NAACP Unit Charges Bias in Banking : Leader Says Lending Institutions Lack Sensitivity to Minorities

The Los Angeles chapter of the NAACP has launched an investigation into alleged discriminatory practices by the area’s major financial institutions, officials of the civil rights organization said Tuesday.

“It is becoming increasingly clear that the banking industry is becoming less sensitive to the needs of the minority community,” said Raymond L. Johnson Jr., president of the local chapter of the National Assn. for the Advancement of Colored People.

Johnson said his group plans to conduct “fair share” negotiations with financial institutions that demonstrate unfair practices and will use lawsuits and boycotts to force improvements at those that do not voluntarily agree to make changes.

A preliminary investigation by the group indicates that banks and savings and loan firms treat black customers and employees differently than they treat whites, Johnson said.

In particular, Johnson said the investigation demonstrated that institutions have:

- Failed to promote minorities to management positions and to include minorities on their boards of directors.

- Maintained “dual loan policies” that make it more difficult for minorities to get commercial or residential loans.

- Failed to provide banking services in minority communities and increased branch closings in minority neighborhoods.

- Limited their use of minority group professionals, such as attorneys and accountants, for outside services.

- Made loans and investments in South Africa, which sanctions racial discrimination in the form of apartheid.

Johnson said the group’s investigation was prompted by complaints, primarily from black bank employees who were denied promotions and from black entrepreneurs who were denied loans.

“But complaints have not just been from blacks, but from other minorities and from whites,” Johnson said. “It appears to be a community concern in the Los Angeles area about the meanness directed toward blacks and minorities by the banking and savings and loan industries.”

NAACP officials did not name specific financial institutions but said their efforts will be focused on the area’s five major ones in the hope that they will set examples for smaller institutions.

The entire lending industry is “notoriously conservative and notoriously discriminatory,” said Melanie Lomax, the NAACP vice president who heads the project. “We’ve found the industry is willing to take all kinds of risks with the white business person that they are not willing to take with the minority business person.”

Spokesmen at several of the major financial institutions said they did not want to comment on the group’s claims because they have not been contacted about specific allegations by the NAACP.

Most agreed that they would be willing to discuss their practices regarding minority customers and employees with the NAACP, although they defended their records of service to the minority community.

“Our record so far is pretty good and I think we have been responsive,” said First Interstate spokesman Robert W. Campbell. “We’re quite proud of what we’re doing.”

Campbell said many banks are aggressively working to change policies that, in the past, may have worked against members of minority groups.

“It’s slow coming,” he said. “Bankers aren’t flaming liberals, you know. But I think there’s a willingness on the part of most responsible banks to be responsive and cooperative.”

Sending Questionnaires

Lomax said the NAACP is in the process of sending questionnaires to local financial institutions to gather specific statistics on their employment and loan practices and hopes to begin negotiations with some banks and S&Ls; in the next few weeks.

(Fair share agreements require companies to return in services to the black community the percentage of revenue they derive from black consumers.)