Mehrsa Baradaran is the J. Alton Hosch associate professor of law at the University of Georgia School of Law and author of "The Color of Money: Black Banks and the Racial Wealth Gap."

Black-owned banks benefit their communities, but they aren’t enough to solve the problem of poverty. (Kevin D. Liles for The Washington Post)

When the Emancipation Proclamation was signed in 1863, the black community owned less than 1 percent of the United States’ total wealth.

More than 150 years later, that number has barely budged.

The racial wealth gap is a direct result of centuries of racist government policies — slavery, Jim Crow, housing segregation and credit policies. Even once those programs ended, not a single federal government program has tried to close the racial wealth gap. Most have perpetuated it.

The GOP tax plan is the latest addition to the litany of policies exacerbating this problem. Worse, a few Republicans have tried to justify the bill by using a tired but trusty script of blaming the poor for their own hardship. Senate Finance Committee Chairman Orrin G. Hatch recently repackaged President Ronald Reagan’s infamous, racially coded welfare queen trope: “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger, and expect the federal government to do everything.”

Actually, Hatch has it exactly backward. It’s the federal government that has failed to lift a finger, expecting black communities to do everything to close the wealth chasm. This practice has left black communities trapped in poverty while white politicians pat themselves on the back for taking ineffectual half-measures whose main virtue is their acceptability to white constituents.

After the Civil War and emancipation, black communities, businessmen and individuals began actively trying to build wealth and credit under hostile conditions. First there was the Freedman’s Savings Bank, which collected millions of dollars in wages from freed blacks hoping to use their savings to buy land. But the white management of the bank speculated away the deposits on railroad bonds. Half the money disappeared because the federal government did not properly oversee the bank or protect the deposits.

Betrayed by white bankers, black Americans turned to banks they themselves owned and controlled. Black communities understood that banks had long served as critical engines of community wealth creation: They multiply money by taking deposits and making loans.

Across the ideological spectrum, black leaders championed these banks. Though they were created to respond to racial hostility, the banks came to signify racial pride, black unity and protest, and served as a galvanizing force during the civil rights movement. Nearly all the principals in the movement firmly believed that without dealing with economic inequality created by historical injustice, the hard-won civil rights legislation would be an empty gesture. Indeed, in his last speech in 1968, the Rev. Martin Luther King Jr.  exhorted the black community to “take your money out of the banks downtown and deposit your money in [a black-owned] bank. We want a ‘bank-in’ movement.”

Black nationalists, often King’s ideological opposites, agreed. “Why should white people be running the banks of our community?” asked Malcolm X. For the emerging Black Power movement, wealth creation through economic control and black banking became symbols of defiant self-determination and active resistance to white racism.

But then the cause of black banking took a weird and ironic turn — what started as a black community’s tool to fight white hostility was hijacked by whites hostile to black activists.

Once black rights groups began to demand economic reforms — including integration, reparations, land grants and other meaningful but costly measures that would allow them to create wealth through government policy just as white Americans always had — whites balked.

Thus the black freedom struggle arrived at an impasse. Frustrated black leaders explained that legislative reforms were incomplete because they did not address the wealth disparity created by a history of exclusion. But many whites believed that they had done more than enough, that any further change would have to come from within the black community.

President Richard M. Nixon, stuck between a public vehemently opposed to further actions to right past wrongs and a series of black riots in poverty-stricken ghettos, became an unlikely champion of black banking, urging “more black ownership, black pride . . . and yes, black power.”

The deceptively vague formula of “black capitalism” was Nixon’s racial detente between an unprecedented black insurgency and a hostile white backlash. Nixon created a program premised on modest investments in banks and businesses in the segregated ghettos. That allowed him to oppose integration and woo white moderates and free-market libertarians unwilling to consider any real economic reforms that would benefit black America. Nixon’s black capitalism promised much and delivered little for black Americans, but it forged a path through a political quagmire.

So politically palatable was the promise of black capitalism that every president since Nixon promoted it in one form or another, be it “community capitalism,” “enterprise zones” or “minority enterprise.” Reagan called black business and black banking the “key to black economic progress” and promised that black banks could have a “beneficial multiplier effect” in black ghettos. President Bill Clinton created robust legislation to promote “community empowerment” through banking — an infrastructure that presidents George W. Bush and Barack Obama bolstered and maintained. Even the precedent-breaking President Trump is following suit, promising tax breaks for inner-city investments and credit support for black businesses.

But promotion of black banking and microenterprise is a policy Band-Aid that feebly attempts to cover the gaping wound of the racial wealth gap. Instead of meaningful financial support, the ghetto gets bankers. In other words, after centuries of law and policies that shut blacks out of the dominant economy while subsidizing white mortgages, white policymakers demanded that black communities make up the gap alone — while the federal government fails to lift a finger.

The premise behind black banking — that a beleaguered community, having been left out of the dominant banking industry, could pool its resources and collectively lift itself out of poverty — doesn’t work. The same circumstances that created the need for these banks — racism and segregation — permanently limited their effectiveness.

Pushed out of the mainstream, blacks needed to create their own economic engines. But these banks merely reflected the economic conditions of the communities they served; they could not change them.

Black banks, serving communities with low incomes and stagnant or declining property values, have higher operating costs, higher-risk loans and thinner profit margins. Moreover, black banks have been unable to perform the money-multiplying alchemy of banking. As soon as black banks make loans, the money leaks out of the black community as black borrowers buy assets from white sellers. The money does not circle back because of the effects of segregation, white flight and redlining. The truth is that segregated communities cannot segregate their money.

Self-help microfinance cannot overcome macro inequality and systemic racism. Policymakers have been placing the weight and responsibility of centuries of wealth inequality on these tiny economic engines, and the results have been failure and frustration.

But although black banks are unable to fulfill the promise of prosperity in the climate of poverty and segregation, they do perform essential functions. They are a place of refuge, banks of last resort and institutions committed to the community. Unlike the contract sellers, payday lenders and subprime mortgage brokers that populate black ghettos, black banks don’t exploit their customers. If policymakers are committed to closing the wealth gap, black bankers must be seated at the head of the table. But they cannot be the only ones in the room.