Oscar-Nominated Film Explores Banking While Black

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: And now, we turn to the racial wealth Gap in the United States. “The Barber of Little Rock” is a short documentary that follows the story of Arlo Washington. He runs a barber college in Arkansas and a credit union dedicated to serving the black community. The film exposes issues of segregation and economic inequality that persist to this day. And Michel Martin spoke with Washington and with John Hoffman, one of the filmmakers, shortly after they received the news that their film had been nominated for an Oscar.

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MICHEL MARTIN, CONTRIBUTOR: Thanks, Christiane. John Hoffman, Arlo Washington, thank you so much for joining us.

ARLO WASHINGTON, SUBJECT, “THE BARBER OF LITTLE ROCK”: Thank you for having me.

JOHN HOFFMAN, CO-DIRECTOR, “THE BARBER OF LITTLE ROCK”: Our pleasure.

MARTIN: And congratulations on the Oscar nomination.

WASHINGTON: Absolutely.

MARTIN: Mr. Washington, you have been a barber in Little Rock, in your community, for what, gosh, more than 20 years. Before we move on, I just — I’m just not sure everybody understands what a barber in some communities does. Could you just describe for folks who may not understand this, what role a barber can play in his community?

WASHINGTON: Absolutely. The barber is the cornerstone of the brick building and the pillar of the community. Barbers are essential. Barbers — the history of barbers. barbers were highly esteemed individuals in their community were the priests. They did the tooth pulling. They did the bloodletting. I mean, we have dentists and doctors because of the barber profession is one of the most — oldest and most prestigious professions. And so, barbers play a critical role in being a melting pot or a community gathering for people needing the services.

MARTIN: But you opened the community’s first Community Development Financial Institution. This is back in 2008. You know, being a barber is no small thing. Running a business is no small thing. Running a barbering school is no small thing. So, how did you get the idea to open this financial institution?

WASHINGTON: We emerged out of an unmet credit need in our community. In 2009, Arkansas became a credit desert with the prohibition of predatory payday lending. And from that, we began to get community members to come and ask for loans. And that’s how we started. And like most small businesses, you know, I started it out of my pocket. Being a small business owner in the community and growing up in the community and experiencing generational poverty myself, I know the importance of access to capital. And, you know, being a barber in the community for so long and providing services, being in the service industry, I wanted to be able to solve for and create an opportunity for those unmet credit needs to be met. Whenever individuals will come to the barber school and ask — and inquire about loans, we would provide them with small dollar short-term loans to be able to meet their immediate unmet need. And it grew from there — from providing loans to our student population, those that were needing wraparound services like childcare, transportation, food, shelter, providing those services to be able to help them to be able to complete the program, that we saw there was a minimum viable product that just wasn’t available in our community. And we — and then I began to do some research on predatory payday loans and how payday loans were — was affecting my community, putting individuals in debt traps. We wanted to be able to provide a safer alternative for our community members that wouldn’t impact their credit, help them to build and generate wealth.

MARTIN: OK. Mr. Hoffman, how did you hear about Mr. Washington’s work?

HOFFMAN: Well, Christine Turner my co-director in L.A. wanted to make a film about the racial wealth gap. And in our sort of deep dive into the problem, we read a book called “The Color of Money” by Mehrsa Baradaran, which is a remarkable book about the history of black banking since reconstruction and how it’s just a series of failure after failure after failure of government programs. But she calls out a program that was created during the Clinton administration of Community Development Financial Institutions, CDFIs, which is a program run by the Fed. That gets capital into underserved communities, communities of color and urban centers, rural communities, because Clinton understood that if people don’t have access to capital, they can’t build small businesses, they can’t get loans for their cars or for their homes, for their farms. So, I was pointed to a conversation between Bill Clinton during COVID and a woman named Donna Gambrel, who was the first director of this program in his administration.

DONNA GAMBRELL: Thank you, President Clinton. It’s a pleasure.

HOFFMAN: And I reached out to her. She’s now the president of the National Association of Black Bankers. And I said, Donna, we want to embed in one of these CDFIs, one of these high touch loan institutions in the community. And live there for a year and follow the money. See how access to capital can transform people’s lives by creating opportunities. And so, she said, there’s this guy in Little Rock. His name is Arlo Washington. And he is — has a barber college. And he has a shipping container in the parking lot of his barber college. And it — opened this CDFI. And we were like, we got to get Arlo. So, that’s how it happened.

MARTIN: I mean, people are sharing some of their deepest wounds. And I — and Mr. Washington, you — you know, you certainly have to know that, right? And I was just wondering if it was hard to kind of persuade people that the purpose of this was not to kind of make fun of people or look down on them, but to elevate the work.

