America's first African American billionaire, Robert Johnson, has recently purchased a small Florida bank that he plans to move to Washington, D.C., one of the United States' strongest banking markets, in order to serve the African American community. Johnson has said he thinks the bank, to be renamed Urban Trust, could become "the preeminent African-American owned bank in the country." 1 How much that will benefit working and middle class blacks or mainly himself and other bank stockholders is unclear.
Johnson, the founder of Black Entertainment Television (BET), by entering the banking sector after building BET into an entertainment giant and selling it to non-black-owned media behemoth Viacom, has several goals for his new business plan. He hopes to build “the country’s largest minority-owned financial services company,” 2 wants to “bring more access to capital to individuals and families who need it,” 3 and wants to reverse the decline in the number and performance of small, undercapitalized banks owned by blacks.4
As part of the endeavor, he will promote and provide financial education to the Washington, D.C., black community so that more income is used on wealth creation and longterm planning rather than consumer spending, to include increasing black home ownership, which lags behind non-hispanic white home ownership at a rate of 48% compared to 75% according to 2005 U.S. government census figures.5
Inroads made by non-black financial institutions into black communities is a primary reason for the decline of black banks in places like Washington. “I’ve observed what’s been happening with some minority banks out there,” Johnson said. “The other big banks have gotten very aggressive at going after their customers.”6
William Michael Cunningham, expert in U.S. minority financial institutions, also claims that “minority banks didn’t innovate. They thought they could hold on to their little niche.”7 Bank neighborhoods gentrified, however, and tougher 1990s U.S. government community reinvestment laws required major banks to become more active in black communities, creating new pressures on black-owned banks due to increased competition.8 Federal intervention has thus harmed the financial segment of the black business ownership pie, though black bank management must share some blame for their own decline.
Some questions about Mr. Johnson’s latest investment venture remain. By aiming to educate blacks about better financial practices, he may well help strengthen the black middle class. Mr. Johnson is a businessman, however, if not first and foremost a businessman. When he replaced BET’s respected but unprofitable news and public affairs programming with more profitable comedies, music videos, and other forms of entertainment aimed at blacks, he responded by saying he went into business to make money.9 He has also tried to become the first black owner of a commercial airline,10 has a $3 billion portfolio in hotels, has teamed with Deutsche Bank AG to create a hedge fund for wealthy individuals and institutions, and is forming a leveraged-buyout fund with the Carlyle Group, the biggest private equity firm in the U.S.11 With all this, building up his and a few co-investors’ profits is probably as much on his mind as helping build up the capital area’s black middle class.
The valuable service Mr. Johnson would perform by educating blacks about sound personal and family fiscal practices is aimed at bolstering black middle class consumer identity. In terms of black business ownership, the Johnson bank purchase and future expansion will likely not increase specifically black-controlled business revenues from their persistently inert status in the American economic basement at around 0.5%—Over 99% of U.S. business revenues are owned and controlled by non-blacks even though blacks comprise about 13% of the population.12
Further, it is unstated whether Urban Trust will or will not hire mainly blacks at all levels. In a communitarian, holistic, black nationalist, self-determinationist, or Proutist analysis, whatever it might be called, black empowerment includes far more than middle class consumerism or even black business ownership if that ownership is defined as being concentrated in the hands of a few at the top of the black economic pyramid. Extensive—and preferential—employment of blacks is another ingredient, and a necessary one both for the sake of employing blacks and for giving them the human capital needed to pass on to future generations, particularly at the middle and higher employment levels like management. This may be taken for granted considering Urban Trust will operate out of districts where blacks do their banking business, but firm policy in this line has not been declared. How good it will be for employees—any employees—is in any case a question, however, considering Johnson’s history: Johnson fought against union creation at BET for 20 years.13 Being an employee in particular, even though a paid position, in reality means being a servant of the interests of company owners, and is not a developed condition of freedom.14
A second primary standard of judgment for his banking venture should be measured by how much he builds up black wealth independent of their personal financial habits, which means a commitment to local black business development. “Recycling Black dollars”15—spending African American money on African American businesses, who in turn keep their money in the local community—is a further essential step in black economic success. This requires both the existence of black businesses and the patronage of black consumers.
