WEBVTT - The History and Effectiveness of Black Banking

0:00:00.080 --> 0:00:03.360
<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

0:00:03.440 --> 0:00:05.760
<v Speaker 1>Tim Stenebeck on Bloomberg Radio.

0:00:06.040 --> 0:00:07.440
<v Speaker 2>First of all, just a little bit of a setup.

0:00:07.480 --> 0:00:09.880
<v Speaker 2>Remember we caught up with Marcus Shaw, CEO at All Finance.

0:00:09.960 --> 0:00:12.520
<v Speaker 3>Yes, I will never forget because he gave me that

0:00:13.680 --> 0:00:16.159
<v Speaker 3>phrase that I use all the time, which is you

0:00:16.200 --> 0:00:18.440
<v Speaker 3>need to put your greed above your bias.

0:00:18.920 --> 0:00:21.320
<v Speaker 2>Yeah right, yeah, it makes so much sense. Well, and

0:00:21.560 --> 0:00:24.960
<v Speaker 2>he is really specifically working on diversifying the All Finance space,

0:00:25.079 --> 0:00:28.280
<v Speaker 2>and he talked about All Finance having their first graduating

0:00:28.320 --> 0:00:31.600
<v Speaker 2>class of HBCU students who are now headed to the

0:00:31.600 --> 0:00:35.440
<v Speaker 2>investment world. So all about diversifying the financial space. And

0:00:35.479 --> 0:00:37.239
<v Speaker 2>that's where we get to our next guest. It's our

0:00:37.280 --> 0:00:40.720
<v Speaker 2>regular Equality segment because JUNI is Equality Month. Harold Butler

0:00:40.760 --> 0:00:43.640
<v Speaker 2>is City Group Global Markets, head of Diverse Financial Institutions Group,

0:00:43.720 --> 0:00:46.440
<v Speaker 2>joining us on site here at Bloomberg Headquarters. Although I

0:00:46.520 --> 0:00:49.279
<v Speaker 2>will say that we try to delve into this all

0:00:49.320 --> 0:00:51.080
<v Speaker 2>the time, I don't need a month to do it.

0:00:51.200 --> 0:00:52.880
<v Speaker 1>Yes, and I'm.

0:00:52.720 --> 0:00:55.600
<v Speaker 2>Looking forward to the time where I think it's really important,

0:00:55.600 --> 0:00:56.840
<v Speaker 2>but that we don't have to talk about it because

0:00:56.880 --> 0:00:57.480
<v Speaker 2>it's just done.

0:00:57.480 --> 0:00:58.560
<v Speaker 1>Wouldn't it be wonderful?

0:00:58.720 --> 0:01:01.160
<v Speaker 2>Why aren't we done already? I've been doing this a

0:01:01.200 --> 0:01:03.760
<v Speaker 2>long time, Yes, and Matt's been.

0:01:03.640 --> 0:01:04.280
<v Speaker 3>Doing a long time.

0:01:04.319 --> 0:01:06.280
<v Speaker 1>And do you know what is funny?

0:01:06.319 --> 0:01:08.440
<v Speaker 3>I was reading there was a story today about the

0:01:08.480 --> 0:01:12.240
<v Speaker 3>Supreme Court backing black congressional district and I think Alabama

0:01:12.440 --> 0:01:16.560
<v Speaker 3>was in Alabama, Alabama, and I was thinking, how insane

0:01:16.600 --> 0:01:18.280
<v Speaker 3>is it that we still have to deal with this

0:01:18.400 --> 0:01:21.360
<v Speaker 3>kind of crap. If somebody a hundred years ago had

0:01:21.400 --> 0:01:23.679
<v Speaker 3>read that headline, they would have been like, seriously, they

0:01:23.680 --> 0:01:26.120
<v Speaker 3>haven't dealt with the racial problems in America yet.

0:01:26.319 --> 0:01:28.440
<v Speaker 1>Seriously. Yeah, I mean exactly.

0:01:28.480 --> 0:01:29.760
<v Speaker 3>It's just unbelievable.

0:01:29.760 --> 0:01:32.400
<v Speaker 1>The right to vote, other things. Absolutely, I agree with you.

0:01:32.480 --> 0:01:33.560
<v Speaker 2>What's wrong with society?

0:01:34.160 --> 0:01:37.760
<v Speaker 4>You know, if I had a crystal ball, I could

0:01:37.840 --> 0:01:41.040
<v Speaker 4>probably give you that answer, right.

