A city neighborhood isn’t merely a hodgepodge of housing and businesses. It’s an amalgam of anchoring entities that keep it alive and thriving, that gives it a defining sense of community. Those anchors include schools, of course. Churches. Parks. And, fundamentally, banks.
That’s not just because banks are repositories for paychecks. The level of commitment that banks make, or refuse to make, to lend in a given neighborhood can make or break that community.
Depriving a neighborhood of lending essentially consigns Chicagoans who live there to a future doomed by disinvestment, joblessness, street violence and worst of all, hopelessness.
It’s no secret that of all the troubles that suppress revitalization of Chicago’s predominantly Black and Latino neighborhoods, the glaring disparity between how much banks lend to the North Side versus communities on the South and West sides is one of the most insidious, and one of the most unconscionable.
An investigation last year by WBEZ and the nonprofit newsroom City Bureau laid bare the problem, examining Chicago home purchase loan data from 2012 to 2018. The report found that mostly white neighborhoods got more than 68% of money lent for housing purchases, compared with just 8% in majority-Black neighborhoods, and 8.7% in Latino neighborhoods. America’s largest bank, JPMorgan Chase, lent 41 times more money in white neighborhoods than in Black neighborhoods.
The amount of money lenders injected into majority-white Lincoln Park exceeded the combined total all of Chicago’s majority-black neighborhoods. That’s a disparity that, for Chicagoans on the South and West sides, destroys dreams of homeownership and kills entrepreneurial spirit.
We’ve said before on these pages that banks need to comprehend the gravity of their actions and erase these lending gaps, not just for the sake of people on the South and West sides, but for all of Chicago. “Fix crumbling parts of Chicago, and you fix all of Chicago,” we wrote.
A measure recently enacted by the City Council aims to offer banks incentives for reform. Sponsored by Ald. Harry Osterman, 48th, the ordinance requires banks that want to serve as depositories for City Hall funds to show they are lending equitably to all of Chicago — not just the moneyed parts of it. Banks will have to report a raft of home equity loan data — including loan amounts and interest rates — by census tract. They will also have to report, by census tract, reasons why mortgage applications were denied.
That’s a start, but that’s not nearly enough. The major banks that do business in Chicago must undergo a wholesale change of mindset when it comes to achieving lending equity. A couple that wants to buy a home in Roseland and start a family, a young woman who dreams of opening a startup in Chatham or West Lawndale, should never be summarily stymied by financial institutions that have a history of denying access to capital to Chicago’s poorer neighborhoods. Yes, redlining has been illegal for some time. But the persistence of inequitable lending metes out the same ugly fallout — and a perpetuation of haves and have-nots.
On the campaign trail, Mayor Lori Lightfoot pledged to erase the inequities that have sadly defined Chicago for so long. She has made strides in working to back up that pledge, and her Invest South/West initiative is a strong example of that — a tranche of $750 million in public money to help jump-start economic growth in 10 South and West side communities. But the time is now for the mayor to tackle — earnestly and comprehensively — the problem of lending inequity that so heavily burdens the trajectory of South and West side neighborhoods.
One program Lightfoot has touted is the product of a Pittsburgh-based bank, PNC Financial Services Group. The recently launched effort, dubbed the Community Micro Equity Fund, provides equity investments of up to $25,000 to entrepreneurs on the South and West sides. Recipients won’t have to pay back the money for two years, and can pay off the amount in the third year or turn it into a loan. That’s the kind of innovative lending approach the city needs — it just needs to happen on a muchbigger scale, and encompass more big banks.
There’s no cure-all to what ails Chicago’s impoverished communities. Reforms that forge stronger trust between community and law enforcement; a commitment to improving the education Chicago Public Schools provide in all corners of the city; a much more robust level of investment by corporate Chicago into the South and West sides; these are all part of the answer.
But access to capital must be part of mix. City Hall shouldn’t see it as a second-tier priority. It should embrace it as an urgent task.
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