Systemic racism, the public and private policies that create and reinforce advantages for some communities over others, plagues the United States. The financial industry, banking in particular, needs to step up to change the pattern.

The federal government has pumped out more than $770 billion in Payroll Protection Plan loans. Banks were given the job of distributing these pandemic emergency funds. But that plan, according to Reveal, the storytelling arm of the Center for Investigative Reporting, failed the underserved communities the PPP was supposed to prioritize.

An analysis of over 5 million loans found that majority white areas received a far higher percentage of loans than any neighborhoods with Latino, black or Asian majorities.

No one should be surprised by the disparities. The PPP is a prime example of systemic racism. Help for minority communities was a specified priority of the PPP. Using banks to distribute PPP funding, however, simply pushed the money through and reinforced the existing discriminatory system.

Banking wasn’t always this way. In 1904, Amadeo Giannini founded what would become Bank of America—currently the largest distributor of PPP loans—by making small loans, often without paperwork, to the immigrants and farmers denied services by the major banks.

Small businesses build the assets that create generational wealth. Poorer communities filled with such businesses have been cut off from financing for decades by redlining practices, the location of bank branches and a lack of banking relationships.

When the pandemic hit, banks were ill suited to fulfill PPP priorities. Some funds were passed through community development financial institutions, but not nearly enough to meet the needs of struggling minority communities.

Giannini proved that banking practices can be designed to correct the flaws that penalize underserved populations and that banks can make money doing it.

To repeat his success, today’s banks should put branches in poor and immigrant neighborhoods with procedures designed for single proprietors. They should build relationships with owners who hire relatives as independent contractors. They should trust those who have been in business for decades. They should lobby to change banking regulations.

Underserved minority communities can be stable and prosperous. Banks simply have to partner with the entrepreneurs who have always been there.

“Our View” represents the opinion of the newspaper editorial board, which is made up of members of its board of directors. Remarks may be directed to

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