There was plenty of elation at banks over Home Mortgage Disclosure Act data released in July showing that home lenders made 55% more loans to African-Americans and 42% more to Hispanics in 1994. But no one should assume that suggestions of bias will up and disappear.
Just a week earlier came the announcement of a Federal Reserve Bank of Chicago study that re-examined the data in the seminal 1992 survey by the Federal Reserve Bank of Boston. That study keyed on loan denial rates for minorities, especially Hispanics and African-Americans. The Chicago Fed numbers also showed a lower approval rate for minorities - but with an interesting twist: Denial rates for high-quality applicants were virtually the same across races, but among the more marginal applicants, minorities clearly, fared worse.
"We're not saying we see blatant racism in the numbers," Dr. William Hunter, the Chicago Fed's research director, told The Wall Street Journal in July. But "the marginal black or Hispanic applicant faces a higher hurdle" than whites with analogous credit histories.
Not surprisingly, the study drew fire from banks and bank trade groups - who have a friend in David Andrew Price, a writer for Forbes Media Critic, a quarterly magazine published by Forbes Inc. Price studied newspaper stories alleging lending bias in cities like Atlanta, Washington and Detroit and concluded that the writers had been unduly swayed by questionable statistics. He cited a number of private economists and others working for federal agencies who suggest the articles' conclusions are exaggerated, though not completely erroneous.
Yet there's a body of bankers who agree that the clamoring of activists has opened new lending channels. "Enlightened banks are seeing new business" in underdeveloped communities, says Richard Roberto, community development officer at New York's European American Bank and president of Neighborhood Housing Services of New York. "Without activism Pushing that, many people would not own a home."