After Redlining: The Urban Reinvestment Movement in the Era of Financial Deregulation 2020004119, 9780226723648, 9780226723785

Citation preview

After Redlining

Historical Studies of Urban America edited by lilia fernández, timothy j. gilfoyle, becky m. nicolaides, and amanda i. seligman james r. grossman, editor emeritus

Recent titles in the series: urban lowlands: a history of neighborhoods, poverty, and planning

newsprint metropolis: city papers and the making of modern americans

beyond the usual beating: the jon burge police torture scandal and social movements for police accountability in chicago

evangelical gotham: religion and the making of new york city, 1783–­1860

running the numbers: race, police, and the history of urban gambling

by Timothy Neary

by Steven T. Moga

by Andrew S. Baer

by Matthew Vaz

the world of juliette kinzie: chicago before the fire by Ann Durkin Keating

murder in new orleans: the creation of jim crow policing by Jeffrey S. Adler

the importance of being urban: designing the progressive school district, 1890–­1940 by David A. Gamson

new york recentered: building the metrop­ olis from the shore by Kara Murphy Schlichting

renewal: liberal protestants and the american city after world war ii

by Julia Guarneri

by Kyle B. Roberts

crossing parish boundaries: race, sports, and catholic youth in chicago, 1914–­1954 the fixers: devolution, development, and civil society in newark, 1960–­1990 by Julia Rabig

chicago’s block clubs: how neighbors shape the city by Amanda I. Seligman

the lofts of soho: gentrification, art, and industry in new york, 1950–­1980 by Aaron Shkuda

the newark frontier: community action in the great society by Mark Krasovic

making the unequal metropolis: school desegregation and its limits by Ansley T. Erickson

by Mark Wild

confederate cities: the urban south during the civil war era

the gateway to the pacific: japanese americans and the remaking of san francisco

the cycling city: bicycles and urban america in the 1890s

edited by Andrew L. Slap and Frank Towers

by Meredith Oda

by Evan Friss

bulls markets: chicago’s basketball business and the new inequality

making the mission: planning and ethnicity in san francisco

by Sean Dinces

by Ocean Howell

A complete list of series titles is available on the University of Chicago Press website.

After Redlining The Urban Reinvestment Movement in the Era of Financial Deregulation

rebecca k. marchiel

the university of chicago press

chicago and london

The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London © 2020 by The University of Chicago All rights reserved. No part of this book may be used or reproduced in any manner whatsoever without written permission, except in the case of brief quotations in critical articles and reviews. For more information, contact the University of Chicago Press, 1427 E. 60th St., Chicago, IL 60637. Published 2020 Printed in the United States of America 29  28  27  26  25  24  23  22  21  20   1  2  3  4  5 isbn-­13: 978-­0-­226-­72364-­8 (cloth) isbn-­13: 978-­0-­226-­72378-­5 (e-­book) doi: https://doi.org/10.7208/chicago/9780226723785.001.0001 Library of Congress Cataloging-in-Publication Data Names: Marchiel, Rebecca K., author. Title: After redlining : the urban reinvestment movement in the era of financial deregulation / Rebecca K. Marchiel. Other titles: Historical studies of urban America. Description: Chicago : University of Chicago Press, 2020. | Series: Historical studies of urban America | Includes bibliographical references and index. Identifiers: lccn 2020004119 | isbn 9780226723648 (cloth) | isbn 9780226723785 (ebook) Subjects: LCSH: Reverse discrimination in mortgage loans—United States. | Discrimination in mortgage loans—United States. | Community development— United States—Finance. Classification: lcc hg2040.2 .m373 2020 | ddc 332.7/220973— dc23 LC record available at https://lccn.loc.gov/2020004119 ♾ This paper meets the requirements of ansi/niso z39.48-­1992 (Permanence of Paper).

t o p e t e r , b ru ce, maggi e, mom, dad, an d bria n

Contents introduction.  Neighborhoods First  1 chapter 1.

 eyond the Backlash: Organizing against Real Estate B Abuse in a “Transitional” Urban Neighborhood  17

chapter 2.

 he FHA in the City: Red Lines and the Origins of the T Urban Reinvestment Movement  50

chapter 3.

I t’s Our Money: Defending Financial Common Sense in a Collapsing New Deal Order  82

chapter 4.

