Antipoverty activists were aghast when Rep. Floyd Flake, D-N.Y., introduced a community development lending bill that rivaled President Clinton's proposal. What angered them most were the incentives the bill offered to commercial banks and thrifts for community lending.

But Rep. Flake, a three-term congressman from Queens, has never been a traditional sort of liberal. In 1991, he weathered similar criticism when he joined Rep. Tom Ridge, R-Pa., to win approval of the Bank Enterprise Act, which gives banks rebates against deposit insurance premiums for certain kinds of community lending activities.

Voice of Experience

And in the debate over community development, Rep. Flake's credentials are better than most of his critics'. A veteran of the Great Society programs of the 1960s, Rep. Flake is an African Methodist Episcopal minister who has used his church in the New York City borough of Queens as the focal point for a community development effort that even his most ardent critics might admire.

As pastor of the Allen A.M.E. Church, Rep. Flake has built up an organization that employs nearly 1,000 while providing assistance ranging from prenatal care to financial services.

"If our church was listed on the Black Enterprise list of top businesses, we would be No. 66 in the country," he said.

Anything That Works

His voting record is distinctly liberal, but Rep. Flake sees himself as a moderate and a pragmatist, willing to support anything that works in his quest to bring prosperity to "the Third World nation within our borders."

And he says his experiences with antipoverty programs have convinced him that community development will not succeed without the involvement of mainstream lenders.

"I come to this as a pragmatist who was involved in the process of community development, and who realizes there comes a point where you don't have all the resources you need available to you," he said.

Two Lending Tracks

"If there is a big marketplace out there in the banking industry where there are resources, there ought to be as many vehicles as possible to access those funds," he added.

As a result, Rep. Flake's legislation would create two lending tracks for businesses. First, it would provide seed money for small community development banks that can help entrepreneurs get started. It also provides incentives for traditional lenders to pick up those businesses when they outgrow their development banks.

Tall and dapper, Rep. Flake is coming into his own. Thanks to the huge turnover in Congress this year, he won the chairmanship of the House Banking subcommittee on general oversight, making him a major player on banking legislation.

And with his community development lending bill, which he cosponsored with Rep. Jim Leach, R-Iowa, he has an opportunity to reshape what may be the only major banking initiative to clear Congress this year.

|So Much Waste'

In a voice that seems perpetually hoarse, Rep. Flake recalled recently how the Great Society years shaped his views on community development.

"There was so much waste," he said, in a pained voice. "When you think about the billions of dollars we spent on model cities, and other than Columbia, Md., and a few others, we just don't have much to show for the money we spent.

"I never want to see that again," he added.

Rep. Flake said the program failed partly because it had so little oversight, but mainly because the government did not involve private lenders -- a mistake he did not repeat in his church.

Leveraging the Donations

In Queens, he said, "we are leveraging church tithes and offerings." About $3.6 million goes into the church's collection plates each year. A third of that goes to community projects, many of them profit-making businesses. All told, income from church-sponsored business and collections gives Rep. Flake a $21.9 million annual budget.

But the real muscle comes from private lenders, he said.

For example, the church has become a major real estate developer, buying up and rehabilitating vacant stores in Queens. In most cases, a 20% down payment comes from church funds and the rest is borrowed.

Bank, Community Benefit

"We bought a block of stores for $250,000," he said. "We put about $500,000 in it, rented it out, and it was appraised at $1.4 million. So we went back and borrowed $650,000 on that and bought more properties."

The bank benefited by picking up two good loans, he said. More importantly, he added, the community benefited from the new stores, which provide services and employment.

"The problem is, you have secondary markets for mortgages, but nobody does that for small business," he said. "So no matter how much housing we produce, the Main Streets of most urban communities are in total depression."

Despite his years in Washington, Rep. Flake said it is the pull of his Queens parish that helps him maintain his balance.

"I realize I could never be a Beltway politician," he said. Back home, "there are real people with real everyday problems that need to be addressed."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.