Yielding to heavy public and private pressure that culminated in a nationally televised program showing its lending practices in a poor light, Affiliated Bank is planning to open three loan-origination offices on Chicago`s West Side before the year is out.
The action will be a small step in redressing a huge gap in access to credit and banking services that exists in some parts of the city`s West and South Sides, particularly where most of the residents are black.
A 1988 study by the Woodstock Institute, a non-profit group that studies community development issues, reported that 15 of Chicago`s 77 community areas had no banks or savings and loans. All but three of those were in areas of the West and South Sides where populations were more than 90 percent black. In one of the others, the population was almost 80 percent Hispanic.
The situation has not improved since then. Woodstock project director Ernestine Jackson said several banking facilities have closed since the study was done, and the institute is planning to update it this fall.
Not surprisingly, the areas with no banks or thrifts get few loans. Another Woodstock study this spring showed that six of the areas with no banks or thrifts were also among the bottom 10 in numbers of mortgage and home improvement loans received per housing unit and in loan dollars received per housing unit. Figures used were for 1990 loans.
All of those bottom 10-East Garfield Park, North Lawndale, Douglas, Oakland, Grand Boulevard, Fuller Park, Washington Park, Woodlawn, Riverdale and Englewood-are in areas where blacks exceed 95 percent of the population.
None of the areas received more than $10 million in total housing lending, and three got well under $1 million. By contrast, 13 of the 14 heavy- lending areas, with totals of $50 million or more, were on the North and Northwest Sides and had predominantly white or, in two cases, Hispanic populations.
The exception was the West Side`s Austin neighborhood, which is 86 percent black and the city`s largest non-lakeshore community. It got a total of $56 million in loans, which still gave it a rank in loan dollars per household of only 49th among the 77 neighborhoods.
Getting lending institutions to come to the black areas of the South and West Sides is no easy task, to judge by what led up to Affiliated`s new plan. Madeline Talbott, director of the Chicago office of the Association of Community Organizations for Reform Now (ACORN), said her group was able to pressure Affiliated into its move by threatening to torpedo a takeover by Comerica, a Detroit-based banking group, of Affiliated`s parent,
Manufacturer`s National Corp. The takeover was completed in June.
Under the federal Community Reinvestment Act (CRA), banking regulators can hold up bank mergers if one of the merging parties is shown to be failing in its obligations to serve all segments of its community.
Affiliated, which has 24 branches in the city and north and west suburbs, was also pilloried on a June ”Frontline” public television program, ”Your Loan Is Denied,” which showed bank officials being confronted by Englewood residents demanding they make loans in that area.
Talbott, who was shown on the ”Frontline” program meeting with Affiliated officials, said they were able to pressure the bank ”because Affiliated was so dramatically bad, and we were successful in making that public.”
One of the most graphic indicators of Affiliated`s avoidance of minority areas was its map of its primary lending area, which showed it serving Chicago`s North and Northwest Sides east of the Kennedy, going as far south as the Loop but excluding the whole West Side. Predominantly white Cicero was also included, jutting into the excluded black West Side.
Along with its agreement to open the three new offices, Affiliated has redrawn its primary lending area map to include everything north of the Stevenson Expressway-now including the whole West Side.
Larry Hemmen, Affiliated`s executive vice president, acknowledged that the move came in response to outside pressure, particularly from federal regulators looking at the bank merger.
”The driving force was our need under CRA to increase our lending in those neighborhoods,” he said. ”Our bank and every other bank are being closely scrutinized on their activities, and we have to do some non-traditional things to generate volume.”
He said the decisions to expand West Side activities were made before the television program aired, but he noted that ACORN had put heavy pressure on the bank. ACORN, a nationwide group working on community redevelopment in inner-city and poor areas, often makes use of publicity and confrontation to further its programs.
”We`re very supportive of what they`re trying to achieve,” said Hemmen. ”I question their tactics.” He mentioned specifically the ”Frontline”
program.
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Talbott, however, argued that Affiliated ”had to be dragged kicking and screaming the entire way.”
Under the new program, Affiliated will open three part-time offices in existing facilities of churches or community organizations. They will originate home mortgages and home improvement loans and serve other personal credit needs.
Hemmen said he expected the churches or community organizations that Affiliated hooked up with would set up counseling programs for loan applicants.
He said Affiliated`s program would be the first of its kind in the city as far as he knew. Something like it is operated by Neighborhood Lending Services, a non-profit mortgage company that works in conjunction with Neighborhood Housing Services, a housing group long active in the inner city.