Minorities Shortchanged in S&L; Bailout
Firms owned by blacks, Latinos and members of other minority groups have garnered only a trickle of the business coming from the federal government’s effort to rescue the beleaguered thrift industry, a computer-aided investigation by The Times shows.
Federal records show that the Resolution Trust Corp., which manages the bailout effort, has awarded black-owned businesses contracts with estimated fees totaling $26 million--2.7% of the $961 million it expects to spend under current contracts for management services, record-keeping, equipment and other activities.
About $19.6 million in such business, or 2%, has gone to firms that are owned by Latinos, The Times’ study shows. And service firms owned by Asian-Americans received awards totaling an estimated $1.7 million, or 0.1%.
Firms owned by white women received contracts with estimated fees of $143.9 million, or 15%, but three companies--BEI-Ritz Joint Venture and Northcorp Realty Advisers Inc. in Dallas and the Beverly Group in Sacramento--accounted for $82.1 million, or about 57% of the total.
Contracts awarded to firms owned by women who are not white have been included under the statistics for members of minority groups. Those owned by black women won contracts totaling $2.6 million, or 0.3%; Latino women, $11.8 million, or 1.2%, and Asian women, $712,000, or 0.1%.
The statistics were compiled as part of a detailed computer review of RTC records conducted by The Times, which provides a comprehensive list of the firms that have been awarded contracts for services involved in the savings and loan rescue operation.
The law that created the RTC in 1989 calls for efforts to encourage participation by women and minorities in handling assets of failed S&Ls.; Unlike other federal agencies, however, the RTC is not subject to any specific requirement to set aside business for particular groups.
The RTC has been under mounting criticism in recent months--particularly from members of Congress--for failing to channel more of its service contracts to businesses that are owned by blacks, women or members of other minority groups.
Rep. Maxine Waters (D-Los Angeles), a member of the House Banking Committee, said the agency has a “dismal record. There is the lack of any desire to have real participation by minorities; it’s just shameful.”
Senate Banking Committee Chairman Donald W. Riegle Jr. (D-Mich.) also expressed skepticism about the RTC’s efforts. Congress wanted the RTC “to do a good, solid outreach program to bring in minorities and women and really get them involved,” Riegle said. “Talk is cheap. What we need are results.”
RTC officials insist that they are trying. “If you group the minority- and women-owned companies together, things don’t look bad,” said John Tierney, RTC director of contracts. But “the criticism we’re coming under is that much of the money is going to firms owned by non-minority women, with relatively little money to minorities.”
Still, stung by attacks by members of Congress and community groups, the RTC is moving to respond to the criticism. Next Tuesday, the agency will ask its board to approve a major effort to attract minority-owned firms and to hire a new, high-level official solely responsible for promoting business with women and minorities.
The policy change followed an incident early last month when the agency found itself having to cancel contracts worth $17.3 million with the Ralph Edgar Group, its largest female-owned contractor, after the firm became disqualified because of a previous default on a loan.
After dismissing the Edgar Group, which by itself had 11% of all the fees going to firms owned by women, the RTC then ordered local officials to redistribute the Edgar contracts by selecting the new recipients without formal bidding. The money went to four firms owned by blacks and two owned by women.
The Times computer study reviewed all contracts and estimated fees that the agency awarded to companies or joint ventures that are controlled 51% or more by women and members of minority groups.
Women, including those who are members of minority groups, account for 14% of the 60,000 firms registered to do business with the RTC--a step required of all would-be contractors--and they received 17% of the fees. Minorities account for 11% of those registered but won just 6% of the fees.
To be sure, not all of the low percentages are the result of inadequate “outreach” on the part of the RTC. Agency records show that minority-owned companies respond only to about one-third of the invitations they receive to bid on contracts. By contrast, those owned by white males generally have responded to 50% of such invitations.
RTC officials are puzzled over the disparity. Dennis F. Geer, an assistant executive director of the RTC, says policy-makers are asking themselves, “Do they need help in preparation (for bidding) or are we asking for too big a contract?”
And agency officials point out that despite the low percentages, they have already been moving to help attract more minority-owned firms. Since the bailout began in 1989, the RTC has been giving firms owned by women and minorities an edge in its contract evaluations, awarding them 10 extra points on a scale of 100 when considering a firm’s technical qualifications.
Such firms also are allowed to bid as much as 3% more than other would-be contractors without being penalized for it. For example, a bid by a minority-owned company for $103,000 would be considered equivalent to a $100,000 bid by a company that is owned by a white male.
Even with the extra concessions, RTC records show that relatively little money is going to minorities. Although minority firms have won more than 1,500 contracts, the awards typically have been for small jobs such as assessing homes, maintaining lawns and making simple repairs.
