How Banks Work

In this episode, John breaks down financial institutions and how they work. The goal isn't to be black, white or anything between. You want to be GREEN! Check this episode out to unlock gems on the benefits of healthy bank relationships. 

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Episode Transcript

Speaker 1 (00:00):
Welcome The Money and Wealth with John Hob Bryant, a
production of The Black Effect Podcast Network and iHeartRadio.

Speaker 2 (00:15):
Hey, Hey, is John Hope Bryant. We're going to get
into a topic today that's really important. It's called how
banks work. Now, this may seem obvious to many folks,
but truth be told, people don't know how banks work.
They assume. They presume based on comments that I feeled
on social media all the time, and people who are

(00:38):
honest enough to have a real conversation with me when
they're not embarrassed and they just tell the truth, they
actually don't have much of a clue how the system works.
And we for lack of knowledge, we then make a
lot of assumptions. Some of the assumptions are correct, and
many of them are incorrect, and they can be detrimental

(01:00):
to your financial health and your wealth building success. You
cannot build wealth in America. The banking system was created
so long ago. It's probably it's arguably one of the
well it's the first or second earliest businesses in the world. Yes,

(01:22):
I can't tell you what the first business was. You
can maybe guess it was one of the vices of mankind.
And it's been joked that banking was created to finance
the first business. That's a joke, but not far from
the truth. And given that barter and trade in its

(01:46):
earliest forms, I'll give them that a minute. Really, we're
tied to what we now call the banking system or
a banking system, and it is global. This is a
global system. You cannot today build a community without banking.
The only time Jesus got upset was when he overturned
the tables or the money changers in the temple, and

(02:09):
that shows how insidious that bad banking, bad capitalism, bad
finance can be. I'm here to talk about good capitalism
and good banking, but also to explain the history of
bad banking because there's a good reason why people are
hesitant about it, why minorities don't trust banks and us

(02:31):
soon are presumed that banks are racist and discriminatory. And
I'm going to really get into this because there's no
question that there's a history of banking that is discriminatory
and even racist. I'm going to walk you through how
I believe that there are different realities in place today. Yes,

(02:52):
racism and discrimination still exists, of course they do. Racism
is like rain it's either fall in some place or
it's gathering. So you might as well get out of
an umbrella and the color you like and start strolling
through it, because it's not going to change, so you
must over the rounded through it. We're going to get
to it. But the modern is again. I love math

(03:15):
in facts because they don't have an opinion, and particularly math,
and I'm going to just walk you through the math
and show you for yourself, unpack this for yourself. You
see that today is the best opportunity you've ever had
to chart your own course of financial liberation. Before I
get into literally walking you through how banks work and

(03:37):
where banks came from, and walk you back through where
we are today, let me tell you very quickly my
own personal story with banking. Some of you have read
this in my book Financial Literacy for All. If you've
not gotten that book, it's the best seller on business
finance in the country today, the number one best seller.

(03:57):
Go get your copy. It has almost a five star review.
You on Amazon, you can get a Walmart. You can
get it at Black Bookstores. By the way, you can
get it at Barnes and Noble. Globally, the book is available.
I walked through the story. But for those who haven't
heard the story and the founder of Operation Hope, by
the way, I'm about to bring that into this whole situation.
I'm gonna give you a short version. My mom and

(04:17):
my dad went to the South, came from the South
to Los Angeles. Again, the details are in my books.
I'm wanna bore you with that. I want to cut
to the real meat of this very important podcast this week.
They built wealth together, generational wealth. I would argue they
owned a gas station and an apartment building and eight
unit apartment building, and they bought for eighteen thousand dollars

(04:41):
that was ultimately worth in the time that my mom
and dad were married, well it was. They could make
the payment for two hundred and that's in two hundred
and fifty dollars a month. They lived in one unit,
rented out too well, they rented out two units. I
would pay the mortgage. The rest of it was profit
today be worth about six million dollars. We lost it.

(05:02):
We lost the gas station worth millions dollars. We lost it,
We lost the home that we were in, et cetera,
et cetera, et cetera. Because my dad could make the
money but couldn't keep it the more money he made
because he was financially illiterate. He was brilliant in many
ways of natural hustler. Johnny will Smith. I got my
business bones from him. He got his business bones from
his daddy, my grandfather Arby Smith, who was a sharecropper

(05:25):
born in Mississippi in eighteen seventy one. My second great grandfather,
George Young, was in the Civil War fault for Abraham
Lincoln's Union cause for freedom even though he was enslaved
and protected Memphis, Tennessee. He was part of the Black
Troops Regimen, one of seven thousand officers in the Union

(05:47):
Army during the emancipation proclamations. Where getting my social justice
bones from going Coming back to this this story, Mom
and dad built a little empire and confused. My dad
confused making money with a profit and didn't know that
my mother was a great saver and she was a
financial genius in the family, and they could have worked

(06:08):
together and built something, but they didn't. My dad didn't
see my mother as an asset as he should have.
He just thought she was cute, and well, that was
my dad's failing. My mother wanted to Smith was a
financial genius and died passed on to glory, promoted last
year with a million dollar cumulative net worth, meaning if

(06:28):
you'd added up all her assets, including when she distributed
to her kids and homes that she'd built in bought,
and so she had had a million dollar net worth
working an hourly job with a credit score that at
that time would be eight fifty four. I believe it was.
It was over eight to fifty back when the credit
score model went over eight one hundred eight to fifty

(06:50):
went over eight fifty, and she lost well, they lost
it all. My mom actually did very well. But when
I moved with my mother and again, I'm like, I'm
jumping over a bunch of the stories here, because I
had a bunch of run ins about money in this
story that were tragic. The guy who saved my life

(07:12):
was murdered in front of me over money, and my
best friend was murdered down the street over money. All
be fourth nine years olds, Okay, now I'm nine years old.
This is the crux of this story. I go to
my classroom in this banker who happened to be Caucasian,
and I'm pretty sure he was from Bank of America,

(07:34):
was teaching financial literacy. It was in a beautiful suit.
It was a white shirt, a red tie, and a
blue suit is beautifully stitched. And I make note of
that because the only white man I saw growing up
wearing a suit back in those days was a detective.
And it was not a good suit. It was a
bad suit. I don't mean a bad suit, I mean

(07:55):
like a really horrible suit, like a cheap suit, like polyester.
And this dude was smooth man. He was classy, he
had he was wealthy, he was obvious. His car was
in the parking lot, didn't and it had tags on it,
license plate. He was brand new. He was there in
the middle of the day. I didn't know what a
salary was, but my mother was on an hourly, hourly,
hourly rate. He had a business cards at sixteen floor.

(08:17):
The heck is that there was nothing in Compton that
was that high. The tallest building in Compton was the
Compton Courthouse. He lived in the neighborhood, not my own.
He came in wentness. He pleased. He was on again.
He was on a salary. He was a corporate executive,
and so the first week we didn't talk much like
he was adversary of us. He didn't want to be there.

