DETROIT -- In a lending initiative similar to one by Atlanta banks, 10 Detroit financial institutions have agreed to commit $40 million for mortgage and home improvement loans in this depressed industrial city.
The agreement, disclosed May 27, came in response to a request by Detroit Mayor Coleman Young, who frequently has criticized banks for failing to finance real estate development in Detroit. Young had asked for the commitment from the banks during a May 20 luncheon he hosted for senior bank executives.
Before making the loan request, Young passed around articles from a series published last month in the Atlanta Journal-Constitution. The series examined lending practices at Atlanta financial institutions and revealed that whites in Atlanta received five times as many loans from area banks and savings and loans as blacks of the same income.
The disclosures prompted nine Atlanta financial institutions to put up $65 million in mortgage and home improvement loans at low interest rates, targeted at minority and working class neighborhoods.
"Mayor Young wanted to be sure that (Detroit) bankers knew what happened in Atlanta," said Bob Berg, the mayor's press secretary.
Some Detroit bankers said they were aware of the newspaper series before their luncheon with Young, but insisted their decision was not influenced by the articles.
"We were following the series closely," said one banker, who asked not to be identified. He said Detroit's housing situation isn't comparable to Atlanta's and denied any discriminatory lending practices exist in Detroit.
Both Young and the Detroit banks could reap an abundance of good public relations if the loan program is successful.
In recent years Young has focused his efforts on downtown and riverfront development, which residential groups claim does little to improve the quality of life in the city's depressed neighborhoods.
Detroit financial institutions were attacked last year in a report by a large group of community leaders. The report accused Detroit institutions of failing to make loans in depressed or black neighborhoods, an illegal practice known as redlining. Detroit financial institutions vigorously denied that such practices existed.
Young said the $40 million pledge by Detroit banks is a dramatic breakthrough. "The impact on our neighborhoods and on our ability to preserve our housing stock is difficult to overstate," Young said in a message to the Detroit City Council.
Detroit community leaders were cautious about endorsing Young's home improvem ent program.
"I'm skeptical because the neighborhoods have not been part of the mayor's agenda before," said Sister Theresa Blaquiere, executive director of Core City Neighborhoods Inc., a community organization on Detroit's west side. "There are some real questions to be asked of the banks on this."
The proposed loan program calls for each of the 10 banks involved to commit $4 million if the city agrees to commit $4 million for home improvement.
Details of how the $40 million loan program will be administered, and exactly who will be served, are still being worked out.Go to the next article or back to the Color of Money index or Power Reporting
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