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Japanese banks: bias?

California's five largest Japanese-owned banks routinely violate the Community Reinvestment Act (CRA) by denying home mortgage and home improvement loans to blacks and other minorities, according to a report released in January. Consumer advocates hope that the findings will encourage more responsible investing by Japanese banks and stricter government enforcement of CRA regulations.

The San Francisco-based Greenlining Coalition and the Boston-based National Community Reinvestment Network (NCRN), collaborated on the study. The five banks--Mitsui Taiyo Kobe, Mitsubishi Bank of California, Sanwa Bank, Sumitomo Bank and the Bank of Tokyo (Union Bank)--have more than $37 billion in assets in California and $1.8 trillion in assets internationally. The study shows that despite their combined assets, only 68 of the 3,287 loans approved by the five banks were granted to blacks in 1990. By contrast, blacks received 1,405 of the 74,650 loans approved by the Bank of America, which has assets of $84 billion in California. The bank's lending records with other minorities are equally disheartening (see table). However, the Bank of Tokyo has set a 20% goal for loans to minority- and women-owned businesses.

"These banks should be judged severely by the regulators on their CRA evaluations," says Leslie Belay, executive vice president of the Organization for a New Equality, an NCRN sponsor. "Unfortunately, the regulators have given high marks to many of the banks that perform badly." Before the report was issued, none of the banks in the study had received an unsatisfactory CRA rating. Passed in 1977, the CRA requires banks and other financial institutions to reinvest in black and other minority communities.

"Any implication that discrimination is involved is absolutely untrue," says Margaret A. Merrett, senior vice president and manager of corporate communications for Sanwa Bank. She says, "1990 was a year when we didn't make that many loans, period.... When the 1991 figures are presented to the federal government, they will show improvement."

In January, leaders of the Greenlining Coalition and NCRN met with government officials and executives of the parent banks. They attempted to work out agreements similar to the Bank of Tokyo's 20% minority goal. Robert L. Gnaizda, chief legal counsel for the Greenlining Coalition, says the Japanese government "agreed with our concerns." He says the Japanese bank executives were receptive, but no firm commitments have been made.

"These [Japanese] banks may be the worst, but none of the banks are doing enough." says Shalley Jones, president of the National Association of Urban Bankers.
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Title Annotation:mortgage redlining
Author:Stewart, Pearl
Publication:Black Enterprise
Date:Jun 1, 1992
Words:412
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