(08:37):
We didn't want him there. And he was there because
of the because of the beginning of the Community Reinvestment Act.
Think that was the first year or it was there
was there was a concern that was coming into law
the next year, I believe it was, and so his
bank sent us there, sent him there to teach us
financial literacy home economics class, which doesn't exist anymore. We
didn't want him there. He didn't want to be there.
He came in once a week for six weeks, for

(08:59):
forty five minutes. The next week he came in. He said,
you know, you kids aren't so bad. Yeah, he said,
you're not so bad for a white dude. So we
started to be a little bit of a rapport. He said,
you remind me of my children, and so we started
to build a rapport. Right became a human interaction. I
don't know, third or fourth session. I started modeling the banker.
I started listening to what he was saying. It was

(09:20):
fascinating me. And by the you know, third or fourth session,
I believe it was a fourth session, I asked him,
what do you do for a living man? And how'd
you get rich legally. He said, I'm a banker and
I finance entrepreneurs. I said, sir, I don't know what
an entrepreneur is. I never heard that word my entire life.
French word. Build something out of nothing, create value, whatever

(09:43):
it is. If it is legal and you're financing it,
I'm gonna be one. That's the moment I became an
entrepreneur again. The story of that and what I did
with that is a soul's another parallel stories. You check
that out of my book Financial Literacy for All, or
my book Up from Nothing, or one of the videos
that are leble online that chronicle this story is a
source of inspiration for yourself. Up from nothing. I'm from

(10:05):
the bottom of the economic pyramid, both income and wealth,
to the bottom of the top one percent in this country.
Legally paying my taxes, you know, working hard, hustling, working
by the rules, playing by the rules. No shortcuts, no
government grants. There's the wrong with the government grants, but
that was just not my part of my deal. No inheritance,

(10:28):
nobody hooked me up, no legal activity. I did it
all by the books, and I didn't do it. I look,
I love my brothers and sisters and entertainment in sports.
But I didn't do it through entertainment in sports. I
didn't do it through the government. I didn't do it
through through any of the traditional routes that you hear
of African American succeeding. And hopefully this is again is
an inspiration for you that you can go right down

(10:49):
the middle and kick the door in like this. I
believe in the James Brown version of affirmative action. Open
the door. I'll get it myself. I want you to
be dangerous, as my friend Tim Bird has said, not
just famous. Someone should be dangerous. I mean, don't you
be intelligent from the neck up and win because you
have earned your seat at the table. So this banker

(11:10):
told me he was a banker, he's an end's entrepreneurs.
I said, I don't know what an entrepreneur is. It
is legal. I'm going to be one. That's who I
am and what I am today. Again, the rest of
that story you could read about. And then I asked
him this other question, and I start wearing a suit.
The next week they came in dressed like him and
got beat up every day. But that made me an
individual that began the process of being an eagle and

(11:33):
Eagles on flying packs. The road Less Travel Scott Peck's
book The road Less Doctor Scott Peck, The road Less Travel.
That books probably thirty years old, forty years old by now.
I would recommend that it recommended reading for you. When
folks are going to the left, you often have to
go to the right. If folks are going to the right,
you may take the road less travel to the left
the left and find your own pathway, just like I did.

(11:59):
People you know, derided me and teach me about financial
literacy and all the stuff my entire life. Now everybody
wants to know. Help me explain to him how does
this system works. We got to make smart sexy again.
We've been making dumb sexy for way too long. We
dumbed down and celebrated it to start. It's time to
make smart sexy again. So I tried. I asked this
banker another question. Okay, banker, I now know what my

(12:20):
vision is. But you mean to tell me your job
is to loan poor people money. Yes, that's my job.
I mean, you got to prove you can pay it back.
But my job as a loan people who are striving
with money and all I got to do is all
I gotta do is to have a plan and to
prove I can pay you back that I'm credit worthy. Yes,
and I don't get dead if I don't pay that
money back. He laughed. He says, no, I'm not gonna

(12:43):
kill you. Why wouldn't we want to kill you. You're our
prime asset. We're loaning you money. We want you to
be alive. But my neighborhood, if you didn't pay the
money back, you got dead. Like you were in the wrong,
wrong street, did the wrong things, said the wrong thing,
and did pay somebody's money back. You just you were
a zero zero zero. I remember I borrowed money for
an inner one of my enterp I was selling clothes

(13:03):
Fila and less A Sportswear, remember those for those old
enough to know about FeelA in the less A Sportswear.
I'll tell that story one of my podcasts. But I
was selling it out of my this point, at the
back of my trunk of my car, and I had
to borrow some money from the wrong dude. And all
these people who saved my life I could have took
my life. I really remember their names and could go
back and say thank you to them for cutting me

(13:25):
a break. This is one of the brothers black man
who cut me a break. He was a gangster for
my neighborhood. I brought money from me. It wasn't a lot,
but when I went to go pay him back after
I sold some goods, he said, no, man, you can't
pay me back. That's not the way this deal works.
You might you indebted to me for life. I had
no idea what he meant. And he and I and
clearly look at my face. He knew that I didn't know.

(13:46):
And he's like, man, you shouldn't be here. He said,
you just shouldn't be here. You've got potential. Like I'm
gonna let you pay me back, don't ever come back
here again. And I learned a number of valuable lessons right,
And that black man saved my life. There's another black
man who literally saved my life. Oc I was dying,
I was swallowing my tongue all My mother saved my life.

(14:08):
You know, told me she live me everyday in my
life and invested me in every way possible. And this
white man also helped to give me direction in life
when he talked to me about banking and how this
system works when you look at Operation Hope today. So
when I listened when he told me that, and I
said to them, you know, are there more bankers like you?
He said, there's got Yeah, there's got to be hundreds
of thousands of bankers, maybe a million of bankers. There's

(14:29):
ten thousand banks back then, forty five hundred banks today.
There's got to be ten thousand bankers in America, he said,
banks in America. There's got to be at least, you know,
a few hundred thousand, maybe a million bankers, and all
of us have the same mission. And I'm like, wait
a minute, All my struggling friends, if they figure out
what I've figured out, they can access capital, get a loan,

(14:49):
get a relationship with somebody who's got some wealth, and
get some relationship capital and come on up. Yes. So
if you look at Operation Hope today, the large financial
literacy coaching organization in America, essentially that's what we're doing today.
Is that this is one of my five divisions of
John O'briyant Enterprises or John O'Brien Holdings. But it's a

(15:11):
thing I'm most known for, so proud of it. Operation
Ohe probably one C three nonprofit which is the biggest
of the country four point five billion dollars of capital
directed to underserve neighborhoods and partnering with a rate corporations
and all that stuff and government. But yes, banks, we're
the only nonprofit allowed in history to operate inside of
a bank branch, an FBIIC insured bank branch. So if

(15:32):
you're just clicking in, you're at minute sixteen. We're about
to get into the depths of how banking work. If
you are want to refer this to a friend, they
have limited time, then they just telling to go to
a minute sixteen and start this conversation with me on
how banks work. Let me now get into it. Banks

(15:53):
are and I mean this is the most positive way possible.
It's going to sound a little ratchet, but I mean
it seriously. Banks are gangster and I don't mean that
in a negative way. I mean this is people sleep
on banking. This is one of the most incredible business
models I remember seen in my life. Check this out.
You're starting a bank, if you're lucky enough to start
a bank, and for every dollar that the depositor puts up,

(16:19):
you're responsible either a depositor puts up or you have
assets right in the form of loans that are credit
worthy or assets on your book. For every dollar on
your balance sheet, you're responsible for about seven cents. Now
it varies. It could be as low as six cents.
It could be a little as four and a half
cents in some cases, but with the different buffers and

