WASHINGTON -- Bankers and regulators on Friday questioned whether an area targeted by Congress for a minority lending study is actually underserved by the banking community.
While they have agreed to participate with the House Banking Committee's effort to examine and improve community and minority lending in a region just east of Washington, they said it is not yet clear to them whether banks there are neglecting their job.
"Banks and bank affiliates are very active in this community," said Comptroller of the Currency Eugene Ludwig. "Perhaps they could be more active, but this is not a case in which banking services and bank credit are simply unavailable."
Challenge Extended
Earlier last week, House Banking Committee Chairman Henry B. Gonzalez challenged regulators, bankers, and community groups to vastly improve lending in an 86-square-mile area of Prince George's County, Md., home to Rep. Albert Wynn.
It chose the predominately black area as a constructive way to test a variety of new initiatives by regulators and lenders to eliminate discrimination and spur community lending.
Mr. Gonzalez held a hearing on Friday in the target area, where he heard from regulators, community groups, residents, and bankers about lending there.
"Even here, in the backyard of America's most powerful decision-makers, consumers go wanting for basic financial services," Mr. Gonzalez said.
Complex Issues
Thank bankers, regulators, law-makers, and public advocates cannot agree on whether lenders are fulfilling their responsibilities there points to the complexity of fair lending and community development issues. While anecdotes and some data point to inadequate service there, other evidence and banker testimony suggest otherwise.
For example, a Federal Reserve analysis of 1992 Home Mortgage Disclosure Act data in the area -- presented Friday by Fed governor John P. LaWare -- showed that last year, black applicants for conventional home loans there were actually less likely to be denied mortgages than whites.
Nationwide last year, blacks were about twice as likely to be denied these applications, Mr. LaWare said.
At the hearing, community groups and residents lambasted the banking industry for discriminating. Calvin Hicks, a minority resident angrily relayed his frustration in not being able to get a home loan, though his annual income is $46,000.
"I am making more money now than I ever have made, and I am told that I can't qualify for a loan,' he said. "I feel used, abused, and totally frustrated at this point."
But George Kapusta, president and CEO of Commerce Bank, College Park, Md., rebuffed the criticisms and urged Mr. Gonzalez to abandon the Prince George's County study.
"Your assumptions are wrong," he told the committee. "The neighborhood is being served -- by banks, savings and loans credit unions, and other financial services providers."
Regulators said they would examine a number of lending issues before they decide how well the industry is performing there. There include: the level and types of services lenders are providing; branch locations and hours; loan volume; and CRA ratings.
In addition, regulators want to compare the target area with a nearby community that is similar except in racial makeup.