WASHINGTON: Absolutely. Of course, when you have a talk about money and need, that’s a very sensitive subject that a lot of people feel uncomfortable with, especially if they’re on the receiving end of it. And telling their stories is something that — you know, these were very authentic and organic and they were in need. You know, a lot of people, if you’re in need, you know, you don’t think about who’s watching or what’s going on. You just know that you need your life bill paid. You know that you need your — help with your rent because you’re about to be evicted or you’re homeless and you need to be placed and you just — it’s — life is happening. It’s a crisis. This is a grant, just an emergency grant. As I heard you say, you didn’t have any clothes, you didn’t have any transportation, you know, everything burnt up.

UNIDENTIFIED MALE: For 17 days and a whole day. Man.

WASHINGTON: There you go. How much is the weekly rent?

UNIDENTIFIED FEMALE: The weekly rent?

WASHINGTON: Uh-huh.

UNIDENTIFIED FEMALE: It’s not weekly. She’s just going to charge me like 545 a month.

WASHINGTON: Because my mother, she passed away with cancer. And so, I’m just thinking if — since you, you know, in that situation, maybe if we was

able to do, you know, maybe a grant for a month, that’d give you time to find a place, how you think that works?

UNIDENTIFIED FEMALE: That will help me a lot.

WASHINGTON: I think that’ll help. What you think?

UNIDENTIFIED FEMALE: It’ll help me a lot.

MARTIN: Mr. Hoffman, I’m just curious, though. I mean, as a person, you’re coming to this because you wanted to understand this issue more. This idea of, you know, black and brown communities being historically underserved and underserved to this day. Were there things in the course of your reporting that surprised even you or that really stay with you even now?

HOFFMAN: I think that the racial divide and the economic divide in Little Rock and the extent of it really challenged me and my understanding about cities in America in 2022 and 2023 when we’re making this film. You know, the two sides of Little Rock are divided by an interstate. And that — the effects of redlining are still being felt. There are strong reverberations of redlining that’s still at work, at play in our American cities, it’s not just Little Rock, it’s cities all over this country. So, Arlo and Scott Green, who happens to be the nephew of Ernest Green, one of the Little Rock members (ph), go on this tour of the 12th Street Corridor, which is the neighborhood where Little Rock Central High School is, which prior to integration was, you know, a wealthy white neighborhood. You see these enormous homes, beautiful old homes abandoned and boarded up. Tremendous, tremendous lack of opportunity. There’s not an ATM, you know, for literally miles for the community. And the film explores that and portrays that. Arlo and Scott Green drive across the interstate, which was built and divided the highway, in a white flight after integration, left the Little Rock Central neighborhood, you know, bereft of opportunity. And they go literally across the highway to a neighborhood where there are 14 banks serving only 8,000 people, where there’s zero banks serving 30,000 black members of the community. Zero. And so, what Arlo is doing in the CDFI program that he, you know, has created, you see that it is having a measurable impact on the lives of people in Little Rock, and it’s not just a few lines. It’s thousands of people that Arlo is impacting. He’s creating jobs. And he speaks about that in the film, that you have to — you can’t develop the community unless you develop the people. So — and you can’t develop the people unless they have access to capital.

MARTIN: Mr. Washington, what’s the average loan? And what’s the repayment rate?

WASHINGTON: Right. The average loans is about — anywhere from $500 to $2,500. And the repayment is about — our default rate is about 6 percent.

MARTIN: 6 percent?

WASHINGTON: Yes.

MARTIN: So that means that, what, 94 percent of the people pay the loans back?

WASHINGTON: Yes.

MARTIN: So, you know, the argument, Mr. Washington, that the big banks make about why they don’t serve that community is that they figure people are poor and they’re not going to pay the loans back. But people do pay your loans back.

WASHINGTON: Yes, I mean, so we have different loan products. You know, we have — and our product — our loan products meet community members where they are on their financial journey. We also provide developmental services as well, like financial literacy and technical assistance for small businesses. And so — but the minimum viable product here is the small dollar loan, the consumer loan. Because when you think about the gaps that individuals and communities experience, you know, it’s that short-term funding opportunity that keeps their — keeps them — keeps their credit in good, healthy shape, keeps their — you know, being able to stay in their home or keep their car. And — but life circumstances happen. And so, payday lenders, predatory payday lenders, you know, are right there at the door to be able to provide capital that a traditional bank just simply won’t provide because of it being such a small deal. But the penny lending industry is a trillion-dollar industry as well. So, you know, there’s some — even though it’s predatory to some people, it’s helpful to folks that really need access and can’t get help anywhere else. So, you know, providing that minimum viable product here in Arkansas, would it be in the only state that was blacked out for a while with a 17 percent usury rate cap is what, you know, still is what created the interior counties being credit debt — being a credit desert. You know, community members are driving to border states to get loans or going online and still accessing these predatory payday loans or merchant cash advances for their business. And, you know, there was an unmet credit need that wasn’t being filled for those loans that were $50,000 in less.

MARTIN: We saw in the film that initially you were funding these loans out of your own pocket, just because people you knew asked you. How do you fund it now?

