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The Color of Money

Follow-ups and reaction

Banking chief reverses stand
calling for fair-lending laws

By Bill Dedman, The Atlanta Journal-Constitution

Published May 25, 1988, Page A1

Copyright 1988, The Atlanta Journal-Constitution

Georgia Banking Commissioner Jack Dunn has backed away from supporting a state fair-lending law.

In an interview on May 6, Dunn had said, "The state is going to have to do more. I don't think there's any question we're going to have to pass a community reinvestment law in the state. I've talked to a number of the legislators. Without any question, we'll do that."

But Tuesday, Dunn handed out to reporters and black legislators a statement questioning whether discrimination occurs.

"Adequate laws exist at the state and federal levels," his statement said.

When asked to explain the turnaround, he said, "I don't give interviews. I'm appointed, not elected."

Dunn, a former bank president, handed out his statement at a joint press conference at the Capitol with the Legislative Black Caucus, which announced a committee to look into lending practices across the state.

After Dunn handed out his statement, the caucus chairman, Rep. Charles Walker of Augusta, said: "It doesn't matter. We're going to have our own proposal. We believe the problem is statewide, and we want a statewide solution."

"Let me emphasize that any action on this rests solely with the members of the Georgia General Assembly," said caucus member Rep. Calvin Smyre of Columbus, the governor's floor leader.

In his written statement, Dunn also questioned the findings of articles in The Atlanta Journal-Constitution. The articles, based on statistics reported by lenders to the federal government, found that banks and savings and loans made five times as many home loans in white areas as in black areas of similar household income.

"The Department of Banking and Finance does not take exception to the statistics generated by the writers of the articles," Dunn's statement said. "However, we do not believe that the conclusions drawn are either logically sound or an accurate portrayal of the role of commercial banks in the mortgage lending area."

Dunn's statement said the articles included data "from only a very small number of banks."

In fact, the articles were based on federal computer tapes including data from 88 institutions: every bank, savings and loan association and large credit union in the metro area. The data covered every home loan made by these institutions from 1981 to 1986.

Dunn also said the articles should have covered all lenders.

Only banks and savings and loans are required by federal law to report the location of loans. Dunn declined to say whether he favored state legislation requiring public disclosure of loan information by all lenders, not only for home loans but also for commercial and other loans.

Dunn also suggested blacks voluntarily may be taking their home loan business elsewhere. "Bank marketing practices may not be attracting business away from other mortgage lenders effectively," the statement said.

Federal law says banks and savings and loans, because they gather deposits, have "an affirmative obligation" to make loans throughout their communities and to market financial services affirmatively.

Dunn said his department would respond to specific complaints of discrimination, and he said his department would do further research to determine if discrimination occurs. When asked what research the department would do, he said, "I don't know."

His written statement concluded, "The commercial banks of this state and indeed the citizens of the state are misserved by voluntary solutions or legislation that does not address the entire problem in a manner that is equitable to all competitors in the lending marketplace. Further, restrictive legislation in Georgia which makes business in Georgia too costly or inconvenient may interrupt the free flow of capital into the state -- a result that could cause greater economic harm than the good perceived by the legislation."

On that last point, Rep. Walker said, "The Georgia Legislative Black Caucus is not interested in encouraging the banks in this state to make bad loans. We are not interested in charity at all. We simply want fairness."


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Reprinted with permission from The Atlanta Journal and The Atlanta Constitution. Further reproduction, retransmission or distribution of these materials without the prior written consent of The Atlanta Journal and The Atlanta Constitution, and any copyright holder identified in the material's copyright notice, is prohibited.


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