THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, November 11, 1994 TAG: 9411110038
SECTION: FRONT PAGE: A22 EDITION: FINAL
TYPE: Editorial
LENGTH: Short : 49 lines
Many banks are more interested in promoting prejudice than they are in making money, or so the civil-rights division of the Clinton ``social'' Justice Department would have us think.
The Justice Department's traditional policy of penalizing banks, or loan officers, who could be proved as favoring loans to whites over those to equally qualified blacks has now been altered to what amounts to lending by quota.
The push for banking by quota first came to light when the Federal Reserve office in Boston published a study showing that blacks get far fewer loans approved than whites do. This ``finding'' was used as evidence that banks discriminate when considering loans. The study, however, did not examine the creditworthiness of the applicants. In fact, it wasn't whites who qualified for the most loans, but Asian Americans.
The government is now promoting a policy that would not only force banks to lend their depositors' money based on what amounts to a quota system, but that they must also open branches in ``underserved'' minority neighborhoods.
In Maryland, for instance, Chevy Chase Federal, and its mortgage subsidiary B.F. Saul Mortgage Co., was recently employed as a sacrificial lamb in pursuit of this agenda. The Justice Department forced it to open branches in minority neighborhoods, offer millions in subsidized loans in minority areas, etc. And why? Not because of prejudice in administration of loans. There was not a single case of that. The government simply believed Chevy Chase Federal had not marketed loans in predominantly black areas to the degree Justice thought it should.
It's hard to see what motivation banks would have for discrimination. Lending money to less creditworthy whites in order to stiff-arm creditworthy blacks makes no economic sense. The Federal Reserve has released another study that adjusts the data for income. Guess what? Blacks and whites with the same income get roughly the same number of loans approved.
The anti-discrimination laws were intended to punish and redress proven cases of racial bias. No one has proved pervasive bias in the banking industry. Perhaps the new Republican Congress can turn its attention to investigating what appears to be a case of the Clinton administration creating a new entitlement program funded by unsuspecting depositors in the nation's banks. by CNB