My colleagues and I commend The Atlanta Journal-Constitution for the effective attention it is drawing to the issue of bank financing in minority communities. We trust that they will learn, as we have, that there are many credit-worthy customers in minority neighborhoods with long histories of employment and residency. My small bank began making real estate and commercial loans available in a beautiful, but redlined, Chicago neighborhood 15 years ago. South Shore is a community with a superior housing stock, whose only misfortune was that it was suffering from the disinvestment that accompanies rapid racial change.
White bankers are more comfortable dealing with whites than blacks.
In addition, they work for shareholders who expect them to maximize profits. They can do this best by seeking the largest, lowest-risk loans. The problems of unfamiliarity with borrowers and their communities get even thornier when the transactions are more complicated than a home mortgage loan. Professional risk assessment of a small business expansion or an apartment building purchase by a conventional lender must overcome even more obstacles. Not only must the banker decide if the borrower will be able to make the monthly payment over the long term and if the property will hold its value, he must also analyze markets and management capacity, working with a clientele that is unfamiliar and with a transaction that is smaller than the banker's other alternatives.