NR 96-92
  September 6, 1996
  
                          Remarks by 
                                
                        Eugene A. Ludwig
                  Comptroller of the Currency
                                
                           Before the
                                
        Dedication of the Operation Hope Banking Center 
                    Los Angeles, California
                                
                       September 5, 1996
                                 
  
  
  
  More than a hundred years ago, the poet Robert Browning wrote that mankind's reach should
  exceed its grasp.  That simple, eloquent thought captures an important aspect of America's
  greatness.  The reach that exceeds our grasp challenges us to new heights.  The determination
  to go beyond what seems possible fuels countless entrepreneurs and growing ventures.  Our
  restless desire to continually create something new, something better makes our economy
  thrive and propels our nation and our society forward.
  
  In short, it is that reach -- when combined with energy and opportunity -- that has caused so
  many American Dreams to become realities. This nation, its cities, its forms of government
  and commerce all stand as legacies to the fact that where hope, energy  and opportunity reside,
  great things can be accomplished.
  
  But as we all know, hope and opportunity are too often scarce resources in many American
  inner cities.  We have all seen the forgotten neighborhoods.  We all know that our alabaster
  cities are too often dimmed by human tears.  Many of us have walked the abandoned streets of
  blighted communities.  There is a tragedy about such places.  A tragedy because we as a
  nation have allowed dreams to be denied and opportunities to be extinguished.  No nation can
  prosper -- indeed no nation can be long secure -- when any citizen or any part of a community
  is effectively denied the real chance of a decent future.  America -- built as it is on great
  dreams, great promise, and the greatness that come from reaching beyond its grasp -- cannot
  deny any one or any community the opportunity to create a decent life and a better future.
  
  We must work together to change this and restore hope in these communities.  Fortunately,
  the work of restoration has begun.  There are, today, Americans and American institutions
  making the reach to create a more hopeful nation ... leaders who not only care, but who are
  prepared to act.  These men and women have rolled up their sleeves and invested a great deal
  of sweat equity to provide their fellow citizens with a meaningful piece of the American
  dream. 
  
  We are here today with some of those leaders:  John Bryant, the men and women of Operation
  Hope and the community and business leaders who share their vision.  In my book, you are
  genuine American heroes -- local heroes -- for what you are doing to offer renewed hope,
  energy and opportunity for the city of Los Angeles.  
  
  As Comptroller, I also have to say that I take pride in what the Office of the Comptroller of
  the Currency (OCC), its people and the national banks we supervise have been doing to lead
  in this important area.  I know there are those who feel that bureaucrats and bankers do not
  always do enough, and certainly, there is a lot more work for us to do.  But I think it is useful
  to focus some attention on what has been accomplished since the first time I visited Los
  Angeles as a public servant.
  
  In the last three years, we have seen a dramatic increase in lending and investments by banks
  to low- and moderate-income areas.  I think the most dramatic evidence of the progress we've
  witnessed is found in the Home Mortgage Disclosure Act (HMDA) data.  Between 1993 and
  1994 alone, there was a 27 percent increase in conventional home purchase loans to low-income households nationwide.  Loans to African-American families around the country rose
  55 percent, and mortgages to Hispanic families jumped 42 percent during those years -- that's
  particularly striking at a time when the market as a whole was growing at about 18 percent. 
  Most recent data show that this improvement continued through 1995 for African-American
  and Hispanic mortgage applicants.  
  
  The numbers for Los Angeles also speak volumes.  Since 1992, $20 billion of home purchase
  loans were made to minority families in the greater Los Angeles area.  I'm proud to say that
  our national banks in this area contributed significantly to that success by increasing mortgage
  lending to Hispanic borrowers nearly 200 percent during that time period.  Further, home
  mortgage lending to area African-Americans -- by all financial institutions -- has increased 85
  percent since 1992 -- nearly three times the rate of the market as a whole.  
  
  Moreover, it's important to note that in the last three years the annual rate of home mortgage
  lending to low-and moderate-income families in Los Angeles has more than doubled.  Put
  another way, the increased rate of home mortgage lending to low- and moderate-income
  families in Los Angeles since 1993 has meant that there are 12,200 families in homes today
  throughout this city that would not have been without this increased level of bank activity.
  