C  ommunities Must Be Vigilant: The Financial Turn in National Urban Policy  122

chapter 5.

 einvestment for Whom? The Limits of Bank-­Led R Reinvestment  156

chapter 6.

 et’s Make the Market Work for Us: The Lost Fight L for Credit Allocation and the Rise of Community-­ Bank Partnerships  192

conclusion  229 Acknowledgments  237 List of Abbreviations for Archival Collections  241 Notes  243 Index  295

introduction

Neighborhoods First

I

n early 1975, Chicago community organizer Gale Cincotta announced a damning report on her city’s financial institutions. She and other activists had spent the past three years accusing these firms of “redlining”—­ refusing to make loans in aging, integrated, and majority-­minority neighborhoods. Bankers, for their part, had spent the past three years denying the accusations. But in 1975, for the first time, activists had evidence to support their claims. A new federal law gave them access to financial institutions’ records, which they analyzed to reveal where the institutions issued loans compared to where their offices were located. The patterns were striking. Local banks collected savings from the city’s older, racially changing neighborhoods, but rarely lent money there. On the West Side, one financial institution collected over $10 million in deposits from customers but made zero mortgage loans in return. Of the forty-­one Chicago banks examined, thirty-­nine lent less than 0.1 percent of their combined $42 billion in assets to redlined neighborhoods over the course of an entire year. In contrast, these institutions lent plenty of mortgage money in the suburbs and in wealthier neighborhoods. What was happening, the activists argued, was that “the banks serve as one-­way conduits for the deposits from the [city] neighborhoods, taking them in and depositing them along the lake shore or in the suburbs.”1 By 1983, however, the relationship between these activists and their banks looked quite different. That fall, First National Bank of Chicago proudly announced its plan to commit $100 million in home and small business loans for the neighborhoods that activists had identified as redlined eight years earlier. And community groups would play a large role in implementing the program. Neighborhood representatives helped distribute those loans to underserved areas. They screened applicants and

2

introduction

figure 1.  Gale Cincotta speaks at a press conference announcing the First National Partnership. Courtesy of People’s Action

identified promising urban redevelopment projects. Cincotta and other activists joined local bankers on review boards that assessed borrowers’ creditworthiness and discussed changes to improve the program. Over the next months, two other Chicago banks followed First National’s lead by allocating $173 million for housing, commercial, and industrial development in “inner-­city Chicago neighborhoods.” “Our communities have been written off up to this point,” said one activist, but these new community-­bank partnerships would “set a new tone and direction for the future.” Cincotta celebrated the First National agreement as “an outstanding, comprehensive example of the kind of program that can be worked out” between local financial institutions and the community groups fighting for neighborhood revitalization.2 This book explains the changed relationship between urban commu­nity groups and their financial institutions during the last third of the twen­tieth century. Putting urban reinvestment at the center of their agenda, urban community groups demanded recompense for redlining and formed a social movement that led to community-­bank partnerships like the one

neighborhoods first

3

created by the First National agreement. The activists who comprised the urban reinvestment movement were working-­ and middle-­class white, black, and Latinx people in racially changing, or self-­described “transi­ tional,” urban neighborhoods, where redlining was a common occurrence. They believed that the decline of American cities was the result of anti­ urban, bank-­friendly public policies. These activists shared a form of social democratic populism that opposed power brokers—­from real estate companies and bankers to regulators and Washington policymakers—­who they believed rigged the game in favor of new suburbs and metropolitan centers in the growing Sun Belt. Trained in the methods of groundbreaking community organizer Saul Alinsky, activists brought the confrontational tactics of the labor movement out of the factory and into the community. They agitated to improve life in urban neighborhoods, despite popular perceptions that American cities were doomed.3 Their struggles with bankers were thus more than fights over loans. At stake was the survival of their neighborhoods: communities they invested with deep meaning. This book tells the story of the reinvestment movement’s lead organization, National People’s Action (NPA), and its impact on federal urban and banking policy. A loose federation of neighborhood organizations, NPA began as National People’s Action on Housing but dropped “Housing” from its name when its mission expanded. The umbrella organization coordinated national campaigns for urban reinvestment from its headquarters in Chicago while its member organizations fought local struggles ranging from housing conditions to health care to affordable utilities.4 The group’s two founding organizers rejected the idea that one had to leave cities in order to find the good life. The first, Gale Cincotta, a white stay-­at-­home mother of six boys, became an activist when her youngest son’s kindergarten class became overcrowded and she worried that his education would suffer as a result. Cincotta recalled her “realization” that “if you didn’t get involved and do something about it, your kids weren’t going to learn to read.”5 Cincotta was a “natural” organizer, by neighbors’ accounts, but she worked hard at it, too. “Her eloquence in bargain­ ing and representing a voice of the people,” said coworkers, matched her “militant passions.”6 NPA’s other founder, Shel Trapp, complemented Cin­ cotta’s public leadership with his capacity to do the groundwork required to build organizations. Trapp was a professional organizer, rather than a homegrown leader, known for his chain-­smoking and his ability to sneak a cuss word into any sentence. A white former Methodist minister with a

