Tuesday, March 18, 2014
Black? No. Hispanic? No. White? Yes! -- California Banks Creating a Nightmare for Minority-Owned Businesses
There's a puzzling problem occurring in the state of California. It's what's known as a conundrum, a real riddle. California is known for its diversity. California tourism ads make it appear to be a place where people from every walk of life can mix and mingle. Non-whites represent up to 60 percent of the state's population, yet when it comes to choosing suppliers, banks rarely do business with them.
Out of $51 Billion, Only 8% Was Contracted to Minority-Owned Businesses
According to a recent study by the Greenlining Institute in Berkeley, California, businesses owned by African Americans, Latinos, Asians or Native Americans got only 8 percent of their products and services business from California banks in 2012. To give you an idea how much that is in comparison to other business suppliers, consider the fact that in 2012 California banks purchased in total more than $51 billion worth of goods and services.
The Good-Old-Boy System
There is definitely what's known as a good-old-boy buddy system in existence among banks in California, where they continue to purchase from white people they know and have been doing business with for years. There is nothing wrong with doing business with people you know. The problem is that the amount of business created by banks is significant enough that is has a major impact on the economy of California, and on minority-owned businesses.
What Banks Need To Do
Banks need to become more aware of their impact on minority-owned businesses and make more of an effort to expand their supplier network. When wealth gaps can be averted, everyone wins and the economy is strengthened. As Bruce Mirken, media relations director at The Greenlining Institute explained it, "If we can encourage businesses in these diverse communities - the entrepreneurial spirit is certainly there - it'll help everybody ultimately; it'll boost our whole economy."