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Summary

When the Emancipation Proclamation was signed in 1863, the black community owned less than one percent of the United States' total wealth. More than 150 years later, that number has barely budged. The Color of Money pursues the persistence of this racial wealth gap by focusing on the generators of wealth in the black community: black banks.

The catch-22 of black banking is that the very institutions needed to help communities escape the deep poverty caused by discrimination and segregation inevitably became victims of that same poverty. Not only could black banks not "control the black dollar" due to the dynamics of bank depositing and lending but they drained black capital into white banks, leaving the black economy with the scraps.

Mehrsa Baradaran challenges the long-standing notion that black banking and community self-help is the solution to the racial wealth gap. These initiatives have functioned as a potent political decoy to avoid more fundamental reforms and racial redress. Examining the fruits of past policies and the operation of banking in a segregated economy, she makes clear that only bolder, more realistic views of banking's relation to black communities will end the cycle of poverty and promote black wealth.

©2017 The President and Fellows of Harvard College (P)2017 Tantor

Critic reviews

"Baradaran's brilliant and devastating analysis leads to an irrefutable conclusion: the racial wealth gap is the product of state law and public policy, and will only be reversed when the same governmental tools that created segregation and discrimination are deployed to end it." (Beryl Satter, author of Family Properties)

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  • Darwin8u
  • 26-09-17

Both a Bridge and a Battle Cry

"to be a poor man is hard, but to be a poor race in a land of dollars is the very bottom of hardships."
- W.E.B. DuBois

Every few years there is a book that is so powerful it turns me into a book nerd evangelical. I go out and buy several copies and press them into friends hands with the fervor of a recent convert and tell them they "NEED" to read it. I think the last nonfiction book to do this for me was 'Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right' or maybe 'The Big Short: Inside the Doomsday Machine'. Usually, the book has both a financial and a policy tint. It also usually also explores unfairness. That makes sense. In my previous life I was a policy analyst and I now work in the finance industry as a financial planner. I'm usually a pretty mellow guy. I meditate, read, drink tea, and chill. But reading about inequality and unfairness tends, for me, to be a big catalyst for action.

If the last few years has taught us anything is America is still struggling with its "original sin" of slavery and the ugly descendants of slavery: discrimination, segregation, inequality, despair. We have seen, just this week (actually for the last few years), protests about the way Black Americans are treated by police officers. That subject deserves its own space, so I wont dwell too much on that here, other than to say the interaction of Black Americans and police officers ISN'T simple. It isn't a subject that cannot easily be explained just by saying police are racists, or unarmed Black Americans should behave differently (different from whom?). There are structural, geographic, economic, historical, and political forces that all contribute to awful outcomes.

Just like blue on black violence isn't easily explained in a tweet or a FB post, the interaction between Black Americans and banks has a long, ugly, and painful history. It is a history that is important to understand if one REALLY wants to explore topics like income inequality, segregation, credit, crony capitalism, corruption, exploitation, state power, wealth, etc... Mehrsa's book explores the policies, laws, programs, politics, economics, and history of black banks AND the history of Black Americans with banks. She points a fairly bleak picture of the fault/chasm that exists between the two financial markets that exist in America. One is the banking structure that exists for a majority of Americans and doesn't need to be explored. But for years that economic structure, that allows people to save (AND BORROW) didn't exist for a large segment of Americans. And when it eventually did, it was skewed heavily. Separate was never equal in banking. Blacks paid a heavy price to save, to borrow (if they could). Even laws that were designed to help pull Americans out of poverty, accumulate wealth and avoid taxes through home ownership, benefited one segment of America while ignoring or fleecing the other.

It is a painful read. It is also necessary. Unlike Mehrsa Baradaran's previous book, 'How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy', this one spends little/less time on prescriptions. She is laser focused on what is wrong, what went wrong, and why. It is a dense (without ANY of the negative connotations typically associated with that word) book. One that required me to open (on my HC edition) THREE different post-it flag packages. I was marking things that were new, quotes that amazed, items I didn't want to forget and I often found myself marking 3 or 4 times a page. Thank goodness for Audible's +clip function.

A few caveats before I end. This isn't a perfect book. It isn't as exciting as a Michael Lewis book (this probably won't get made into a movie) and the prose isn't as pretty as Robert Caro's LBJ series. But it is important. It is a labor of both love and skill. Reading some chapters in it, I could tell Mehrsa spent months in presidential libraries. Well researched books give me a thrill. Especially when you recognize that a certain nugget of data or quote may never have seen the light of day if it wasn't for the doggedness of a skilled lawyer/historian. 'The Color of Money' deserves to be in the library of anyone who deals with or seriously thinks about income inequality, race, banking, inner cities, etc.

As a white, upper-middle, male who has benefited from educated parents, stability, wealth, and every advantage American history and politicians have blessed me with, it is difficult and humbling to realize just how many of the economic realities I take for granted every day weren't available to the parents of my black friends. Hopefully, more of these same financial realities WILL be available to the children of ALL my friends. Hopefully too, we can begin to cover both the scars of the disadvantaged, and the economic and social chasms that separate (unfairly) us. This book is both a bridge and a battle cry.

