Japanese Banks Pledge Housing Funds
Eleven Japanese-owned banks, under pressure to comply with the Community Reinvestment Act, pledged last week a total of $1 million in lending for housing renovations in New York City.
While the dollar amount is relatively small for a lending commitment from so many banks, the action is important because it signals a relatively new push by wholesale and foreign-owned banks to meet their community reinvestment obligations. It comes amid a rash of weak CRA ratings, illustrating how much ground these banks need to cover to meet standards.
In announcing the program, New York Mayor David N. Dinkins said, "The presence of these banks here today is evidence of their strong sense of civic involvement and responsibility as they seek to do their part to help our neighbors and make New York a better place to live."
Service Group Is Supported
In addition to the $1 million in loans for low-and moderate-income residents, the banks granted $526,500 for operating expenses over the next three years to the office in New York City of Neighborhood Housing Services, a nonprofit organization that spans more than 100 U.S. cities.
NHS, like other agencies, has been hit hard by state and city budget cuts. It has had $430,000 cut from its budget.
In the last few months, NHS has introduced several programs to help banks meet their federal reinvestment requirements. These third-party programs are especially attractive to banks that do not have retail networks and so lack a defined community in which they need to invest.
"It's our wish, our desire to get in touch with the community ... and to make some contributions to the community," said Taiju Yamashita, president of Nippon Credit Trust Co., a participant.
Two other banks that are lending money through NHS - IBJ Schroder, and Mitsubishi Trust Co. - recently received from regulators "needs to improve" ratings, the second-lowest on the four-tier CRA scale. Both are now participating in the New York City housing program.
Other banks involved with the program are Yasuda Bank and Trust Co., Long Term Credit Bank of Japan, Fuji Bank and Trust Co., Mitsui Trust Bank, Toyo Trust Company of New York, Bank of Tokyo Trust Co., Sumitomo Trust and Banking Co., and Taiyo Kobe Bank and Trust Co.
