As Berkshire Bank embarks on its second CEO search in less than two years, its board can do a service to Massachusetts by picking a leader who is committed to carrying forward its initial forays into diversity, equity and inclusion.
The last three months since George Floyd died under the knee of a Minneapolis police officer have thrown a spotlight on this country’s history of racial injustice and empowered voters and consumers to demand society begin to dismantle its legacy.
While most forms of outright racial discrimination have been illegal for over 50 years, no law can hope to address deep structural imbalances in the economy. That is where a visionary bank like Berkshire can come in.
By systematically excluding its Black families from homeownership after World War II during one of the greatest economic expansions the world has ever seen, America also denied them the same chance to build intergenerational wealth which it gave to its white families. And by failing to invest in many of its majority-Black communities, from schools to businesses, America has kept many other doors to opportunity closed.
Berkshire is not a charity, but under the leadership of outgoing CEO Richard Marotta and current Eastern Massachusetts market president Malia Lazu, it has been one of a handful of banks trying to show the rest of the industry how to help build a better world.
Banks together command billions of dollars of investment capital, but much of that is doled out in loans based on criteria, like credit scores and prior business experience, that are naturally stacked against entrepreneurs of color.
Berkshire kicked off a pilot last year to challenge that, called the “Friends and Family” program, which looked to prove out a different way of prudently underwriting small business loans. The bank has also tried to grow its footprint in communities of color with efforts like Reevx Labs – part business incubator, part branch alternative. And to make sure these seeds have a fertile soil in which to grow, bank leaders have been trying to change the company’s internal culture to one that strives for diversity, equity and inclusion and is opening to challenging the status quo.
Of course, moves like Berkshire’s or related efforts from select other local lenders like Eastern Bank aren’t charity. They’re hard-headed business moves predicated on the twin notions that consumers of color are underappreciated by many firms, and that they can help a bank grow market share and fend off challenger banks if that lender can build a trusted brand.
It’s that kind of investment in people of color that Boston, Massachusetts and America need right now to start fixing systemic inequalities. But in a cautious industry like lending, we also need banks like Berkshire that are showing other banks how they can be a part of the solution.
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