Malia Lazu has worn many hats during her two decades in Boston: community organizer, reality TV star, and political provocateur. But her latest role could be the most radical of all: bank president.
Until she went to work for Berkshire Bank about a year ago, Lazu had never held a corporate job. You would sooner find her protesting in the streets than presenting Power Points in the boardroom. Those close to Lazu aren’t even sure she believes in capitalism.
Longtime friend Grace Moreno, head of the Massachusetts LGBT Chamber of Commerce, likened Lazu’s career move to “AC/DC doing Bach.”
But to Richard Marotta, chief executive of Berkshire, Lazu’s heavy-metal approach is exactly what the bank needed to make structural changes so communities of color feel welcomed — a customer base he sees as Berkshire’s future after its headquarters relocated to Boston from one of the whitest parts of the state.
“There are generations of group think,” Marotta said. “We as an industry, we as a company have to feel uncomfortable.”
A stiff banker in pinstripes Lazu is not. She has a kinetic energy and megawatt smile that are as hard to miss as her bluntness. And her charge from Marotta is about as different as it gets from the business deals that get done in downtown office towers every day: chip away at the traditional barriers that prevent customers, particularly Black and brown, from creating and acquiring wealth.
In particular, she has focused on lifting entrepreneurs of color. Instead of traditional bank branches, for example, Lazu is opening free co-working spaces for start-ups and local businesses, including one in Roxbury’s Nubian Square. During the pandemic, she provided small businesses with no-collateral emergency lines of credit before the federal government rolled out its relief program.
“When you look at how people build wealth, it’s not from a working-class job,” said Lazu, 43, but from ownership of either a home or a small business. “If we’re not talking about owning, we’re not being serious. … How do Black and brown communities get white picket fences?”
For a community bank that got its start in Pittsfield 174 years ago, Berkshire itself seems an unlikely standard-bearer for upending industry orthodoxy. Marotta’s hiring of Lazu may have seemed unconventional at the time, but it feels downright prescient today as the country reels from a racial reckoning and corporate America does much-needed soul-searching about its role in closing economic inequities.
An Afro-Latina — her father is Black Puerto Rican, her mother Italian-American — Lazu is now among the highest ranking Black bank executives in Massachusetts. And unusual for corporate Boston, Berkshire Bank has two Black directors on its board.
Prabal Chakrabarti, executive vice president of the Federal Reserve Bank of Boston, said financial institutions can play a particular role in closing racial equity gaps, so long as they think creatively: expanding community investments, for example, beyond mortgages, and into child care and health centers.
“This is really a moment to be bold and creative,” Chakrabarti said. “This is the time to think differently. What is the purpose of a bank?”
Berkshire still has a light presence in Boston, with no branches in predominantly minority neighborhoods. However, a recent Community Reinvestment Act report said the bank had a “notable” increase in lending to low-income neighborhoods in 2017, the year it relocated to Boston.
Other banks have been aggressive in courting communities of color, such as Boston Private partnering with nonprofits to revitalize neighborhoods and Eastern Bank opening branches in underserved areas of Chelsea, Lawrence, and Roxbury. And Boston is home to one of the nation’s only Black-owned banks — OneUnited.
Financial institutions have been trying for more than four decades, through the Community Reinvestment Act, to reverse the ugly legacy of redlining, a government-sanctioned policy in which banks avoided giving out mortgages and other loans to Black applicants, which in Boston and other cities prevented them from moving into white neighborhoods.
Despite these efforts, Black communities are mired in economic inequality. Here’s the 2015 stat from the Federal Reserve Bank of Boston seared in so many people’s minds: The median net worth of non-immigrant Black households in Greater Boston was $8. For white households, it was $247,500.
A college education and ownership, whether of a home or business, are considered paths to capital acquisition, even wealth. But white Americans can tap more resources to propel them up those paths than Blacks, whether through family money, or professional or personal connections.
And the reality is that banks alone — while they can do much more — can’t produce economic justice. Christian Weller, a professor at University of Massachusetts Boston who studies the racial wealth gap, said only massive policy reforms can address such historic inequities: debt-free college education, for example, or giving out so-called baby bonds of $1,000 per year for every child until adulthood.
These ideas aren’t pie in the sky. Senator Cory Booker and Representative Ayanna Pressley have filed a bill to set up baby bonds, while Senator Elizabeth Warren and Representative James Clyburn have proposed canceling student loan debt for many Americans.
Weller said such reforms won’t work if the status quo remains in banking, where, often, Black applicants are rejected at higher rates for loans or charged higher interest rates.
“US corporations, small and large, need to think about not just how to be race-neutral but race-conscious,” said Weller.
Lazu has been pushing for transformation in one way or another since she arrived from Hawaii in 1995 to attend Emerson College. At 19, she began working as a community organizer and cofounded what is now known as MassVote to drive voter participation in the urban neighborhoods.
She then went off to Washington and New York City, working for singer/actor-turned-philanthropist Harry Belafonte on youth violence issues. Her exuberant personality is made for TV; in 2004, she was runner-up on Showtime’s “American Candidate” — an “American Idol”-style show but with budding politicians.
“If the country is ever ready to elect a black, Puerto Rican, Italian woman with a pierced tongue and hip-hop sensibility as president, it might be Emerson College alum Malia Lazu,” according to a Globe story at the time.
