Wells Fargo To Invest $50 Million Into Black-owned Financial Institutions

American multinational bank, Wells Fargo, has disclosed plans to invest in Black-owned banks known as Minority Depository Institutions. This is a part of its pledge last year to invest about $50 million into Black-owned MDIs, with the two latest beneficiaries being Citizens Trust Bank in Atlanta and Carver State Bank Savannah. While Wells Fargo hasn't disclosed exactly how much the banks will each receive, it has said that all beneficiaries will have full access to its experts in finance, technology, and product development.

Wells Fargo, which was the world's largest bank by market cap in 2015, is currently the fourth-largest bank by total assets in the United States, and number 30 on the Fortune 500 list of the world's largest corporations by total revenue. 

This move by the bank is motivated by the need to close the large wealth gap between the black and white communities. According to the Federal Reserve, the typical white family has eight times more wealth than the typical black household. One of the factors causing this is unequal access to wealth opportunities, and Wells Fargo wants to do something about that.

Gigi Dixon, the head of External Engagement for Wells Fargo's Diverse Segments, Representation, and Inclusion, said "MDIs are a viable and very important sector of the banking industry that can directly support the financial health of communities where typically there are gaps in banking services. By working together with MDIs, Wells Fargo can address some of the issues where these banks are located and help reach the unbanked. These investments will complement our community development efforts while positively impacting people in many communities we serve.”

In a written statement, the vice-chairman at Wells Fargo, William Daley said that the company "want to be a partner to these important institutions and, in turn, have a positive effect on local communities."

Last week, a marketing campaign was launched by the Federal Deposit Insurance Corporation. It was targeted at the estimated 7.1 million households that are currently running without a bank account. This campaign is intensified in cities like Houston and Atlanta, where a large number of Black households have no bank accounts, compared to white families. From data, only about 86.2 percent of Black households have a bank account, compared to 97.5 percent of white households.

One way to tackle the problem is to invest in Black-owned MDIs, which are currently struggling as they have borne the brunt of the economic downturns and recessions. In the MDI study, carried out by the Federal Deposit Insurance Corporation, between 2001 and 2018, over half of Black-owned MDIs have shut down. These banks are critical to the financial success of their communities.

The banks which are set to be beneficiaries of this investment are:

• Broadway Federal Bank in Los Angeles, California
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• Carver Federal Savings Bank, in New York
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• Citizens Savings Bank & Trust, in Nashville
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• Commonwealth National Bank, in Mobile, Alabama
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• M&F Bank, in Durham, North Carolina
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• Optus Bank, in Columbia, South Carolina
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• Carver State Bank, in Savannah, Georgia
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• Citizens Trust Bank, in Atlanta, Georgia
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• First Independence Bank, in Detroit, Michigan
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• Liberty Bank and Trust, in New Orleans, Louisiana
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• Unity National Bank, in Houston, Texas