Tuesday, February 23, 2010

Success Stories of Blacks in Finance

Success Stories of Blacks in Finance

A QUICK history quiz: Who was the first black American member of the New York Stock Exchange? Who founded the first black-owned brokerage house? Who was the first black stockbroker?

Before berating yourself too much for not knowing the answers, substitute ''white'' for ''black'' and try to answer the same questions. No? That's not surprising. For whites, the answers are buried in the equivalent of the Mesozoic strata of financial history -- there were merchant bankers in America before the stock exchange was born in 1792, and countless, nameless stockbrokers had come and gone before anyone thought to keep track of them.

But for blacks, these hurdles were cleared almost within the lifetime of today's senior generation on Wall Street. It was only in February 1970 that Joseph L. Searles, a young lawyer who was a protégé of John V. Lindsay, then the mayor of New York, was acclaimed as the first black to have full membership on the Big Board. The first black licensed stockbroker? Either Thorvald McGregor, a Virgin Islands native and former Marine, or Lawrence L. Lewis, a back-office clerk from San Francisco who finally landed a front-office job in New York City, depending on which 1949 media account you accept. The first black-owned firm to be licensed by the National Association of Securities Dealers was McGhee & Company, whose Georgia-born founder, Norman McGhee, hung out his shingle in 1952.

That their stories -- and the larger landscape of racial barriers that riddle America's financial markets -- have been so neglected is reason enough to cheer the appearance of Gregory S. Bell's first book, ''In the Black: A History of African Americans on Wall Street'' (Wiley, $24.95).

One glance at Mr. Bell's footnotes, heavy with newspaper and magazine clippings and personal interviews but almost devoid of other books in the field, underscores the importance of his groundbreaking effort.
Multiple biographies are tricky, and some flaws of Mr. Bell's book are inherent in the genre. How do you find a driving theme? How do you avoid simply stringing little cameos together on a time line?

In most cases, ''In the Black'' strikes a sensible balance between the general and the particular. The vignettes are colorful and engaging but do not slow the story. Most of the people he dwells on at greater length repay his attention by adding significantly to the texture of his story.

The language of these tales is often awkward, and the chronology is sometimes a bit confusing. These are largely first-book flaws, and do not distract much from the story. However, Mr. Bell made an organizing decision as he began his research that greatly alters the scope of the book and leaves a reader hungry for a broader picture.
Perhaps because of his personal vantage point -- he is a son of Travers J. Bell Jr., a co-founder of Daniels & Bell, which until its demise in 1994 was one of the most prominent black-owned securities firms -- he decided to focus on black Wall Street entrepreneurs. And they are, without a doubt, a fascinating crowd.

Besides his father, they include Wardell R. Lazard, who founded W. R. Lazard; Reginald F. Lewis, the financier who built TLC Beatrice International; Harold E. Doley Jr., the New Orleans native who built a successful brokerage firm; and Raymond J. McClendon, who helped build Pryor, McClendon, Counts, once a municipal bond powerhouse. MR. BELL gives a thoroughly engaging account of the history of many of these firms. For the ones that have risen and fallen, he traces the early cold-shoulder days, the brighter prospects that came with the election of notable black American mayors, and then the bleak, often bitter sunset of the firms' existence. But by not tracing the experiences of black Americans who rose within the ranks of big Wall Street firms, he has left out a large, important part of history.

He mentions early the first blacks hired by Merrill Lynch but does not pursue how the future unfolded for them or those who followed them into the cubicles of institutional Wall Street. Only in his final chapter, ''The New Breed,'' does he catch up with some who took the corporate road, not the entrepreneurial one.

There, we meet E. Stanley O'Neal, picked two years ago to run Merrill Lynch's brokerage unit, one of the world's largest armies of brokers. It is entirely possible that Mr. O'Neal, now Merrill's president, oversees more stockbrokers than have ever worked at all the black-owned brokerage firms in the country.

Our introduction to Franklin D. Raines, the chief executive of Fannie Mae, is even shorter and more tantalizing. And Kenneth I. Chenault, chief executive of American Express, is barely mentioned.

While it is not fair to criticize an author for not writing the book one wishes he had written, Mr. Bell's decision results in a slightly lopsided look at the topic captured in his subtitle. But given the scarcity of other material on the role of blacks on Wall Street, this is definitely a case of half a loaf being far better than nothing.

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