The Democratic National Convention Committee deposited a total of $1.5 million in three community banks and thrifts here, hoping to spur loans to people who'd do business with the convention.
Seaway National Bank, Second Federal Savings and Loan, and Community Bank of Lawndale - all in minority markets - each got $500,000 last week in from the convention committee. The money will be on deposit for about six months.
Under Federal Election Commission rules, the deposits earn no interest.
"We certainly are appreciative," said Walter E. Grady, president and chief executive of $234 million-asset Seaway National, the nation's largest black-owned bank.
The convention committee first deposited money locally at its 1988 convention in Atlanta, although committee press secretary Delmarie Cobb said she thinks this is the first year that deposits went to community banks.
The Democratic committee hopes the banks will lend the money to small businesses, such as vendors who want to do business at the August convention here, Ms. Cobb said.
However, "this money was not given to them with any stipulations," she said. "It was just our desire to help people who were trying to do business with the convention."
Mr. Grady said he had no specific lending strategy for the money, but would use earnings on the deposits to offset low-down-payment mortgages.
Seaway also will consider loans to minority firms that get contracts with the convention, although not necessarily using the convention's deposits, he said.
Mark T. Doyle, president and chief executive of $160 million-asset Second Federal, agreed that lending against the short-term deposits could be difficult.
"It's a problem finding someone to lend to for six months," said Mr. Doyle, who intends to earmark funds to promote citizenship-related activities in his predominantly Mexican-American market. "I think it's more a way of the Democratic National Committee displaying their interest in investing in Chicago's communities."
Meanwhile, the Republican National Committee, which is holding its convention in San Diego this August, has not yet deposited any money with local banks, said Ron Bird, senior vice president of $175 million-asset San Diego National Bank, which has the convention host committee's operating account.
"I think that is a good idea," Mr. Bird said. "