4

introduction

figure 2.  Gale Cincotta and Shel Trapp discuss organizing strategy. Courtesy of People’s Action

commitment to racial justice, Trapp found organizing to be a career through which he could work for social change. Joining Cincotta and Trapp were former seminarians, urban sociologists, VISTA volunteers, and innumerable local residents who chose organizing over moving, could not afford to move, or, in the case of some black activists, found their neighborhood choices restricted by racial discrimination. These activists built local community groups, won allies in government and in small banks, documented suburban favoritism, and became frequent witnesses for the congressional committees in charge of banking and urban affairs. They developed local strategies to increase urbanites’ access to capital, including mortgage commitments from local banks and loan counseling for new urban homeowners. Drawing an analogy to the Marshall Plan, which helped Europe recover after World War II, they called on policymakers to make “a national decision” to prioritize neighborhood revitalization.7 They advocated for tax breaks for the purchase

neighborhoods first

5

of older homes, programs to combat urban housing abandonment, and increased assistance for the urban elderly.8 They reflected a larger trend of activists of the late twentieth century pursuing urban revitalization through community control.9 Their constant pressure for a “national neighborhood reinvestment policy” ensured that national conversations about the “urban crisis” did not end with the late-­1960s urban rebellions. Instead, reinvestment activists helped make the 1970s, as one historian put it, the “decade of the neighborhood.”10 At the movement’s peak, its crowning legislative achievements created a unique role for community organizations as grassroots financial regulators who policed urban redlining at the street level. These legislative achievements laid the groundwork for community-­bank partnerships. Activists organized for and celebrated the passage of the 1975 Home Mortgage Disclosure Act (HMDA), which forced banks to reveal the geographic distribution of the loans in their portfolios. Armed with data that suggested race-­based geographic discrimination in lending, reinvestment activists’ allies in Congress next pushed for the Community Reinvestment Act (CRA), which, when passed in 1977, activists hoped would become affirmative-­action legislation for previously redlined neighborhoods. These new laws gave neighborhood activists standing to leverage new loans from banks that had previously failed to meet the credit needs of nearby communities. The partnerships that grew from activists’ use of reinvestment regulations directed an estimated $1.7 trillion dollars to American cities by 2004, while increasing the flow of fair credit to minority communities.11 As one sympathetic banker said of Chicago, the reinvestment movement showed that the expertise of community groups, paired with fair bank loans, just might “make this city viable again.”12 Activists had surprising successes winning new banking regulations like the CRA for two primary reasons. First, activists’ demands on banks meshed with broader American expectations for how banks ought to behave during the era between the 1930s and the 1980s— ­expectations I call “financial common sense.” By that, I mean that activists echoed a widely shared understanding of financial institutions as special types of businesses, rather than typical for-­profit firms. Financial institutions required a government charter to open and operate. They acted as stewards of people’s wealth. And their choices had enormous ramifications for the distribution of resources across the metropolis and the nation. By this logic, financial institutions were “quasi-­public” institutions that should serve the public interest.13 When demanding fair access to credit, activists

6

introduction

often drew on a language of consumer rights, as bank customers. But they also claimed citizens’ rights, as members of the public that these quasi-­ public banks were obligated to serve. A second cause of reinvestment activists’ success was that they found a receptive audience in local, state, and federal policymakers. In the 1970s’ economics of scarcity, activists’ policy proposals to enlist banks in urban redevelopment offered a way to revitalize American cities without adding costs to government budgets. Despite success in winning new antiredlining banking policies and leveraging community-­bank partnerships from them, the story of the urban reinvestment movement is nonetheless one of roads only partially taken and of inadequate small-­scale solutions to big structural problems. This book explains how the movement failed to meet its larger goal of a Marshall Plan for American cities. New reinvestment regulations in banking were, in retrospect, a limited victory compared with the capacious vision that activists had in mind when they demanded urban reinvestment. The economic downturn of the 1970s set the limits for urban reinvestment and assured there would be no Marshall Plan for cities. Washington policymakers rejected new federal urban programs out of fear that increased federal spending would worsen the era’s persistent inflation. At the same time, financial deregulation shifted the ground beneath activists’ feet, as policymakers began to endorse banking deregulation to give bankers what they said they needed to survive the economic downturn. By the decade’s end, reinvestment referred largely to something that banks did—­ and banks were fast changing. Without a national urban policy rooted in neighborhoods, activists increasingly relied on community-­bank partnerships as an important yet imperfect tool that created opportunities for locally led urban redevelopment but that ultimately hinged on whether such efforts meshed with bankers’ priorities.

Bringing Finance into Urban History After Redlining shows how the US financial system shaped and was shaped by the community organizing of urbanites during the 1970s and 1980s. The ideas that drove Cincotta and many others to action grew from their financial common sense. Activists believed that the relationship between financial institutions—­particularly locally oriented savings and loan associations (S&Ls), also known as thrifts—­and local communities was a two-­way street. S&Ls’ survival hinged on collecting community savings

