Congresswoman Barbara Lee's Letter To Federal Reserve Chairman Alan Greenspan Regarding Minority Home Ownership
Last year, during questioning on Capitol Hill, Congressional Black Caucus Member Rep. Barbara Lee asked Federal Reserve Chairman Alan Greenspan a question regarding the amount of loans being given to American minority groups for the purpose of purchasing homes. Chairman Greenspan responded to Rep. Lee's inquiry by stating that according to Community Reinvestment Act data, banks were providing such loans to Blacks and others at a rate that was deemed "outstanding". Having seen data and heard anecdotes that the situation was anything but how Mr. Greenspan had described, Rep. Lee dug further into the issue of minority home ownership juxtaposed to Chairman Greenspan's answer and found some interesting information. Earlier this month she wrote Mr. Greenspan to inform him of what the Congresswoman had learned. Here is a copy of that letter, obtained by BlackElectorate.com:
February 8, 2002
The Honorable Alan Greenspan
Federal Reserve System
20th & C Streets, NW
Washington, DC 20551
Dear Chairman Greenspan:
I very much enjoyed sharing the dais with you at the recent Greenlining Institute Economic Development Conference in Oakland and greatly appreciated your kind words.
I write to you in light of President Bush's State of the Union speech in which he discussed his concern for minority home ownership, which is only 47 percent nationally and an estimated 40 percent or less in California, the world's fifth largest economy.
Based on the data that the Federal Reserve provided to me in response to my July 19th, 2001 questions to you before the House Financial Services Committee, I asked the Greenlining Institute to do an analysis for the state of California. I also asked them to do a summary of minority home ownership loans for the most recent year available by the thirteen largest financial institutions doing substantial business in California. I am enclosing both.
As the Federal Reserve's data shows, every institution received either a "high satisfactory" or "outstanding" CRA lending rating from their federal regulator. They received this rating even when they made one percent or less of their loans to African Americans.
I would like to offer the following preliminary observations and recommendations:
1. An institution that makes one percent or less of its conventional home loans to African Americans in the state of California is not doing an outstanding job. It is a disservice to the federal regulators, the banking industry, and 90 million minorities in the United States to reward institutions with inadequate lending patterns.
2. Greenlining provided a suggested CRA rating, based on a bank's actual lending patterns. Greenlining, using the regulators system, gave most institutions a ranking of "substantial non-compliance". Please see attached the separate chart prepared by Greenlining from actual verified bank data.
3. Although you may not wish to lower the CRA ratings as substantially as Greenlining and I suggest, it would certainly seem ill-advised to reward an institution by giving it a "high satisfactory" or "outstanding" rating when its percentage of loans to underserved minorities is very low.
4. Consistent with President Bush's State of the Union message relating to minority home ownership, I would like to suggest a meeting within 30 days by the four primary regulators, the Secretary of the Treasury and the President's chief economic advisor, Larry Lindsey to discuss efforts to promote greater minority home ownership. I hope one of the goals will be to seek parity with white home ownership (presently 72 percent) within ten years. If possible, I would appreciate it if a representative from the Congressional Black and Hispanic Caucuses could make brief presentations at the meeting.
I hope, Mr. Chairman, that you can personally make this a high priority and chair and convene the initial meeting. I appreciate your response to this important inquiry.
Member of Congress
Tuesday, February 26, 2002
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