(16:43):
things in place, it's going to be about six seven
cents minimum. It's called Tier one capital and a little
bit of buffer, and then more like ten cents on
the dollar on average for all of the things that
a bank's responsible for and reserve, et cetera. So with
bank regulators, don't get nervous. But check this out your

(17:06):
private business, your private shareholders. Your mission is to make
a profit, okay, and you only have to put up
ten cents, seven to ten cents for every dollar that's
on your balance sheet. But you get the benefit of
that whole dollar when that loan that you're going to give.
And I'm gonna break this down in a minute, pays
you back. And it's guarantee. Your enterprise is the only

(17:28):
business in America. I can't do this, say this without smiling.
Guaranteed by the full faith and creditor of the federal
US federal government, the biggest government in the world in
facting the beggar's economy and the only, the only flight
to quality economy, the only money center economy, the biggest
GDP economy, the most credible economy in the world. The

(17:50):
United States of America, the federal government, the FDIC, Federal
Deposit Insurance Corporation. Did you know what that meant? FDIC
guarantees every bank and the Maria. There used to be
ten thousand when I was growing up, is more like
forty five hundred banks today. And so they were the
only business that's it's the only business backed by the
full faith and credit of the federal government. Check this out.

(18:12):
Think about this. This is wild and and that model
only requires you to put up seven cents of the dollar.
And these bankers walking around, you know, in these very
conservative suits and living burger sertive lives. But they really
have the slickest, most amazing business model on the planet.
And I applaud them. I want them to do well

(18:34):
because their job is to empower entrepreneurs like me and others.
And it's a dynamic tension between that entrepreneur and that banker.
The banker's job is keep you on the road. You walking,
you know, roll into a ditch if you're an entrepreneur,
a small business owner, or drive into a ditch. And
the entrepreneur's job is to drive, drive, drive forward toward
growth or profitability. So you've got this entrepreneur that's sort

(18:54):
of scares the banker, this business owner whose dreams scare
the banker. But the banker's job is to be sober
and sort of disciplined and and and responsible and sort
of uh, make sure that that this bank, that this
entrepreneur business makes sense. There's an old joke, the bank

(19:14):
will lend you money you could prove you don't need it.
I'll get to that in a minute. It's a joke,
but it's not far from the truth. You've got to
look like you're not a big risk. Stop thinking that.
You go to go to a bank and and and
looking like you got to risk all over you low
credit score or high debt, no money in the deal, whatever,
and think the bank is out of venture capitalists. A
bank is again fd I c ensured the bank, the

(19:36):
government will take them over they screw up. So here's
the fundamentals now, and basically, just to cut to the chase,
the bank makes their money by the difference in the
interest expense between what they're going to pay on your deposits.
So you're putting in money in that bank depositing, and
you're depositing because you know it's backed by the full
faith and credit of the federal government. And let's just

(19:57):
say the government banks are chart gonna pay you two
cents two percent for your money. I'm just making this
up two percent three percent for your money. Okay, maybe
a little bit more different kind of account whatever. And
the banks that have loan that money back out at
let's say the current interest rates at seven, nine, ten percent.
The credit cards might be in the teens, but there's

(20:18):
a lower as a higher default rate for credit cards.
But let's assume that they're got to loan that out
for at ten percent, just to make this simple, and
they're charging and they're charging you three percent, sorry, paying
you three percent four percent. Uh, And there's an administrative
cost for them to run the bank. Let's call that
two percent two to three percent. So now the cost

(20:39):
is about six percent. You follow me, they're charging you
as a loan for your range Rover or your car,
or for your mortgage loan, or for your whatever it
is your you know, your your indebtedness to them, they're
charging you ten percent. In this example, their profit is
three percent. Fair exchange is no robbery. My friend Rob

(21:02):
McGrew would say, why you're hating on the bank for
making three percent. They made sure that you had the
capital in place so that you could get whatever it
is you needed. If the case of a business, a
business loan, where you're gonna make multiples more than they're
gonna make by the way money's made on top of
capital and assets, than it is you just making a living.
That's a whole other video for another time. But if

(21:24):
you're a business owner and you're taking this money putting
it to work, you're gonna make you know, ten x
hopefully what that banker is gonna make. You're not freight
concerned with the banker make it three percent because because
of the banker wasn't there, you'd make you have no
access to capital at all. Maybe in this example, here's
core functions of banking. Okay, begin to write this down,

(21:44):
and we're gonna get into discrimination and all the stuff
and why it didn't work for people of color and
women also in a minute. But I'm just giving you
the functions here. Accepting deposits, savings accounts, checking accounts, certificates
of deposits. Okay, I remember I was starting operation show
about break CDs, certificates of deposits all the time. Twenty

(22:05):
five thousand dollars CDs. I break them to meet payroll.
I handed CD to Rachel daff I mean, back then
it was physical. These were physical instruments, you know, documents,
you had to fill out everything. It's digital now, checking accounts.
I remember the joke was, I can't be broken. Still
have checks left? Anybody old enough watching and listening to
this know what I'm talking about? Can I get a name? Man?

(22:27):
Remember floating checks? Remember that, you know, you send a
check and then run around for two or three days.
You write a check, run around two or three days,
try to cover that check before you hit you. No, No,
I never did that. Of course I did, and I
honored all my obligations. You can't do that stuff now.
Money is digital. It's immediate, right, all right? And then

(22:48):
so that's accepting deposits. That and then the bank pays
you an interest return on those deposits providing loans. All right,
this is where the gets starts to get interesting personal laws.
Unsecured loans for various personal needs, typically unsecured mortgage loans.
These are loan secured by for personal real estate secured
by the property itself. Call it real property. Okay. Business

(23:15):
loans loans to businesses for expansion operations or other needs.
Credit cards revolving credit lines that allow customers to borrow
up to a certain credit limit. And this is the
biggest way to impact your credit score is to reduce
your consumer credit card debt to debt to limit ratios. Again,
the best way to get your credit score up. The

(23:36):
number one way to get your credit scred up, per
my financial coaches and Operation Hope, out of everything else
you're doing, is I mean, my credit card fluctuated recently
by like thirty points because one of my credit cards
went up because a member of my family was using
it now and I wasn't aware of it, even though
my rest of my balance sheet is incredibly large. But

(23:57):
that thing, that one element called a disproportionate impact on
my credit score me John O'Brien, right, And so I
had to pay that credit card down. And because the
ratio of what I owe to the limit of what
I could charge was too high. You want to get
that down to twenty thirty percent of your limit to

(24:18):
get the bet credit score of your Yeah, so if
you have a limit of ten thousand, you want to
be no more than two or three thousand dollars to
get the best credit score impact. Even you know, ten percent,
fifteen percent great, you know, fifty percent the limit is
not bad. You don't want to be at seventy eighty
ninety percent of the limit. That starts making the bank's
nervous that you're, you know, living beyond your means or

(24:41):
living through your credit cards, which a lot of people
are doing, by the way right now, So I'm not
picking on anybody. Point number three Payments and settlement services.
This is another is that banks are in money transfers,

(25:03):
facilitating the movement of money between accounts and across borders.
There's individual companies that are in this business too, Western
Union and other companies that are in this business. But
banks do this check clearing, processing checks and ensuring the
transfer funds between accounts, and this is aided by the
Federal Reserve. That's what one of the things the Federal
Reserve system does is help with the check clearing process.

