Financial services companies have long been characterized as opposed to investing in their companies' own communities. In my experience, this has not remotely been the case. I support community reinvestment and am delighted that the Financial Services Modernization Act, which President Clinton recently signed into law, will give a shot in the arm to investment of capital into our communities.

Nor am I alone in supporting community reinvestment. I know of no major bank or banking association that opposes it.

The industry clearly realizes that it is in its own interest, in the Rev. Jesse Jackson's words, "to expand the marketplace and leave no one behind."

The banking modernization law reaffirms this country's commitment to promoting community reinvestments by requiring that depository institutions invest back into the communities from which they draw deposits. Specifically the law emphasizes the provision of credit and other financial resources - through home mortgages, small-business loans, and similar services - to low- and moderate-income areas, which have traditionally been underserved by the financial services industry. The law will ensure that all segments of our society have the resources they need to prosper.

Through years of experience, we have found that the business of community development is simply good business. It sets in motion a virtuous cycle whereby low- and moderate-income populations increase their levels of homeownership, increase their savings and accumulation of assets, support and strengthen local businesses, and in turn generate a need for an expanded range of financial services that accompanies economic activity and growth.


It is the right and moral way for banks to operate, and it increases profit opportunities. When the market expands, everyone wins.As we have seen over and over again, the history of financial services in this country is the history of financial services democratization. Products and services that had once been the preserve only of business people or the very wealthy have steadily become the preserve of all people.

Providing access to capital has been in the forefront of American banking. From our introduction in 1921 of the first savings account that could be opened with as little as one dollar, to the widespread proliferation of checking accounts, credit cards, and now even mutual funds and retirement accounts, the industry has continually put more and more financial tools into the hands of more and more people.


This has helped to generate a greater level of asset-building wealth, which has provided a stable platform upon which a growing population of individuals and families can increase their opportunities and expand their horizons.With the modernization law, the financial services industry will yet again be able to increase the range and innovation of the products and services that we can offer our customers in "emerging markets" at home as well as abroad.

We will be able to provide to these communities an unparalleled level of product choice and convenience, while also making available products that they might otherwise never have had the ability, or in some cases even the awareness, to choose.

The unification of financial services under one umbrella organization will also benefit the field of community redevelopment in ways not perceived at the level of the individual consumer. Much community development activity focuses on large real-estate-based projects, such as the creation of large and highly complex affordable-housing projects, industrial development programs, and other major initiatives that must bring together numerous sources of funding, including government. By uniting under one roof an investment bank, a commercial bank, and an insurer, for example, a company can not only underwrite the tax-exempt bonds providing the project's underlying mortgage but also underwrite the bonds providing a second level of debt, insure the property, and syndicate the tax credits that are awarded by a state agency, all at once.


Normally, each of these transactions incurs its own set of costs, each with its own battery of bankers, lawyers, and other pro fessionals.By providing a comprehensive package of products and services, we will be able to reduce greatly the total costs associated with them - freeing up funds and resources for other community development work.

We have no doubt that as a wide range of banks, insurers, and investment houses merge into larger entities, their competition will further drive efficiency and productivity in the community development process.

The challenge for those of us in the financial services industry is to ensure that our creative abilities make the community development process work. Mr. Weill is chairman and co-chief executive officer of Citigroup Inc. in New York.

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