24 of 26 people found this review helpful

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  • Richard Bagley
  • 15-01-18

A fascinating, frequently disturbing history...

Any additional comments?

A fascinating and fast-paced history of banking, with a focus on more than 150 years of targeted *economic* discrimination against black Americans. I was shocked to learn some of the on-the-record statements made by blatantly racist politicians – including many who have occupied the Oval Office.

The author explains the incredible power of banking’s money multiplier effect, and how this power could not be realized in ghetto “savings & thrift” banks that were not also lending to their local customers. This book made me realize, for the first time, how important something so seemingly mundane as FDIC deposit insurance is to the entire banking system.

For decades black banks have found themselves caught in a complex double-bind (“Damned if we do, damned if we don’t”) of needing to run profitable businesses, coupled with implicit and explicit goals of acting as community institutions – functioning like quasi non-profits – to serve high-risk, high cost-to-serve customers in under-banked ghetto neighborhoods (customers with low deposit balances AND high transaction volumes).

I was hoping the last chapter was going to be, “And this is how modern black banks cleared the hurdles that led to the demise of all their predecessors…” Unfortunately, that happy ending is still a future event. The author left me significantly better informed about the systematic, historical causes of the racial wealth gap and sincerely hoping that viable solutions are on the near horizon to help close that wealth gap in America.

Well researched and well written. I recommend it.

4 of 4 people found this review helpful

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  • Meta Thomas
  • 26-01-18

Informative however...

I found it very hard to stay focused on this book due to the narrator. The delivery was very choppy...I get trying to enunciate the words...but this was ridiculous.....It truly took away from the message. I found myself saying focus on the message and not the messenger. Ugh!

1 of 1 people found this review helpful

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  • Joseph Jones
  • 08-11-17

Excellent

Dr. Baradaran's work and voice is at once eye-opening, sobering, and infuriating. Her voice is as one with an insider's perspective to the history and nuanced relationship of the Black community to this Nation's consistent and deliberate abuse.

1 of 1 people found this review helpful

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  • Amazon Customer
  • 30-10-17

A must read!

The Color of Money is an important work that needs to be read by everyone.

1 of 1 people found this review helpful

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  • RAIS MUJAHID
  • 30-10-17

A must read!

Very enlightening read about American history and how it has plunder the black community while blaming it!

1 of 1 people found this review helpful

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  • curtis bouyer
  • 17-08-18

Must read

Incredible narration of one of last years most compelling books. Mehrsa Baradaran takes on America’s greatest problem and brings the truth to light.

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  • Tracee Flemings
  • 10-08-18

Decent effort

I truly enjoyed the amount of research that went into this project. However, when it comes to historical figures, it is important to get their names correct. The first Black female millionaire went by the name of Madam C.J. Walker and not C.K. Walker. I thought I heard it wrong the first time, and yet it was repeated later in the book. It would have been nice if the reader were a little more engaging. There were quite a few moments were I caught myself daydreaming. All and all, decent effort.

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  • Louwrentius
  • 05-08-18

Cre Ated

I loved the information, very well done. I also liked the naration except for the reader’s tendancy to say “cre ated” instead of “created” which purely for my own quirkyness stung me like a bee everytime I heard it.

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  • Mira Krishnan
  • 04-08-18

Thoughtful, detailed analysis. Amazing narrator

First things first. I have panned some narrators on Audible in reviews. Not this time. Let me just say that Lisa Renee Pitts should narrate every book in the store, or at least every economic book. She is in any event PERFECT for this book, and this is one of the best performances in my library.

Second, this book fills in gaps. As a critical person, this book answers a lot of questions that I had half-formed about the nature of the economic problem affecting African Americans. The central argument, which many Americans reject without a really good reason, is about reparations. Here, it's important to know that reparations were (1) the rightful policy of the occupying Union Army after the war, as part of their initial role leading Reconstruction, (2) codified into US law and implemented prior to being dismantled, and (3) many African Americans had reparation land stolen or coerced from them during Reconstruction.

We talk about Reparations like they're a nonstarter, because they repair some abstract harm of racism. The truth is there is a real and tangible harm that occurred when freed slaves were either not awarded (because reparations were stopped) or had stolen from them their rightful share of the productivity of the South. Reparations for African Americans are no less concrete and have no less traceable historical origins in tangible harms, than reparations for survivors of the Holocaust.

This book is not about reparations, but one of the fundamental facts that Baradaran starts with is that black wealth had barely budged in the time since slavery and remains very disproportionately lower than the wealth of any other US ethnic group. The starting capital position of the black community is the ultimate reason. Layered on top of that were the many unreasonable demands and double standards placed on black banking.

The one thing I wished Baradaran talked more about was the question I came in with. I wanted to know, should I put more of my wealth in black banks (as someone who is not black)? I think the answer is yes - Baradaran makes the argument that black banks are built to fail because of the double standard, but she really dances around the one really important question, which is how to create more "mainstream wealth" (that is, wealth that is not segregated from the US economic system) that is owned and controlled by African Americans.

Anyways, this is an important read because it is really a masterful analysis of a hidden part of US history and it tells a complex tale of how racism interacts with economics and tilts the "invisible hand" of the market. I cannot recommend this book strongly enough.