Calibrating the Financial System

This chapter explores how the financial system was created and developed to recognize whiteness as a first credential of banking. Based on the theory of racial capitalism, this chapter reviews the origins of modern-day banks, redlining, and credit scoring to explain how the financial system confers advantages to whites. The financial system’s calibrations to whiteness have made it unable to render equal access to financial products and services. Whites have disproportionately higher bank account ownership rates, savings amounts, and accumulated wealth compared to their Black and Brown counterparts. Reports that decontextualize these differences from racial capitalism ignore the racist policies and practices responsible for these present-day renderings.

Epilogue

As the epilogue to Banking on a Revolution, this final chapter challenges the social work profession to seize responsibility for issues of finance and the economy. Finance’s outsized role in the economy and its exploitation of marginalized communities are pressing concerns, with widespread implications for rendering racial, economic, and social justice. Although the profession has, on the whole, abdicated responsibility for macroeconomic issues, social work is uniquely positioned to bring understandings of racial, economic, and social justice to bear on issues of finance and the economy. Though, it is unlikely that the profession will fully realize its commitment to justice without training and preparing social workers to do this work.

Financial Education for Liberation

Financial education interventions are delivered in public schools, nonprofit organizations and workplaces in a variety of formats, such as workshops, lesson plans, and coaching sessions. Financial education, however, portends to help a person budget and learn their way out of poverty while ignoring rampant systemic oppression and discrimination. This chapter reviews the research on financial education and offers an alternative approach to this popular-yet-rarely-effective intervention. A popular education approach based on Paulo Freire’s book, Pedagogy of the Oppressed has the potential to raise critical consciousness, teach about financialized racial neoliberal capitalism, engage in political activism, and prepare us for a financial system revolution.

Theorizing Moves to Financial Innocence

This chapter explores popular, normative theories that attempt to explain access to banking and finance by focusing on individuals and families. Theories such as financial socialization, development, behavioral economics, and financial capability try to explain racialized differences in access to banking and finance while ignoring the financial system’s calibrations to whiteness. This ignorance makes opaque the forces that wield power and opportunity and reinforces tropes of bootstraps and individual responsibility. Programs and policies built on normative theoretical traditions will not lead to a financial system revolution; instead, they will continue to exacerbate racialized inequality.

Financialization and the Tyranny of Bootstraps

This chapter explores recent trends in student loan debt, particularly the for-profit educational corporation Corinthian Colleges’ scandal, in order to define the key terms financialization and neoliberalism. Finance is playing an expanded role in higher education and securitization is being employed to capitalize off of students’ loan debt. Students are increasingly taking on debt and bearing responsibility for a capitalist economy that is stacked against them. Banks and lenders bundle and sell this debt to wealthy, white investors as securities. Given that Black and Brown borrowers take out more student loans, repay their debts plus interest over longer periods of time, and experience higher default rates compared to their white counterparts, these securities are racialized just like the individual lines of debt from which they were created.

The Nature of Change

This chapter explores the possibilities for a financial system revolution that equalizes access and democratizes power, such as through movements like Black Lives Matter and Occupy Wall Street. Examples of steps toward equalizing access and democratizing power include student loan debt protests, municipal identification documents, community benefits agreements, and public banks. These examples demonstrate the importance of uniting incremental change with the power of people. Moreover, any revolution must intentionally challenge the financial system’s calibrations to whiteness. The financial system’s calibrations have been a global, centuries-long exercise in concentrating economic power with whiteness. The type of revolution our financial system needs cannot be achieved through technological advancements.

Digital Redlining

This chapter explores how the rise of digital technologies enables new manifestations of racialization in financial services, using Google Fiber’s promises of low-cost high-speed Internet services in Nashville and Kansas City as examples. Akin to redlining in the lending market, Black and Brown communities may experience digital forms of redlining due to limited access to technologies such as high-speed Internet and smartphones that exist alongside the rising number of bank branch closures. At the nexus of financial and digital divides, banks’ overreliance on fintech can reproduce and amplify marginalization. Not only can fintech concentrate wealth, the computer algorithms on which fintech is built can further stitch whiteness into the financial system.

Capitalism Doesn’t Bend

This chapter explores how communities advocate for themselves in the midst of large bank mergers, focusing on the KeyBank–First Niagara merger that was completed in 2016 with a $16.5 billion benefits agreement. The concomitant rise of bank mergers and benefits agreements demonstrates how communities are increasingly voicing their opinions and trying to secure economic investments. However, much like the system of securitization, benefits agreements bundle the rights of future revenues into short-term deals that are sold to communities for banks’ and their shareholders’ long-term profits. Benefits agreements can exploit marginalized communities to proffer evidence of the banks’ compliance with the Community Reinvestment Act in exchange for only minimal economic investments.

Only Sharks in the Tank

This chapter explores the coordinated relationship between banks and payday lenders by examining the recent attempts of the Consumer Financial Protection Bureau to regulate the payday lenders in Kansas City. While payday lenders and other higher-cost alternative financial services are criticized for their predatory practices, banks often escape a similar level of scrutiny despite their punishing fee structures and risk-based calculations. Both banks and payday lenders have largely escaped federal oversight. The disproportionate harms inflicted by payday lenders on Black and Brown communities are often treated as tolerable, perhaps considered causualties of doing business to dismiss these lenders from the oversight they deserve.

Corporate Landlords and the Climate Crisis

This chapter explores the nexus of finance and climate change by examining the concurrent rise of extreme weather disasters and corporate landlords. Wealthy, white corporate investors use their financial resources to profit from extreme weather. In the wake of hurricanes and floods in Lumberton, North Carolina, corporate investors swooped in to buy single-family homes and rent them out for profit. These landlords have created precarious housing for Lumberton’s Black, Brown, and lower-income white families, who were more likely to be displaced by extreme weather and then were forced to put more of their comparatively lower incomes toward rent. Corporate landlords’ speculation on single-family rentals around the country capitalizes on the racialized displacement that will likely worsen with climate change.