neighborhoods first

7

as a source of capital, activists charged. In turn, S&L customers relied on thrifts’ services, especially mortgages, to help them build and manage household wealth. It was the state that shaped these expectations. Indeed, during the post-­Depression period, white urbanites in neighborhoods like Cincotta’s financed their homes with the help of regulated local financial institutions. By insuring customers’ savings and providing a vehicle for homeownership, the state regulated thrifts to ensure that they provided services that Americans came to expect as much as other New Deal entitlements.14 The nature of the local savings and loan gave S&Ls a reputation as social institutions with obligations to the communities from which they drew deposits. This view was oversimplified. It ignored the reality that financial institutions created money when they debited a customer’s account.15 But this oversimplification nonetheless shaped Americans’ ideas about the purpose of financial institutions. As activists, federal policymakers, and some thrift executives saw it, thrifts were not merely profit-­generating institutions but also stewards of local savings. In the financial common sense created by the New Deal financial regime, most Americans believed that the customers of a particular thrift were bound to one another as members of the same community. This financial common sense did not include black Americans, however, and that exclusion produced the crisis that set off the story told here. As previously white neighborhoods began to integrate, all residents of these neighborhoods found themselves written off as “risky”—­a kind of one-­drop logic wherein the arrival of any black residents indicated that neighborhood decline was coming. Activists expected the benefits assured by regulated banking, and when they lost them in older or racially changing neighborhoods, they mobilized. Yet while nearly every US history textbook starts its New Deal chapter with a discussion of that era’s banking reforms that structured Americans’ access to credit, historians have yet to fully integrate the role of New Deal financial regulations into urban histories of the postwar United States. The social and economic entitlements created by the New Deal included not only minimum wages, Social Security, and laws bolstering labor’s right to organize, but also federal mortgage assistance and bank deposit insurance. And while historians have shown how important this first set of entitlements was in shaping Americans’ worldviews and animating their politics for decades thereafter, the benefits wrought by New Deal– ­era banking reforms, of which mortgage insurance was just one, have received surprisingly little attention.16 Yet the system created in the wake of the

8

introduction

Great Depression governed how the next two generations of Americans managed household wealth and, more important for this story, borrowed to supplement their earnings. For reinvestment activists, preserving that system meant preserving control over how and whether money flowed within urban neighborhoods. As they saw it, the financial was political. But these urban activists also recognized that bank-­based reinvestment could not solve all of the problems facing low-­income urban communities, especially in the 1970s as unemployment was on the rise and inflation shrank the value of their money. Given the limitations of bank-­based reinvestment, NPA sought a national neighborhood reinvestment policy that would coordinate federal funding and bank financing to improve the conditions of older, integrated urban neighborhoods. To activists who wanted a new Marshall Plan for the cities, “urban reinvestment” meant coordinating public funding and private financing to divert new resources to cities that had suffered from “disinvestment” through job and tax flight. Activists included the banks in their prescriptions not because they lacked faith in the government but because they believed banks controlled more money than the federal government did. Only substantial new resources, they believed, could rebuild their struggling urban economies. What they won instead was new regulations to win loans from local banks. After Redlining puts these new loans in the broader context of a shift in federal urban policy. During the Carter administration, a new policy regime based on the principles of “urban reinvestment” emerged as critics from across the political spectrum lost faith in the clear-­and-­renew approach of postwar urban renewal. This shift came from grass roots, and the Community Reinvestment Act reflected its premises. Indeed, reinvestment activism was in large part a critique of the existing urban policy regime. The housing acts of 1949 and 1954 created the legislative framework for what became known as “urban renewal,” the federal strategy to remove “blight” by empowering city agencies to clear “slums” and build modern structures in their place.17 During the early 1970s, the Nixon-­ Ford administrations dismantled federal urban renewal and sought to de­­ centralize the federal government’s role in revitalizing urban America, a policy framework they called “New Federalism.” As Democrats rose to power in the aftermath of Watergate, they changed course. Liberal policymakers—­members of Jimmy Carter’s administration and Democrats on the Senate Banking Committee— ­embraced a financial turn in federal urban policy. They endorsed the CRA and other bank-­based initiatives as a cornerstone of a new approach to urban policy and as a

