The Man in Charge of Putting Jobs Where the Jobless People Are

C. Robert Kemp was named last week as the first chief executive of the Los Angeles Community Development Bank, the product of a unique public-private partnership between the U.S. Department of Housing and Urban Development, the city and county of Los Angeles and several commercial and community lenders. LACDB is intended to make loans to entrepremeurs and create jobs for residents of the Los Angeles Empowerment Zone, which includes such low-income areas as Pacoima, Watts and East L.A. The loans are not restricted to minority-owned businesses. Kemp talked with TRIN YARBOROUGH.

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Question: What is your main goal for the community development bank?

Answer: To create 20,000 good, sustainable jobs over the next 10 years. I’ve become pretty realistic about how long such a task will take. We’ll finance businesses that agree to locate in the target areas and agree that at least 51% of their employees will be neighborhood residents. At first we’ll be co-lending with institutions willing to assume, say, half the risk of the loan. We’ll guarantee the rest. And the community development bank will be more flexible than commercial banks. We’ll consider borrowers with fewer assets, higher debt, a shorter profit history, a shorter time in business or a weaker credit record. Then we’ll work with them to help them meet requirements by targeting management weaknesses and such.

Q: What problems do you see?

A: My biggest worry right now is to successfully mediate and work through any differences between lending partners about how we should proceed. But we have many good things going for us--a lot of capitalization, a good strong board backing our goals and good support from all the entities involved.

Q: How did you get into this field?

A: When I began this kind of work 28 years ago. I thought I’d give it about five years, then go back to being an electronic engineer.

I was born in Detroit and studied electronics in the Air Force. I was assigned to different cities and countries to work on projects like an early warning radar system, and in 1956 was sent to San Diego to train electronic technicians. I fell in love with California and promised myself that someday I’d come back to live. In 1962 I did, and went to work for TRW not long before the 1965 Watts revolt.

The defining moment of my life was when Martin Luther King Jr. was assassinated. I realized that anyone in America could be killed for no reason other than that they held a different belief. I thought if people could be sure of a job, and through that achieve dignity and a way to support their families, that would eliminate many problems. So I pledged to commit the rest of my life to the economic empowerment of people who were poor and disadvantaged.

Q: Why are you qualified for this job?

A: I believe my background makes me uniquely qualified. After the 1965 revolt, I began getting fellow TRW employees to volunteer their lunch hours to work with at-risk teens. TRW asked me to start some corporate social responsibility programs and also to find the company some minority contractors. I volunteered at the Watts Industrial Training Center teaching adults, including welfare mothers, to do electronic work, along with basic reading, writing and arithmetic. I became vice president of the Interracial Council for Business Opportunity, a group of volunteer business people who helped borrowers that had been turned down by commercial banks to develop business plans and get approved.

This was my first experience with the combination of business and lending--a whole new world I hadn’t been aware of. In 1972 I became CEO of Economic Resources Corp. in Watts and developed Watts Industrial Park--it’s doing terrific now with 90% occupancy--and Watts Shopping Center. Also, I studied nights for three years and got an MBA from UCLA.

Q: In 1977 you became special assistant under President Carter to the Secretary of Commerce, but quit 18 months later. Why?

A: It was a nightmare situation. For example, I was charged with coordinating nationally about 350 representatives of various agencies, each with their own separate policies, to get them to agree on uniform federal guidelines on who was eligible for minority preference programs. We had a series of brutal meetings and it was a pretty impossible assignment. But I learned a lot during my time with the government, like how many things it purchases, from hammers to water purifiers. And we brought an almost threefold increase in government use of minority businesses.

I took a job as CEO of the Opportunity Funding Corp [and] when the savings and loan debacle hit in the 1980s, it was a depressing, demoralizing time for minority-owned lenders. One thing we did to preserve our shaky assets was shift a lot of investment capital into communications, where FCC regulations for minority preferences were still strong. We also bought the Family Savings Bank in L.A. when it was collapsing; it’s doing fantastically well now. During the 1992 Rodney King verdicts civil unrest, its only damage was a bullet hole in the front door.

Q: Why have so many small businesses, and loan programs to aid them, failed in the past?

A: Because of undercapitalization, greed, fraud, avarice and management, management, management. You’ve got to have good management.

I’ve gotten a great deal of psychological satisfaction from the number of people who’ve been helped over the years, but there’s so much more to do.