacations, road trips, and long weekends give us something to look forward to. Imagine how a savings account dedicated to travel would make you feel. Imagine that same account growing enough to pay for your getaway before you even make a final decision about your destination. With your travel fund in place, it’s easier to resist the temptation to throw caution to the wind and just put it on the credit card and pay later. Not paying high interest is just one of the many benefits of being financially responsible.

Create a Debt Elimination Plan that will free you from the burden of obligation.

Use the clarity of your Spending Plan and the hope from your Savings Plan and use debt elimination advice to experience debt free living. Indebtedness is in the way of living the financially sound life that we envision. There are many debt elimination strategies that can be used to accelerate your debt free date. Imagine what could change for you if your credit cards had a zero balance. What you allow yourself to dream about and save for if your current credit card payment could go towards your Savings Plan instead? How would that affect your travel fund?

How would your life be different if you implemented these strategies? Would getting the mail and checking email feel different when you saw a bill? How would having the option to set your bills up on autopay free your mental energy and time? What else would change that would improve your quality of life?

Utilizing a Financial Coach is like having a personal trainer for your money. Find out if a mentor, accountability partner, guide or cheerleader is right for you by scheduling your FREE 30-minute Q&A call.

"You can be young without money, you can't be old without it."


-Tennessee Williams