Page 24 RAIN Summer 1986 loans from investors, who often set their own terms, and provide below market rate loans to community development projects. There are now approximately 35 funds most of which belong to the National Association of Community Loan Funds. The Institute for Community Economics in Greenfield, Massachusetts, has the largest fund. ICE has made $3.5 million in loans to community development projects in 20 states. Some traditional banks are now funding community development projects, but seldom take the initiative. A coalition of organizations in Chicago, led by the WOOdstock Institute and the National Training and Information Center (NTIC), People who care how banks use their money should go to their bank~r and s,ay: "/want to see the way you len4 your money and where you lend it." collected data on the lending practices of three of Chicago's . largest banks. They found that the banks were not adequately meeting the credit needs of their community. In 1984, they negotiated·with the banks to provide over $17Q million in community development loans. In the first two years of operation the banks have had no defaultS and are very pleased with the results. Richard Hartnack of First National Bank which made a large commitment, said "We're not going to end it when we reach $120 million." Since the Chicago success, NTIC and the Woodstock Institute has provided technical assistance to citizen groups in other cities around the country including St. Louis, Phila-. delphia, and San Antonio. Over $200 million has been allocated by some of the major banks for community development. loans. ' Community Reinvestment Act: Encouraging Local Input The tool being used .by community organizations is the Community Reinvestment Act of 1917.. CRA requires federal regulatory agencies to encourage financial institutions to help meet the credit needs of their local communities and assess how well they meet those needs. If a bank or savings and loan association wants to open a branch office, relocate, or acquire or merge with another company, CRA n:quires regulators to consider the views of any interested party. Community groups that feel a bank is not meeting local credit need can directly participate in the review process. Banks are required to make public a CRA statement outlin..: ing its local community and the types of loans available. Hopefully, the banks that are now committing money to community lending due to CRA challenges will continue their programs. Becoming a permanent source of urban redevelopment is difficult. According to Joan Shapiro, Vice President of Developmerit Deposits at South Shore Bank, · "It's not easy. You need a long term commitment. Bankers see much quicker and easier short term profit opportunities. You need to have commmitted management in there for the long term and shareholders tbat buy into it. If your shareholders demand profit maximization and no deviation from standard commercicil lending practices, this isn't going to happen. A major barrier.is the lack of experience and lack of availability of loan officers sensitive to these issues." Dozens of bankers have toured South Shore Bank and a few say they are planning to initiate similar programs. Although South ShoFe bank staff have been generous with their. time, ·Shapiro says that it is not a bank priority to convince·other . banks to meet the credit needs of their community. She sug- .gests, "People who really care about the way banks use their money should go to their banker and say: 'I want to see your CRA statement. I want to see the way you lend your money and where you lend it. What is the percentage of your assets in loans, rather than your securities portfolio? Of those loans, what percent are actually in our community? What kinds of loans? What percentage of your board or officer core are women or minorities? In nine out of 10 cases the answers to those questions won't be satisfactory." If a bank is not meeting its community's credit needs, depositors can move their funds to a more responsive institution, possibly a smaller bank or savings and loan, a credit union, or a socially screened money market account. .In the long run, a commitment to community development lending by traditional institutions is needed, whether it comes as a result of a CRA challenge or by the example of successes such as South Shore Bank. Shapiro asks, "Can you imagine what would happen if the big money center banks put half of their resources back into their communities"? o o S9cially Responsible Plastic Money· Would you like to.help stop the arms race and feed . the hungry every time you say "charge it"? It's now possible. The managers of Working Assets Money Fund have established the Working Assets VISA card. When someon~ signs up for a card, $2 of the $22 annual fee goes to nonprofit organiza'tions such as Sierra Club, Oxfam, and Amnesty In~emational. Each time you use your card, five.cents goes to the same groups. The interest rate is 17.5 percent. The Working Assets Money Fund is a money market account that avoids investing in firmS that manufacture weapons or pollute the environment and seeks investments that create jobs. Once the money fund'was well established, shareholders were.surveyed to find out what other financial services were desired The number one response·was a credit card. Although some of the Working Assets board members felt that they should be creating ways to save money rather than spend it, the shareholders got wha~ they wanted. For more information, contact: Working Assets, 230 California Street, San Francisco CA 94111; 4151788-0777.
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