Shareholders at Carver Bancorp, America’s largest Black owned and operated bank, have known since early spring that their bank was on the brink of bellying up. On Tuesday, at the Studio Museum in Harlem, they voted in favor of a rescue package from the federal government and Wall Street firms.
That vote meant the Harlem-based bank would receive $55 million and thereby relinquish control. Like the troubled financial situation at Inner City Broadcasting Corporation, another long-standing institution with Harlem ties that was on the verge of bankruptcy, the bank had few alternatives. It was either take the money or close the doors.
“There were no alternatives,” said Carver’s CEO Deborah Wright. “The amount of capital needed was not available locally.”
According to several news reports, the decision rankled many shareholders, who wondered how things will pan out in the future with outsiders now in control.
Last year the bank lost $40 million which practically eliminated the profits it had secured over the last decade. The main problem was the bank’s inability to recover past-due real estate loans, a total of $120 million, greatly exceeding what it had set aside in reserves.
Wall Street banks, it was reported, will now hold 73 percent of Carver’s shares, the U.S. government 25 percent and the remaining shares to Carver’s existing stockholders.
Among Wright’s future plans is to resume control of the government’s percentage of holdings as soon as possible. Such a measure would mean a dramatically increase in new bank accounts and the purchase of loans from other institutions. .