Word: banke
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Dates: during 1960-1969
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...talk about race goals, Hudgins is a businessman first and a Negro second, and there is little evidence to show that Freedom National has had any substantial effect on Negro ownership in Harlem. The bank has made one large loan, for the purchase of a large furniture store in Harlem by a Negro businessman. This purchase is significant because most Negro businesses are small, service-oriented firms such as beauty parlors and liquor stores. But reliable sources indicate that Freedom National's loan policy and loan rates are not significantly different from those of any other bank in Harlem. Half...
Only in one respect does the bank's loan policy differ significantly from that of white banks. It is the largest participant in Small Business Administration loans in the city. Since the Federal Government insures these loans up to 90 per cent of their value, the bank takes on a smaller part of the loan risk. It can extend credit to businesses too small or new to have amassed enough profit to finance desired improvements. But even in this category sources from inside the bank indicate that 40 per cent are going to firms located outside of Harlem. The bank...
...easy simply to cry hypocrisy and exploitation of race sympathy. The gap may be the result of sound business decisions. Even if Hudgins and the other Negro directors genuinely desire to help Harlem, their good intentions cannot overcome the real financial difficulties which Negro-oriented banks everywhere face. Because of the low levels of income of most Harlem residents, individual family checking or saving accounts are very small, usually less than $1000. A small account contributes little to the bank's total assets, but will be expensive because small accounts always show more withdrawals and checks to process per hundred...
...Harlem. Because Negro businesses are small and few, and white businessmen are not interested in switching their accounts to Freedom National, large business deposits which would cost less per hundred dollars to maintain have not made up for the large number of small individual accounts. Therefore, the bank must rely on building up a large enough volume of small accounts to make handling them profitable. In the bank's present situation, where the costs of funds available to loan out are high, it is a normal banking reaction to minimize loan risk by spreading loans to other areas than Harlem...
Until the bank finds a more solid financial backing than it now has, it will be preoccupied with the simple question of survival. Although in the long run, such helpful steps as liberalization of mortgage credit or the establishment of an educational loan fund might be possible, Freedom National is behaving now very much like any other bank. Rather than admit this fact, Hudgins continues to talk race goals--partly because he really believes in them and partly because he thinks favorable publicity will attract the volume of small accounts the bank needs to survive...