That idea was the impetus behind the Community Reinvestment Act passed by Congress in 1977. Under the act, banks are evaluated by the Federal Reserve and other government agencies to ensure that credit is being extended throughout a community, especially poor and minority neighborhoods that have often been the victim of red-lining.
The act doesn't require banks to take high-risk loans (there was enough of that in the '80s), but it also provides no specific criteria for evaluating banks and is wishy-washy about enforcement.
As a result, banks have been less than spirited about reinvesting in declining neighborhoods.
During the past two years, Goode has been working on reversing that subtle form of redlining. He pushed for an annual review of community loans in Philadelphia, formed a commission to get banks and others to come up with better strategies to get credit to low-income neighborhoods and helped create a pilot tax program for big businesses that contribute at least $1 million over 10 years to community redevelopment.
Tomorrow, Goode is scheduled to introduce legislation that will require banks to put in writing their goals to reinvest in poor neighborhoods. If the banks don't comply, they may be dropped from the list of financial institutions the city does business with. That may provide the nudge banks need to do the right thing. We urge Council and especially Mayor Street to get behind this legislation. *