By 2012, Lazu was back in Boston and cofounded Future Boston Alliance for politically-active millennials, which pushed for late-night MBTA service and made no secret about its hope to unseat then-Boston Mayor Tom Menino.
Lazu was running her own boutique diversity consultancy and lecturing at Massachusetts Institute of Technology when, in the spring of 2018, Marotta retained her as a consultant to help Berkshire diversify its workforce and customer base. After a year, Marotta knew he wanted to bring her in house.
Lazu was hesitant. “I’m unconvinced that American capitalism works for everyone,” she recalled thinking.
But having the CEO all-in on making diversity and inclusion part of the business model was a big selling point. She was first hired as chief experience and culture officer, and in Februarybecame regional president of eastern Massachusetts.
Marotta moved into Berkshire’s top job in late 2018 and wanted the bank — with 130 branches across seven Northeast states — to look and act like the communities it serves.
“It wasn’t driven for headlines. It wasn’t driven for me to take a knee,” said Marotta. “The purpose and goal is to erase systemic racism in the industry.”
It’s also good business: Studies have shown that companies with diverse teams outperform their peers financially.
Lazu has been shaping Berkshire’s two-pronged brand strategy with one mission feeding off the other: Become the bank that wants to close the wealth gap and appeal to millennials who want to do business with companies trying to do the right thing.
Or as Lazu likes to say, she’s creating “a bank with dignity.”
There’s also opportunity, considering that about 47 percent of Black households do not use a bank or don’t have the funds for an account. Lazu thinks the number is high because the Black community remains mistrustful of banks after their redlining history.
Lazu has been pushing to evaluate loan applicants on factors beyond their financial profile, like FICO credit scores and a borrower’s standing in the local business community.
“We as an industry have a checklist. It looks like FICO, it looks like collateral, it looks like cash on hand. It looks like things that are fraught with racial bias,” said Lazu. “To say that’s how we define creditworthiness — that excludes people of color and poor people.”
It may sound like Berkshire is lowering its lending standards, but she said that’s not the case.
“We don’t take on more risk,” Lazu said. “We’re redefining risk.”
Lazu knows too well the barriers entrepreneurs of color face. She ran Accelerate Boston, a start-up incubator that helped people in Roxbury, Dorchester, and Mattapan start businesses.
Last August Lazu and Berkshire struck a partnership with The Runway Project, an Oakland organization that provides early-stage funding for entrepreneurs of color, and together launched a “Friends & Family Fund” that gives out low-interest loans of up to $20,000. The underwriting process is based on the entrepreneur’s connection to the community and less on credit scores and personal collateral.
The coronavirus pandemic has hit communities of color disproportionately, and not just on the public health front. When the shutdowns began in early March, Lazu got wind minority small business owners were in a real bind. Within a week, she worked with the Black Economic Council of Massachusetts and the LGBT chamber to set up a $3 million fund to provide emergency lines of credit of up to $50,000.
These low-interest loans do not require personal collateral and are set at a fixed interest rate — both unusual terms. Instead of collateral, the two business organizations vouched for the ability of their members to pay back the money.
BECMA executive director Segun Idowu said the fund was an example of how Lazu inherently understood the needs of communities of color. “She shows why it matters who is in the room, who is setting the agenda, and whose perspectives are being amplified,” he said.
Her colleagues marvel at the sense of urgency she has brought to Berkshire.
“She’s not a sit-there-and-wait individual,” said Rob Torres, a Berkshire vice president who is one of Lazu’s direct reports. “Malia has turned the bank upside down in the best way possible.”
Lazu has also set her sights on rethinking the presence banks have in a community beyond traditional branches. Borrowing an idea from the Bank of Ireland, Berkshire in January opened its first Reevx Labs, a free co-working space in Nubian Square for emerging entrepreneurs, artists, and small nonprofits. The Reevx name is a nod to revolution and evolution, and Berkshire has plans to open labs in Providence and Springfield, including one in a shuttered branch.
Cassandria Campbell, cofounder of Fresh Food Generation, had met Lazu through Accelerate Boston and Berkshire through its Reevx space in Roxbury, where she lives.
When her six-year-old business was crippled by the shutdown, Campbell turned to Berkshire for a $43,000 loan through the federal government’s Paycheck Protection Program. She was able to hire back about six employees to her company that serves farm-to-plate Caribbean cuisine through catering and a food truck.
Prior to the pandemic, Campbell said her business was sound, but she struggled to get capital to expand because she doesn’t own a home that could be used as collateral. Campbell, who is Black, said too many banks are risk averse to entrepreneurs such as her. “You end up not giving people a chance,” she said.
Berkshire was willing to “look at the whole applicant,” she said. “Sometimes you have to go beyond punching numbers and see what the computer spits back out.”
These days with Black Lives Matter protests filling the streets, Lazu can get wistful about her previous life as friends fan out to right the latest wrong. “My organizing takes place on Zoom,” Lazu quipped. “I did actually question if I’m in a position to make change. I still wrestle with it.”
But her friend Moreno has no doubt Lazu is in exactly the right place.
“If it is possible for banking to actually play a role in shifting the wealth gap and significantly bringing assets to the most disenfranchised, you’re going to have to flip the model around,” said Moreno. “There is nobody I can think of who can flip the model around better than Malia Lazu.”
Shirley Leung is a Business columnist. She can be reached at firstname.lastname@example.org.