Businessweek Archives  Color Blind Credit: How The Banks Can Do
Better    Fifteen years ago, Senator William Proxmire had a
simple idea: The Wisconsin Democrat reasoned that banks and
thrifts, granted charters to collect federally insured deposits,
had an obligation to return a significant portion of those funds
to their neighbors in the form of loans. That idea blossomed
into the Community Reinvestment Act of 1977 (CRA). It gave
regulators the power to block a bank's requests to expand or
merge unless the institution can show that it has tried to meet
the credit needs of all constituencies--rich and poor, black,
brown, and white--in its service area.  Unfortunately, CRA has
spawned a far-from-simple regulatory mess that satisfies no one.
While more than 85% of all banks win "satisfactory" or
"outstanding" ratings from regulators on CRA examinations, it's
clear from available data that CRA has been far from successful
in wiping out "redlining" of poor or minority neighborhoods or
racial discrimination in lend