Financial education and home purchase loans aside, this acquisition in the long run may be characterized more by the benefit it brings Robert Johnson and his fellow stockholders. Good home and personal financial practices, even if encouraged by Mr. Johnson, are ultimately the responsibility of black people, not him. What he provides that may be unavailable to ordinary blacks is capital, though how much this is needed in the Washington, D.C., community where Urban Trust will operate is unclear and may already be offered by non-black banks. Over time, the practical distinctions between Urban Trust and other banks may end up being minimal and make it an African American bank in a limited sense only—a privately owned bank lacking full commitment to the economic development of the local black community, like the shell or white of an egg without the yolk. The meaning of “minority-owned” has multiple reverberations and its value goes only so far if its benefits are narrow in range or if it mimics what non-black banks provide.
In the end, as pretty much self-confessed, Robert Johnson’s real color may be the color of money, making him more like non-black bank owners than like his own people. As he once said to the Washington Post,
- What are my responsibilities to Black people at large? If I help my family get over and deal with the problems they might confront, then I have achieved that one goal that is my responsibility to society at large.16
If he were to truly care for black people and move with them economically, he would also employ and train them, give them preference in hiring, and enter commercial lending in order to provide local blacks finance capital for local business enterprises and help establish the longterm viability of black economic institutions, not just healthy working and middle class families. One commentator sharply criticized Johnson when he sold his media company to Viacom on November 3, 2003:
- That was the day Black ownership of media giant Black Entertainment Television was buried in a graveyard named “Formerly Black-Owned.”
BET ownership will be interred next to Pro-Line hair products, U.S. Radio Network, blackvoices.com, Black savings and loans, nearly half of Essence magazine, and Black-owned farmland. With the sad passing of BET, the graveyard of Black ownership is getting full.17
Simply starting, expanding, and then selling economic enterprises to non-blacks will not in the long run give blacks true economic strength. Nor will only healthy personal financial practices or home ownership. More vision is needed.
No truly sound economy excludes ownership and control of economic resources and institutions. Without it, the black economy will most likely for the most part continue to comprise employees and consumers—dependent on others for jobs, products and services, subject to their interests and under their control. This is a logical outcome of the civil rights ideology, however, which is intimately associated with an economic system that allows economic dominance and subordination in several dimensions, including ethnic and racial, even as it promotes limited social and political freedoms.18
- References
1. Washington Business Journal. “Bob Johnson buys Florida bank,” http://biz.yahoo.com/bizj/060315/1259578.html?.v=1, March 15, 2006.
2. O’Hara, Terence. “Johnson buys bank, plans black-focused firm,” The Washington Post, http://www.msnbc.msn.com/id/11837687/, March 15, 2006.
3. Ibid.
4. Ibid.
5. Singletary, Michelle. “Keys to Black Empowerment,” The Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2006/02/18/AR2006021800173_pf.html, February 19, 2006.
6. O’Hara, op. cit.
7. Ibid.
8. Ibid.
9. Superville, Darlene. “Time for Bob Johnson to step aside?” Black America Today, http://www.blackamericatoday.com/article.cfm?ArticleID=754, March 20, 2005.
10. Ibid.
11. O’Hara, op. cit.
12. Hammer, Brian. “The Economic Salvation of African Americans,” footnote 40, http://www.proutist-universal.org/archives/000780.html, Sept. 30, 2005.
13. Toure, Yemi. “The End of Black Entertainment Television,” http://www.media-alliance.org/article.php?story=20031109003422874, Nov. 28, 2003.
14. Please see “Florida Orange Growers Reject Employee Subservience,” by Brian Hammer, http://www.proutist-universal.org/archives/cat_cooperatives.html, March 23, 2005, for discussion of various meanings of freedom within economic systems, including comparison of the concepts of freedom under the modern private enterprise system and the cooperative system.
15. Toure, op. cit.
16. Ibid.
17. Ibid.
18. Please see “The Economic Salvation of African Americans,” by Brian Hammer, for a fuller, detailed comparison of the civil rights and self-determinationist ideologies within African American society, http://www.proutist-universal.org/archives/000780.html, Sept. 30, 2005.
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