  In addition to improved HMDA results, national bank investments in community
  development corporations and CDC projects has quadrupled in less than four years.  Here in
  California, national banks have contributed to and leveraged over $1 billion in community
  development and public welfare investment since 1992.  And when we look to the future, we
  have seen a huge increase in loan commitments.   For example, in the last three years the
  commitment has been $100 billion.  This figure represents 70 percent of all commitments
  made since CRA was enacted in 1997.     
  
  These are impressive, important numbers, and all of us who are concerned about the fate of
  our children and the future of our cities can take pride in the progress these statistics represent. 
  I applaud the commitment the banking industry has made to reach beyond its grasp to serve
  previously underserved communities and families.
  
  When I became Comptroller of the Currency in April of 1993, I set four priorities for the
  Office to pursue, one of which was to work closely with the industry and community leaders
  to ensure that all creditworthy Americans had fair and equal access to credit.  Achieving that
  objective has required work on a number of fronts.  
  
  At President Clinton's direction, the OCC led a two-year effort to revise the Community
  Reinvestment Act (CRA) rule and shift the emphasis from process and paperwork to focusing
  more on bank performance.  Through an open administrative process that included six public
  hearings across the country, including meetings here in Los Angeles, testimony from more
  than 300 witnesses and 7,000 comment letters from bankers and community groups, the goal
  was achieved -- a new CRA regulation that is proving more effective in meeting community
  credit needs while significantly reducing burdens for banks.
  
  Among the new directions taken by the reformed CRA is an increased focus on banking
  services as an adjunct to credit.  The new CRA service test offers greater opportunities for
  banks -- directly or in partnership with community groups such as Operation Hope -- to
  provide broad-based community development services.  For example, under today's CRA,
  banks receive service credit for activities such as lending executives to affordable housing
  organizations, offering school savings programs, making grants to foundations that teach at-risk youths entrepreneurial business skills, or providing technical expertise to nonprofit
  organizations devoted to health services.  This is a tribute to the fact that keeping a
  community economically vibrant requires a variety of approaches.
  
  In addition to our drive to revise CRA and make it a more comprehensive vehicle for
  community reinvestment, in April of 1993, the OCC shifted the focus of our fair lending
  examination procedures away from comparing loan files with bank lending policy to
  determining -- through 
  comparative file analysis -- whether a bank's home loan application process produces similar
  outcomes for minority and non-minority applicants with similar qualifications.  Since that
  change, we have conducted over 3,000 fair lending examinations.  We have made 23 referrals
  and notifications to the Department of Justice and the Department of Housing and Urban
  Development of violations of fair lending laws.  In the previous history of fair lending laws --
  a quarter of a century -- the OCC had made but a single referral.  And that referral was
  inspired, not because of an examination, but as the result of an advertisement.
  
  While there may remain incidents like these that require our diligence, today, we see a
  changing picture.  From a national perspective, bankers are making aggressive, progressive
  strides to expand their markets and serve their communities responsibly.  And the OCC is
  working with them, because beyond our supervisory responsibilities, we have an important
  role to play as a resource by offering community development expertise and providing forums
  for discussion and information sharing.
  
  To increase the OCC's support for the industry's community development initiatives, we now
  have community development specialists in each of our district offices.  These specialists
  serve as a resource for bankers and their community partners as they strive to implement
  profitable community development lending and investment programs.  Our OCC staff has
  conducted over 200 specific outreach meetings across the country to seek ways the OCC can
  better serve community development and consumer groups, and I meet monthly with
  consumer, small business and community development professionals.  Incidentally, I'll be
  leaving here in a few minutes to attend an OCC luncheon with community development
  specialists from throughout Southern California.  And earlier this year, we hosted a
  conference in Washington that brought together bankers and community leaders from across
  the United States to talk about the profitable market opportunities community development
  lending represents. 
  
  In addition to face-to-face communications, the OCC is employing information technology to
  share knowledge and advance community development activity.  We have brought more CRA
  material to the World Wide Web than any other agency or organization.  I'd encourage you to
  visit our Web site at: www.occ.treas.gov.  This link gives bankers and community
  development experts access to our latest legal interpretations relating to CRA, so they can get
  a clear sense of the unique, creative ways institutions are meeting their CRA obligations. 
  Further, the Web site offers users the opportunity to download the latest CRA evaluations,
  allowing interested groups and individuals to search by institution or by state to see when
  banks in their community have been assessed and how well they performed.
  