(25:24):
And you have companies that a lot of companies in
Georgia are the backbone of the financial services system that
are helping with this process. You never remember the check
systems growing up. You didn't want to be on check systems.
That was not a good thing, that made you bounce checks.
That's not owned by banks. I don't think for investment services,
brokerage services buying and selling securities on behalf of customers.

(25:49):
This is not this this activity is not guaranteed by
the fdi C. Hello, just because you're at a bank
does not mean that all the functions of that bank
are guaranteed by the FDIC. Did you know that most
of the investment functions are not fully guaranteed? Like your
deposits are you know up to excellent X dollars for

(26:09):
your deposits? And a bank wealth management providing financial planning
and investment advice, mutual funds and ETFs offering pulled investment products.
These things I just mentioned you investment services typically are
not covered under FDIC insurance. Check with your banking and
financial services provider. Five safekeeping and Custodio services Safe deposit boxes,

(26:35):
secure storage for valuable items, custodial accounts, to managing assets
and securities on behalf of clients. Think about trust activities. Trust.
You've heard of trust, bank of the whatever. Okay, so
that's you know, that's a whole other part of banking.
But I don't want to get into it. I don't
want to get into a whole sidebar of another size

(26:57):
of type of banking, a state discipline. So I get
through this in one Let me know if you want
me to go deeper in another podcast into any one
section of this banking and go down the rabbit hole.
I'm happy to. By the way, get back focused again.
How banks make their money? Interest rates spread again? This
is what I said earlier. The primary way banks earn
their money is through the difference between the interests they

(27:18):
pay on deposits and the interests they earn on loans.
This is known as the interest rates spread. This is
why people's you know, brothers like yo, man, I don't
want no mutgage or no house. You know what I'm saying.
You know what I'm saying. I don't know what you're saying.
I can't understand you buy a house. I don't own
the house. The bank owns a house. If you don't pay, Yes,

(27:40):
that's true. In fact, if I borrow, if I loan
you money, I said this several times. It music. If
I loan you money, you're a friend of mine, you're
a family member, I love you. But if I own you,
loan you money the Bank of Bryan and you don't
pay me, I'm going to own your house. Real talk,
because business is not personal. Can I get an amen?
This is the church of what's happening now and what
have you done for me lately? Right? So the interest

(28:04):
rate spread is different between what they're earning banks are
paying on deposits, the money you're putting on deposit at
the bank, and the interests they're earning on loans. So
they want to get the highest rate they return they
can on these interest rates on these loans, which is
which will come into discrimination here. Conversation in a second. Fees,

(28:29):
accounting fees, monthly maintenance fees, overdraft fees, and other service charges.
This is a way that banks can make money. Transaction
fees fees for wire transfers, foreign currency exchanges, and ATM
usage fees. When you go to the ATM machine, it
doesn't mean all the money. It means something else, right,

(28:50):
And when you go to that machine and you pull
that money out, you'll see it says depending on the
bank you go to, it says two dollars used to
be a dollar. By the way, then with a dollar
fifty you see now it's two fifty three fifty three
ninety five is going up again? Fair change, no robbery.
What is it worth for you to get that money
from on the run when you needed that moment? You

(29:10):
don't have to take it. You can see that fee
and say, no, I sit the word. No, I'm not
going to pay that fee, and I'm going to go
get money from my mother, my sister and my father,
my wife or husband and i'll i'll you know, no,
I'm cool. But if you hit that button, you're paying.
If you're pulling out two hundred dollars and you're paying
that three fifty three ninety five fee, well that's the
cost of doing business. That's one of the ways that,

(29:33):
in this particular case, banks can make money. What else
is there? Investment income banks, investment securities, bonds, and other
financial instruments to earn profits, returns, advisory and brokerage services,
fees for providing financial advice, investment management, and brokerage services.
The regulatory environment they're regulated by, as I said, the

(29:56):
FDI c EOCC officers, the control of the currency, the
Federal Reserve System in some cases CFPB to Consumer Financial
Production Bureau, in some cases state regulatory agencies. Every state
as a banking regulator, the Federal Reserve System. You know
already mentioned that most banks, national banks regulated by the OCC,

(30:18):
the Office of the Coupture of the Currency, which regulated,
by the way, the Freedman's Bank, which was created in
eighteen sixty five, charted to teach free slaves about money.
That's the bank that I the building I helped get
renamed in twenty sixteen by Secretary Jack lou thankumus Secretary
renaming the Treasury Annex building the Freedman's Bank Building in
honor of former slaves put every dollar they had in

(30:39):
a bank that ultimately failed after Lincoln was assassinated. And
that's one of the reasons that bank. The black folks are,
you know, wary about banks. Wary about banks is because
that bank duped them. If Freder Douglass trying to save
that bank, by the way, types of banks. Commercial banks
offer full range of services to individuals and businesses. Investment banks,

(31:02):
it specialize in underwriting, facilitating mergers and acquisitions, and providing
other investment services in many ways. Operation Hope is a
nonprofit investment banking organization. And the way in which we
do things. We take all these disparate assets and opportunities,
we structure them together so the whole is more than
the parts, and we create solutions for the government, community
and the private sector. And you were the America's first

(31:25):
nonprofit social investment bank or I started that thirty two
years ago. Four point five billion dollars invested so far,
millions of clients, three hundred physical office, fifteen hundred satellite offices.
That's Operation Hope in most banks in the country. We're
getting the bank out of the no businesses back into
the yes business at scale. I'll get to that in

(31:46):
a second. A lot to get in on the second
half of this podcast, but I wanted to break this
down people have been asking me for this. Retail banks
focuses on individual customers, offering savings and checking accounts, personal loans,
and credit cards. That is where most of you are
doing your business. For the retail bank, and there are
good retail banks today and they have an incentive not

(32:08):
to discriminate against you. Again, I'm going to get into
the when they did and why they probably are not
trying to do that now. And if it is, it's
probably some individual of the bank that's hating on you,
not the institution itself. Again, I'm gonna tell you why
in a minute. Central banks national banks that manage money,
monetary policy, issue currency, and regulate the banking system. I

(32:30):
EI the Federal Reserve in the US, the big baller
of all banks, the biggest baller of all ballers, the
biggest bank of all banks. The only one that can
print money is a Federal Reserve. And I know a
lot of the Federal Reserve presidents. We have a black
Federal Reserve president right here, right in Atlanta, Georgia, Georgia,
Rafael Boston, a very good guy. You had a black

(32:52):
man who was vice chairman of the Federal Reserve when
ninet eleven happened, by the way, because green Span, then
the Fed chirman was out of the country. He was
in charge of stabilizing the biggest economy in the world
and did a great job during during nine to eleven.
Great guy, and he's a friend of mine as well.
The role of technology. Modern banks are increasingly relying on technology,

(33:15):
and I believe that that modern banks are going to
move into this area of emerging markets, which is people
of color, which is a far cry from where they started.
So now let's go into discrimination by US banks in
the banking system, and then I'll come back to sort
of the timeline of how banks got to where we

(33:37):
are today and where we are today. So discrimination by
US banks was significant one hundred years ago, I mean
like horrible, like disgusting, Like a bank was one hundred
years ago owned by the family of Races, Inc. Or
the family of Joe Blow. It doesn't mean they were racist,

