Is That Really The Biggest Problem For Black America?

Financial literacy — the skill set to make informed financial decisions — is one that a vast majority of Americans don’t possess. Only about one-third of Americans have a working understanding of interest rates, mortgage rates and financial risk, according to the Financial Industry Regulatory Authority.

African American adults answered 38 percent of questions correctly on the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) compared to 55 percent of white adults, according to a report by the Teachers Insurance and Annuity Association of America.

The P-Fin Index relates to common financial situations that individuals encounter and, in that sense, can be viewed as a gauge of “working knowledge.”

Operation Hope founder John Hope Bryant and Bishop T.D. Jakes discussed financial literacy at the annual Hope Global Forums, held Dec. 11-13. Bryant’s Operation Hope produced the forums. They were joined by Dan Schulman, president and CEO of PayPal; Tony Ressler, principal owner of the Atlanta Hawks and executive chairman of Ares Management; and Doug McMillon, president and CEO of Walmart.

Bryant and Jakes have joined with big corporations to push financial literacy for Black America. But is that that really the biggest problem for Black America?

During the forum, Bryant promoted something he called “silver rights,” a term he coined to describe the economic empowerment of minority and low-income communities, TK reported.

“I don’t know about you, but I’m sick and tired of being sick and tired,” Bryant said. “Our goal is that by the time your kids grow up, financial literacy is in school — kindergarten through college — as a requirement so that everyone learns the language of money.”

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In 2021, Operation Hope launched Financial Literacy for All, a joint initiative with businesses such as Walmart, Bank of America, Disney and many others.

Bryant is the founder, chairman and CEO of the nonprofit Operation HOPE, which provides financial literacy empowerment and economic education to youth and adults. The nonprofit has committed to creating 1 million new Black-owned businesses by 2030.

Jakes is the bishop of the nondenominational Dallas-based megachurch The Potter’s House, and a strong advocate for real estate investing. Jakes’s church services and Evangelistic sermons are broadcast on The Potter’s Touch.

“Home ownership is my Bible,” Jakes told CNBC before the Forums event. “You can accrue wealth in an appreciating asset.”

He added, “The problem in our community is we are consuming depreciating assets. The young people today are not interested in homeownership because they want mobility. We are not trying to fix you so you are immobilized, we are trying to fix you so you are empowered economically and aggregate wealth to pass to your children.”

The Operation Hope founder has long stressed the need for Black Americans to embrace capitalism.

“I grew up in Compton,” Bryant told CNBC. “Without capitalism and a banker teaching me financial literacy at 9 years old,” Bryant says, “I wouldn’t be who I am.”

The racial wealth gap remains a major issue and has continued to grow. The average Black household earn about half as much as the average white household and own only about 15 to 20 percent as much net wealth, according to the U.S. Federal Reserve. Jakes and Bryant stress that increasing financial literacy in Black America would help close the gap. But according to 2021 article in Fortune, the “financial literacy gap doesn’t exist.”

The article concludes that the narrative that financial literacy would help help Black people make better financial decisions, and more wealth would follow. But the article stresses that The “supposed financial literacy gap doesn’t exist. Kids across the income spectrum have similar levels of financial knowledge, but that knowledge doesn’t put money in the bank for low-income kids, and it won’t fill the United States’ approximately $14 trillion wealth gap.”  

Reparations advocate William Darity Jr., a professor of public policy, African and African American studies, and economics at Duke University, weighed in.

“Yes, financial education can be beneficial,” Darity told Fortune. “But if it’s provided without any significant financial resources, it’s the equivalent of a recipe without any ingredients…[Some financial education narratives] say that people aren’t making the right decisions. My argument is people don’t have adequate resources.”