WASHINGTON: Well, it’s funded now through grants and loans. Low cost, long-term loans. CDFIs — the model of CDFIs is, you know, we — is debt capital. A lot of it is debt capital. So, we borrow money at a lower rate, and then we re-lend it at a higher rate. CDFIs are spread lenders. So, you know, that’s — at the — you know, when it first started, you know, we didn’t — I didn’t think about that. I just wanted to help and be a resource. And we were restricted on the amount of funding that we were able to deploy or the amount of money that we were able to lend each month, you know. I would — I set aside $1,000 out of my paycheck and I would make $250 loans at 5 percent for, you know six-month terms. Of course, that wasn’t sustainable. It wasn’t profitable. And it wasn’t scalable. We got a little — we got more sophisticated as we began to grow and build capacity.

MARTIN: So, you know, Mr. Hoffman, I think we’re, there’s something like, what, 1,500 community development financial institutions around the country. That’s still not a lot compared to the number of places where people are unbanked or minimally banked or who are relying on payday loans. Why do you think that there aren’t more of these?

HOFFMAN: Well, there aren’t more because the Congress has only allocated a certain amount of money. So, you could double, you could triple, you could quadruple the CDFI program and you still would have a tremendous amount of unmet need out there. But as it’s conceived, it is working conceptually. And so, you know, again, credit back to Bill Clinton for, you know, seeing this, that there was an unmet credit need in this country and it’s keeping communities down. And so, it’s about $10 billion a year right now in the federal government. It’s administered by the Fed. This $10 billion that’s going out, and Arlo gets a little piece of that, and he’s able to distribute that money and change people’s lives. So, if the CDFI program, if Congress decided to double or triple it, there would be that much more money that people like Arlo could be, you know, loaning out and changing more people’s lives.

MARTIN: But, Arlo, do you think that — you know, I think one of the things that people will see in the film is that getting a loan from your institution, it’s kind of a different process.

UNIDENTIFIED FEMALE: You’re saying you’re interested in the loan.

UNIDENTIFIED FEMALE: Yes, ma’am. UNIDENTIFIED FEMALE: OK. I’m just going to get this out. So, tell me about what you’re doing with your businesses.

UNIDENTIFIED FEMALE: I’m Barbara Salas (ph). I do credit restoration. I also have a T-shirt and decal line.

UNIDENTIFIED FEMALE: OK.

UNIDENTIFIED FEMALE: Due to the things that I deal with in life, such as sickle cell, having a pacemaker, having 80 percent mass in my right breast, going to treatment once a week.

UNIDENTIFIED FEMALE: And then you still run three businesses?

UNIDENTIFIED FEMALE: Yes, ma’am.

UNIDENTIFIED FEMALE: I’ll hire that now.

MARTIN: Do you feel like your staff, your employees have sort of a special sauce or something in the way that they deal with people or see people or evaluate people?

WASHINGTON: I would say it’s the cultural difference. You know, what’s held communities back, you know, for the most part is fear and insecurity of dealing with a financial institution because unbanked and underbanked populations is just not used to it. And it can be intimidating when you, you know, are not treated with the same dignity and respect that, you know, our white counterparts experience. And when you think about the — you think about the historic, you know, abandonment of banks from low- and moderate-income communities and, you know, just the generational poverty and that’s caused from that, you know, and it is a mentality. So, I would say the cultural difference.

MARTIN: And, Mr. Hoffman. Let me ask you before we let you go. I was just wondering if there was something about this experience of making this film that has changed you in some way.

HOFFMAN: I love making this film. I think that for me to be welcomed in, a white man, an older white man with white hair, to be welcomed in to — by Arlo and to all these communities that he’s a part of, whether it’s in the Barber College, in the shipping container, in the other bank branch, and to develop these friendships with people who will forever be in my life. And to really have the trust extended to me in particular and has been, you know, a deep — a deeply affecting experience and a treasured one.

MARTIN: And, Mr. Washington, what is next for you? What more do you want?

WASHINGTON: You know, it’s all about the mission with me at this point and staying true to the mission. And closing the racial — closing the wealth gap in America. You know, we’ve — we now have a federal credit union. We now are taking deposits, so we can — we’re taking a holistic approach to closing the wealth gap. We’re able to provide, you know, financial literacy with the loan fund, with the credit union. We’re able to teach about investing and saving and all of the things that are essential when it comes down to your financial stability whether you’re needing to gain or regain your economic ability, just being a resource, being a resource and a conduit of resources. Ensuring that the federal programs or investments that are made to get to the — meant to get to the community, get there. You know, that’s my life’s work. You know, I consider it God’s work. I consider it an honor and a privilege to serve.

MARTIN: All right. Arlo Washington, John Hoffman, thank you both so much for talking with us today and congratulations once again.

WASHINGTON: Thank you.

HOFFMAN: Thank you so much.