Summer 1986 RAIN Page 21 Socially Responsive Banking: One·Out of 14,500 Ain't Good by Rob Baird •How many U.S. banks seek advice from a Bangladesh banker on how to make "micro-loans" to low-income women? •How many banks put more money into low-income neighborhoods than they take out? • How many banks have a long term commitment to improving the low and moderate income neighborhoods in which they operate? The South Shore Bank of Chicago is the only one out of approximately 14,500 commercial banks in this country that is doing a0 ll of the above. And it still turns a good profit. Why would·a U.S. bank even consider making "microloans" to low-income women? It started with Ronald Gryzwinski, who was president of another bank on the south side of Chicago, and three colleagues. They were concerned that government and nonprofit organizations were unable to . adequately address the problem of pervasive urban decline. He left the bank in 1968 and went to the Adlai Stevenson Institute, then part of the University of Chicago, to try to find an appropriate business structure for an organization that could successfully promote urban reinvestment. Gryzwinski fixed on the 1970 amendments to the Bank Holding Act, in which a key provision states, "Bank holding companies possess a unique combination of financial and managerial resources, making them particularly suited for remedying our social ills." Gryzwinski was convinced that a bank holding company was the model he was seeking. He and his team then needed to find a bank and a neighborhood in which to test the idea. By the early 1970s, South Shore Bank was a declining bank in a declining neighborhood. Formerly a white affluent neighborhood, in less than 10 years South Shore became a predominantly black low and moderate income community. Systematic _disinvestment .in such neighborhoods by banks and insurance companies precipitated the decline. The owners of the South Shore Bank had no experience or interest in figuring out how to respond to this new clientele. After an unsuccessful effort to move the bank downtown, they put it up for sale. Gryzwinski and three associates assembled 11 investors, formed a bank holding company in 1972 and purchased the South Shore National Bank in 1973. In addition to the bank, the holding company has three affiliates. City Lands Ronald Gryzwinski, Chairman of South Shore Bank's holding cpmpany (Photo courtesy of South Shore Bank)
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