Seeking billions in investments a reckoning for Baltimore banks

A man who has lived in Baltimore County for nearly 30 years wrote to ask me why Baltimore “hasn’t made itself into a model progressive city.” The city has had Democratic leadership for decades, he pointed out, and certainly the city should have benefited from the concentration of Democratic power in the Maryland General Assembly by now. Why does the city still need assistance?

“I don’t know the political history of this area enough to answer my own question,” the man wrote.

And I am not about to conduct a history class here by going over ground — the loss of industry and union jobs, white flight, the erosion of the tax base, the concentration of poverty — covered in numerous columns over the years. But I will recommend three books: “Baltimore: A Political History,” by Johns Hopkins professor emeritus Matthew Crenson; “Not In My Neighborhood: How Bigotry Shaped a Great American City,” by former Sun colleague Antero Pietila; and new this year, “The Black Butterfly: The Harmful Politics of Race and Space in America,” by Lawrence T. Brown, former associate professor at Morgan State University.

The man from the county might not have been looking for an explanation heavy on racism and segregation. But no local history is credible without it. One part of Baltimore thrives — the geographic “white L” running from the north to the center and southeast areas of the city — while large parts of the “black butterfly,” with its wings to the east and west, continue to struggle. That is a vestige of the statutory segregation of the past and a reality that lingers.

In his book, Brown addresses “racial equity,” an ideal that has become a popular cause following the deaths in police custody of Freddie Gray in Baltimore and, more recently, George Floyd in Minneapolis.

“Racial equity,” Brown writes, “starts with a reckoning.”

That means understanding how racial discrimination — in the county as well as in the city — played a part in shaping Baltimore as it became a majority minority city. It means understanding how, over time, Black neighborhoods were repeatedly disrupted and deprived.

That last part — specifically, how Black neighborhoods were deprived of investment, amenities and jobs — is what I’ve been focused on again. I’ve been speaking with people who care about this, understand it and want to do something about it. In fact, there’s a new effort getting underway that sounds like a reckoning for Baltimore banks. It’s called the Community Reinvestment Act for Blacks and Latinos of Baltimore, and it’s led by community activists who say it’s time for the banks to do a lot more for Black and Latino small-business owners and families who wish to own a home.

They’re right, and I’m glad to see them on the case. Here’s some supporting evidence from earlier columns:

In 2018, an analysis of financial data by the Baltimore Business Journal found that Black people in the Baltimore area were twice as likely as their white counterparts to be denied a home mortgage by a bank.

Also in 2018, a study from the Johns Hopkins 21st Century Cities Initiative found a significant retreat by Baltimore banks from lending in the city. By 2016, the number of loans to small businesses had dropped to less than half the number of loans made in 2007.

And during that same decade, banks nearly doubled their deposits in the city, reaching $26.5 billion.

In 2019, an Urban Institute report confirmed the stark disparity in investment in Baltimore neighborhoods widely understood and obvious to anyone who drives around the city. One of the researchers said he was impressed by “the sheer magnitude of disparity by race.” White areas had received more than three times the loans for housing and businesses that majority-Black neighborhoods received between 2004 and 2016.

So now comes the CRA for Blacks and Latinos of Baltimore, described as “a coalition that addresses long- standing financial and investment issues of both Black and Latino communities, in the spirit of economic justice.”

The leaders of the group are Wanda Best and Jules Dunham Howie, both from the Upton Planning Committee in West Baltimore; Kathy Christian from the Midway Community Development Corporation on the east side, and Watchen Bruce, CEO of the nonprofit Baltimore Community Lending. They’re going to be challenging banks with the biggest market shares in Baltimore — Bank of America, M&T Bank and nine others — to invest $30 billion in the city over the next five years. That’s loans for small businesses, home mortgages, the financing of affordable housing and grants to nonprofits that serve Black and Latino communities.

That $30 billion, said Howie, is a reasonable, data-driven ask, based in part on the assets of the top 11 banks. ”For decades Black and brown communities have been marginalized and denied access to vital capital,” she said. “Disinvestment in Black and brown communities will no longer be tolerated. CRA Baltimore was established to be a voice for the voiceless and a grassroots accountability watchdog for the local banking community.”

The group, part of a national movement taking place in other cities, gets its name from a law passed when Jimmy Carter was president, the Community Reinvestment Act of 1977.

The law was a response to deteriorating conditions in cities and historic discrimination in lending. The new Baltimore group thinks it’s time to get back to the CRA’s original intent — to push banks to do more, billions more, for the people and communities they avoided in the past. To some it sounds crazy, says Kathy Christian, but the timing is right for the conversation. What if the banks say no? Says Christian: “No is not an option.”