  That is what we're doing in Washington and throughout the OCC to improve the way we
  supervise banks and communicate with the banking industry and the public.  But it is out here
  -- in the trenches and through yeoman efforts by business, local government and concerned
  citizens --  where the really exciting work is being done. 
  
  On our bus tour today, we've seen what greater cooperation at the local level can yield.  What
  a difference a few years make!  The buses that took us through the surrounding neighborhood
  passed by sights that I wouldn't have believed possible three short years ago when I last
  visited this area.  From our bus windows in the fall of 1993 we saw scores of problems left in
  the wake of rioting that opened wounds some thought could never be healed.  It was a
  sobering tour, and the challenges before this city and its leaders were obvious and unenviable. 
  The challenges were such that I would think that even an energetic optimist like John Bryant
  had to have been asking himself, "Is there really any hope here?"
  
  But hope was there ... hope that gave rise to solutions ... hope that attracted over a billion
  dollars of corporate investment to an inner city that citizens and businesses were determined
  to rebuild ... hope that brings the $1 million dollars of Small Business Administration Loans
  for minority-owned businesses, which we presented today.  On this bus trip through South
  Central, yes, we still felt the weight of all there is to be done, and, yes, we recognized that we
  are by no means at the promised land.  But we were also able to clap our hands and celebrate
  the results of your shared commitment to South Central's future.  Hope is indeed here today.
  
  We should take the time to pat ourselves on the back and think about how far we've come in
  community development.  It's deserved.  But we must not break our arms in the process. 
  Because we still have hard work to do, and we must now set our sights on the tasks ahead. 
  Today, it is clear to all of us who care about revitalization in places like South Central Los
  Angeles that continued progress depends upon strong local partnerships and continuous
  process improvement -- partnerships focusing on the nuts and bolts of mortgage lending and
  community development.
  
  I'm talking about the day-to-day attention to the fundamentals -- refining and perfecting, for
  example, the process by which the banking industry underwrites loans and services the
  obligation throughout the life of the loan . . . the process of managing properties and
  providing families and businesses effective counseling . . . the process of strengthening
  existing partnerships, adapting to changing realities, and embracing new cooperative
  strategies.  All of this is necessary to move the community development market fully into the
  mainstream and help today's new customers establish relationships with their financial
  services providers that can last a lifetime.  
  
  That is what makes this new banking center so exciting.  It brings two of the concepts shaping
  the future of financial services everywhere -- relationship banking and technology -- into the
  inner city.  The Operation Hope Banking Center can be a model for how to reach out to
  underserved communities and put the benefits of technological advances within their grasp. 
  John Bryant, Operation Hope, and the dozens of financial institutions involved in this
  undertaking are pioneers who share a strong commitment to ensure that access to financial
  services is preserved in an era of banking industry consolidation and electronic commerce. 
  You've created a high-tech, one-stop shop for financial services, where men and women can
  come to do everything from paying utility bills to receiving credit counseling, to exploring
  entrepreneurial franchise opportunities.  
  
  A center like this demonstrates that the inner city need not be swept away by the currents of
  change running through the financial services industry.  Rather, these forces can provide
  expanded opportunity and hope to those who already have relationships with banks as well as
  to the thousands of unbanked individuals who are not currently served by the banking
  industry.  In recent years, we've devoted considerable energies to reaching out to banking's
  underserved.  The next frontier for all of us will be to find ways to reach the unserved -- those
  who have no relationship with a financial institution, no way of building a solid credit history,
  no place to cash a check without incurring an expense, no help in preparing for their future. 
  We can and must bring them into a banking system that is continually evolving and
  increasingly capable of finding new ways to serve all of our citizens better.  It is within our
  reach.
  
  Doing that will be a challenge, of course.  But we not only have the responsibility to do so, we
  have a base to build on.  We have shown that it is possible to dramatically increase financial
  services  business in low- and moderate-income areas.  We have seen banks do this business --
  not as a handout, a charity or an obligation -- but as a real profitmaking endeavor.  We have
  seen that dedication, energy and partnerships among dedicated citizens like John Bryant,
  bankers and public servants do, indeed, make a difference.  We have seen that there are
  reasons to hope -- that we Americans will never stop reaching beyond our grasp.
  
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