(33:58):
but that but that does mean that bank, if that
family was racist or they had backwards views, they could
write policies that completely, wholly, completely, without question discriminated against
people of color. This is called the segregation of the
in the Jim Crow laws of You don't even need
to go back to the eighteen hundreds, which was horrible,

(34:20):
you know, the nineteen twenties, this was Jim Crow era.
During the nineteen twenties, the racial segregation was legally enforced
in many states under Jim Crow laws. Legally it was
the law of the land. This institutionalized racial discrimination and
created significant barriers for Black Americans in particular, including banking. Again,

(34:41):
when I tell you can't grow without having a good
banking system in your community, it's really hard to build
a community or wealth. And one of the reasons that
black people have less than tempers of their white counterparts.
Will hold on for a minute, really read my books,
then introducer Frogs. It deals with land and a bunch

(35:04):
of other stuff. But I'm gonna give you the banking
side here in a second. And it really wasn't banking's fault.
This particular part lack of access to banking services. Black
Americans had limited to no access to What I mean
by that, it's redlining. So for anybody listening to this,
what do you mean, John, it wasn't banking's fault. You
just said it was banking's fault. Okay, if you were
a racist bank, yes you can distribute against blacks. But
the biggest problem the blacks hole had with red lining

(35:26):
wasn't the banks, it was the government. So hold on.
Lack of access to banking services. Black Americans often had
limited access to bank stream banking services. That's why the
Freedman's Bank was so important. That's why the bunch of
black banks that were started were so important. And you know,
there was a time where black banks really thrived, and
it could have been the black banks could have been
multi billion dollar banks today, but they were hated on,

(35:49):
discribuinted against, and held back. And now that banking has
taken off like a rocket, is hard for small banks
to become big, irrespective of their cultural heritage, particularly particularly
with the culture however, it's hard for them to get
into the billions and tens of billion dollars of assets.
So I think we've got one or two banks now
that are black control that have a billion dollars technically

(36:12):
billion dollars in assets. Milton Jones is one of the
few black men used to be with Bank of America
who created a billion dollar institution, and he wasn't supported.
The institution was dismantled. And there are a couple of
banks a day again have the bing dollar thresholder that's
a very small bank in today's banking environment. And I'll
explain why that's important. Discrimination discriminating toory lending practices, even

(36:36):
when black Americans could access banking services, they often face
discriminatory lending practices. Banks routinely denied loans black applicants or
oft are offered loans at much higher rates to their
white counter parties just because they could. Redlining, this is
really important. Redlining was rampant in the early twentieth century,

(36:57):
and it was endorsed by the government. The government. It
literally took a map and they took a pen, and
they put a red line around what they call dangerous
and risky neighborhoods. Now, these are the same neighborhoods where
former slave people came from the South try to migrate
north for better life, and because they weren't given opportunities
and could get jobs and access the capitol and blah

(37:18):
blah blah, they concentrated in the areas that became higher
in crime. Blah blah blah. It was it was property
by design. And so they said, oh, that's a rare
risk area. We're not going to guarantee mortgages, we the
government in those areas, We're gonna red line a gam
And what do you think bankers did? Bankers, even the
best banker, even the nicest person in the world is

(37:38):
that is risk averse. What did I tell you? They
cannot go out of business, the government will take them over,
and they have very thin capital to assets, so they
can't make many mistakes. They can't make many bad loans.
So you could be a complete saint, but your capital
is a coward. Capital is trying to find a safe
place that it wants to be a safe place to
sit at the highest return with the lowest risk. Listen

(38:00):
to me, banks with the highest return, the lowest risk,
and a safe place to sit. That's what every provider
of capital wants, even if you're a saint. And so
here you have these neighborhoods and governments that are red lined,
and the government's not going to guarantee a mortgage. So
where did the capital go. It went to the places
that were green green lit, which were white suburban neighborhoods,
and banks made loans there. So they could have been racist,

(38:23):
they also could have been a saint, but they just
were like, I don't want to I don't want to
lend over there. I'm gonna lend over here. Where's low risk,
high return or guaranteed return near guaranteed return, And I'm
not gonna be taken over by the banking regulatories agencies
animal get my loan guarantee, which you know means that
the loan was danged near risk free in those cases.

(38:46):
So little known fact it was not the banks themselves
that instigated redlining. It was a US federal government. The
government did a lot of bad stuff to incite inequality,
and uh, I've just say now they're trying to make
it right. Economic inequality, you know, became embedded, and you

(39:08):
know there were legal protections that were put in place
to help you out. The Civil Rights Act of nineteen
sixty four, with my hero and asked for Andrew Young
and his friend doctor King helped to put in place
my sheerro. Doctor Dorothy Heyd and other women also helped
in this movement. The Fair Housing Act of nineteen sixty eight,
which was passed when doctor King was assassinated in honor

(39:29):
of him. Really, President Johnson did that in honor of him,
and the Community Reinvestment Act of nineteen seventy seven, which
is the law that I really wrapped myself around CRA
the Community Reinvestment Act. Everybody write that down and research it.
It's about five hundred billion dollars a year. That's right,
B five hundred billion dollars a year that is directed

(39:49):
to investment lending in service, investment, equity, lending debt. Both
of these are forms of capital. Debt and equity are
both capital lending and service volunteers. I'm like the banker
who came in my class froom to teach financial literacy.
So now you know why that banker came in my
classroom because the bank got credit for teaching financial literacy

(40:11):
in my neighborhood. You want somebody teach financial literacy your
neighborhood for free. Go to your local bank. They'll be
enthusiastic if they have half a brain, come and teach
a class for your your your club, your links chapter,
your boys and girls club, your nonprofits, your school, whatever.
That's exactly what happened, and you hat a bonus. You
get a role model that's coming so you can model

(40:31):
what you can see because people people want to be
what they can see. And I saw this banker and
a suit on, and I end up wearing a suit myself.
I'm not a banker, I'm an entrepreneur, but I end
up suited and booted, just like that banker. Was, so
you have legal protections increase access to banking services. This,
this legal infrastructure is made it harder for banks to discriminate.

(40:55):
UH and banks and like corporations and every other capitalists
and every other free enterprise entity respond to incentives and penalties,
and so the penalties are hire to do wrong and
incentives are hier to do right. The pendulum has shifted
right in the last let's say forty years, fifty years now,
there's been significant progress in providing equal access to banking services.

