The Clinton administration's push to promote inner-city businesses took a new turn Thursday as the secretary of the Treasury called on large financial institutions to serve as mentors to their smaller counterparts and customers.
Lawrence H. Summers, in one of his first public appearances since assuming his post July 2, applauded the willingness of lenders to finance community development, but said more steps are needed.
"This is about much, much more than money," he said. He maintained that banks can and should play a leadership role by providing advice to smaller businesses and creating networking forums for them.
Mr. Summers made his remarks at a roundtable discussion in New York involving more than 20 business and financial leaders and entrepreneurs. The event was hosted by Chase Manhattan Corp., whose community development initiatives-which Mr. Summers viewed earlier in the day during a tour of Harlem-were touted as models of a private-sector business mentoring program.
By calling on banks to provide technical support for community development, Mr. Summers appeared to be raising the ante for some lenders.
The mentoring approach Mr. Summers described is "a reflection of what some of the cutting edge financial institutions are already doing," said Judith A. Kennedy, president of the National Association of Affordable Housing Lenders.
While bankers said they are already providing much technical assistance to communities, there were calls for more to be done.
Deborah Wright, president and chief executive officer of Carver Federal Savings Bank, said that while New York communities are on the rebound, "the sad fact is that we are not prepared to take advantage of that opportunity." The bank isn't financially constrained, she said; rather, it needs more expert advice and guidance.
Mr. Summers' trip to New York was part of President Clinton's "New Markets Initiative" campaign to create private sector investment for businesses in low- and moderate-income rural and urban areas.
Ms. Wright was one of several members of BusinessLINC-a mentoring program formed last year under the auspices of the Treasury Department and the Small Business Administration-who participated in the roundtable.
Others on the high-powered roster included Henry R. Kravis, founding partner of Kohlberg Kravis Roberts & Co.; Lawrence Toal, chairman and chief executive officer of Dimes Savings Bank; William Rhodes, vice chairman of Citigroup; and Mark Willis, senior vice president of Chase Bank.
William Harrison, president and CEO of Chase Manhattan Corp., said Chase is engaged in "reaching out for the untapped market potential the lies in our urban areas." Chase provided the financing for the project Mr. Summers toured in the morning-Harlem USA, the New York City neighborhood's first large-scale retail development in two decades.
Mr. Summers said the new facilities in Harlem will change the landscape and will bring New York City $200 million in retail income and $517 million in city sales taxes.
William McDonough, president of the Federal Reserve Bank of New York, encouraged Congress to enhance the Community Reinvestment Act to help with community development. Access to capital for important community projects and for the economy as a whole, coupled with mentoring for entrepreneurs will help bolster the New York economy, he said.