From 1971 to 1977 the American movement against redlining advances from local protests against banks on Chicago’s West Side to passage of new federal laws designed to bring finance under democratic control. The work of the organizations at the center of the story—the National Training and Information Center and National People’s Action—prove the possibility of non-specialists educating themselves about even the most seemingly abstract social systems and intervening to reshape them to their own ends.
A Puerto Rican man walks into the office of the Northwest Community Organization (NCO), and tells Director Shel Trapp that he has been turned down for a business loan at nearby National Security Bank. The loan officer explains that the man’s building is in a “riot area,” too risky for a loan.
Later that day, an Italian guy comes in and tells Trapp that his son, just back from the military, was denied a loan from National Security to buy a house on his parents’ block. The loan officer instead offers a loan for a house in Schaumberg—25 miles outside of Chicago in the suburbs.
Both men are furious, and demand that Trapp do something. Trapp first organizes a weekend picket in front of National Security Bank, calling it off after a few weeks in the face of lagging energy and no results. Later, modeled on the Sit-In of the Civil Rights movement, the group invents the Bank-In to disrupt bank business through outrageous requests for change like $3000 in singles counted one-by-one, taking out rolls of pennies, busting them open, and bringing them back to the counter, and generally clogging teller windows. Like the bank picket, this tactic is not so promising until an elderly Polish woman, Josephine Cozile, begins to throw handfuls of pennies across the lobby floor, repeatedly yelling “OH SHIT!”. Around the forth time Cozile does this, the bank president runs out and agrees to meet the organization with the full board of directors, where the group reaches an agreement where the bank sets aside $250,000 for first mortgages for local residents, $250,000 for loans for local small businesses, and a $1000 contribution to the organization.
As word spreads about the Bank-In triumph, other communities request the Northwest Community Organization to help them with their banks. Trap connects with Gail Cincotta and they organize a National Housing Conference to address the issues they see in Chicago neighborhoods like abandoned buildings, block busting, and the availability of mortgages.
To build a mailing list for the conference, Trap sends a group of college students to O’Hare airport to copy addresses from the national phonebooks there of all organizations in the U.S. with the words “housing” or “community” in their names. In March, 3000 people show up in Chicago under the banner of “Neighborhoods First!”
After the conference, Cincotta and Trapp found what will become the National Training and Information Center (NTIC) and National People’s Action (NPA). Wanting to understand how banks distribute loans, NTIC and NPA push the Federal Home Loan Bank Board, a bank regulator, until they release information on the source of banks’ deposits and the fates of their loans. Even though the Bank Board cuts the names of the banks off the top of the report, it reveals enough for Cincotta to take the results to Senator William Proxmire, Chair of the Senate Committee on Banking. She uses the data to show how banks are accepting deposits in urban neighborhoods like Austin but refusing to loan there, vacuuming money from the city to build the suburbs.
With the support of Senator Proxmire, the Congress passes the Home Mortgage Disclosure Act (HMDA, pronounced HUM-DAH), requiring banks to publicly report information about home loans. The first draft, written on the basement floor of a rectory between midnight and 4 am by ten people with two bottles of Jack Daniels, required extensive disclosures about many types of loans. As passed, the bill was weaker, but still provided a new way for residents to monitor their neighborhood financial climate. The concept of the National Training and Information Center, and its newsletter Disclosure, was to train organizations across the country to access and interpret HMDA data. Local organizations could then present proof of biased lending patterns to banks with demands for change. The hope was that the disclosure required by HMDA would eliminate the need for Bank-Ins.
NTIC does their own analyses of HMDA data for ten cities, and finds Chicago-like patterns across them all. Using markers and acetate, they produce maps overlaying lending activity with race and income information. Trap remembers thinking “Not only are these guys redlining our communities—they’re fucking racists!” While a chicken-and-egg argument continues today on the relation between race and poor access to finance, the NTIC maps for the first time make visible the financial dynamics of American cities.
Armed with HMDA information, the anti-redliners return to Congress demanding further action—the democratic power to make banks change lending practices. The Community Reinvestment Act (CRA) asserts that “regulated financial institutions have a continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.” The law directs federal bank regulators to draft rules to ensure that banks help meet community needs. In theory, a new piece of democratic technology is worked into the financial system, putting in place capacities and feedback loops to support a nascent concept of financial justice.
Soon after the CRA becomes law, Ronald Reagan becomes president; under his leadership, the rules are barely developed and rarely enforced by federal regulators. Formal ratings for bank compliance with CRA are not put forward until 1989. In the 1990s, the Clinton Administration reforms the process with some results. In the meantime, ongoing financial deregulation legalizes single companies that operate banks across many states, removes government control of interest rates, and allows the combination of commercial and investment banks with insurance companies, illegal since the Great Depression. These changes leave far fewer lenders classified as “depository institutions” and subject to federal regulation and CRA. Today, in a bizarre twist, CRA has surfaced as the villain in a right-wing story pinning the blame for the Subprime Meltdown on the CRA’s public intervention into private markets.
It is crucial to note that participants in the anti-redlining movement did not demonize finance, but saw it as an opportunity for democratic intervention, a social machine subject to both economic and political controls. Their achievement in building distributed monitoring and enforcement mechanisms for finance are inspiration and cautionary tales for us as we negotiate our present economic breakdown and we are reminded of the fact that the boundaries between economics and politics, public and private, are ours to make. ◊