WASHINGTON -- "Who's afraid of Alan Greenspan?"
Thousands of West Coast newspaper readers were confronted with this question this morning when they opened their New York Times.
A group of California-based community activists took out a full-page add in that paper's West Coast edition, trashing the Federal Reserve for being a "major obstacle to fair lending."
In particular, the groups criticized the Fed's refusal to require -- or even allow - banks to collect data on their lending to minority businesses.
The query about Mr. Greenspan's awe-inspiring power was splashed across the top of the eye-catching advertisement. Two other questions followed: "Why, Mr. President, is the Federal Reserve in charge of minority and inner-city economic development? And, why is the Federal Reserve opposed to minority business loans?"
Open Letter to Clinton
The ad also included an open letter to President Clinton, urging him to "take personal charge of your administration's effort to provide fair-lending opportunities to all" and to wrest from the Fed its oversight of fair-lending compliance.
Fed officials have repeatedly defended their record of enforcing community reinvestment and fair-lending laws, saying they are committed to eradicating bias. But that has not stopped many activists from continuing to criticize their efforts.
The Greenlining Coalition, a San Francisco based public advocacy group, organized sponsors for the advertisement. Close to 100 organizations, including the California Black Chambers of Commerce, the Latin Business Association, and Philippine News, co-sponsored the effort, which cost $3,000.
National Ad Too Expensive
They chose the West Coast edition of the Times because the cost of an ad in the national edition was prohibitively expensive, said Robert Gnaizda, counsel to the coalition.
The letter comes as the regulatory agencies are reworking their Community Reinvestment Act rules and toughening their enforcement of anti-discrimination laws.
Community groups have repeatedly urged the agencies to require banks to collect more data about their minority lending, especially to minority businesses.
Bankers have strongly opposed these calls, and until recently they have had the solid support of the banking agencies. But this backing appears to have diminished somewhat as President Clinton's banking appointees have come into power.
"The Federal Reserve is in the process of capturing and destroying your fair lending program by protecting banks that refuse to lend to small women and minority-owned businesses," the letter said.
The letter also criticized the Fed's position that businesses cannot ask business-loan recipients about their race, even if they will use it to track their minority-lending records.
Obstacle to Fair Lending Seen
"One simple example of the Federal Reserve as a major obstacle to fair lending is the battle between the Federal Reserve and community-oriented banks that want to assist minority and women-owned businesses," the letter said.
Fed officials have said they believe the Equal Credit Opportunity Act forbids such data collection. Congressional action would be required for them to change their rules, they have said.
The advertisement noted that several policymakers - including some lawmakers and administration officials - have already asked the Fed to rethink its position on voluntary collection of minority-business lending.