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The Color of Money

Follow-ups and reaction

Black clergy push plan to leave white banks

Ministers charge steps taken are not enough

By Bill Dedman, The Atlanta Journal-Constitution

Published June 26, 1988, Page A1

Copyright 1988, The Atlanta Journal-Constitution

Atlanta's black ministers say they will drive in a cross-town motorcade July 5 to begin a campaign to shift money to black financial institutions.

Organizers of the three-month "Minority Economic Independence Campaign" are avoiding the term boycott, but they acknowledge that their withdrawals this week from white institutions will become deposits next week in black ones.

The campaign would be the first time black ministers have united in a public protest of lending inequities that were disclosed by The Atlanta Journal-Constitution. In a series published in May, the newspapers reported that banks and savings and loans rarely made home loans in black or integrated neighborhoods, and made banking services less accessible to blacks.

The campaign also would pose several ironies.

-- The two black institutions for which the campaign could raise thousands or millions of dollars are helping plan it. Officials from Citizens Trust Bank and Mutual Federal Savings and Loan have attended planning meetings.

-- Herman J. Russell, the largest stockholder and chairman of the board of Citizens Trust, which has the most to gain, is also a director of white-owned First Atlanta Bank, which has the most to lose. First Atlanta has the largest share of the city's black customers, according to a 1986 market study.

-- The black bank, Citizens Trust, which is expected to be the main beneficiary of the campaign, exists today partly because of help from the larger white banks. Ten years ago, the small Citizens Trust almost sank into bankruptcy. It was kept afloat by $3 million in new capital -- much of it from Atlanta's four largest banks. That money has been paid back, but the bank still is paying back a more recent loan from Citizens and Southern Bank (C&S).

The campaign is being promoted in the name of the Community Task Force for Economic Justice, a new organization which includes the Southern Christian Leadership Conference (SCLC), Concerned Black Clergy, the Georgia Housing Coalition and several neighborhood associations.

Despite the recently announced programs by nine banks to make $65 million in low-interest loans to blacks and whites in working-class neighborhoods, the ministers said not enough has been done to ensure justice and repair past injustice. They plan to announce demands at a press conference Wednesday.

"Basically, the white banks haven't done anything yet," said the Rev. Timothy McDonald of the SCLC. "We will be preaching to move the church money, move our businesses' money, move our own money. One preacher moved $20,000 already."

The two black lending institutions acknowledge their encouragement of the campaign, but say they are not exploiting the situation.

"What is good for the city of Atlanta is good for this institution. We're going to prosper. The city is going to prosper," Russell said. "I welcome being in a situation where we can have great input, great involvement that is going to benefit mankind."

"Exploitation carries a negative connotation," said I. Owen Funderburg, president and chief executive officer of Citizens Trust. "What we're trying to do is to promote Citizens Trust Bank and to take advantage of the fact . . . that we have been an active player in that community for all of our existence."

"This effort is clearly not a boycott," said Fletcher Coombs, chairman and chief executive officer of Mutual Federal. "It's intended to make more people aware of our institutions. Many people don't know we even exist."

In addition to helping organize the campaign, Citizens Trust has launched a new advertising campaign. In a newspaper ad, Funderburg says, "We've been giving credit where credit's due. For 67 years. We've had the courage to serve in areas where no one else would.''

The bank also has distributed photocopies of the newspaper series, "The Color of Money," at the bank and other black businesses, including Paschal's Motor Hotel, whose co-owner James Paschal is a bank board member. The bank has inquired about purchasing reprints of the articles in bulk.

In at least three public meetings about the lending issue, Funderburg has said the other banks are afflicted with "institutional racism."

And a new sign at the bank promotes a new service: a discrimination hotline.

Already Citizens Trust is benefiting.

From April to May, the number of new accounts at the bank increased 58 percent and the amount of new deposits increased 134 percent, Citizens Trust officials say. They would not provide more recent figures or dollar amounts.

At the smaller Mutual Federal, Coombs has recorded a "minor" increase in deposits since May 1.

The ad campaign and other actions of Citizens Trust have caused some grumbling by officers at other banks, although none offered any criticism for the record.

"Is someone upset about us marketing our own institution?" Russell asked. "That's the American way of doing business."

Russell did hear some criticism, although not by name, from City Council President Marvin Arrington. At a City Council meeting just after the articles were published May 1-4, Arrington prayed for blacks who had not received loans, for the financial institutions, and "a special prayer for black members on boards who have allowed this to happen."

"First, I want to thank my good friend Marvin Arrington for praying for me. I always can use that," Russell said in an interview last week. "I would have to give First Atlanta's board a pretty good mark. I am only one man and one vote; that's what every member of the board has."

Blacks have much money in the city's large banks and savings and loans. Some black leaders contend the amount is more than $1 billion. According to a rough estimate by the newspapers, based on national census estimates, blacks in metro Atlanta have $765 million in financial institutions.

Currently little of that money is in the two black-owned institutions.

The $105 million in assets of Citizens Trust is 1 percent of the total assets of the city's largest bank, C&S. Mutual Federal has assets of $33 million.

The July 5 motorcade with megaphones and banners will start at Paschal's on Martin Luther King Jr. Drive and wind into downtown. It won't stop at any large banks for withdrawals, but it will stop at Citizens Trust on Piedmont Avenue and around the corner at Mutual Federal on Auburn Avenue.

Organizers hope to have at least 100 black and Hispanic ministers, business owners and individuals announce they are placing money in the two black-owned institutions.

There has been a debate in the black community about the wisdom of a boycott by any name. If the power of black depositors lies in deposits in white institutions, the argument goes, why remove them?

On the other hand, "Let's say the estimate of $750 million in the banks is correct, although we think that's low," said one organizer, who asked not to be named. "Even if $100 million is moved -- and that would double the deposits of Citizens Trust -- we still have $600 million in the other banks. That's a lot of clout, and it's even larger when we have demonstrated the ability to move money."


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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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