(41:18):
Many banks that I actively seek to serve underserved communities,
minority communities, often spurred by regulatory requirements like CRA and
community advocacy. Now, while a vert discrimination is illegal, sobtle
forms of discrimination and bias still exists. All right, So
I'm not crazy, I'm not naive. I get that financial
literacy and economic conclusion. Someff that I'm really specialized. Again,

(41:40):
I call it silver rights from civil rights in the streets,
the silver rights in the suites that I think is
a great level of the playing field. And I love
credit scores, as anybody listening to me, you know, I
love credit scores because again, I like math because it
doesn't have an opinion. I love computers, and I love

(42:01):
what artificial intelligence and computing and technology is going to
do this because when my mother went to the computer
at midnight and said she wanted to get an auto loan,
the computer wasn't some lady looking over her and trying
to discriminate, looking at her and saying do I like
you or not? It was a computer. And my mother
put in her credit score and her income, and as
long as her income was satisfied, she could afford to
prove she could afford to pay for it the car

(42:23):
she wanted, and her credit score was satisfactory. Anything over
seven hundred, you're a star. Seven to fifty eight hundred,
you're a superstar. The computer just said yes, approved her
at great rates. The computeritess here is black or white.
Computer star is green, the color of us, currency of prosperity.
Follow me. And now here's a sad fact. And this

(42:47):
is again, this is not our fault, but it doesn't
matter what's your fault. Now. I believe in the James
Brown version of affirmative action. Open a door, I'll get
it myself. I want you to understand that this is
where we are today, and I want you to improve
yourself versus harping on two hundred years of history that
you know more than that. As you're here, man, you
can't change with recent history. Let the legislators and civil

(43:09):
rights leaders and historians and policymakers change that. I want
you to change your life. Half of black folks have
a credit score below six to twenty today. Now poor
whites aren't much better. They're about the same. Latinos are
just above that. But the lowest credit score in the
country on a average are people the people who've been
discriminated against them, in my opinion, the most in this
country actively, which are African Americans. It makes sense, but

(43:34):
that means that half of us wake up in the
morning and we're locked out of the free enterprise system. Hello,
you can't get a good mortgage below seven hundred. You
can't get a small business loan. Certainly below seven hundred
is risky credit. It's considered risky credit. You can't get
you know, good credit cards. You can't can't get it
all alone at five hundred credit scores. I've said on
another podcast, that's not a five hundred credit score. It's
not a Mercedes is Mercedes payments. So the number one

(43:57):
thing you can do is to work with a whole
financial coach, because I know the criteria why bank's going
to turn you down. Now, let me deal with this
whole discrimination thing you're like right now, I mentioned one
hundred years ago. Yes, racism was real and it was
rampant in banking because the Bank of Hoosy What's was
owned by the Hoosy Whats family in the city of
Who's He What's Okay, and they just didn't like black

(44:17):
people and they said, we're not lending to you today.
Wells Fargo, Bank of America, you know, City Group, you
know who else? US Bank, I'm just picking it out now,
Bank of the West, they just were bought pn C Bank,
Region's Bank, so Novah's Bank. I can't go on and
on and on and on on First Horizon Bank. These

(44:38):
are publicly traded institutions that you and I own stock in.
Now you may say I don't own stock in them.
If you have a four oh one K plan, that's
your employer and you and they invest in a broad
basket of investment in investment grade stocks. Yes you do, right,
So you can't say that's a white bank anymore. That's
your bank. If black folks own stock, white folks, latinos

(44:59):
a Asians, Indians, everybody owns the corporations, governments, pension funds.
If you're a teacher, your pension fund manager may have invested,
meaning the people who manage your pension fund or your
an investment accountant there as a teacher, they may have
invested in these major institutions. Right, So, the job of
the CEO of a major bank's publicly traded is to
make some money. And if they're discriminated against you because

(45:21):
you're black, they're not. You may be the best of
them performing a loan they've got and they, by the way,
they can't overcharge you like they used to because now
the big brother, the federal government, their biggest partner, is
looking at them, looking over their shoulder. They're highly regulated today.
It's a highly advantageous business model, has a lot of
leverage and a lot of profitability for the banks. Again,

(45:44):
if you have seven cents of your own money ten
cents of your money in a loan, but the loan
is paying a dollar, as long as that whole loan pays,
that bank is getting multiples of their seven cents in profit.
A dollar turns into a ten dollars turns into a
one hundred dollars, turns to one thousand dollars, and loan
size to a million dollars to a billion dollars to

(46:06):
ten billion, twenty billion dollars of loan portfolio. Just imagine
the compounding effect of that owner, a group of owners
of that bank, how much money they're making. By the way,
we're the shareholders, we're the owners of that bank. So
a bank today, my rich friends eat, my poor friends
do better if only the stay rich. In the model

(46:31):
I'm talking about now, even a racist wins of black
people do well because the GDP, the economy, economy rises,
loans are performing. If your credit score, if you raise
your credit score to seven hundred, there's nothing more powerful
than God or love and the moving your credit score
to seven the credit score is seven hundred, one hundred
and twenty points to seven hundred, nothing more powerful. So
to move your credit score from five point fifty where

(46:53):
the bank says no, you're declined. You may think it's racism,
but they're decline to you because your credit score stinks.
Your debt to income ratios are out of way. Needs
you have more debt to income than the Irish person
and you have low savings, and it's not your fault
if you again, you come from the environment I talked about,
But that's not Getting a loan into you today is
not about somebody's fault. It's about a qualifying for credit,

(47:14):
and I mean good credit. I don't want you qualifying
for the homeboy, chefing network, shopping network credit with these
high rates and bad terms. I don't want you to
doing a check cashing, payd the loan lending, rental, own stores,
title lending, liquor stores, financing, hood financing, and a five
hundre credit score. Neighbor I grew up in. I want
you to get seven hundred credit score. I want you
to get rich people money, Okay, I want you to

(47:36):
get seven hundred credit score, seven tifty credit score, eight
hundred credit score money, which is best rates, best terms.
They treat you like a king, like your private banking client.
I'm your private banker at operation Hope. Are you getting
what I'm saying. It's a lot of information in a
short period of time. So if you can get your
credit score up, a computer, not a person, is trying
to say yes, and the bank needs to make a

(47:57):
profit and they make a profit by making a loan,
but the bank is forced to be in the no
business because your credits may be tow up from the
flow up as my credit my dad used to call
it wasn't credit, it was credit. He said his credit
was bad growing up. So Operation hobest job working in
these banks right, working with the only nonprofit allowed to
operate inside of a bank branch in UNS history. Operation

(48:17):
hopest job is to get the bank out of the
no business. I'm sorry you declined for a loan and
back into the yes business. Yes you're approved, and not
just approved at market rates, at prime rates in terms.
That's what I want. I want you approved at prime
rates in terms. And I love going through airports and

(48:38):
the TSA agents in the airport are like yo man,
Joe yo s John O'Brien, Hey man, I'm six ninety.
Hey I'm six seventy. I'm seventy ten, showing me their
credit score right as I'm going through, and they patted
me down going through security. I absolutely love it people
shopping me. Hey. I became a homeowner because of you. Hey,
I started a business because of you. Hey, I got
that I got a great personal loan or line of

(49:00):
credit for my business because of you. You know, hey,
I started your one million Black Business Initiative program, which
has over forty thousand participants now our partnership with Shopify.
And as I was doing that programmer didn't realize I
didn't even need a loan I got. I just had
some sales, and Shopify gave me an advance on my
next sale for my former sale, and I've been fueling

(49:20):
myself through that and so on. So I love these stories,
but you've got to understand how this game works, and
I want you to use a good good debt. There's
good debt and bad debt. Right. Good debt is where
where you're loaning against assets that have the ability to
appreciate go up in value. You know, businesses, you know,
mortgage on your house, you know, anyway, and you're even

(49:44):
your education can I think appreciates because you're smarter and
you can earn more of the college education than you
were with the high school education. You get a return
on investment even on a student loan. So good debt
is against something that will appreciate or can appreciate, and
bad debt is financing. I don't know clothes, jewelry. You
know most jury has an eighty percent profit margin on it.
You know that's not if you ever need to sell

