Greenlining: An Equal-Opportunity, Grass-Roots Antidote to Redlining : Economics: With a little prodding, corporate America is finally realizing that ignoring inner-city communities is costly to the bottom line.
Redlining is no stranger to minority communities. It’s the equivalent of whites-only baseball played by America’s corporations and businesses. “Greenlining” aims to do to these communities what Jackie Robinson did to baseball.
Like the “Green Power” movement, which appeals to corporate self-interest to protect the environment, the Greenlining Coalition aims to promote the economic well-being of minorities and the poor by encouraging corporate America to abandon redlining and form partnerships with them. Why should corporations, after years of cold-shoulder treatment, embrace inner-city and low-income communities? Profits and market share.
Started in 1979, the Greenlining Coalition comprises 16 multiethnic organizations, among them the California Council of Urban Leagues, the League of United Latin American Citizens, the Filipino-American Political Assn. and Consumer Action. Its first partnership, also in 1979, was with Glendale Federal Savings and Loan. The coalition agreed not to file an action with the Federal Home Loan Bank Board to block Glendale’s merger with another S&L.; In return, Glendale pledged to develop inner-city lending programs, name minority and female representatives to its board of directors and revise its philanthropic policies.
Its most recent partnership was announced last month when Security Pacific Bank said it was committing $2.4 billion in the 1990s to economic development in inner-city and low-income neighborhoods. The bank also plans to retarget its philanthropic contributions to reflect the needs of its customer base, almost half minority. The program is the result of numerous meetings of the coalition and its counsel, Public Advocates, with Security Pacific’s chief executive officer, Robert Smith.
Other banks also recognize the immense profits to be made by lending in the inner cities. The Bank of Tokyo, which owns 77% of Union Bank, reached a comprehensive equal-opportunity agreement with the coalition in 1988 to head off a potential legal challenge to its plan to merge with a California bank. The pact calls for the bank to invest at least $42 million a year in the inner city, to name a total of five minority and female representatives to its board of directors, to set up a comprehensive multilingual outreach program and to offer free checking accounts to the poor. As part of the bank’s lending program, the Baltic Inn in San Diego was restored and the Mercy Family Plaza in San Francisco built to create housing for low-income and senior citizens.
Commendable as Bank of Toyko’s action is, Southern California Edison recently went further. Last September, after a series of Supreme Court decisions that made it more difficult for plaintiffs to prove discrimination and weaken the quota system, Howard Allen, Edison chairman, asked the coalition to join him in announcing corporate changes that would strive to end economic exclusion.
The power company promised to add two female and minority representatives to its board of directors, ensure that 30% of its top management be minority and female, award roughly 30% of its $1 billion year in contracts to minorities and women and increase by tenfold its direct philanthropic contributions to the poor and minorities.
Allen has been outspoken on the matter of equal opportunity, asserting that it is not only morally right, but makes good business sense and can be achieved on merit alone.
Other major corporations have also pursued the profit potential of serving all segments of California’s diverse population. In 1986 and 1987, AT&T;, GTE and Pacific Bell entered into agreements with members of the coalition to provide multilingual telephone services. One expert estimated that the introduction of full Spanish-language telephone services could increase Pacific Bell’s revenue by at least $5 billion this decade. AT&T;, impressed by the profitability of Spanish-language telephone services, has announced that it will voluntarily launch a 140-language phone service throughout the United States.
The Greenlining Coalition has been less successful in dealing with foreign-owned banks and the insurance industry in California. Unwillingness to lend to minorities in California has prompted legal protests by the coalition, Consumers Union and Communities for Accountable Reinvestment. As a result, the Federal Reserve Bank is scrutinizing the lending practices of Mitsui Bank Ltd. of Japan.
Far more notorious are the exclusionary business practices of the insurance industry. Two of the state’s largest insurance companies virtually refuse to sell auto insurance in minority areas of Los Angeles. This has spawned administrative legal suits by Consumers Union, Voter Revolt and the Greenlining Coalition. Partly as a result, Insurance Commissioner Roxani Gillespie will hold hearings next month on redlining.
But the practices of the insurance industry are increasingly out of step with more and more economists, educators and CEOs who believe that California’s long-term economic viability depends on its business community developing partnership with its minorities--which will collectively be the majority by the year 2000.
These minority-corporate ties are best developed voluntarily. But as the civil-rights struggle has demonstrated, government incentives--and penalties--are sometimes a helpful prod. Two of California’s five largest banks--Wells Fargo and Security Pacific--currently have no minority representatives on their boards of directors. The chairman of Security Pacific, however, has pledged to have two minority board members by the end of the year. A typical major bank or savings-and-loan has less than 1% of its loans in the African-American community, less than 2% in the Latino.
That is why the coalition is asking Rep. Henry B. Gonzalez (D-Tex.) and Augustus F. Hawkins (D-Los Angeles) to sponsor legislation that would block any takeover or merger unless the acquiring corporation can demonstrate its commitment to equal opportunity. If passed, the legislation could break corporate resistance to multicultural opportunity. Martin Luther King Jr.’s dream of economic parity for minorities and corporate America’s dream of increasing market share and profitability could both come true.