0:01:41.160 --> 0:01:44.440
<v Speaker 1>I think people need to relax. Quite frankly, what does

0:01:44.480 --> 0:01:46.160
<v Speaker 1>that mean? What do you mean? I think people?

0:01:47.160 --> 0:01:51.240
<v Speaker 4>I actually think folks are very uptight right in the

0:01:51.360 --> 0:01:54.400
<v Speaker 4>US and general. And it's not necessarily just a financial markets.

0:01:54.440 --> 0:01:56.800
<v Speaker 4>You know, I'll give you an example. You know, when

0:01:56.840 --> 0:02:00.560
<v Speaker 4>you go my very first time to Europe, I had

0:02:00.600 --> 0:02:04.080
<v Speaker 4>the pleasure of serving in the US Army and I

0:02:04.080 --> 0:02:06.080
<v Speaker 4>got stationed at NATO's SUBPEC.

0:02:06.240 --> 0:02:09.760
<v Speaker 1>And when I landed, and this is back several years ago,

0:02:09.800 --> 0:02:11.040
<v Speaker 1>it was how many years? A long time?

0:02:11.520 --> 0:02:14.480
<v Speaker 4>And when I landed in Belgium, I went to the

0:02:14.520 --> 0:02:16.600
<v Speaker 4>installation and I said, well, where.

0:02:16.360 --> 0:02:17.720
<v Speaker 1>Is everybody this?

0:02:17.960 --> 0:02:20.959
<v Speaker 4>Oh, it's sies the time where people are taking the

0:02:21.040 --> 0:02:24.720
<v Speaker 4>lunch and taking a break so they can reset themselves

0:02:24.720 --> 0:02:28.880
<v Speaker 4>for today, right, and communicy families or whatever. And then

0:02:28.880 --> 0:02:30.239
<v Speaker 4>they come back to work and to work a couple

0:02:30.280 --> 0:02:31.639
<v Speaker 4>of hours, and they're much more effective.

0:02:32.160 --> 0:02:35.600
<v Speaker 1>And I said, what's wrong with this picture?

0:02:36.720 --> 0:02:37.440
<v Speaker 4>I'm in, I'm in.

0:02:37.720 --> 0:02:39.799
<v Speaker 1>I want to join that too.

0:02:40.720 --> 0:02:43.240
<v Speaker 2>We said that about Germany, right, that there was more balance.

0:02:43.400 --> 0:02:47.079
<v Speaker 3>I mean, you know what because of the social system,

0:02:47.120 --> 0:02:49.720
<v Speaker 3>because of the safety nets. I think also, you know,

0:02:49.840 --> 0:02:51.840
<v Speaker 3>people aren't as worried about how am I going to

0:02:51.880 --> 0:02:54.000
<v Speaker 3>pay for if I have an accident, how I pay

0:02:54.000 --> 0:02:55.720
<v Speaker 3>for health care? If I get fired, how am I

0:02:55.720 --> 0:02:58.720
<v Speaker 3>going to afford to pay my restaurant? Because there are

0:02:58.800 --> 0:03:03.080
<v Speaker 3>so many more safety nets. And as a result, I

0:03:03.080 --> 0:03:04.520
<v Speaker 3>think they need to use them less.

0:03:04.800 --> 0:03:06.840
<v Speaker 2>To be honest, now I get it, they get you're

0:03:06.840 --> 0:03:07.680
<v Speaker 2>not worried about it.

0:03:08.480 --> 0:03:11.400
<v Speaker 1>So if we relax, Yes, I like to relax.

0:03:11.480 --> 0:03:15.280
<v Speaker 2>Why do you think how can that improve the situation

0:03:15.440 --> 0:03:19.080
<v Speaker 2>in terms of diversification. We I'm tired of hearing I

0:03:19.120 --> 0:03:21.400
<v Speaker 2>love you, Mackenzie, but tired of hearing about the studies.

0:03:21.440 --> 0:03:24.280
<v Speaker 2>I get it. It's better to be diversified. And there's

0:03:24.320 --> 0:03:28.440
<v Speaker 2>a bottom line financial component to it. So tell me

0:03:28.680 --> 0:03:31.400
<v Speaker 2>if we relax, how does that make things better?

0:03:31.560 --> 0:03:35.320
<v Speaker 1>Well, I mean, let's use the financial component. Right. So,

0:03:35.920 --> 0:03:36.400
<v Speaker 1>like you, I.

