BANKING

"Black People Don't Know How to Manage Money," They Said

How a racist stereotype endorsed by Morgan Stanley financial advisors deprives Black people of equitable opportunities

Black people don't know how to manage money," Morgan Stanley managers said, describing the financial literacy of their Black clients, according to Jeanna Pryor, a retired Air Force colonel who once worked for the investment company. Rather than acknowledging the numerous ways the banking industry deprives Black people of equitable opportunities, financial managers, at least in private, were attempting to justify the racial wealth gap.

In America, it is often said that cash is king and that green bills with former presidents' faces printed on them are the most valuable asset someone can possess. And while it's no secret that Black people have significantly less wealth. A Survey of Consumer Finances found that "White families had eight times the wealth of Black families.” Americans often debate who is responsible for this disparity. As I wrote in Cultured, "The only way White people could maintain their just world beliefs in the presence of racial injustice was to blame the victims." Stereotyping Black people as financially illiterate is a way Morgan Stanley managers justify depriving Black Americans of equitable financial opportunities.

When America was born in 1776, the racial wealth gap already existed. The enslavement of African and Indigenous people created a racial caste system, ingratiating White families from unpaid labor. This gap has been maintained by income inequality, discriminatory housing policies, and a legacy of political disenfranchisement. As America prospered, a rising tide couldn't lift all boats. For generations, racism weighed down the vessel, making it nearly impossible for Black people to remove these stones. This is why, more than a century after the abolition of slavery, Black families continue to have the least amount of cash on hand and, thus, the least financial security and power. It's a pernicious lie to claim Black people "don't know how to manage money" when the truth is White people have systematically deprived Black people of access to capital. The fact that in a nation where Black people were once sold as chattel, they have the least amount of money is no mere coincidence. It's by design.

While no one alive today participated in creating America's racial caste system, White people in the modern era continue to benefit from racially discriminatory laws and policies and have been largely resistant to any efforts to bridge the divide. During the Reconstruction Era, for instance, many White southerners violently targeted Black people to maintain social control over the formerly enslaved. Black sharecroppers worked under the "close supervision of the same overseers," who enslaved them, ensuring they would never amass wealth that superseded theirs.

These efforts deprived Black people of building generational wealth. For instance, in January of 1879, an angry White mob lynched a Black man, Ben Daniels, and his two sons in Arkansas after he tried to pay for something using a fifty-dollar bill, and a White merchant assumed it must be stolen. That's how rare it was for a Black person to amass wealth during the Reconstruction Era, that a Black person possessing a fifty dollar bill was cause for alarm and scrutiny. Sadly, racist violence continued to target Black people's wealth acquisition throughout the Jim Crow era.

History shows that wherever Black people attempted to become self-sufficient, to collectively rise, White people answered with violence. During the 1921 Tulsa Race Massacre, White rioters destroyed 35 square blocks of the Greenwood community, an area known as Black Wall Street. Another example can be found in March of 1944 when a group of White men lynched Reverand Issac Simmons, a Black minister and farmer in Mississippi. Before his death, Simmons owned two hundred and seventy acres of land in Amite County that his family owned since 1887.

However, when White locals heard a rumor that there could be oil on the property he planned to leave to his children, a group of White men confronted him, asking him to show them the property line. Then, "they began to beat him and shouted that the Simmons family thought they were 'smart niggers’ for consulting a lawyer." Once outside their car, the White men shot Simmons "three times, cutting out his tongue," warning his son Eldridge Simmons that "he and his relatives had ten days to abandon the family property." Not only were most Black people forced to labor in low-paying jobs, but the brutality of the Jim Crow era discouraged many Black families from purchasing land, particularly in the South, where prosecutors were unwilling to prosecute White people for crimes targeting Black people.

The banking industry in American society has perpetuated inequalities. Racial redlining, initially sanctioned by the government, denied Black Americans access to mortgages, insurance loans, and other financial services, creating racially segregated communities that remained mostly intact even after Congress passed the Fair Housing Act of 1968. Despite the fact that racially discriminating against banking clients is now illegal, Morgan Stanley's managers' comment that "Black people don't know how to manage money" suggests racism still influences lending decisions.

In the Reveal, Aaron Glantz and Emmanuel Martinez described Modern-Day Redlining as a pervaisive phenomenon in today's banking industry. Black customers reported that loan officers "seemed to be fishing for a reason to say no." In Philidelphia, for instance, Black people are "2.7 times as likely as whites to be denied a conventional mortgage." Also, the current credit system, which banks use to determine who is eligible for a loan or line of credit, is prejudicial. The system fails to take into account rent and utility payments, thereby putting young, Black, and Latino renters at a disadvantage. So, even if Black people pay rent on time for twenty years, their credit score will not reflect their due diligence.

Chapter 13 of the California Reparations Task Force noted, "This wealth disparity cannot be explained by lack of personal motivation and effort, family instability, or lack of education. For example, in 2019, black professional-managerial households had a net worth of $38,800, while white professional-managerial households had a net worth of $276,000. Single white parents had more than two times the wealth — $35,000 — of married black parents — $16,000." Black Americans are not bad at managing money. They have been systematically deprived of the same opportunities to accumulate wealth.

Once again, it all boils down to whether or not someone believes our system is inherently just. Those who do will likely ignore the stones weighing Black Americans' boats down and claim the system is fair, and thus, Black people are to blame for the poverty that keeps their communities in chains. However, those willing to examine the available data will see that Black Americans are no worse at managing money than any other racial group. They are, however, much more likely to face racial discrimination in the banking industry, a problem that will persist unless challenged.

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