neighborhoods first

9

direct response to the urban activism that had already proved effective in enlisting local banks to help solve the urban crisis. But policymakers enlisted financial institutions to help combat urban decline without any explicit directives that they actually improve the material conditions of low-­ and moderate-­income people. In the end, the CRA and other Carter-­era initiatives—­the Community Investment Fund through the Federal Home Loan Bank Board and the Urban Development Action Grant program—­ relied on the imperatives of finance for urban redevelopment, and their limits for low-­income people quickly became clear.18 As the 1970s came to a close, bank-­based reinvestment laid the groundwork for gentrification, or displacement, in some previously redlined communities. Charting the demands of the urban reinvestment movement alongside these developments in federal urban policy also reveals the way in which monetary policy, not just tax-­and-­spend fiscal policy, created obstacles for resident-­led urban revitalization in the 1980s.19 As bank-­based reinvestment failed to meet its needs by 1980, the reinvestment movement resurrected questions about the relationship between money and democracy that historians have often associated with the Populists of the late nineteenth century. Forged during their urban antiredlining activism, NPA had the economic knowledge to emerge as a vanguard organization in campaigns to force the Federal Reserve Board to consider the ways that decisions about money and interest rates affected Americans of modest means. Yet their efforts to resurrect the money question did not lead to changes in monetary policy. Instead, they showed the difficulties of swaying the Fed at a time when central banking was assumed to be a technocratic enterprise outside the realm of politics—­a stark contrast to the way the Populists framed the money question. But these efforts did reveal a surprising new articulation of working-­class interests— ­one in which activists talked about “redlining by class” and “economic discrimination,” referencing unequal power relations in a macroeconomic terms rather than in terms defined by the workplace. Importantly, this articulation had urban roots. It was reinvestment activists’ experience combating banks through urban redlining that informed this critique, showing the ways that place-­based identities shaped their class-­based demands in an era of economic restructuring. To that end, After Redlining builds on an understanding of the late twentieth century as a period of financialization and highlights the impacts of that economic transformation on American cities. Beginning in the 1970s in the United States, profit-­making through “financial channels,”

10

introduction

such as interest and service fees, grew disproportionately compared to profit-­making through other economic activity.20 The story of financialization has implications for urban history. Indeed, what we call “financialization” in hindsight did not look like large-­scale economic restructuring to urbanites living through its early phases. Instead, financialization began more simply as financial deregulation. During the 1970s and 1980s, policymakers changed the way that thrifts worked in order to give financiers the flexibility they said they needed to do their part in fighting inflation and high interest rates. The effort to solve the inflationary crisis included rewriting the rules of banking, in the process undermining thrifts as institutions that had a stake in the local communities outside their offices. This policy regime changed just as the reinvestment movement won the Home Mortgage Disclosure Act and the Community Reinvestment Act, codifying banks’ obligations to low-­and moderate-­income neighborhoods outside their offices. In hindsight it is clear that activists won new banking legislation that built antiredlining protections into a financial policy infrastructure that was actually disappearing. This story of advancing toward a retreating goal helps explain the limits of community-­bank partnerships as a mechanism for providing urban affordable housing, as well as the persistent resource disparities within the American metropolis.

Social Democratic Populism in Transitional Neighborhoods Despite NPA’s ultimate influence on banking regulations and urban policy, its founders did not set out to build a national movement with a federal legislative agenda. Rather, they started with a smaller goal: to protect urban neighborhoods from real estate speculation. As the historian Beryl Satter has argued, most historians have been “blind to the issue of speculators and their profits” when explaining why some urban neighborhoods deteriorated as black families moved in.21 But in transitional neighborhoods, real estate exploitation was a fact of life. Speculators capitalized on popular beliefs that black residents reduced property values. They sought panicked white sellers who would accept low offers on their homes for fear that waiting would mean their homes’ values would fall.22 The speculators sold those homes to black families, whom they could charge more owing to the “dual housing market” in which black people had few housing options.23 Real estate agents reaped enormous profits on both sides of the sale in transitional housing markets. As Cincotta watched hundreds of real estate speculators flock to her Chicago neighborhood alone, she

neighborhoods first

11

and some others concluded that all neighborhood residents, regardless of race, were losing. It was in these “transitional” urban neighborhoods that the reinvestment movement took root. In response to their experience with real estate abuse, reinvestment activists drew on a tradition of social democratic thought that was rooted in the conviction that social goods should trump market imperatives.24 Their variant of social democratic politics provides an entry point for examining how ordinary people thought about the relationship between markets and society at a moment when prevailing assumptions were changing. As historian Daniel Rodgers has argued, “economic concepts moved into the center of social debate” during the 1970s, and Americans increasingly saw markets as ensuring “freedom, choice, and reason.”25 Yet for those whose neighborhoods were labeled “risky,” the ideal of market choice did not mesh with the reality that financiers’ assumptions about urban riskiness made “choice” an illusion. Accordingly, reinvestment activists expected the federal government to intervene, through regulation and through targeting programs, to help the people and places the marketplace was stacked against. In other words, urban activists looked to the state to ensure that the market was more fair than free. Reinvestment activists’ demands were shaped in large part by their financial common sense, but their shared political worldview was also rooted in their particular shared experience as residents of transitional neighborhoods. Life in postwar American cities created a set of common experiences for many who watched the social, political, and economic transformations of the postwar era from their front stoops. The black freedom struggle, federal attempts at “urban renewal,” the construction of new highways that eased suburban commuting, the onset of persistent inflation, the growing faith in the potential of the “free market”—­these postwar transformations unfolded differently depending on where one lived in the metropolis. Thanks to a growing body of rich scholarship, we now know a great deal about the connections between place and politics in the postwar suburbs. Historians have well documented how for many white Americans, the suburbs shaped their aversion to government as well as their explanations for the persistence of racial inequality in a nation that purportedly outlawed race-­based discrimination in the 1960s.26 But with so much scholarly attention to the growth of the suburbs and the political Right, scholars have let the winners dominate the historiography.27 The history of the reinvestment movement suggests that many urban Americans were keenly aware of the ways in which federal policy bolstered residential segregation. Urbanites encountered the power of the

