WASHINGTON -- The House Banking Committee is taking a novel path in its fight against lending discrimination: It will challenge regulators and bankers to quickly improve performance a single community.
The committee wants the banking agencies, industry officials, and community groups to work together to dramatically improve bank lending and services in a predominately black area of Prince Georges County, Md., just east of Washington.
Currently, three dozen branches of 11 banks -- including NationsBank, Maryland National Bank, and Crestar -- are located there.
Announcement Due Friday
The initiative will be announced al a committee hearing in Maryland on Friday.
The "challenge area" lies in the district of Rep. Albert Wynn, a committee Democrat who has taken a particular interest in minority lending.
The committee wanted to track an area in its own backyard, after The Washington Post highlighted lending disparities in the Washington area.
Committee Chairman Henry B. Gonzalez, D-Tex., intends to revisit the area in a year to judge which strategies have been effective.
The committee hopes that shining a spotlight there will spur creative initiatives by both regulators and bankers to increase mortgage and small-business lending to poor and moderate-income communities. They also hope that banks will improve the number and quality of branches in the area.
"We're really going to be saying to the regulators: Look, show us some results here," a committee spokesperson said. "Clearly the regulatory agencies in the past haven't done their job."
Banking Committee staff members said the plan is an attempt to make speedy progress on the issue, without getting bogged down in finger pointing and confrontations with regulators and industry groups.
Regulators have agreed to work with Congress, more carefully scrutinizing the Community Reinvestment Act and Home Mortgage Disclosure Act records in the area. They will also try to measure the impact of recent initiatives, including the President's effort to spur small-business lending.
The challenge also will give them a chance to test out their new CRA rules, which are due in January.
"The committee has come up with an interesting way of personalizing the whole debate about CRA," said Stephen Cross, deputy comptroller for compliance. "We can't do this for every underserved county in America, but let this be a model for how we can proceed."
"The committee would like to hold a hearing next year and be able to say there are more bank branches, there's more lending, there's been a clear improvement in service, and that these improved services contributed to Profit and credit quality," he added.
The-86-square-mile test area follows a single road, from poorer neighborhoods like Capitol Heights at the district line, into more affluent communities like Largo farther east. Blacks make up 82% of the 1.59,000 residents and include a wide range of income levels.