Group Seeks to Fight Banks’ ‘Redlining’ : Asks That More Money Be Reinvested in Minority Communities

A coalition of community organizations has requested a meeting with federal banking regulators and industry executives to discuss ways to persuade California banks to provide more loans to minorities and increase the availability of affordable housing.

The organization, called the Greenlining Coalition, asked Federal Reserve Chairman Alan Greenspan and Robert F. Erburu, chairman of the Federal Reserve Bank of San Francisco, to set a meeting within the next 30 days. The group asked that the chief executives of the state’s largest banks be asked to attend.

A spokesman for the San Francisco Fed said Friday that the agency expects to respond quickly to the letter. He also said that recent San Francisco Fed studies have pointed out the pressing credit needs of some metropolitan areas in the state with high minority populations.

The letter was dated Wednesday and said the group represents 16 organizations for minorities, consumers and the homeless, including the Urban League, the League of United Latin American Citizens and the San Francisco Black Chamber of Commerce.

The group said it wants to discuss compliance with the federal Community Reinvestment Act by the state’s big banks.

The act requires financial institutions to provide loans and services to its community without discrimination.

In addition, the group said big banks should help finance more affordable housing, particularly for the homeless, preserve inner-city neighborhoods and assist minority-owned financial institutions.

“Not one federal official has raised an outcry over the fact that blacks have received less than half of 1% of the dollar value of recent bank loans,” said George Dean, president of the California Council of Urban Leagues.

The coalition also asked Federal Reserve officials to conduct random audits of loan portfolios at major banks in the state to ensure that they are complying with the CRA.

The letter cited remarks made by Rep. Pete Stark (D-Oakland) that all banks and savings and loans “redline,” a practice in which minority neighborhoods do not receive a fair share of loans.

In testimony before a House committee on March 9, Stark said redlining is essentially impossible to detect, and he criticized the effectiveness of federal laws against the practice.

California’s big banks have consistently denied that they discriminate in lending. Many of the banks recently formed a consortium, under sponsorship of the San Francisco Fed, to pool money and provide loans for developers of low-cost housing in the state. The savings and loan industry has a similar coalition.