0:03:36.920 --> 0:03:44.400
<v Speaker 4>Am oftentimes mind boggled at the same conversation around you know,

0:03:44.520 --> 0:03:46.920
<v Speaker 4>why are we doing what we're doing?

0:03:47.280 --> 0:03:47.480
<v Speaker 1>Right?

0:03:48.160 --> 0:03:52.440
<v Speaker 4>Just recently, in fact, I was asked, so, why are

0:03:52.520 --> 0:03:55.400
<v Speaker 4>we having the same conversation about equity?

0:03:56.040 --> 0:03:58.400
<v Speaker 1>Yeah, why are we still having this conversation?

0:03:59.240 --> 0:04:01.920
<v Speaker 4>And you know, without having to go into a history

0:04:01.960 --> 0:04:05.680
<v Speaker 4>lesson which sometimes I don't mind doing. Right, uh, and

0:04:05.920 --> 0:04:08.320
<v Speaker 4>and really helping that individual ask me the question to

0:04:08.400 --> 0:04:11.520
<v Speaker 4>talk about helping them to understand why things.

0:04:11.240 --> 0:04:12.120
<v Speaker 1>Are the way they are.

0:04:12.800 --> 0:04:18.440
<v Speaker 4>I said, let's let's refocus your question and you ask yourself, right,

0:04:19.040 --> 0:04:23.240
<v Speaker 4>if if the shoe were on the other foot, what

0:04:23.440 --> 0:04:25.039
<v Speaker 4>how would it be different for you?

0:04:25.480 --> 0:04:25.640
<v Speaker 1>Right?

0:04:25.720 --> 0:04:27.039
<v Speaker 4>And when I say the shoe of being on the

0:04:27.080 --> 0:04:29.520
<v Speaker 4>other foot, you know he's talking about in this case,

0:04:29.839 --> 0:04:34.520
<v Speaker 4>I'm kind of tired of hearing about diverse and equity

0:04:34.600 --> 0:04:35.600
<v Speaker 4>and all this kind of stuff.

0:04:37.200 --> 0:04:41.480
<v Speaker 1>No, no, no, I'm just saying, why isn't it done right?

0:04:41.680 --> 0:04:44.599
<v Speaker 4>That's just the whole point is that I think, I

0:04:44.640 --> 0:04:48.360
<v Speaker 4>think we and I hope this is where we're going now.

0:04:48.640 --> 0:04:48.800
<v Speaker 1>Right.

0:04:49.120 --> 0:04:52.839
<v Speaker 4>Much of the work that's been done, certainly past the

0:04:52.960 --> 0:04:55.480
<v Speaker 4>horrific events that took place several years ago. There's a

0:04:55.520 --> 0:04:59.040
<v Speaker 4>lot of corporations that have come into the space that

0:04:59.080 --> 0:05:02.960
<v Speaker 4>are putting capital in the space. George Murder, George Floyd.

0:05:03.000 --> 0:05:05.120
<v Speaker 2>The conversation shifted dramatically.

0:05:04.680 --> 0:05:09.440
<v Speaker 4>Dramatically, right yet and yet I think I think progress

0:05:09.520 --> 0:05:12.599
<v Speaker 4>is happening, But yet we're not there yet, right. And

0:05:12.800 --> 0:05:16.240
<v Speaker 4>I think it's because it continues to be a difficult

0:05:16.320 --> 0:05:19.320
<v Speaker 4>conversation for people to have. I think people some people

0:05:19.360 --> 0:05:23.680
<v Speaker 4>don't really understand steal the what or what needs to happen.

0:05:24.240 --> 0:05:27.200
<v Speaker 4>And I think some folks just get for clint about

0:05:27.520 --> 0:05:29.720
<v Speaker 4>the level of commitment that they need to make right.

0:05:29.760 --> 0:05:30.800
<v Speaker 1>We over a.

0:05:30.800 --> 0:05:34.760
<v Speaker 4>Lot of times financial institutions in general, because it's the

0:05:34.839 --> 0:05:37.240
<v Speaker 4>nature of how we do business. You know, we think

0:05:37.279 --> 0:05:39.400
<v Speaker 4>about it a lot, right, We put do you think

0:05:39.440 --> 0:05:41.640
<v Speaker 4>about risk and we think about this, and we think

0:05:41.640 --> 0:05:42.719
<v Speaker 4>about that, and all.

0:05:42.600 --> 0:05:44.360
<v Speaker 2>This out of time. The trader's got to pull the

0:05:44.400 --> 0:05:45.320
<v Speaker 2>button and make the trade.

