U.S. Bancorp is launching a multipronged initiative to address the racial wealth gap.
The new initiative announced Wednesday is built around providing communities of color, with a particular focus initially on the Black community, greater access to financial information, education, products, resources and capital. The effort spans the entire enterprise and also includes recruiting more people of color to work for it.
The array of ideas and projects at U.S. Bank is unfolding as more American companies grapple with the yawning chasms of wealth and opportunity by race. The banking industry confronts a decadeslong history of underserving Black people in particular, rooted partly in unfair lending practices for much of the 20th century that created wounds that still linger.
“There’s this trust gap between the Black community and the financial industry,” said Greg Cunningham, U.S. Bancorp’s chief diversity officer.
An internal working group spent the last six months researching and building the initiative, which will roll out in pieces throughout the year, he said.
The work builds off an initial commitment it made last June following the killing of George Floyd in Minneapolis just a few miles from the company’s Minneapolis headquarters. At that time, the company said it would provide an additional $100 million a year in loans to Black-owned businesses, double its number of Black-led suppliers, and award $15 million in grants to groups addressing systemic economic and racial inequalities. About $5 million of those grants went to organizations in the Twin Cities.
Cunningham, whose position was elevated at that same time to report directly to CEO Andy Cecere, said U.S. Bancorp is on track to meet or exceed those goals it set last year. But he said he knew there was more the bank could and should do.
“U.S. Bank can’t solve systemic racism, but what we can do as a financial-services institution is we can look at the data and look at the inequities that are happening and say where could we actually apply the core competencies of the bank,” he said. “And we landed on this incredibly inequitable racial wealth gap that’s happened in this country where white families have household wealth of $170,000 and Black families have $17,000 in household wealth. That’s a 10-to-1 racial wealth gap in this country that affects every single one of us.”
In Wednesday’s announcement, the company committed to make $25 million in loans and grants to small businesses run by women of color, increase education about homeownership through community groups, focus outreach of its wealth management division to Black communities, and to develop and promote Black executives. Recruiting more Black financial advisers and Black mortgage loan officers will also be part of the effort, Cunningham said.
The $25 million microbusiness fund will be funneled through community development financial institutions (CDFIs) so the funds can be distributed faster and more efficiently, he said.
The company will also look to expand outreach for one of its debt products in which the bank purchases a firm’s accounts receivables so it can access that money right away instead of having to wait 30 or 60 days. He noted that the program could be especially useful to Black-owned businesses, about 90% of which are sole proprietorships.
“Oftentimes what those small businesses struggle with is cash flow,” he said.
Another program set to launch later this summer is focused on one of the best ways to build wealth — homeownership. Toward that end, the bank is going to provide more coaching and mentoring in financial education through partnerships with community and youth groups.
“This is not about just getting people into a mortgage,” said Cunningham. “It’s about helping to educate people on wealth building and how important homeownership is and how that process of owning a home is a long-term proposition.”
U.S. Bank recently expanded its practice of ensuring a woman or person or color is interviewed for every manager-level position to all roles. And last year, it partnered with the McKinsey’s Black Leadership Academy to offer its leadership development program to its employees. About 150 U.S. Bancorp employees are participating in the program, with plans to expand it this year and next.
“How do we prepare them for the c-suite?” said Cunningham. “That’s where the real dearth is. Every organization in America is diverse at the bottom. It’s as you move into management and as you move up into executive leadership” that diversity falls off.
Cunningham is one of four people of color and the only Black executive on the 14-member managing committee of top leaders at U.S. Bancorp. Within the last year or two, each person on that executive team has been paired with an employee to sponsor, with a focus on supporting women and people of color within the company.
One of the reasons this initiative has been possible, Cunningham added, is because of Cecere’s decision last year to elevate his position to be part of the managing committee. In doing so, he made diversity, equity and inclusion a strategic priority of the company and part of its daily planning process, Cunningham said.
“It sent a really important signal to the organization,” he said. “It has been a catalyst to get this work done.”
Kavita Kumar • 612-673-4113