re Jmow in our own dealings that money cannot substitute we ;ilso tend to believe that money can solve our problems. r1g on inside the money business that leaves us on the short s going on: tine who succeeds and who loses in our society and what :ment. And this within a banking system that is actually a s determine that they won't make loans in a part of town 1omeowners with absentee landlords and speculators. discount the future- justifying and encouraging rapid use ainable society virtually impossible to attain. ts been a repeated factor in inflation. ors, not stockholders, and in spite of interest limits on such loans--meaning that they end up supporting profiteering her than ones that deal fairly at low prices, support the local • Jf the financial marketplace that our savings support has ttors. This reticence on our part has probably been THE the power of speculators to devastate our farmlands and fr money has and are developing an increasingly versatile ~ control of the conditions and purposes of its use. s a good overview of the manipulations inside our financial t small number of people. 540 Santa Cruz Ave., Menlo Park, CA 94025), $3.95. vithout money and use our resources creatively to good $8/yr. NA] No. 2 ($1) is an excellent issue on dealing with 1, 1976) is an interview with new age entrepreneur par exed 1int. Lrtng nd Redlining Easy financing and our patterns of changing jobs, cities and re idences every few years have resulted in the vast majority of our homes and neighborhoods being under perpetual mortgages- to the profit of financing institutions and at great cost to our communitie . Financing co t on a $10,000 house that lasts 100 year and i paid for five times at 6% interest amounts to $86,000! Cooperative community financing as propo ed by Joe Falk (see "Greenlining" section) eliminates such mortgage pyramiding, saving alma t 70,000 per house! Branch banking and non-enforcement of charter regulations allow banks to take money from one area and loan it el ewhere- making loans unavailable in the local communit and making the saving of poor people in the city pay for developing rich suburbs. The Central Seattle Community Council Federation hawed that for every dollar placed in savings institutions by Seattle city residents, about 30¢ is reinvested in the city, while for every dollar inve ted by suburbanites, about $2 is reinvested in suburban growth. A group called the Committee to Challenge Savings and Loan Association Policies is working now on anti-redlining and related actions. Redlining is the practice whereby bankers quietly determine that they won't make loans in a part of town where it might be less profitable to them. They thus effectively draw a red line around a neighborhood, creating a self-fulfilling _nrophecy of deteriorating and vacated slums. The problems these practices generate for our neighborhoods are very real. Excellent studies of the Adams-Morgan District of Washington, D.C. are available Money, A,1o11ey, Who's Got the Money?, William Batko of I LSR, $1 from: Institute for Local Self-Reliance (ILSR) Gives a brief overview of DC banking practices that remove money and profits from the District and their effects on economic activity in D.C. 1717 18th Street, N.W. Washington, DC 20009 The Adams-Morgan Business Sector: Redlining: Mortgage Disinvestment in the District of Columbia, by ILSR, the D.C. PIRG and the Institute for Policy . Studies, $1.50. a....,._ Paying for Otber People's Development, Batko, Connor and Taylor, ILSR A fine study of the detailed economic, employment, environmental and social effects of different banking practices upon a neighborhood. Comparisons show, for instance, that supporting local non-chain stores instead of franchises and shopping centers keeps more money circulating in the community and produces significantly more employment per dollar of sales. Provides detailed documentation by zipcode of loan practices of local savings . institutions and the failures of regulatory agencies, as well as the actions that can be taken to remedy the problems. '-1 reenlining redlining and to make money available for velopment have been successful in several The .U.S. Congress has finally passed a bill (S-1281), which the President has signed, requiring disclosure of lending practices by financial institutions, which will assist individuals and community groups researching redlining practices. It won't help, however, with more subtle variations of redlining such as discriminatory interest rates, excessive downpayment re- \rquirements and unusually short loan periods, or with rer:llining practices by insurance companies. Write your Congressperson for a copy of the law. ~ I Cin Chicago the problems of redlining became visible some tnree years ago, and, after many unsuccessful.attempts to ~et , banks to change their practices, the city council finally passed an_o~dinance re_quiring ful) ~iscl_osu~e b_Y banks of their loan practices. The city government has been persuaded to deposit its money 111 non-redlmmg mst1tut1ons, and more_ than $2 million was withdrawn from those banks and reinvested in other institutions who had formed agreements with the community coalition. Chicago now has over $100 million in pledges to move savings from redlining lenders, five of ·whom have signed greenlining agreements. State, church and retirement funds, or other large blocks of savings can produce powerful leverage on banks in this way. _J "Redlining: Problems and TacticsThe Chicago Experience," Gail Cincotta, Street Magazine, Summer, 197 5 Pratt Institute Center for Community and Environmental Development 240 Hall Street Brooklyn, NY 11205 A summ_ary of redlining challenges in Chicago. Homeowners' Federation 10234 Washtenaw Avenue Chicago, IL 60642 and Housing Training and Information Center At the end of 1972, our collective savings amounted to the following: Savings and Loan Mutual Savings Banks Commercial Banks Credit Unions Life Insurance Reserves TOTAL $207,300,000,000 $ 91,300,000,000 $276,100,000,000 $ 21,700,000,000 $203,600,000,000 $800,000,000,000 The figure above does not reflect our personal or commercial checking accounts, shares of stock or cash equity in our homes or personal property but only individual or corporate savings which can be invested for long periods of time. 4209 W. Division St. Chicago, IL 60651 Good contacts for further informaLion The greatest majority of these savings are owned by individuon technical aspects of redlining and als, but, conversely, most of the funds are used to finance what can be done at a neighborhood -...-.....,,._.,. commercial activity only because we are not organized to use ').level. In Kansas City, Joe Falk and the Future Associates have 1 worked ou~ a very c~m~re~ensive program of leveraging com- • muntty sav111g~ held 111 life 111surance companies, various kinds of banks, pension funds and individual savings to secure funds for neighborhood improvement rather than commercial development. They show that more than $210 billion of our savings is available from those so1,!rces. ooperative Community D 5 from: he Future Associat 0. Box 912 If we loaned the above sayings to 40,000 potential developing neighborhoods of 5,000 people each, which would cover the entire country, this would provide each neighborhood with $20,000,000 and each family of four people with about $16,000 in funds with which to finance a place to live. With this kind of capital base and a little leverage we can go a long way towards making our neighborhoods better places in which to live. The point we are trying to make here is that we are collectively very wealthy, and, if we use our wealth wisely, we can make our country even better than it is. We have no one to blame but ourselves for our situation, since we have the money, but we have not organized ourselves so we can use our savings. Instead we have turned them over to others to manage for us. (From Cooperative Development) © April 1976 RAIN Magazine 2270 N.W. Irving, Portland, OR 97210
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