Rev. King’s Message of Economic Justice Still Reverberates Today

Forty years ago last month, a young Southern pastor was chosen to lead the Montgomery Improvement Assn. in a boycott of the segregated city buses. Denounced by the local business establishment and dismissed as a meaningless distraction by law-oriented advocate groups, the Montgomery bus boycott helped spark a revolution in civil rights in America and human rights around the world.

Today the struggle continues. Community response to mega-mergers, like the proposed acquisition of First Interstate by Wells Fargo, may well usher in the next phase of the civil rights revolution: the battle for economic justice.

In many ways, the Rev. Martin Luther King Jr. was well ahead of his time. With the bus boycott, lunch counter sit-ins and Chicago protests against housing and employment discrimination, Rev. King demonstrated a keen awareness of the connection between the dreams of social justice and economic empowerment. Many of his targets were economic, not political. Indeed, in the months before his assassination in 1968, he was planning the Poor People’s Campaign, a multiracial, anti-poverty march on Washington that would kick off an intensive movement to secure a share of this country’s great bounty for all Americans.

As we again celebrate Rev. King’s birth Monday and continue to mourn his untimely passing, we must remember to focus on the genius of the message as well as the greatness of the man. And we must adapt his message of economic empowerment to an environment that in many ways requires more ingenuity than ever before.

In 1955, segregationists cynically marketed the idea of black self-reliance, but denied access to its raw materials--economic and educational opportunity--and then pointed self-righteously to the predictable end product, black poverty.

In 1995, Merrill Lynch (along with Wall Street’s other major brokerage houses) made little effort to market inner-city investments. This is the same Merrill Lynch, of course, that guided Orange County executives into gargantuan financial losses that resulted in major cuts to basic services for that county’s poor. Also in 1995, Chase Manhattan made a bid to merge with Chemical Bank at the same time it was lending less than one-half of 1% of its portfolio to minority homeowners or businesses, and continued lending policies that have led to billions of dollars in losses in international and speculative investments. (The merger was approved by the Federal Reserve last week.)

Many California banks make less than one low-income minority home loan per $100 million of assets, according to the banks’ own figures. In some areas, even middle-income minorities are turned down for loans at twice the rate of whites with the same income--all of this at a time when 80% of all new households formed in the state are minority. Without access to capital, economic empowerment and racial equality are only distant dreams.

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What is the promise of 1996? More of the same. Unprecedented changes in America’s economic structure threaten to undermine the political gains of the civil rights era. Corporate America is merging and downsizing away the once-safe middle manager. Industrial America has all but disappeared, leaving millions on the verge of economic irrelevancy. Banks will continue to consolidate through mega-mergers in an effort to compete with insurance companies and investment houses for investment dollars. Branch banking may become a relic of the past as banks adopt the more flexible, less capital-intensive methods of doing business that their financial services competitors have utilized for years. In a society increasingly driven by technology and information, access to banking, economic opportunity and eventually even voting will be channeled through the home computer. The cost of the coming information-based society will be high for low-income, minority communities.

The new civil rights struggle is fundamentally economic. We must make our communities economically aware and technologically literate. Our children can ill afford to languish in decaying urban schools with little access to books, and even less access to the information superhighway. There is no time to waste in remedies that prepare us only for yesterday’s world. We cannot continue to demand a seat at a crumbling table.

The new strategies must include an understanding of industrial trends and the changing nature of the American work force. We must comprehend the nature of the regulatory and the competitive environments in which industry operates. And we must leverage this knowledge to anticipate and take advantage of opportunities to expand the economic pie for future generations.

The new tactics must involve committed multiethnic leadership that encourages and, when necessary, forces private industry to address the needs of communities where they do business. Politicians from across the political spectrum have urged Americans to awaken to their ownership of government and take back America.

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For low-income communities of color, that is only a meager beginning. We must engineer a fundamental change in the relationship between our communities and the private institutions that affect our economic destiny. The answer is no longer to seek government as an intermediary. To take control of our communities, we must now go directly to the source.

Rep. Maxine Waters (D-Los Angeles) articulated this new relationship recently when asked which bank she supported in the First Interstate-Wells Fargo merger battle.

“I don’t know whose side to be on,” she replied, then added with a smile, “I’m going to go back and look at the records to see who has put the most money into inner-city and minority communities and then I’ll decide.”

Two months later, a multiethnic group of 30 community and business organizations pursued this approach by uniting to compel Wells Fargo to address the consequences of its First Interstate merger bid on low-income, minority and disabled communities. With an understanding of the competitive marketplace and industry trends, community leaders sought to leverage the fundamental changes in banking to maximize future economic opportunity.

The result of this intervention was a pledge that commits $45 billion in new capital for small-business and economic development, expands minority and low-income access to banking services utilizing new technology and establishes an unprecedented 40% minority and women contracting goal. The pledge furthers Rev. King’s goal of racial equality by committing Wells to be the outspoken leader among banks in affirmative action and diversity of board members and senior management.

For perhaps the first time in history, a private-sector institution is earmarking substantial funds to address the economic dislocation caused by its restructuring. The agreement will be enforced in the same manner it was originally garnered: through community creativity, cooperation and vigilance. In addition, once the merger is approved, the new bank’s future positive Community Reinvestment Act evaluations by the Federal Reserve Board and the Comptroller of the Currency will hinge on the implementation of the pledge.

With its pledge, Wells has recognized that affirmative action and economic opportunity are key to its corporate future and the prosperity of California. Equally important, however, is the lesson for community leaders. Rev. King’s simple boycott taught Montgomery’s black community that it could unite to demand first-class economic citizenship from previously unresponsive institutions.

If we approach today’s challenges with multiethnic cooperation, determination and courage, we too can leverage unresponsive private institutions to help bring our children closer still to his glorious dreams.