The oldest Black bank has received a bailout from Wall Street.
Carver Bankcorp, the nation’s largest bank founded and run by African-Americans, voted to cede control of the Harlem-based institution to Wall Street, the U.S government and other key investors in return for $55 million cash to rescue their bank on Tuesday. Under the plan, Wall Street banks will hold 73 percent of Carver's shares, the U.S. government 25 percent, and the rest will be retained by Carver's existing stockholders.
“This represents a significant shift from community ownership to corporate,” said investor Wimberly Edwards. “What’s our future with all the outsiders whose interests may be different from ours?”
At the same time, Edwards said that Morgan Stanley, Citigroup, Goldman Sachs and the other new owners are “keenly attuned to our mission” and “wouldn’t have stepped up” if they didn’t think Carver was worth preserving, according to Carver CEO Deborah Wright.
“I understand the optics,” Wright said in an interview after a shareholder meeting on Tuesday. “But ... the amount of capital we needed wasn't available locally.”
Carver posted a $40 million loss last year, wiping out the prior decade’s worth of profits. In order to turn the bleak losses around, the bank plans to diversify beyond its traditional real estate in order to serve more small businesses. It hopes to attract more consumers who lack bank accounts.
Historically, Black-owned banks have provided loans and services to Blacks when white institutions refused.
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(Photo: Mark Wilson/Getty Images)