Before being appointed to the board of the Federal Deposit Insurance Corp., I was a young officer at the largest bank in Kentucky.

Having been reared in a small Ohio town, I'd had little experience with race discrimination.

One of the most prestigious clubs in downtown Louisville had a "whites only" rule. A young black man, a graduate of Dartmouth and Harvard who had joined one of Louisville's largest law firms, was denied entrance to the club as a guest to play squash.

When I arrived at the FDIC, I decided I would do what I could to change what I had come to regard as a deplorable and degrading practice. I believed that private clubs discriminating on the basis of race, religion, or gender should not be supported by the business community.

I encouraged the FDIC board to adopt a policy statement "discouraging" banks from paying dues to clubs with discriminatory membership practices. We had no legal authority to enforce the policy statement.

We were simply taking a stand, trying to exert a little moral leadership.

Disappointing Reaction

Soon after the policy Statement was issued, I appeared on a "meet the regulators" panel at a bankers convention. Many of the bankers in the audience were enraged about the FDIC's policy statement.

One banker received an ovation when he called me a "goddamned bureaucrat who ought to have something better to do."

The episode made me angry, to be sure. But mostly I was disappointed.

I had worked with bankers for a lot of years. They were good, decent people, pillars of their communities.

They had an opportunity to put something right that was terribly wrong. Not many private clubs would be able to maintain their discriminatory practices in the face of bank resistance.

I had hoped that banking's leaders would speak out in favor of what we had done. Had the industry's leaders done this - in short, had they led - banking would not only have done the right thing, it would have scored huge public relations and political coups.

Instead of leading, the industry|s captains allowed a few noisy reactionaries to be the industry's voice. The results were some angry and disappointed regulators and some very bad publicity.

A Choice to Make

The industry has a similar choice before it today. The regulators, the Clinton administration, Congress, and the media are all focused on community reinvestment and discriminatory lending practices.

Indeed, Gene Ludwig, the new comptroller of the currency and an old friend of the President's, has made it clear that eliminating discriminatory lending practices is one of his highest priorities.

Federal Reserve Governor Larry Lindsey, from a different political camp, has been equally outspoken on the subject.

The industry's leaders can remain silent. If they do, a void will be created - and it will inevitably be filled by the reactionaries.

The Real Issue

No bank of any consequence would knowingly enpge in discriminatory lending practices. That's not the issue. The issue is whether the banks are doing enough to help identify and overcome the subtle forms of discrimination that exist throughout our society.

Bankers can complain that they are being singled out unfairly and that banks' competitors should be forced to do their part. Banks will not pin any relief through this strategy, though they might acquire Companions in misery.

I think it makes a lot more sense for the industry to take the initiative in understanding and addressing the concerns of the community groups.

The industry's leaders should get out front and make it clear that bankers care deeply about their communities and will.not tolerate discriminatory lending practices, whether intentional or unwitting.

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