---------- Forwarded message ---------- Date: Wed, 14 Jan 1998 20:07:17 EST From: ANACTIVIST <[EMAIL PROTECTED]> Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Fwd: Greenspan: Gov't May Not Be Answer Don't know how many of you may have seen this article, but thought it interesting in light of recent dialogue. Alma Williams [EMAIL PROTECTED] In a message dated 98-01-12 22:42:23 EST, AOL News writes: << Greenspan: Gov't May Not Be Answer .c The Associated Press By MICHAEL WHITE LOS ANGELES (AP) - Federal Reserve Chairman Alan Greenspan warned a congressional panel Monday against relying too heavily on government-funded programs in its attempt to lift low-income communities out of poverty. Greenspan made the comment to members of the House banking committee after he and other top federal bank regulators toured a riot-scarred South Central Los Angeles neighborhood. ``I'm very dubious of all sorts of government solutions,'' Greenspan said during a forum on community reinvestment at the California Museum of Science and Industry. ``... I do not think they work over the long run.'' Greenspan was joined at the forum, and during the earlier three-block walk along Vermont Avenue, by Comptroller of the Currency Eugene Ludwig and Ellen Seidman, director of the federal Office of Thrift Supervision. Greenspan's comment on government programs came after other U.S. Rep. Lucille Roybal-Allard, D-Calif., asked if he would support offering tax credits or giving banks more credit for fair lending obligations under the Community Reinvestment Act if they more aggressively loaned to inner city businesses. A key problem with relying on government to solve the problem, he said, is that the level of government investment and political commitment changes, and long-term economic growth requires consistency. Responding to another question, Greenspan said he did not feel it would be ``fruitful'' to increase banks' obligations under the CRA, the nation's main fair lending law. The solution to rebuilding inner city economies, Greenspan said, is to help more people own property so they can build equity. That, in turn, he said, can become the basis for obtaining loans to start new businesses. He did not offer a plan for accomplishing that goal. In prepared remarks that were distributed at the forum, but not actually delivered, Greenspan acknowledged that South Central residents have had less access to small business loans than other low-income areas. A Federal Reserve study found that low-income neighborhoods comprise about 4.9 percent of the U.S. population and 5.6 percent of all businesses. They received 4.7 percent of small business loans in 1996 and 5.6 percent of the total dollar amount loaned. But a study of lending within South Central census tracts showed that these neighborhoods received 1.6 percent of loan dollars, while they include about 2.5 percent of Los Angeles businesses. ``Of course, without investigating the nature of the firms in South Central, their credit needs and the role of nonbank sources of finance, it is difficult to draw useful conclusions,'' the statement said. Nationwide, however, minority borrowers have had more access to loans, said Ludwig. Between 1993 and 1996, home loans to blacks rose 52.5 percent and to Hispanics 55.6 percent. For all borrowers, lending rose 18.4 percent, he said. The area visited by the officials earlier in the day was a thriving business district until the 1992 riots. Now lots sit empty where businesses once stood. Other buildings are shuttered and men stand on street corners hoping to find work. ``It was good before the problems with Rodney King,'' said Lucio Lopez, 35, as he waited on the corner of 84th Street and Vermont, where he stands six days a week in hope of getting day-work as a painter. Sometimes he makes up to $80 painting homes. Other times he can wait up to a month without getting a job. Rioting erupted on April 29, 1992, after a jury acquitted four white police officers accused of beating King, a black motorist. Authorities say 55 people died as a result of the violence that followed and an additional 2,383 were injured before it ended on May 2, 1992. Some 1,100 buildings were damaged or destroyed by fire, with property damage estimated at $1 billion. Ludwig said new legislation will enable regulators to look more closely at possible redlining, or discriminatory practices by banks and ensure that more capital is available in low-income neighborhoods. ``We measure what they do, not what they say. We will be looking at what they're doing,'' he said. >>
