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The Color of Money

Follow-ups and reaction

Atlanta among 20 worst cities in loan inequities

By Bill Dedman, The Atlanta Journal-Constitution

Published July 27, 1988, Page A9

Copyright 1988, The Atlanta Journal-Constitution

Atlanta ranked among the 20 worst American cities in inequality in home loans to white and minority neighborhoods, according to a 1983 study released last week by the Federal Reserve Board.

The study of 100 metropolitan areas sifted statistically through factors such as household income and housing values to determine the influence of race on the number of home loans made by banks and savings and loans.

Atlanta ranked 19th, meaning 18 metro areas showed a greater influence of race and 81 showed a lesser influence of race.

The federal study was released to The Atlanta Journal-Constitution under the federal Freedom of Information Act. Earlier this month one of the authors had refused to release the study and said only that Atlanta ranked "somewhere in the middle."

"As with most studies of this type, results are subject to varying interpretations," the authors warned. They noted that they studied only one year of data and they had no access to real estate transfer information or application data, which could show varying demand for mortgages. They also did not visit cities to determine, for example, whether loans in what the census identified as a black area actually went to blacks, or perhaps to whites "gentrifying" the area.

However, their study is the only one to compare cities on racial inequities in lending. Banks and savings institutions were required to report their lending by census area beginning in 1976.

The 10 metro areas in which race appeared to influence lending patterns the most were: Santa Barbara, Calif.; Bridgeport-Milford, Conn.; Oxnard-Ventura, Calif.; Saginaw-Bay City, Mich.; West Palm Beach, Fla.; St. Louis, Mo.; Shreveport, La.; Youngstown-Warren, Ohio; Atlantic City, N.J.; and Wilmington, Del.

The 10 metro areas in which race appeared to influence lending patterns the least were: Tampa, Fla.; Sacramento, Calif.; Seattle, Wash.; Greenville-Spartanburg, S.C.; Tulsa, Okla.; Miami, Fla.; Bakersfield, Calif.; Portland, Ore.; Riverside-San Bernadino, Calif.; and Lancaster, Pa.

These were the rankings for other Southern metro areas: Augusta, Ga., 15th; Fort Lauderdale-Hollywood, Fla., 18th; Jacksonville, Fla., 20th; Pensacola, Fla., 21st; Birmingham, Ala., 23rd; Richmond, Va., 26th; Chattanooga, Tenn., 27th; Charlotte-Gastonia, N.C., 29th; Houston, Texas, 32nd; Raleigh-Durham, N.C., 35th; Nashville, Tenn., 36th; Mobile, Ala., 40th; Louisville, Ky., 47th; Little Rock, Ark., 49th; Knoxville, Tenn., 53rd; Beaumont-Port Arthur, Texas, 55th; New Orleans, La., 59th; Memphis, Tenn., 62nd; Austin, Texas, 63rd; Macon, Ga., 68th; Dallas, Texas, 70th; Orlando, Fla., 71st; Baton Rouge, La., 74th; Jackson, Miss., 79th; Montgomery, Ala., 82nd; Charleston, S.C., 83rd; San Antonio, Texas, 86th; and Corpus Christi, Texas, 89th.

The federal researchers analyzed 1981 reports from every bank and savings institution in the 100 cities. The reports show the number and dollar amount of loans made in each census area. Census records were used to determine the race and other characteristics of residents.

In general, the federal study found only "mild evidence" of discriminatory behavior by banks and savings and loans.

"It is possible that the tighter mortgage market conditions prevailing in 1981 may have reduced identifiable disparities between neighborhoods," or perhaps federal laws against racial discrimination have had their intended effect, wrote the study's authors, Robert B. Avery and Glenn B. Canner.

Similarly in Atlanta, a Journal-Constitution study found that disparities between white and black middle-income neighborhoods were lower in 1981. But the disparities nearly doubled by 1986, increasing from 3.2-1 in 1981 to 5.4-1 in 1986. The study, "The Color of Money," was published May 1-4 in the Journal-Constitution.

A nearly identical study this week in Detroit also found increasing racial disparities, rising from 1.5-1 in 1981 to 3.1-1 in 1986. The study, "The Race for Money," was published beginning Sunday in the Detroit Free Press. In the 1983 federal study, Detroit ranked 57th.


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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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