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The Color of Money

Follow-ups and reaction

Panel to probe banks' lending policies

By Bill Dedman, The Atlanta Journal-Constitution

Published May 5, 1988, Page A1

Copyright 1988, The Atlanta Journal-Constitution

Black leaders moved on several fronts Wednesday in response to disclosures of unequal lending patterns by Atlanta banks and savings and loans.

The action came after a series of articles this week in The Atlanta Journal-Constitution. The series, "The Color of Money," described how Atlanta banks and savings and loans rarely lend money to home buyers and home owners in black or integrated neighborhoods.

Among the developments:

At a special meeting, the Atlanta City Council formed an "action committee" of politicians, bankers and citizens to investigate the lending practices of Atlanta financial institutions. Council President Marvin Arrington said the committee should "come back with some hard recommendations" in 20 days.

The Fulton County Commission unanimously approved a law prohibiting discrimination in the sale, rental or finance of housing. The fair housing ordinance had been held last week; several commissioners said the Journal-Constitution articles spurred the reversal.

Earl Shinhoster, the Southern regional director of the NAACP, said in an interview that black depositors should withdraw funds from white- owned banks "if lending policies and practices do not change substantially."

Bank executives said at the City Council meeting that they do not quarrel with the figures in the Journal-Constitution report, but emphasized that they do not intentionally discriminate.

City Councilman Bill Campbell urged the city and other local governments to reconsider where they deposit taxpayer money.

Fulton County Commissioner Gordon Joyner said local governments should consider asking the U.S. Justice Department to investigate lending practices in Atlanta.

Fulton Commission Chairman Michael Lomax called on banks to take "affirmative action" to improve lending records, and to publicly apologize to the black community and the city.

City Councilman Victor Maslia, a white bank officer, said banks should release figures on applications by blacks and whites so the full story can be told. Just two of 88 institutions would divulge those figures to the Journal-Constitution.

State Sen. Arthur Langford, chairman of the Senate Consumer Affairs Committee, said in an interview that his committee would call hearings and seek "clear-cut, definite solutions" if banks and savings and loans did not change lending practices.

U.S. Rep. John Lewis said in an interview that he planned to call on members of congressional banking committees to strengthen the Community Reinvestment Act, which says banks have "an affirmative obligation" to lend to all parts of their communities.

The special City Council meeting had been scheduled as a quiet discussion over lunch. But the small meeting room at the Westin Peachtree Plaza Hotel was packed with more than 60 politicians, lenders, journalists and citizens.

"We're not here to beat up on anybody, but to find some solutions to some problems," Arrington said. "I want to hear from some of our banking friends and people at the savings and loans if we have a problem, if what we read in the paper was true, and how do we respond to it."

Several times when Arrington called for responses from bankers there were no volunteers. However, three bankers did suggest that lending disparities do exist.

"I think anytime that there's a perception of a problem, that there must be a problem," said Lee Sessions, executive vice president of Citizens and Southern Bank. "I think obviously there's a perception of a problem, and we need to address it. I think there might be a wrong impression, though, that the financial community has been idle. In the past three years, we've tried to put out in the low-income census areas of Atlanta some $39 million in mortgages. That may not be enough . . . but we're trying."

On Tuesday, C&S spokesman Dallas Lee said the bank planned to offer $5 million in home purchase loans, about 125 loans, at 1 percentage point below its normal interest rate. The loans would be available south of Interstate 20 inside the Perimeter. Lee said the loan program was not in response to the newspaper series but had been planned for months.

Wade Mitchell, executive vice president of Trust Company Bank, said: "I think it's obvious that there are problems. All you've got to do is drive through neighborhoods that are not developing and see that the problems exist. I think the financial institutions recognize that and are trying to do something about it.

"I don't take any quarrel with the numbers in (the Journal- Constitution) report," Mitchell said. "Even if they were plus or minus 20 percent, the thrust would be in the same direction. I do take exception, if I'm reading properly between the lines of the report, that the condition exists as it does today because of active racism, bank policy. I think that that is irresponsible, unfair, and it also is untrue. There are no policies that call for redlining and certainly no policies that restrict the race to which any bank that I know anything about can lend money."

I. Owen Funderburg, chairman and chief executive officer of the black-owned Citizens Trust Bank, said: "I think it's institutionalized racism. We have to find an approach to break with that tradition."

Funderburg said after the meeting that "a couple dozen" new accounts have been opened at his bank this week by former depositors at white- owned banks.

Several council members said banks redline, an illegal practice of refusing to do business in minority areas.

Councilman Archie Byron: "The article is accurate. We experience a lot of redlining in our district. When I moved to Bankhead Highway . . . a banker said, `Byron, I'm sorry, you can't get the help you need. The area's redlined.' "

Councilman Hosea Williams: "First, we've really got to admit to ourselves that this problem exists, not sweep it under the rug. There's no greater problem that faces black folks, including drugs and AIDs, than economic deprivation. We're being cheated, and we didn't just start being cheated."

Councilman Jabari Simama: "It's not personal. You can be a great guy. You can love Bill Cosby and all of that. But it's embedded in some historical structures that have developed within the institutions. We need to come up with some real, substantive solutions. I don't want a pot of money that will appease people for a couple of months or a couple of years."

Councilman Thomas Cuffie: "(The lending pattern) is not surprising to me. And I don't think it's surprising to bankers or the community or elected officials either. It's just that it's been empirically validated."

Commission Chairman Lomax: "I've been disappointed, I might say, by some of the responses that have occurred over the last couple of days, and I'm heartened today to see so many of the banks represented. I feel that the banks really do owe not only affirmative action in regard to this but an apology to the city as a whole for what has gone on, whether they've known about it or not. And I think they owe us an apology for some of the characterizations they've made of the black community."

County Commissioner Joyner: "Just in these newspaper articles, there is enough information for the U.S. Justice Department, if we push, to bring federal lawsuits for housing discrimination against every bank that has not shown community reinvestment as required by the law."

Shinhoster of the NAACP: "If lending policies and practices do not change substantially to meet the concerns and demands of the black consumer market, then withdrawing funds from recalcitrant banks and banks with poor policies would be a logical step to take. Economic withdrawal makes sense."

Several Southside residents and business executives attended the city meeting to say they had been turned down for loans because of redlining. One man held a sign: "Want to be an Atlanta bank president? Here's the only tool of the trade you need - a red pencil!"


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