12

introduction

federal government when they protested new Federal Housing Administration programs. They ran into federal regulators when they demanded a solution to redlining. And they argued that state-­sanctioned private lending policies wrote them off because their neighborhoods were coded as “risky” places due to the presence of black residents, the age of local housing stock, or the large proportion of low-­ and moderate-­income people. While many white suburbanites could see neither the hand of the state nor the role of structural racism in securing the good life, these urban agitators were hyperconscious of both. The urban reinvestment movement also recasts the current literature’s emphasis on racial divisions within the metropolis, another interpretation reinforced by a suburban focus. The leaders of this multiracial movement were trained in the Saul Alinsky tradition of community organizing, which adapted the strategies of labor organizing to the places where peo­ ple lived. Most important for the reinvestment movement’s multiracial constituency, community organizing gave activists a framework for iden­ tifying the specific people and institutions that created local problems dur­­ ing racial “transition” rather than reflexively blaming neighbors of different racial or socioeconomic backgrounds. The reinvestment movement showed that despite racial divisions within the metropolis, cities proved fruitful ground for interracial politics where “blacks and whites were fighting banks, not each other.” The movement fused these principles of local community organizing with a discourse of antidiscrimination that its members adapted from the black freedom movement. While Cincotta, Trapp, and many other NPA leaders were white, black activists’ critiques of structural inequality proved particularly important in the movement’s struggle against “geographic discrimination.” In American cities, appraisers applied a similar logic to neighborhoods, as the arrival of any black residents prompted real estate experts to racially code the entire block or neighborhood as a risky investment. As activists saw it, all urbanites suffered the effects of institutional racism when they chose to live in neighborhoods that weren’t heterogeneously white. This logic prompted many urbanites to organize across racial lines and to identify their interests as shared through place, rather than at odds because of race. In light of their conviction that structural racism and antiurban bias created unfair policies, reinvestment activists deployed a surprising use of affirmative action that historians have yet to incorporate into narratives of postwar urban social movements. Affirmative action expanded opportunities for workers who had been long denied access to good jobs due to race-­ and gender-­based discrimination. As impressive, the impact of struggles

neighborhoods first

13

over affirmative action fundamentally changed the way Americans think about work and fairness. But the reinvestment movement suggests that the legacy of the black freedom struggle extends beyond the way that other movements also deployed it to “assert government’s responsibility to ensure equality.”28 Seeing that the state had favored suburban development for more affluent whites at the expense of lower-­income and minority residents in the cities, reinvestment activists demanded affirmative action as a policy prescription to change that pattern. Pattern changing made affirmative action a powerful tool for addressing structural inequal­ ities that were rooted in the intersection of race and place—­inequalities that were difficult to combat in the wake of civil rights victories that made race-­based discrimination against individuals, but not places, illegal.29 An exploration of the reinvestment movement’s urban politics also suggests the role of place in the 1970s fragmentation of a shared political identity among working-­class whites, whose electoral support historians have deemed crucial for making, and then undoing, the New Deal political order. In the scholarship that seeks to explain the fraying of American liberalism and the rise of the political Right, working-­class and lower-­middle-­ class whites have played a starring role. As historian Lizabeth Cohen has shown, when white workers of recent immigrant descent (sometimes called “ethnic whites”) recognized their interests as shared in the Great Depression, they created a new class consciousness that proved crucial to securing victories not only for a previously weak labor movement but also in the realm of electoral politics, ensuring the rise and reelection of FDR.30 Some historians of postwar political history argue that by the late 1960s, white workers reconfigured the Democratic Party in much the same way they reconfigured American cities—­by leaving. But the reinvestment movement suggests that the reconfiguration of white working-­class politics should be understood not so much as uniform decline or realignment but rather as a fragmentation. Events beyond the workplace politicized these activists, but their identities were nonetheless rooted in class. Indeed, reinvestment activists described themselves as “neighborhood people,” “community people,” or residents of “low-­and moderate-­income communities.” These terms all had a class-­based edge, but a place-­based anchor.31

Neighborhoods First This book charts the history of the urban reinvestment movement through a largely chronological story. It starts on Chicago’s West Side in the