(50:06):
that jury, you get your heartbroken on what the on
what the pawnshop or whoever will buy it back for?
So bad debt depreciates. Good debt finances things that may appreciate.
Did you get to understand that we do something just
on debt? Let me know, I will. I want you
to get good debt. There's no billionaire, it's ever become
a billionaire without good debt. Did you hear me. There's

(50:28):
no government, there's no growing economy in the world ever
that didn't get there without good debt and guests, who's
financing the good debt banks? All right, this is one
of the most incredible models in the world banking, and
I'm trying to break it down for you something I've tried,
I've tried to master and tried to really understand. I

(50:50):
find I signed the loan facility for two hundred million
dollars on one of my tied to one of my
private companies, a recapitalization. Actually I didn't sign it literally,
I didn't have to sign it. It was non recourse debt.
I sold that company, but it was nice to be
a black man. And I have to asked for a
personal guarantee for ten thousand dollars loan, which happened to

(51:11):
be my entire life. And nosebleed rates meaning very high streets.
This was very low rates, very good terms, so on
and so forth. And we have about four point seven
four four point eight billion dollars of capital that we've
commulated and deployed through my entities over thirty two years,
most of that in the last fifteen years. And it's
just growing, growing, growing, and again prime rates is what

(51:34):
I want for you. Okay, here's in the last time
we've got left. This has been helpful to you, by
the way, I understand how this game works and how
you can master it, and why even somebody's excriminated against you,
we can make sure that that bank treats you well.
We've got a great partnership with Wells Fargo. They had
some drama in the past. I was there when the

(51:54):
drama unfeled it. By the way, I was in the
room years ago when I think people make really bad
DESI visions and those were people that was not the
institution itself. Again, you know, the federal government depends who's there.
Like the Biden administration is different from the former president's administration,
is different from the Clinton administration, and the Obama administration,

(52:15):
the Johnson administration, the Regular administration, the Bush administration, and
the Bush Fathers different from the Bush the Sun administration.
Even though it's the US presidency, it's the US federal government,
but it's different because of who's in the seats at
the time. So if you have bad people running a
good institution, then it's a badly run good institution, and

(52:36):
it'll be pimped, it'll be manipulated, it'll be taken advantage of,
and that culture will perpermeate. So there have been times
where these institutions will run well. There's been time when
these institutions will run badly and it shows and reflects
in their stock value, that profit or the lack thereof
the regulatory oversight, public criticisms. And I love the group

(52:57):
that's there at Wellesbarugo. Now I love the groups there
Bank of America. There there's people of color at the
higher ranks. These intitutions. They build those in situtions of order.
Over one hundred hope inside locations. And our mission is
to get that bank out of the no business and
back into the yes business. And I deal with the
CEO Brian morning Hand and Bank of America, Charlie Sharf
at Wells Fargo. I deal with Jane the CEO at

(53:18):
City Group, who's a partner with us. It's kids accounts
with Mayor Andrea Dickens and City of Atlantic. Every kid
gets a kid gets an account in kindergarten and the
City of Atlanta the child's savings account through Operation Hope
and City Group, and in the Mayor Dickens in the
City of Atlanta. And the statistics show that a kid
who gets an account a bank account at kindergarten, it's

(53:39):
fifty percent more likely to go to college. Hello. And
if you're put any money in that account, and we're
putting fifty dollars into each of those accounts and now
asking banks to match it. The money money visual money
comes from the city and we're asking banks to match
it to our network of partners. You put twenty five
fifty dollars in that account, the kid is seventy five

(54:00):
percent more likely to graduate from college. Hello. Talking education
to aspiration, we have ten percent of first Horizon Bank
branches in Tennessee. The largest bank in Tennessee. Brian Jordan,
great guy who runs that banks. The Novus Banks put
up one hundred thousand dollars to match the money in
the kids account that was just recently. That's their CEO

(54:21):
Key Bank, their CEO Chris Gorman's a great guy. The
CEO of City National Bank. The Kelly Coffee she just
joined our Hope Global Boarding directors. We haven't done anything
with her, but we hope too. They've had some rough patches,
but they're trying to come back strong. You know, never
let a crisis go to waste. People make mistakes, but

(54:43):
that doesn't mean they are a mistake. You know, if
an institution is tripped and fall and made some mistakes,
help them get up and do good. Help them do
good for your community and show that they are a
good institution. And you can you know, all this stuff
is sort of it's transparent. Now. You can see who
has a good CRA rate community reinvestment, who is a
bad one, who's been sued a million times and has

(55:04):
all these fines and penalties, how long ago that was,
and who's corrective action, and then see what their manager
team looks like, see who's on their board of directors,
See who their managers are, who their leaders are, Are
they living their values? And again I've been there. Ain't
no perfect, but I've been remarkably impressed with the trajectory,
the trend line of progress. We're still waiting to see

(55:27):
a black CEO of a money center bank or even
one of these super regional banks. You have money center banks,
which is the top you know, four or five banks,
and you've got super regional banks, which are these behemoths
like P and C and US Bank and et cetera,
et cetera. I've already named the money center banks with
those who are systemically important, most systemically important to the

(55:49):
system of freederprise and capital and commerce. And you've got
you know, regional banks, they're still big, one hundred billion,
you know. And then you've got the community bank, said
community that could be fifty billion dollars a day. That's
why I was saying, a black bank with a billion
dollars is really out gunned in many cases. Now, if
you want to put your money in a black bank,

(56:10):
knock yourself out. I have money in a black bank
that black bank, though may not on their own be
to give you the best terms that you're looking for,
no matter how much they love you. It's not personal.
They've got a higher capital ratio, they have less capital available,
less assets available to lend, they can take less risk.
They're going to ask you if they're going to be
more conservative. In most cases, they're going to ask you.

(56:31):
And let's they have a partnership with a major bank.
By the way, they might they're going to ask you
for probably more down payment. They may have to charge
you a higher interest rate because they need to pay
for their overhead. It's not personal, so you may end
up because by doing the right thing, you may end
up paying a slightly higher interest rate, slightly more cash
down cash down slight less best slightly less than premier terms,

(56:53):
even though you qualified, which proves it. That is not
just race that's in there. If you want to support
a black bank, and I encourage you to, I do
it right, then then put your money on deposit at
a black bank you have good credit, give them a
good loan and credit card or you know, the personal loan, whatever,

(57:13):
and pay it back and see if they have a
strategic alliance with a bank or have some kind of
federal guarantee or something that will allow you to get
access to big bank pricing at a small community bank.
Feel right, so you can find you can you know,
two things can be true at the same time. You
can I do business with a bunch of institutions. I
do business with banks, money center banks, regional banks, community banks,

(57:37):
credit unions. I do do business with a broad range
of institutions, and those will give me the best deal
for what I'm looking for gets the business. At the
same time, I'm conscious and I make sure that I
give back to my own community, and I make sure
that i have money on deposits. And I'm doing business
with black banks, and we have hope and site locations
at black banks, including you know, supporting Citizens Bank, which

(57:59):
is bank that doctor King's father, Daddy King, served on
the board of in Atlanta, Georgia. Did you know that?
All right, We're getting long in the tooth for this podcast.
I hope you've enjoyed this. Let me tell you real quickly.

