This is an opinion column.
I secured my first bank loan right after graduating from college. I worked throughout the four years and left with a manageable amount of school debt, yet still needed cash to move from California to New York and start my journalism career.
Fortunately, while in high school in Tulsa, I participated in a local bank program designed to teach financial literacy (although I don’t think the term yet existed) to a group of us from schools throughout the city. Our “Junior Board of Directors” convened every Saturday for several weeks, listening each time to bank employees sharing the ins and outs about money.
We also received a free checking account. Looking back, that move was slick and ingenious, a seed planted that might sprout into a potential customer for years if not life. Indeed, I utilized that bank (years, alas, have yanked its name from my brain) throughout college and until I opened an account in New York.
Mobile deposits? Please. Still decades away.
Because I had a relationship with the bank (and a mom who co-signed), my loan request was approved. The amount: $1,000.
I diligently put my monthly payment check in the mail on time for however long it took that loan balance to hit zero. I’ve also tried to never be late with a payment on that credit card I was suckered into getting while in college (and always paid more than the minimum balance), or any mortgage or subsequent credit payment.
Between my entrepreneurial father (I’ve written about his store on Black Wall Street), a schoolteacher mom, and the Junior Board of Directors, maybe I did learn a little somethin’ about managing finances.
Now truth: I’m no Warren Buffet or Robert F. Smith. I’ve made some knucklehead money moves—a few still cause a tear. But I’ve never been denied a loan, probably because I sensibly managed my finances, tended to my credit.
Not that I couldn’t have been denied.
I’ll save for another day my lesson on the seismic impact on African Americans’ ability to build assets when we initially were assets, when redlining diminished the value of our homes, which obliterated our ability to qualify for a loan, which fostered a historic distrust of banks, which spawned the life-blood sucking payday loan/predatory lending industry, which….
Just know this: Blacks are still far less likely to be approved for a mortgage or small-business loan than whites.
Sometimes they’re denied due to an anemic credit score, lack of a consistent banking history, or insufficient collateral due to long-standing wealth disparities.
Sometimes just because. Sometimes even when their financial profile is better than white applicants whose loans were approved.
A LendingTree analysis of 2022 Home Mortgage Disclosure Act (HMDA) data across the 50 largest U.S. metropolitan areas found Black homebuyers are 5.30% more likely to be denied a mortgage than the overall homebuyer population. On average, 14.44% of Black homebuyers are denied, relative to 9.14% of the overall population.
Check with Federal Reserve System data on small business financing. It shows more white applicants (35%) are approved for every dollar they apply for than Hispanic (19%), Black (16%), and Asian (15%) business owners.
All this to say: Birmingham-Southern College is learning what it’s like to be Black.
To be denied. To be stifled for financial shortcomings—fair or not.
As you likely know by now, BSC, almost a year after we reported that the lauded private institution on the city’s beleaguered westside was in dire need of $37.5 million to keep its gates open, was denied a $30 million loan of our money by state Treasurer Young Boozer III because, well, it didn’t qualify, Boozer said.
Citing BSC’s Moody’s credit rating of Caa2, he compared the school’s creditworthiness to “a junk bond, one step above default.” (Moody’s defines Caa-rated obligations as “judged to be of poor standing and are subject to very high credit risk.”)
“A terrible credit risk,” is how he terms them, noting collateral and claims others may have on it that may hinder repayment of the loan.
“Unfortunately,” said Isaac Cooper, CEO/Managing Partner at Birmingham-based IMC Financial Consulting, which provides literacy programs and services for numerous clients, including Birmingham City Schools, “Birmingham Southern is dealing with in public what the Black community has been dealing with in private, and how it could potentially impact the future of the institution in just the same way [low credit scores] in Black neighborhoods create a forecast that speaks to potential conditions for future generations.”
“Credit is incredibly important, and it’s really just a function of how you pay your bills,” said John Hope Bryant, founder, chairman/CEO of Operation Hope, which seeks to “expand economic opportunity” through programs that raise credit scores, decrease debt, and increase savings. “If you are a white-owned, traditional institution with no history of markets discriminating against it, or some other bias beyond its control. it is then possible—like every other business sector where capitalism creates and capitalism destroys—it is possible that this institution, respectfully stated has just run its course.
“Blockbuster was everywhere until it wasn’t and now there’s Netflix. JC Penney’s and Montgomery Ward were everywhere until they weren’t and now you have Amazon. So, it’s not just credit rating, it’s also market forces. Unfortunately, it might just be that somebody mismanaged the finances and/or the business plan has outrun its skis, in which case, it needs to be restructured or it will go away.
“That is the nature of capitalism, the nature of business.”
And the unfortunate, but very real nature of math.
How BSC got to this dire place is well-chronicled and does not lie with current leadership, which is understandably distressed and yanking every possible lifeline to avoid closing its wrought-iron gates for good.
I understand, too, economic, and educational concerns, like those expressed this week by the mayor—concerns for jobs lost, for students unwillingly thrust into let’s call it an academic transfer portal.
Given the governor’s decree to get Alabamians “off their fannies” due to the state’s woefully low workforce participation rate, hiring managers across the region may already be lurking outside those gates.
And area colleges would almost certainly welcome BSC refugees (and their tuition) with open arms.
Randall Woodfin penned a guest column published Tuesday that was a sincere plea for Boozer to “reconsider” his denial, lest the bucolic 192 acres along Arkadelphia Road tumble into a purgatory of uncertainty for “a part of Birmingham that cannot afford to lose its best neighbor.”
I get it. Memories of the ruins of Carraway Methodist Medical Center laying waste to the Norwood neighborhood for 15 years now still linger even as bulldozers make way for The Star at Uptown, a $346 million development that includes a $50 million amphitheater.
Woodfin also noted the westside is on the precipice of a “transformative revitalization” buoyed by investments totaling $375 million.
That tells me this: While the prospect of Birmingham-Southern closing is understandably frightening—especially for residents in neighborhoods too long gated from economic prosperity—its soil won’t likely lay dormant long.
Out of respect for BSC and the tenuous tensions of its quest to survive, suitors with new visions for the hillside acres have probably remained mute, waiting for a denouement before making their bid.
BSC President may very well gain the lifeline he needs to keep the gates open—and at least for a time. If not, those may not have to wait for long.
“If this was a historically Black college or university with a history of all that comes along with them being denied access to capital markets, etcetera, then I would say maybe it might be a good use of public funds,” adds John Hope Bryant. “Combine it with some financial coaching to give them a new lease on life because they have a public mission that is unique and rare that will uplift hundreds or thousands of people in Alabama.
“That’s not what we’re talking about here. Students can go to another white college or university without any problems and we’re not talking about a college or university whose principal problem was being discriminated against. So sorry, but loan denied.”
It hurts. We know.
More columns by Roy S. Johnson
I’m a Pulitzer Prize finalist for commentary, a member of the National Association of Black Journalists Hall of Fame, and winner of the Edward R. Murrow prize for podcasts for “Unjustifiable,” co-hosted with John Archibald. My column appears in AL.com, as well as the Lede. Check out my new podcast series “Panther: Blueprint for Black Power,” which I co-host with Eunice Elliott. Subscribe to my free weekly newsletter, The Barbershop, here. Reach me at email@example.com, follow me at twitter.com/roysj, or on Instagram @roysj