The civil rights era gave meaning to the term “redlining” within the banking industry – literally drawing a red line around an area where no loans would be approved.
Many of us know well the clichés denigrating and defining where people live and who they are. Even in the 1946 film “It’s a Wonderful Life,” the housing battle between Bailey Savings & Loan (headed by George Bailey) and Potter Savings & Loan (headed by Henry Potter, the richest man in town), encapsulated the enduring struggle between who gets loans and who doesn’t.
Inexorably, time marches on. The Fair Housing Act of 1968 prohibited discrimination in the sale, rental or financing of a dwelling based on race, color, religion, sex or national origin.
The meaning of financing discrimination would require refinement by Congress over the next 20 years to address notions such as “redlining.” One such refinement was the Community Reinvestment Act, passed in 1977, which encourages banks to meet the needs of all borrowers.
Other voices: Gun buybacks could help with Wilmington violence
In Delaware, where the Financial Center Development Act of 1981 opened the state’s doors wide to credit-card banks, the influence of the banking industry was growing and so were concerns about whether the banks’ leaders, often from out of state, would be sensitive to the community’s needs.
Onto this fertile ground in 1987 stepped a new nonprofit organization, the Delaware Community Reinvestment Action Council – celebrating its 30th anniversary this month.
In its contentious early years, DCRAC strove to bend banks who were not eager to make loans in areas where they believed there was more risk than reward. In fact, DCRAC was less than two months old when it achieved its first success.
As part of the merger of the Delaware Trust Co. and Meridian Bancorp Inc., completed on Dec. 1, 1987, the bank agreed for the first time to make Community Reinvestment Act loans at below-market rates to homebuyers who received housing and credit counseling.
It took a while, but the relationship between DCRAC and the banks evolved. No longer primarily adversarial, they have sought, and sometimes found, common ground.
In part because of DCRAC’s prodding, banks have learned that their investments in low-income neighborhoods can have a significant impact on community revitalization and the financial and economic benefits that flow from such vibrancy. Banks have even extended their investment into our schools, with grants like $250,000 from Discover Bank to help create an Innovation Center at William Penn High School to help motivate its students to attend college.
Over the years, DCRAC learned that its clients came with multi-faceted needs under the rubric of fair lending, such as access to housing, access to credit, access to financial institutions and access to the Internal Revenue Service. As a result, DCRAC gradually expanded its services across a broad array of issues and in so doing we have become a strong advocate for Delaware’s low-income residents.
A credit clinic was added in 1995, a housing clinic in 2001 and a tax clinic in 2003. Our clients’ experiences moved us to advocate for strong laws to limit payday loans, whose high rates and short terms take borrowers into a death spiral of unending payments.
When necessary, we have tried to ensure that the State of Delaware uses funds received through settlements of class–action lawsuits against financial institutions for the benefit of the class of people who were harmed.
DCRAC itself has seen the benefit of our banks’ commitment to the Community Reinvestment Act. With support from several banks, DCRAC chartered the Stepping Stones Community Federal Credit Union in 2011.
For 30 years now, DCRAC has engaged with Delaware’s banks as they have taken major steps to satisfy their responsibilities under the Community Reinvestment Act. We expect to continue on that path for at least 30 more. We invite everyone to drop in on us and see us for who we are: men and women from disparate backgrounds bonded in the pursuit of fairness and justice for clients who put their trust with us.
Rashmi Rangan is executive director of the Delaware Community Reinvestment Action Council Inc.
Read or Share this story: http://www.delawareonline.com/story/opinion/contributors/2017/09/29/quest-community-reinvestment-continues-delaware-voices/716089001/