(58:22):
I've covered a lot of ground here and I've had
no notes, so I hope that I did a good
job of covering banking for you. By the history of banking,
here's the history, the chronology starting three thousand years before
Christ was born. Yes, in ancient origins Nesopotamia, that's the
earliest trace origins of banking. It was records of clay

(58:44):
tablets showing the loans were made and interests were charged.
That's banking. Ancient Egypt, two thousand years before Christ. Similar
to Mesopotamia. Ancient Egyptians. Some black people won't argue. Maybe
all black people, who knows. I don't know what they
look like back then, but you know it was hot.
These dark people, they were brilliant. They used granaries and

(59:06):
temples as storage and lending facilities. The concept of interest
bearing loans was well established. That's banking. The ancient Greece
and Rome. That was eight four hundred years before before Christ.
And Greece, money lenders operated in marketplaces and some temples
provided loans. In Rome, banking was more sophisticated and official,

(59:29):
with professional bankers and deposits and credit facilities. That's definitely banking.
They also developed the concept of checks and promissory notes.
That was five hundred, four hundred, eight hundred years before Christ.
Medieval period five hundred to fifteen hundred years after after Christ,
with the fall of Rome, banking activities diminished a little bit,

(59:52):
disnet disappear. They then re emerged in the night templars
and folks actually in places of faith play. The Catholic
Church later on became a very big player in the
banking monetary scene. Italy and the birth of modern banking
that was the twelfth and fourteenth century. The Renaissance period

(01:00:12):
saw the rise of powerful banking families in Italy, such
as the the Medicy family in Florence. They developed new
banking techniques, including double entry bookkeeping, bills of change and
letters of credit. Their early modern period the Bank of
Amsterdam that's nineteen oh six, the Bank of England at
sixteen ninety four. We don't have time to get into
details here. I'm giving you the high watermark here. The

(01:00:35):
eighteenth and nineteenth century expansion of commerce banking. During the
eighteenth and nineteenth century, commercial banks proliferated, especially in northern
North America and Europe. These banks provided a wide range
of services including deposits, loans, and investment products. And let's
just say this, they also financed slaves. Some of these
banks and bank Bank was operating in the eighteen hundreds,

(01:00:56):
earlyteen hundreds. They took slaves as collateral. The banks that
actually show on their records. By the way, one of
the banks didn't mentioned that we partnered with is true
as banks a good institution. Their CEO, Bill Rogers, great
guy who's one of the people who took me and
made and scale my operations up. He acknowledged that the history,
the long history of his bank, you know, involved in

(01:01:18):
slavery and financing plantations who put slaves up as collateral.
You know, JP Morgan Chase has history of slaves being
collateral for loans going back one hundred and fifty years.
Any bank that's that owed has history of financing plantations
in the slave trade, and they financed and sometimes took

(01:01:38):
his collateral human beings. Yes, it happened. That doesn't mean
the people who are running today are races. They could
be the nicest people in the world. They can't, you know,
help what happened one hundred and fifty years ago. But
these institutions have, you know, rainbows follow stores. You want
again try to find ways to let them come up
and prove they're good for your community. To Truis is

(01:02:01):
one of those formerly sun Trust, it's one of those
situtions that it has proven that. By the way, the
head of Banking and Truist is Doctae Wilson, a black man,
and operation opens in eight hundred satellite locations and fifty
real locations physical locations at Truis. Of their two thousand
branches were in almost half. I commend them, and they're
doing a really good job. O was I talking about Truist, Oh? Anyway,

(01:02:24):
I was just talking about the fact that the bank,
a bank that's at ode, has a history in the
slave trade. So that was the seventeen hundreds and eighteen hundreds.
The Industrial Revolution period overlapped with this development of the
stock market. Banks were involved in that period. The twentieth century,

(01:02:44):
the Great Depression and the banking reforms of the nineteen
thirty the Great Depression, that's where the FDIC came from.
All bank regulatory agencies came out of crisis. Okay, So
the FDIC came up because the banking system collapsed during
the Great Depression in people's confidence went away. I've already
told you that the Freedom's Bank preceded this in the

(01:03:04):
eighteen hundreds, and that was a bank created by Lincoln
to teach free slaves about money, financial literacy, and down
it's how they're savings. By the way, two months after
forty Acres of the Mule. It's another podcast for another time,
but that's also my book for financial literacy for all
post war expansion nineteen forty five nineteen seventy that's when
everything took off. Deregulation and globalization nineteen eighty to the

(01:03:26):
two thousands, financial crisis and reforms two thousand and eight,
that's a big mortgage crisis, present day digital banking and fintech.
And I would argue artificial intelligence is coming and I
think ethical banking is coming back. I think emerging markets
what I think that Financial cra Community Reinvestment Act is
about to mean emerging markets in America. That's my I

(01:03:50):
think the d E and I I think the title
has been so abused. It's that that top. That title's
probably gone. But diversity is key to the business plan
for America. And I believe that banks are one of
the unities that will lead the effort to say, hey,
we need new markets to conquer, new places to make

(01:04:11):
a profit, and I want them to make a profit.
By the way, and I was doing this deal with Shopify,
the one me and Black Business Initiative. I was on
a Roland Martin show and one of the callers said,
why is shopify doing this? Why they putting up one
hundred and thirty million dollars over ten years help black
blacks become business owners and what was the right thing
to do? Told me, Luky, the founder is a good
guy friend of mine. But also pause pause, pause, they

(01:04:37):
want you as a customer, right, they want to do
well and do good And don't you want to be
a customer or do you just want to hand out?
Do you want to hand out or hand up? They're like, oh,
we want to hand up exactly right. So this is
a James Brown version of affirmative action or or get
it myself. And in this case, Shopifi was also acting
like a quasi bank because they financial sales as you
increase your sales through the technology platform. So I think

(01:04:59):
that that commun need reinvestment act, that people of color,
communities of color, diverse places are going to be as
we train these communities up and get them experts at
capitalism and free enterprise and financial university and get them strengthen,
get their hustle strengthened so they have a business plan
behind their great idea and their and their work ethic,
which we have because when the rules are published and

(01:05:20):
the plane fools level, we kill it. We absolutely succeed.
When the rules are published and the plane fills level.
Look at the arts, look at the look at professional sports,
look at frankly, government service, look at the faith area
rules of published plainforce level. We absolutely succeed, and we're
going to do it free enterprise and capitalism too. And
I believe that emerging markets in America will the regulatory

(01:05:42):
environment of Community Reinvestment Act CRA is going to morph
into emerging markets in America. The D E and I
is R and D research and development for future GDP
gross domestic product. I hope this has been helpful. GDP
is the incomfortation, by the way, I hope this has
been helpful you much. This is John O'Brien, This is
Money and Wealth. I didn't do the trending topics and

(01:06:03):
I didn't do a fan question this time, but I
hope you enjoyed this podcast as I break down banking,
love and light. Go to Operation Hope. Subscribe to this podcast,
get my book Financial Literacy for All. Sign up on
to all my social media platforms. Tell your friends and
let's change the world. It's time to make smart sexy again.
Making dumb sexy for way too long, dumbed down and

(01:06:25):
celebrated it. It's now the time to make smart sexy again.

Speaker 1 (01:06:42):
Money and Wealth with John O'Brien is a production of
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