25 years of blacks in financing - coverage by B.E - Countdown To 25

Black Enterprise, Oct, 1994 by Matthew S. Scott, Rhonda Reynolds, Cassandra Hayes

Not too long ago, if you wanted to convene a meeting of black America's financial all stars--individuals with power and influence in the banking, finance and insurance industries--you probably could have fit them neatly into one small conference room. In fact, Granite Broadcasting CEO W. Don Cornwell, then a top trader at Goldman Sachs, convened a meeting in 1978 between National Urban League President Vernon Jordan and blacks in corporate finance. Only 17 people showed up.

How things have changed! Even though many financial gurus and deal-making wizards, including Cornwell, have launched successful business ventures moving them out of finance, a steady wave of newcomers has replaced them. This new army of financial whizzes has engaged the financial industry with a "take-no-prisoners" attitude, leading to a series of economic breakthroughs.

The financial warfare of the past 25 years has been fought with an arsenal of MBAs, law degrees, business plans and venture capital. African-Americans led an assault on the financial services industry with this weaponry. They received key support from such market forces as interest rates, legislation such as the Community Reinvestment Act and good old-fashioned wisdom. The results are undeniable.

For 25 consecutive years, African-Americans have improved their economic standing in America. During those years, BLACK ENTERPRISE has chronicled and celebrated the achievements that have spurred that growth.

In 1973 when BE began listing the top black-owned banks, savings and loans and insurance companies, their assets totaled less than $2 billion. Twenty years later, the assets of black-owned financial institutions were an impressive $4.2 billion. This steady growth has occurred despite an overall decline in the total number of black financial institutions, from 123 in 1973 to 76 in 1993.

The same phenomenal growth has occurred on Wall Street. The investment banking landscape has changed since 1971 when Daniels & Bell became the first black-owned investment bank to secure a seat on the "Big Board" of the New York Stock Exchange. Black investment bankers have been the architects of some of the biggest deals on the Street. People are still talking about BE's exclusive coverage of the late Reginald F. Lewis' leveraged buyout of TLC Beatrice International in 1987.

Such shrewd deal making prompted many Wall Street executives to start their own investment banking firms during the 1980s. Success came quickly, and BE was there, beginning our annual listing of the nation's top black-owned investment banks in 1991. In 1993, firms on the BE investment bank list co-managed bond issues worth $162.7 billion.

With billions of dollars in trading activity, BE sought to discover which black traders had the hottest hands. The BE October 1992 cover story, "25 Hottest Blacks on Wall Street," put money mavens such as William Blair & Co. 's Michelle L. Collins, one of only two women on our list, in the limelight for the first time.

Capital has even been flowing in the venture capital markets. Once, federally funded Minority Enterprise Small Business Investment Corporations (MESBICs) served as the premier source of venture capital for small minority businesses. Now, a crop of privately run black-owned firms, led by Boston-based UNC Ventures, have found creative ways to generate millions of dollars for investing.

Unfortunately, not all the news has been good. Discrimination in the financial services industry serves as a continuing reminder that even the most successful blacks still confront barriers to advancement. Some of those who started their investment banking firms in the 1980s did so because they felt they weren't compensated properly at white-owned firms.

In the accounting industry, Bert Mitchell and Robert Titus are celebrating the 20th anniversary of their accounting firm, Mitchell, Titus & Co., the nation's largest minority-owned accounting firm (see "Two Decades In The Black," in this issue). However, there are relatively few other success stories in accounting, where blacks have never represented more than 1% of the workforce.

Black-owned insurance companies have endured a shaky 25 years, since the industry has not enjoyed robust profits in many years. Strong companies got stronger and weak companies struggle to keep pace. North Carolina Mutual Life Insurance Co., led by CEO Bert Collins, remains the nation's largest black insurance firm, and a prominent symbol of the black business legacy of Durham, N.C.

Atlanta Life Insurance Co.'s Jesse Hill Jr. has been one of the beneficiaries during these tough times. His company, No. 2 on the BE INSURANCE LIST, has snapped up several of the smaller black-owned insurance companies that could not weather the storm of competition from majority firms. As a result, in 1973, there were 42 black-owned insurance companies, twenty years later the number had dropped to 23.

The semiannual BLACK ENTERPRISE Board of Economists' roundtable has analyzed black America's economic challenges since its christening in 1982. Economic forecasts from such authorities as Andrew Brimmer, former member of the Federal Reserve System Board of Governors and Bernard Anderson, now assistant secretary in President Clinton's Labor Department, have helped many Wall Street wizards to pick the proper time to cut their masterful deals.