While black-owned firms have won 742 separate contracts, the average award was $26,062, about 30% less than the average award of $37,443 for companies owned by white males.
As in an earlier, broader investigation by The Times of RTC general contract activity, the study shows that the awards to minority-owned contractors are concentrated among a relatively small group of firms.
Five firms account for almost $19 million of the $26-million total awarded to black-owned firms. Three groups accounted for $15.7 million of the $19.6 million going to Latino-owned firms. (See accompanying chart.)
In the case of both minority- and white-owned firms, the larger contracts have been those awarded for asset-management. Times researcher Murielle Gamache contributed to this story.
Top Latino-Owned Contractors Aiding the S&L; Cleanup
The figures are based on an analysis of all contracts awarded to companies with a Resolution Trust Corp. “minority- or woman-owned business” (MWOB) designation. In cases where a company with such a designation has a joint venture arrangement with a company that does not, only those contracts awarded directly to the minority or woman-owned business have been included.
Contractor Number of (Service Rendered) City Contracts 1 Maria Elena Torano Associates* Miami 5 (Asset management) 2 Telacu, Carpenter & Realecon Joint Venture Irvine 1 (Asset management) 3 Espinoza Phoenix 2 Development (Asset management/ property management) 4 CSW Associates Miami 1 (Asset management) 5 Garcia St. Petersburg, Fla. 4 & Ortiz, PA, CPA (Auditing & accounting, tax consulting) 6 Nexus Austin, Tex. 1 Financial Group (Real estate brokerage) 7 Greystone Sugarland, Tex. 2 Brokerage (Real estate brokerage, property management) 8 John Hall Phoenix 16 & Associates (Real estate brokerage) 9 Long, Chilton, Harlingen, Tex. 5 Payte & Hardin (Closing assistance) 10 Rosemar Inc. San Antonio 4 (Real estate brokerage)
Contractor Estimated (Service Rendered) Fees 1 Maria Elena Torano Associates* $8,895,125 (Asset management) 2 Telacu, Carpenter & Realecon Joint Venture $5,810,388 (Asset management) 3 Espinoza $1,005,121 Development (Asset management/ property management) 4 CSW Associates $557,482 (Asset management) 5 Garcia $321,600 & Ortiz, PA, CPA (Auditing & accounting, tax consulting) 6 Nexus $306,000 Financial Group (Real estate brokerage) 7 Greystone $210,340 Brokerage (Real estate brokerage, property management) 8 John Hall $197,610 & Associates (Real estate brokerage) 9 Long, Chilton, $182,400 Payte & Hardin (Closing assistance) 10 Rosemar Inc. $144,500 (Real estate brokerage)
* Totals for Maria Elana Torano Associates include contracts awarded to META/TECON Asset Management Group and METEC Asset Management Inc. Maria Torano is associated with all three ventures.
Top Black-Owned Contractors Aiding the S&L; Cleanup
Contractor Number of (Service Rendered) City Contracts 1 ONYX Asset Management Houston 1 (Asset management) 2 RPC/ Wayne, Pa. 1 Mitchell Titus Inc. (Asset management) 3 Graistone Detroit 2 Realty Advisors Inc. (Asset management) 4 Smithtec Inc. Midvale, Utah 2 (Asset management) 5 Nevander Newport Beach 3 Asset Management (Asset management) 6 Mortgage Dallas 12 Recruiting Consultants Inc. (Auditing and accounting) 7 L&A; Services Baton Rouge, La. 2 (Loan administration/consulting) 8 Wright Way Tyler, Tex. 2 Property Services (Real estate brokerage, property management) 9 Kathy A. Dockery, CPA Los Angeles 2 (Auditing and accounting, other consulting) 10 Automated Silver Spring, Md. 2 Sciences Group (Computer systems and database management)
Contractor Estimated (Service Rendered) Fees 1 ONYX Asset Management $7,843,371 (Asset management) 2 RPC/ $3,907,935 Mitchell Titus Inc. (Asset management) 3 Graistone $2,936,889 Realty Advisors Inc. (Asset management) 4 Smithtec Inc. $2,181,000 (Asset management) 5 Nevander $2,136,800 Asset Management (Asset management) 6 Mortgage $1,198,080 Recruiting Consultants Inc. (Auditing and accounting) 7 L&A; Services $731,500 (Loan administration/consulting) 8 Wright Way $492,720 Property Services (Real estate brokerage, property management) 9 Kathy A. Dockery, CPA $459,890 (Auditing and accounting, other consulting) 10 Automated $349,941 Sciences Group (Computer systems and database management)
