MLS strikes ‘historic’ $25m deal with black-owned banks
A major sports league has announced it will borrow $25 million from black-owned banks to help bridge the black-white economic gap in what it calls a “historic” deal.
Major League Soccer said the partnership, facilitated with the National Black Bank Foundation, marks the first time a sports league has partnered exclusively with black-owned banks in a major business transaction.
“As a league, we continue to increase our racial justice initiatives,” MLS Commissioner Don Garber said in a press release announcing the partnership.
“To have a real impact, economic justice must be part of the equation. This transaction with a syndicate of community-focused black banks is an important step, and we hope it will raise awareness of the importance of black-owned banks and their impact on the economy,” Garber added.
The Federal Reserve notes that wealth inequality rose between 1989 and 2016, the last year comparative statistics were available, with blacks and browns struggling the most.
“We find that successful families tend to be white, college educated, and/or older. We find that struggling families tend to have one or more of these characteristics: black or Hispanic; no four-year university degree; and/or younger,” according to a Federal Reserve report that examined what wealth inequality looks like in America.
The MLS effort hopes to make a difference. The loan will allow black-owned banks to earn additional capital through interest and fees. Banks can then use this extra money to lend to small businesses and make other loans in the communities they serve.
The Federal Reserve also said that black households tend to be “unbanked” or “underbanked” more than any other demographic group. Unbanked means these black households don’t have bank accounts, and underbanked means they use alternative, more expensive financial services like payday lenders, the Federal Reserve report notes.
“I brought MLS and NBBF together because I saw an opportunity to partner with the power to transform lives in Black communities and change hearts and minds across our country,” Bernice A. King, CEO of the King Center and board member of the National Black Bank Foundation, said in the press release.
“This agreement undoubtedly marks an important moment in the ongoing struggle for civil rights in the United States,” she added.
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