WASHINGTON -- A stack of records that would reach as high as the Washington Monument has brought minority lending to the forefront of the banking industry's agenda.

That's how much data regulators collect each year to with the Home Mortgage Disclosure Act.

Public disclosure of the data -- which has shown that minority applicants are more likely than whites to be denied mortgages has sent lenders and regulators scrambling to prove they are serious about ending discrimination.

But while HMDA and its reams of documents have certainly grabbed the industry's attention, its impact on minorities' access to credit is less certain.

"It's not clear that anything has changed as a result of this," said Allen Fishbein, general counsel of the Center for Community Change, a public advocacy group in Washington. "Patent disbelief has changed, and that's all to the good, but whether that translates into remedies in the marketplace is not clear."

Passed in 1975 to test whether banks were redlining entire low-income and minority neighborhoods, HMDA changed significantly in 1989, when lenders were required to include information on the applications for home loans they denied as well as the ones they accepted.

Scanty Improvement

After shocking the industry with evidence that blacks were 2.35 times as likely as whites to be denied in 1990, the data for the following year showed little improvement. In 1991, black applicants were 2.17 times more likely to be denied.

Bankers claimed they didn't have enough time to react to the problem before the second wave of data came out. In later years, evidence would mount that the industry's attention to the problem was working, they predicted.

But early reports on 1992 HMDA data appear to be no better -- and in some cases worse -- than those for 1991. While the government won't release aggregate statistics until the fall, many bankers who have examined their own data have been surprised to find that despite paying considerable attention to minority. lending activities, they have tailed to improve by the numbers.

Slippage at MNC

"We don't know why we're going to look bad again," said Vickie B. Tassan, corporate CRA official for MNC Financial Inc.

At MNC, 1.4 blacks were denied for each white in 1990. Despite vigorous outreach and expanded products. 1.7 blacks were denied for each white in 1991, and the disparity grew again in 1992.

"It's going to take us a longer amount of time." Ms. Tassan said.

Regulators say they have not yet fully analyzed the national data, but they have noticed an increase in the volume of loan applications. That could be a result of the continuing refinancing boom, some say, or perhaps from lenders' improved outreach to minority and low-income residents.

More Applicants, More Denials

Bankers point to the irony that efforts to bring in more applications are likely to lead to higher denial levels, making the raw HMDA numbers look worse.

And they say factors like high unemployment, declining proerty values, and refinancings all beyond a lender's co may contribute to another year of lackluster numbers.

"The banks will be once again criticized this year, and once again accused of one of the worst kinds of allegations -- racial discrimination -- and yet they're in it for the long term," said American Bankers Association spokeswoman Virginia Stafford. "It's simply going to be a matter of time before we see changes."

A better gauge of improvement than the HMDA data, lenders say, would be evidence of the expanded marketing efforts, special programs, and new policies that show the industry's commitment to solving the problem.

But community organizations say that not all minority lending programs are effective. There's a big difference between a bank that introduces a few specialized initiatives and one that makes a top-to-bottom change of attitude and commitment, they say.

The irony of so much interest generating little change so far in the HMDA data points to the limitations of the data. HMDA is just a sheet of numbers that does little more than raise red flags about possible problems.

The records cannot explain much about why the bias is occurring. They don't even address the likelihood of preapplication bias.

And because the law does not mandate collection of key economic variables -- like credit history -- it has minimal explanatory value, telling little of the story of minority lending.

Even banks' harshest critics acknowledge that HMDA data alone cannot "prove" racial bias.

"Rejection rates are not a proficient measure, by any means, of discrimination," said Deepak Bhargava of the community group Acorn.

Nonetheless, both the government and the industry devote huge sums of money to collecting the HMDA data each year.

Not only is it the biggest data collection effort by the Fed -- which number-crunches HMDA data on behalf of all the bank regulators -- but bankers frequently name HMDA as one of the most onerous and costly regulations.

An Overrated Measure

Many in the banking industry say that, given the many limitations of HMDA, especially in the face of its burdensome costs, the law has pined a stronger reputation than it deserves. HMDA has taken on a life of its own, they say.

"One of the risks for banks is the HMDA data is misused and abused," said Lucy H. Griffin, a Washington-based compliance consultant.

Activists see it differently. Despite its limitations, HMDA is the only quantitative gauge of discrimination, they say. And because it deals with only one type of lending -- mortgages -- they believe it likely underestimates the extent of the problem. HMDA becomes even more important, in this light, they say.

"The HMDA data is fine and it's serving its purpose, but let's keep this in perspective, it is only looking at a piece of the picture," Mr. Fishbein said. "This is the tip of the iceberg." Despite continued industry gripes about HMDA, most bankers have recognized that as a matter of public relations, if not principle, they cannot ignore their data.

Any banker in the Boston area can explain why. After participating in a lending study by the Boston Fed, bankers there found themselves under close scrutiny.

Regulators went back and reviewed records the study said may have involved racial bias. The Justice Department launched its own investigation, targeting Shawmut Bank in particular.

And dozens of banks are still being investigated by Massachusetts Attorney General Scott Harshabarger, as a result of the Boston Fed study.

Activists say this tough scrutiny of the industry is long overdue. Bankers are way behind much of the country in grappling with the problem of racial bias, they say.

"We're going through the civil rights era in the banking industry," said Acorn's Mr. Bhargava. "That's the context for why this has flared up into a war rather than a skirmish."

Airing Dirty Laundry

And they point to HMDA as the vehicle for this newfound awareness. Forcing banks to make public their abysmal minority lending records has brought the full force of public opinion against the industry, they argue.

"The most effective regulator is public disclosure," Mr. Fishbein said. "It's up to the public to determine whether institutions do a good job or not, and that can only come from good information."

Added Chris Lewis, banking expert at the Consumer Federation of America, "This is one of the better examples of how disclosure does, in and of itself, instill and maybe inspire public accountability. HMDA has started the learning process."

He points to a potent example of the industry's acknowledgment of the power of HMDA, especially as they push for more relief from regulatory burden.

"You don't see in a lot of this cut-the-red-tape P.R. much effort to erode HMDA reporting," he noted.

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