14

introduction

mid-­1960s, where an interracial group of urbanites organized against real estate abuse. Urban activists, I show in chapter 1, acquired skills through their training as community organizers, which gave them a method for building an interracial group. In so doing, they analyzed urban problems in terms of power relations, rather than racial divisions. Their attempt to counter the influence of speculators in their local real estate market keyed them into the important role of home financing institutions and set the stage for activists to ask questions about why local thrifts stopped lending right when their neighborhoods started racially integrating. Through this work, activists soon learned that the Federal Housing Administration (FHA) played a key role in structuring the housing markets in transitional urbanites. In chapter 2, I recount the little-­known history of the FHA’s mismanaged urban insurance programs, which provided risk-­ free profits to real estate speculators.32 Cincotta, Trapp, and a core group of activists realized that FHA reform required changes in national policy, and they used “real estate abuse” as the issue to recruit neighborhood groups from around the country to join a new national network: National People’s Action on Housing (NPAH; later simply National People’s Action). Activists soon moved into the national realm of politics, the topic of chapter 3. During the mid-­1970s, as national policymakers agreed that the financial system created by the New Deal had ceased to function prop­ erly, NPAH capitalized on a window of opportunity to win FHA insurance reform and to influence legislative debates over the nature of financial deregulation. During this brief but generative period, NPAH’s prescription to strengthen the relationship between financial institutions and local communities emerged as a viable reform strategy as they won access to bank lending data that would help them document race-­based geographic discrimination in lending. Chapters 4–­6 examine the reinvestment movement at its peak and then follow it as activists made the most of community-­bank partnerships when activists’ influence on national policy waned. At the movement’s peak, leg­ islators passed the Community Reinvestment Act, which gave reinvestment activists standing to challenge bank mergers and acquisitions. But, as chapter 4 shows, activists wanted a national neighborhood reinvestment policy, not just a banking regulation. The CRA helped activists direct credit toward affordable housing, but it was a small-­scale, piecemeal solution to the large-­scale structural problem of urban disinvestment. The book then explores the limits of bank-­based urban reinvestment in the absence of new federal funding and programming to complement it.

neighborhoods first

15

As I show in chapter 5, the Federal Home Loan Bank Board, the federal regulator of savings and loan associations, developed its own ideas about what constituted “urban reinvestment.” The thrift regulator and its industry pursued new lending opportunities but with little regard for how its policies would affect low-­and moderate-­income people. The CRA pro­­ vided no protection against the new threats of gentrification and, in 1980, the first steps toward financial deregulation. The narrative ends with the story of National People’s Action’s most radical proposal— ­credit allocation through the financial system—­and shows how NPA and its allies lost the battle to protect Americans of modest means from the recession-­ inducing effects of monetary policy under the Carter and Reagan administrations. As the effects of financial deregulation became apparent, the CRA remained the most promising coping mechanism for urban activists seeking new resources for their communities. The CRA played a key role in empowering a network of neighborhood groups, community development corporations, and financial institutions that rehabilitated affordable homes in many neighborhoods, but it ultimately offered an insufficient solution to a growing affordable-­housing crisis in American cities. By the late 1980s, as the conclusion reveals, the legacies of the CRA’s shortcomings could be seen not only in the disappearance of locally rooted financial institutions from Chicago’s West Side, where reinvestment activists first organized, but also in the persistent racial and economic inequality that characterized the American metropolis of the late twentieth century. Bank-­based reinvestment did nothing to shrink the racial wealth gap, nor did it provide economic security for low-­income people. A short note on source limitations and terminology is warranted. Unlike many histories of social movements, After Redlining does not focus much on internal movement conflicts. The reasons are twofold. First, my primary archive, the unprocessed papers of National People’s Action, did not provide significant insight into tensions within the movement. Instead, the memos, newsletters, speeches, and organizer training materials provided rich evidence that highlighted the movement’s outward-­facing strategies to win allies and combat adversaries. Second, my goal is to uncover the urban reinvestment movement’s impact on the political economy of the late twentieth century, particularly its mark on the financial system and its difficulty in affecting national urban policy priorities. Tracing this story often meant highlighting moments in which movement leaders came into conflict with opponents and presented a united front. Regarding terminology, I use the terms “thrift” and “savings and loan association” (S&L)

16

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interchangeably. I use the term “commercial bank” when I am referring to those financial institutions that typically served business but that increased their share of consumer savings deposits and mortgages starting in the 1960s. I use the term “financial institution” or simply “bank” when I am referring to either thrifts or commercial banks. Finally, I use the term “deregulation” to refer to changes in the US financial regime during the 1970s and 1980s. I do so in order to convey the terms of the historical actors who made sense of the changing laws and regulations that governed financial institutions during this moment. However, my use of this term is not meant to suggest that financial regulations disappeared, nor that the state abandoned its role in overseeing financial institutions. A more analytically accurate term for this process is “reregulation”33 —­a rewriting of rules to support changed priorities such as bank competition and inflation fighting, rather than the concept of “security,” central to the New Deal financial regime.

chapter one

Beyond the Backlash Organizing against Real Estate Abuse in a “Transitional” Urban Neighborhood

