In mid-September the Big Easy began to show the faintest signs of life. Floodwaters that covered about 80% of the city were starting to recede, revealing rubble-strewn streets, wind-crushed buildings, and horrific visions of death. Against this backdrop, Alden McDonald Jr. surveys his once-thriving bank. Its formerly pristine floors are now covered with shattered glass and debris. An ATM machine lies overturned and damaged by looters. Several of the branch’s computers have been stolen.
The president & CEO of Liberty Bank and Trust Company (No. 3 on the BE BANKS list with $348.2 million in assets) soon learns several bank branches within the city share similar fates. None are operational. Outside of New Orleans, two branches in Jackson, Mississippi, and three in Baton Rouge are open for business. McDonald is working to get branches damaged by Hurricane Katrina reopened. “Part of the problem is going to be whether or not the city or the government will let us rebuild some of them because it could be in a contaminated area of the city,” he says.
Rebuilding requires money. Loads of it. McDonald says that Liberty — one of the major banks used by the city’s school system-has lost an estimated $40 million, and roughly 80 of the bank’s 160 employees are out of work. McDonald is courting some of the corporate giants that will be part of the rebuilding process to open accounts. “If big corporations want to help out, they can put some deposits in our banks and run some checking accounts through us,” he says. “That way we can lend money to people who are rebuilding or buying in other communities.”
McDonald is one of thousands of black business owners affected by Katrina. The monstrous storm that wreaked havoc along the Gulf Coast, displacing and killing scores throughout Louisiana, Mississippi, and Alabama, was equally devastating to businesses, particularly black businesses. In this issue, BLACK ENTERPRISE takes a look at Katrina’s impact through the eyes of economists, experts, and entrepreneurs left picking up the pieces.
BRACING FOR THE ECONOMIC STORM
On a macro scale the damage caused by Katrina is clear, and Hurricane Rita further serves to slow down cleanup efforts. As crews continue to repair damaged offshore platforms in the Gulf, rising oil prices mean higher prices at the pumps. Immediately after the storm, gas prices jumped as much as 50 cents per gallon in some areas. This affected consumer spending — a major economic indicator.
From a business perspective, that means the cost of shipping increases dramatically. And although the Port of New Orleans reopened, congestion caused by debris in the channel as well as barge shortages will make for higher freight costs.
New Orleans is responsible for receiving about 18.5% of U.S. imports and shipping out almost 30% of U.S. exports, according to William Spriggs, senior fellow at the Economic Policy Institute in Washington, D.C., and a member of the BE Board of Economists. This could mean higher prices for consumers for everything from a cup of coffee to bananas. Spriggs points out that