Savings and Trust: The Rise and Betrayal of the Freedman's Bank by Justene Hill Edwards
The Freedman's bank was formed at the end of the Civil War to give former slaves a place to save their money. It was initially charter to be a very safe savings bank in a single location. It would invest in government bond and pay a small amount of interest. It expanded to other locations. Many of the leaders were white men who desired to help the blacks. The bank later expanded to many other locations. Many of the clients were using it as a place to store money until they could buy land. Transactions tended to be small. The bank later ran into money issues. It had difficulty making the promised interest payments. It spent money on opulent buildings. The solution seemed to be to go into other money making ventures, such as making loans. It was restricted to making "safe" loans to those with significant land as collateral, and was forbidden from loaning to those controlling the bank. Alas, the first restriction ended up restricting loans to most of the black patrons and the second restriction was flouted. After a banking panic hit, the bank hit huge issues. Advance notice was required for withdrawals. (Though certain mostly white business customers could get money out easily.) The bank eventually failed. Even in failure, there were some last minute loans to friends. Almost none of the outstanding loans were paid back. The clients only received a few cents on the dollar and now were resistant to dealing with banks. It is a typically case of bank failure caused by greed, tho. This probably set back the financial condition of the freed slaves, though was only a small part of the many negative policies during reconstruction.
Thirteen Bankers describes the control that bankers have managed to btain over our current financial system. It begins with a history of banking and moves towards the "innovation" that has occurred in banking. Only a few generations ago, banking was a relatively low paying conservative industry. However, bankers introduced more and more complex instruments that allowed them to make more and more money. Bankers are also heavily involved in the regulation of banking, making it difficult to implement some needed regulation. Big banks have also become "too big to fail" The government's willingness to let institutions fail at the start of the 2009 financial crisis ended up "forcing" the government to bail out the remaining banks. There was a huge liquidity crisis that could not be resolved. The perverse impact was that the big risky banks end up getting bigger, while the small diverse banks were wiped out. "Too big to fail" banks take riskier and riskier bets because they know they can get bailed out.