Putting Money Where the Mouth Is : A million-dollar message of leadership and hope from Arco

Founders National Bank can do more business in South Los Angeles because of an impressive $1-million investment by Arco.

The oil and gas company also pledges an additional $1-million infusion if other corporations meet that challenge and invest similarly. In total, Founders stands to gain $3 million in capital.

Arco’s noteworthy commitment boosts the assets of Founders, formerly a savings and loan that in January, 1991, was chartered under new ownership to become California’s only black-owned commercial bank. The investment also makes the relatively young bank more attractive to other major investors.

Best of all, Founders is expected to leverage the investment 15 times, and that money should translate into jobs.

There is no magic to job creation. Small businesses create the majority of new jobs. Entrepreneurs traditionally rely on savings, investors, loans and profits to start up or expand businesses. That growth, which puts more people on payrolls, is stunted when access to capital is severely limited, as it is in most inner-city areas.

Founders, though headquartered in the Crenshaw district, has always been committed to serving nearby South-Central Los Angeles. The partnership with Arco will strengthen that commitment by allowing greater lending, and also by allowing the bank to acquire more branches.

Before last spring’s riots Founders had plans to expand: After the merger between Bank of America and Security Pacific was approved, it inquired about branches that were expected to close. Those discussions have continued, and hold out the promise of greater banking services in South Los Angeles.

Access to banking services is limited throughout much of the black and Latino neighborhoods that stretch south from downtown through Watts. Most major commercial banks leave that business to check-cashing outlets or to minority-owned banks and savings and loans. After the 1965 Watts riots, many corporations fled the inner city. The challenge announced by Arco this week encourages corporate leaders to return.

Founders and Los Angeles’ two black-owned savings and loans--Family Savings Bank and Broadway Federal--cannot rejuvenate inner-city neighborhoods without help. Other corporations and financial institutions--banks, savings and loans, pension funds and credit unions--need to follow Arco’s exceptional lead and increase their stake in the new Los Angeles.