Like most people, Ann Deuel doesn't like to be jeered at. But
the barbed laughter was especially sharp coming from a loan officer
who derided her plan to open a home for abandoned children.
Ms. Deuel sought a loan three years ago from a large Chicago
bank to found Jamal Place, a shelter for abused boys in Chicago's
Lawndale neighborhood. "The banker said, 'What do you mean you
don't have any collateral?' - I was virtually laughed out of the
office," says Deuel.
Today, Deuel is having the last laugh. She eventually secured
two loans and now 10 boys live at Jamal Place. The gray-stone
building stands out amid the drug dens, tumbledown tenements, and
weed-rich lots as a small oasis of order and security.
More important, banks in recent years have stepped up lending to
low-income home-buyers, businesses, and welfare programs like Jamal
Fresh money arrives
"In the last three years in particular there has been a rapid
acceleration in the pledge commitments that the banks are making"
to low-income areas, says Allen Fishbein, general counsel at the
Center for Community Change in Washington. "It's off the graph."
From 1993 to 1995, the number of home loans to the nation's
lowest-income borrowers rose 21.4 percent, a far greater jump than
for any other income group, according to the Federal Financial
Institutions Examination Council.
The banks have been prodded into low-income neighborhoods by new
creative financing plans and federal mandates. Once there, they
have recognized the potential payoffs from lending to depressed
communities desperately in need of money for new businesses, jobs,
homes, and bedrock social services, say bankers and experts on
For example, Citibank announced recently that it is investing $2
million in the National Association of Community Development Loan
Funds (NACDLF), a nonprofit community lending organization like the
one that gave Jamal Place its crucial first loan.
The Citibank investment - a new financial innovation conceived
by the bank and the NACDLF - is the first by a commercial bank to a
nonprofit community-development organization.
The investment is a deeply subordinated loan that the community
group may consider as permanent capital. The group can thereby
vastly expand its borrowing and lending.
A bank that invests in a nonprofit community-development group
gets credits under the Community Reinvestment Act (CRA) that far
exceed the investment's dollar amount. …