House Banking Committee Chairman Henry B. Gonzalez was keynote speaker last week at a community reinvestment conference in his home town of San Antonio, Texas, hosted by the Federal Home Loan Bank of Dallas. Here are excerpts from his address:

Like the ancient Gaul of Caesar's "Commentaries," San Antonio has always been divided into three economic and racial parts. When the city received its first municipal charter in 1837 -- the year following the Texas-American War -- the city's first mayor was not named Garcia or Sanchez or Gonzalez.

He was John Smith. And not unlike other cities, the Anglo or Creole elite had the power to allocate development resources in a town largely of poor Mexicans.

For example, when former Mayor Bryan Callaghan 2d brought municipal progress to San Antonio, he paved and lighted the streets, brought water lines in, built the city's first jail ... and set up a modern transit system.

Mayor Callaghan's improvements existed mainly to facilitate the interests of the upper crust.

I remember all to well arriving on the city council at a time when the water board didn't have the slightest concern about entire downtown neighborhoods with no water supply at all. Those in power simply did not find in necessary to serve everyone equally, and as a result, some were not served at all.

Many Policies Tried

Our banking system unfortunately works in much the same way. Like San Antonio's old elite, many institutions see the only sound "business decisions" as those that benefit ... certain classes of people.

The Federal Government has tried many policies to reverse and arrest patterns of urban decline. However, none of these policies work unless there is private capital available to enable sustained growth to occur.

And that is where the Community Reinvestment Act comes in. . . . It means making sure banks do all they can to serve their communities.

I'm not talking about credit allocation. I am not talking about using CRA to force banks to make bad loans, for a bad loan does nobody any good. I am, however, suggesting that CRA properly used will identify real opportunities with real benefits for everyone concerned.

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