Hold the tough talk, NAACP. Cancel your boycott, Concerned Black Clergy. Atlanta banks and savings and loans know how to make friends and keep friends.
With money. Lots of it.
The banks have agreed, as a first step in narrowing the lending gap uncovered in our series, "The Color of Money," to offer southside Atlanta $65 million in loans for home improvements and home purchases.
For possibly the first time, the banks will offer mortgages for 97 percent of the purchase price of a southside house -- and without private insurance. They will accept gift money -- anathema to banks -- as down payments. They will cut interest rates and forgo discount points. In short, they'll bend backward to demonstrate good faith to black communities -- and to begin narrowing the lending gap uncovered by staff writer Bill Dedman.
The question is whether $65 million will close the gap. With blacks depositing some $765 million into Atlanta banks, we doubt it. The goal of banks should be to reinvest in black communities at the rate they reinvest in white communities. Our series showed that in black communities the rate of reinvestment is just $9 of every $100 deposited in banks; in white communities it is $13 of every $100 deposited. The goal should be to equalize that rate of reinvestment.
To do so, the banks may have to commit funds over and above this initial $65 million. Subsequent lending commitments probably won't be -- probably can't be -- more 97-percent, uninsured mortgages. But home-improvement loans granted on the ability to repay -- not on home equity -- can help narrow the gap. Georgia Federal unveiled such a loan recently. Writing more 90-to 95-percent mortgages with private insurance might also help narrow the gap. Whatever tack the banks eventually use, the goal should be to equalize levels of reinvestment in black, white and integrated communities.
The banks still have a distance to go. But with the $65 million lending commitment last week, they've moved swiftly and admirably in the right direction. We're inclined to believe they've done so not just to avoid political heat, but to show their good will and good citizenship with all of Atlanta.
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