In The Color of Money, Mehrsa Baradaran weaves together an intriguing and sobering analysis about the relationship between public policy and black economic realities. She argues that wealth inequality in the United States has been created and sustained for decades by banking legislation that has discriminated against blacks since their emancipation from slavery. “And,” she explains, “the color of capital, commerce, property, trade, and money was white” (5). Moreover, Baradaran unpacks the role of black banking in narrowing this long-standing economic divide. Historically, black banks have been praised for their potential to eliminate the racial wealth gap through extending economic opportunities to blacks. However, black banks never came close to ending the practices that left black people in a state of economic inferiority. Though integral, the responsibility and burden of fixing such a seismic problem should not be placed on black banks alone, because they are but a small factor in the larger system.

The book is divided into eight chapters that cover the period from 1865 to the present with historical and contemporary observations. It begins with the early history of black banking and the Freedmen’s Savings Bank in the aftermath of the Civil War. The bank took advantage of black depositors through a series of unscrupulous transactions by its white administrators. Its failure left blacks with a general distrust of banking as an alternative form of wealth building. Between 1888 and 1900, the earliest iterations of black banks formed through mutual aid and fraternal societies. An example includes the True Reformers Bank in Richmond, Virginia, founded by the Grand Fountain of the United Order of True Reformers. As Baradaran notes, however, black enterprises such as banks lacked the necessary capital to expand beyond certain parameters. The “rise of black banking” in the first half of the twentieth century happened in tandem with Jim Crow segregation, as blacks were relegated to a separate economy that forced them to set up their own parallel institutions. There were more than one hundred black-owned banks established during this period, and the overwhelming majority of them existed in the South. Nevertheless, only a handful of them survived the Great Depression. The book noticeably transitions to a more focused discussion about the impact that broader banking policies had on blacks in the urban North.

Next, Baradaran deals with the impact of major economic policies from the Great Depression to the civil rights movement. During these periods, the economic opportunities of most Americans expanded, yet prosperity for blacks was virtually nonexistent. The programs established by President Franklin D. Roosevelt during this period, according to Baradaran, had a more significant impact on banking and the credit market than laws passed at any other time in the country’s history. “So monumental were the New Deal reforms,” she explains, “that banking history can be divided into the Before New Deal and After New Deal eras” (122). Moreover, these reforms gave whites a particular advantage, as they represented a kind of affirmative action. This was especially true when it came to legislation related to home mortgages that effectively reinforced residential segregation in the form of redlining while fueling the rise of the American middle class. The most illustrative examples can be seen with the creation of agencies such as the Federal Housing Administration (FHA), among others. The FHA became one of the most important New Deal agencies, but black people and black banks were largely excluded from accessing its benefits. “The black population was left out of the capital-building and prosperous decades of the 1940s to the 1960s,” Baradaran writes (127). Despite the gains of the civil rights movement, with the passage of milestone legislation, these reforms eschewed the kind of wholesale economic policies that were deemed necessary by civil rights leaders. Here, Baradaran points to Dr. Martin Luther King Jr.’s “I Have a Dream” speech to underscore the perils of economic inequality that he and others wanted the federal government to address. However, King’s dream became an “economic nightmare” by the time of his assassination. While the goals of the civil rights movement had always emphasized economic justice, activists and organizations became more assertive in their appeals during the latter part of the 1960s.

The last section is perhaps the strongest, as Baradaran updates our understanding of black capitalism from the Nixon administration onward. The support for black capitalism came more readily in the form of rhetoric versus substantive public policy. As civil rights leaders were forced to readjust their strategies in attacking institutionalized racism, at the height of urban rebellions in the North, activists in the Black Power movement simultaneously redefined their goals in stark economics terms. Nixon hijacked the Black Power movement’s hardcore message by embracing these ideals in language packaged as “black capitalism.” In other words, “Nixon co-opted the black Power movement’s rhetoric of economic self-determination to push for a segregated black economy, thereby justifying his neglect of other proposals for meaningful reform” (164). Nixon employed black capitalism as a conservative strategy and offered weak solutions to dealing with economic problems facing black communities, which included the Office of Minority Business Enterprise (OMBE). In reality, the OMBE had a predominantly white board and became a symbolic gesture. “At best,” explains Baradaran, “black capitalism was being used as state paternalism, but at heart it was deployed as a decoy instead of an honest account of a systematic problem” (206). The book goes on to interrogate the influence of banking policies on black communities in the past forty years. As the war on drugs and crime intensified during the Reagan and Clinton administrations, so, too, did exploitive credit and lending policies specifically targeted at black communities. The subprime mortgage crisis of 2008, which destroyed what little black wealth existed through homeownership, had its roots in deregulation measures put into practice several decades earlier.

The Color of Money is more precisely a sharp and critical legislative history of banking discrimination against blacks and the ways black poverty has been and continues to be extremely profitable. Baradaran is in fine form dissecting the process of black banking, in particular, and the larger banking industry more broadly. The reader learns about the intricate pitfalls and dual mission of black-owned banks such as the Freedom National Bank in Harlem (cofounded by baseball pioneer Jackie Robinson), Unity Bank in Boston, and ShoreBank in Chicago. One might consider some language throughout the book overused. “Often referred to as black enclaves, black neighborhoods, or other racially neutral descriptions,” Baradaran explains, “the word ghetto is a much more accurate descriptor because it captures the involuntary nature of segregation” (70). While phrases like “the ghetto,” “the black ghetto,” and “urban ghettos” highlight the oppressive conditions in black areas across the country, the terminology does not convey how black people actually refer to themselves or their communities in the present. Through law and politics, the book uncovers and explains in lucid detail the depths and layers of economic policies designed to keep the racial wealth gap from being penetrated and, ultimately, the failure to integrate the American economy.