Jr. Soon after the L.A. race riots, the Federal Reserve announced that it too would play a part in the new welfare order. If the loans didn't work out, the Fed promised to ignore them in assessments of the banks' worth. But this was absurd. If a bank turned down creditworthy black customers, other banks would make the loans, and the profits.
Competition ensures industry-wide fairness.
These were the first official steps toward affirmative-action banking. Banks were now supposed to give business loans to firms destined for failure, and home mortgages to those unlikely to make payments over a long term. Good risks, after all, were already getting credit. The Fed would keep track, and publicize, the CRA records of banks. Poor compliance meant a government crackdown and media protests by the fiduciarily underserved.