Banks under the gun to improve their minority lending are finding that success is elusive when they try to go it alone.

Even the most elaborate plans to increase loan applications from minority groups often fizzle the cooperation and counsel of the banking industry's traditional antagonist - consumer and community groups.

"There's great value in our sitting down and talking, because the goals here are the same," said Mark Willis, president of Chase Manhattan Corp.'s community development subsidiary. "If we don't do this together, it's going to take a long time to solve the problem."

Common Ground

Some bankers say they have already found common ground with community groups.

"We're in sync on 90% of the issues," said Mike Mantle, president of Bank of America Community Development Bank in Walnut Creek, Calif., and chairman of the American Bankers Association's community development lending subcommittee.

Community groups not only help banks conceive ideas but can also become program advocates in depressed communities.

The alliances also provide political good will for banks, because the Clinton presidency has brought Washington clout to community groups.

A meeting this spring of Acorn, one of the most visible activist organizations, illustrated this newfound clout. Henry Cisneros, the secretary of housing and urban development, not only chose this group for his first public address but also promised monthly meetings with Acorn's top staff.

Mr. Cisneros was not the only administration heavyweight at the meeting. Eugene Ludwig, then comptroller-designate, and Frank Newman, a Treasury under secretary, also attended. And an Acorn delegation met with White House chief of staff Thomas F. "Mack" McLarty.

In Accord

Even before the inauguration, banking leaders got a taste of the increasing influence of community groups.

During President-elect Clinton's economic summit last winter in Little Rock, Ark., ABA chairman William Brandon found himself seated next to the Rev. Charles Stith, a Boston-based activist whose group had picketed an ABA convention not long before.

The two found they agreed in many areas, Mr. Brandon recently told a group of community activists. He now says he hopes their dialogue will develop into a "summit" among industry leaders, public advocates, and government officials to discuss how they can foster continued partnerships.

"What you want and what I want in the majority of cases will be the same," Mr. Brandon said.

C. Howie Hodges, executive director of the ABA's Center for Community Development, called this quest for alliances the transformation of a "Field of Dreams" attitude -- the idea that if you put a program together, borrowers will come -- among bankers.

"Now they're taking off the pin-striped suits," Mr. Hodges said. Bankers are "taking steps to get out into the community and find the loans."

Activists Changing, Too

Just as banks are coming to recognize the importance of community coalitions, citizens organizations have recently realized the need for lenders to be involved in community renewal.

"Community groups are much more aware than they were five years ago of the role of credit and the need for banks in the community," said Deborah Goldberg, community reinvestment specialist at the Washington-based Center for Community Change, an advocacy group. "They can speak banker lingo now."

Cooperation between lenders and community groups comes in many forms. These include funding consortiums, conferences for inner-city residents on how to buy a home, and just sitting down together to discuss neighborhood problems.

Reaching Out

Maryland National Bank, for example, has tapped dozens of community groups in Baltimore for help in reaching out to minority homebuyers.

Several times a year the bank and community groups co-sponsor "homebuyer workshops" in neighborhoods throughout the city. Realty agents, credit counselors, home inspectors, bankers, and city officials are brought in to walk people through the homebuying process.

Public advocates believe such consumer education efforts are among the best ways to reach minorities -- many of whom feel alienated from the entire credit system.

"That's where banks will spend money in the next few years," said Vicky Tassan, corporate CRA official for MNC Financial Inc., which owns Maryland National.

Sensitivity Training

Bank examiners, too, are coming to rely more on community groups. Examiners say they have grown much more sensitive to public advocates and are incorporating their comments in bank exams.

The Federal Deposit Insurance Corp. interviewed more than 2,000 local groups in conjunction with exams last year - up from almost none two years before.

These same groups are also showing up more often in examiner training sessions. Examiners at these sessions sometimes wind up angrier at the industry than at the community groups, said Janice Smith, the FDIC's director of consumer affairs.

Making Commitments

A prime example of the evolving relationship between community groups and the banking industry may be the growing number of public "commitments" that lenders have cajoled individual lenders into making.

Some banking companies, facing protests to their applications for mergers and acquisitions, have won over community groups by making such commitments to improve minority and inner-city lending.

These agreements often include dollar targets, minority lending goals, and staff changes.

200 Agreements

According to the National Community Reinvestment Coalition, a Washington-based network of community groups, more than 200 such agreements have been made throughout the country.

In the aggregate, community groups say, they have generated $30 billion in commitments to reinvest in communities.

"This is only an inkling of what we can do," said Mr. Stith, the Boston-based advocate.

Though initial contacts between community groups and lenders can be nasty, real partnerships often evolve once they commit themselves to working together, both sides say.

Bankers' Complaints

Though many community groups and lenders have become more allies than adversaries, by no means have they become sweethearts. The banking industry continues to complain that activists' demands are unreasonable, burdensome, and prohibitively expensive.

They say some groups have misused Home Mortgage Disclosure Act data. And they worry that activists will not stop complaining until lenders make every loan -- prudent or not - that comes their way.

Many lenders also distinguish between the high-profile groups that have set up Washington offices and the less outspoken groups quietly working in individual neighborhoods.

"The groups that are the most visible are not necessarily the most effective in the long run," said Virginia Stafford, an ABA spokeswoman.

And though community groups say they welcome the more amicable relationship with lenders, strong partnerships between banks and their communities are by no means universal.

"There are some fairly high-profile examples of partnerships," said Ms. Goldberg of the Center for Community Change. "But there probably are many, many more communities and institutions in this country where these programs do not exist."

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