0:05:45.360 --> 0:05:47.520
<v Speaker 4>You got to do it right. If we weren't on

0:05:48.360 --> 0:05:51.760
<v Speaker 4>UH Radio, Live radio. I have a nice little term for.

0:05:51.760 --> 0:05:55.040
<v Speaker 1>Them, but it's probably it sounds like we got to

0:05:55.040 --> 0:05:56.680
<v Speaker 1>get off the pot. I mean, really what we need

0:05:56.720 --> 0:05:56.920
<v Speaker 1>to do.

0:05:56.960 --> 0:05:59.680
<v Speaker 3>I think also it's just it's so hard for people

0:05:59.720 --> 0:06:03.760
<v Speaker 3>to over come their biases. When Marcus Shaw came on

0:06:03.960 --> 0:06:06.680
<v Speaker 3>and he gave us this term, you need to put

0:06:06.680 --> 0:06:10.440
<v Speaker 3>your greed over your biases, because his point was, if

0:06:10.480 --> 0:06:12.640
<v Speaker 3>you have that kind of diversity, you're going to be

0:06:12.680 --> 0:06:16.600
<v Speaker 3>able to generate more revenue, better margins. You're going to

0:06:16.640 --> 0:06:18.520
<v Speaker 3>be able to make money. And that's what we all

0:06:18.560 --> 0:06:21.280
<v Speaker 3>want to do, we all want ostensibly, right.

0:06:22.000 --> 0:06:25.520
<v Speaker 2>So bias is that strong that people will give up

0:06:25.920 --> 0:06:26.800
<v Speaker 2>making money.

0:06:27.040 --> 0:06:30.640
<v Speaker 3>Let's talk about black banks versus sure, because you said

0:06:30.680 --> 0:06:32.919
<v Speaker 3>sometimes you don't mind giving people a history lesson, and

0:06:32.960 --> 0:06:36.880
<v Speaker 3>I think people need that. Here there are historically black banks.

0:06:38.520 --> 0:06:42.400
<v Speaker 3>Are they still in operational the same sort of scale

0:06:42.440 --> 0:06:43.279
<v Speaker 3>that they once were?

0:06:43.680 --> 0:06:48.760
<v Speaker 4>Well, you know, since reconstruction, the black banks that are

0:06:48.800 --> 0:06:52.120
<v Speaker 4>in existence today, about seventeen of them, So that's not

0:06:52.160 --> 0:06:55.440
<v Speaker 4>a big number across the country, probably have more capital

0:06:55.800 --> 0:07:01.280
<v Speaker 4>than they ever ever had. Right the number of years

0:07:01.320 --> 0:07:04.800
<v Speaker 4>prior to these events that we've talked about, such as

0:07:04.800 --> 0:07:07.000
<v Speaker 4>the murder George Bloyd and how the whole industry sort

0:07:07.040 --> 0:07:10.400
<v Speaker 4>of change, it was a tough world, right, and it's

0:07:10.400 --> 0:07:13.440
<v Speaker 4>still tough, but it is changing because the banks do

0:07:13.520 --> 0:07:18.440
<v Speaker 4>have capital. Prior to you know, there wasn't capital to

0:07:18.480 --> 0:07:22.040
<v Speaker 4>do things right, and so people oftentimes ask me, well,

0:07:22.040 --> 0:07:26.200
<v Speaker 4>how come there are black financial institutions that have been

0:07:26.240 --> 0:07:30.240
<v Speaker 4>around for one hundred years and they remain under a

0:07:30.320 --> 0:07:31.240
<v Speaker 4>billion dollars.

0:07:30.960 --> 0:07:32.720
<v Speaker 1>In assets for example, right?

0:07:33.280 --> 0:07:35.360
<v Speaker 4>And then I like to say to the history lesson things,

0:07:35.360 --> 0:07:39.120
<v Speaker 4>I said, well, if you were denied capital markets, if

0:07:39.160 --> 0:07:42.360
<v Speaker 4>you couldn't play in the capital markets, you'd be the

0:07:42.400 --> 0:07:46.160
<v Speaker 4>same way, right, because it's a vicious cycle, right, And

0:07:46.200 --> 0:07:49.640
<v Speaker 4>if you don't have access to capital, you don't grow, right,

0:07:49.880 --> 0:07:53.440
<v Speaker 4>And if you don't grow, you cannot offer the communities

0:07:53.440 --> 0:07:57.360
<v Speaker 4>that you serve services and things like that.

0:07:57.760 --> 0:08:01.360
<v Speaker 1>So you know, it has been a I think it's exponential.

0:08:01.440 --> 0:08:03.880
<v Speaker 2>It does if if they're able to lend out and

0:08:04.320 --> 0:08:05.760
<v Speaker 2>you keep going, it's.

0:08:05.560 --> 0:08:08.320
<v Speaker 1>Just that's right, That's right.

0:08:08.400 --> 0:08:11.480
<v Speaker 3>So what can be done about it? You are at city,

0:08:11.760 --> 0:08:14.760
<v Speaker 3>can you do you work with them? Or are you competitors?

0:08:15.480 --> 0:08:16.600
<v Speaker 1>Definitely not competitors.

0:08:16.760 --> 0:08:22.680
<v Speaker 4>Right, so we've taken we're well, we're not that I'm

0:08:22.720 --> 0:08:26.160
<v Speaker 4>gigantic waistline maybe a little bit, but you're what.

0:08:26.120 --> 0:08:27.440
<v Speaker 2>We considered one of the big banks.

0:08:27.480 --> 0:08:30.440
<v Speaker 4>Well, we are a big bank, right, and I'm thankful

0:08:30.480 --> 0:08:32.280
<v Speaker 4>we're a big bank because we're able to do things

0:08:32.320 --> 0:08:35.360
<v Speaker 4>in a unique way and we're the first. Really maybe

0:08:35.360 --> 0:08:37.280
<v Speaker 4>you didn't know this, I'm so I'm happy to tell

0:08:37.280 --> 0:08:41.120
<v Speaker 4>you this. We're the only bank still on the street,

0:08:41.480 --> 0:08:45.360
<v Speaker 4>the first to actually create a dedicated business unit, the

0:08:45.440 --> 0:08:49.640
<v Speaker 4>Verse Financial Institutions group. This focused at the minority deposit

0:08:49.760 --> 0:08:53.240
<v Speaker 4>institution are to include broker dealers and asset managers because

0:08:53.240 --> 0:08:55.920
<v Speaker 4>they're part of the equation as well. Absolutely right, And

0:08:56.000 --> 0:09:00.199
<v Speaker 4>so our mission, our focus really has been to get

0:09:00.240 --> 0:09:05.520
<v Speaker 4>to communities underrepresented, right, under invested communities through these financial

0:09:05.520 --> 0:09:09.920
<v Speaker 4>institutions in a way that you know, we can help

0:09:09.960 --> 0:09:13.400
<v Speaker 4>those banks attract investment to a community, to get rid

0:09:13.400 --> 0:09:18.120
<v Speaker 4>of food deserts, which helps people eat more healthy so

0:09:18.160 --> 0:09:21.280
<v Speaker 4>they don't go to the doctor. And you know as much,

0:09:21.440 --> 0:09:22.920
<v Speaker 4>and it's you said earlier.

0:09:23.400 --> 0:09:24.199
<v Speaker 1>It's a vicious cycle.

0:09:24.280 --> 0:09:26.840
<v Speaker 2>Yeah, all those things that keep people from moving ahead

0:09:26.880 --> 0:09:28.960
<v Speaker 2>financially as well as just kind of personally.

0:09:29.960 --> 0:09:30.520
<v Speaker 1>Stay in touch.

0:09:30.600 --> 0:09:31.240
<v Speaker 2>Let's know how things are.

0:09:31.480 --> 0:09:33.719
<v Speaker 1>I'm happy to stay in touch. I got so much

0:09:33.720 --> 0:09:34.400
<v Speaker 1>to talk about. You.

0:09:34.559 --> 0:09:37.600
<v Speaker 4>If you have me back, we can have all kinds

0:09:37.640 --> 0:09:38.800
<v Speaker 4>of fun talking about this week.

0:09:38.840 --> 0:09:40.880
<v Speaker 3>We will definitely have you back. Thank you for coming in.

0:09:41.080 --> 0:09:42.160
<v Speaker 3>Thank you for your service.

0:09:42.320 --> 0:09:44.120
<v Speaker 1>Thank you very kind. By the way, thank you.

0:09:44.200 --> 0:09:45.200
<v Speaker 2>Waistline is just fine.

0:09:45.240 --> 0:09:46.439
<v Speaker 1>I'm just okay. I appreciate that.

0:09:47.000 --> 0:09:50.640
<v Speaker 2>Harold Butler, who's Global Markets head of Diverse Financial Institutions

0:09:50.679 --> 0:09:51.720
<v Speaker 2>Group at City Group