I

n 1971, a young white couple met with a real estate agent to discuss selling their home in Austin, a neighborhood on Chicago’s West Side. Austin’s population was 99 percent white at the time of the 1960 census, but black families had recently begun moving in. The real estate dealer assumed that the couple had requested the meeting because they wanted to leave Austin, as many of their white neighbors had in recent months. As he took a seat at their kitchen table, he praised their decision. “By the grace of God, you are making the greatest move in the world,” he said. “Their living habits are completely different than ours.” Black people “don’t live or act or even think like we do.” He went on to call Austin’s black newcomers “orangutans” and “apes” and sneered that they “cook in the bathtub.”1 Little did the agent know that the couple did not share his opinions about their new black neighbors, nor did they actually plan to move. As members of the Organization for a Better Austin (OBA), they had been working with community organizer Gale Cincotta to build an interracial neighborhood group to combat agents like him. Their guest had no idea that the kitchen meeting was a sting operation. A hidden tape recorder captured his sales pitch, providing evidence that the man instigated fear about the arrival of black neighbors in Austin. The Chicago activists had a name for agents like him: “panic peddlers,” real estate speculators who scared whites into selling their homes at undervalued prices, charged black families exorbitant rates for those homes, and reaped enormous

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profits in the process. The OBA members sent the tape to the Chicago Tribune, and the paper ran three full pages of its transcript.2 The members of OBA reflected a larger trend in the 1960s wherein residents bridged racial and homeowner-­renter divisions in an effort to wrest control of their neighborhoods’ fates from powerful people and in­ stitutions who had written them off or, worse, exploited their alleged declines for profit. In “transitional” urban neighborhoods that had begun to integrate, powerful people with money to make shaped the possibilities and limitations for their neighborhoods’ futures. Real estate agents stoked fear that black residents would bring down property values, turning panic into quick money as they bought low from white sellers and sold high to black buyers. At the same time, residents of Austin and other tran­ sitional neighborhoods around the country also felt that their city gov­ ernments had abandoned them, as many local governments reduced trash pickup or failed to allocate new resources to overcrowded schools. City officials often flagged these same communities for small-­scale urban renewal projects, where cleared lots might sit vacant for months or years before new structures went up, leaving eyesores that added to the perception of neighborhood decline. In transitional neighborhoods like Austin, many residents had an overwhelming sense that something was being done to them, without their input, making it hard to envision a future for themselves in the communities they called home. The desire to gain control drove many to action. As OBA’s activism suggests, transitional urban neighborhoods created conditions ripe for the development of a political worldview that united a neighborhood’s residents around their shared interest in their neighborhood’s future. Historians have shown that “transitional” neighborhoods across the country became seedbeds for the politics of racial backlash, as many white homeowners “defended” their neighborhoods from integration, conflating white racial exclusivity with high property values.3 But as OBA’s efforts reveal, the politics of white homeowners were only one option among many available to urbanites as their neighborhoods were in flux. Others embraced a kind of social democratic populism that challenged the logic of free markets in the realm of urban home financing and that aimed to make housing markets more fair than free. These urbanites drew heavily from the playbook of Saul Alinsky, a political theorist whose school of community organizing brought the methods of organized labor out of the workplace and into communities.4 The Alinsky method provided urbanites a framework for analyzing neighborhood problems in terms of power relations, rather than racial difference.

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Most important for the trajectory of the urban reinvestment movement, activists in transitional neighborhoods like Austin identified the people and institutions who shaped real estate markets as manipulating transitional housing markets for their own profit. Members rejected the imperatives of what real estate agents claimed was a race-­neutral market based on supply and demand, instead charging that panic peddlers exploited both buyers and sellers in a dual housing market that was entirely color conscious. They challenged “slum landlords” whose unwillingness to maintain their properties hurt not only their tenants but also the whole neighborhood as deteriorating buildings further incited panic. They also chastised their local savings and loan institutions for refusing to grant mortgages in the neighborhood when it began to integrate. Their attempt to create an integrated Austin ultimately failed, but their efforts mattered for other reasons and had national implications. Their organizing laid the groundwork for the urban reinvestment movement, a collective, sustained effort at the national level whose members sought to redirect public and private resources to end the inequities that real estate abuse helped to create.

Community Organizing to Manage Integration Before Austin was a hotbed of real estate protest, it was an all-­white community with a mix of homeowners and renters. Chicagoans talked about the neighborhood as one entity, but with two populations divided, north from south, by its major artery, Lake Street. North Austin’s bungalows and small-­frame single-­family homes gave the area above Lake Street a suburban feel. Its historic Midway Park subneighborhood boasted majestic nineteenth-­century homes, as well as several structures designed by Frank Lloyd Wright and his students. It also included a golf course and several manicured parks. Homeowners and renters mixed in South Austin, on the other side of Lake Street, where row houses, brick two-­ and three-­flats, and corner apartment buildings lined the streets. But locals often flattened these north-­south distinctions when referring to Austin in general. So did the city’s demographers, when they counted residents on both sides of Lake Street as part of the Austin “community area.” The neighborhood had a reputation as a “city within a city” and a “posh” place to live in the early 1960s.5 “It was a place where you didn’t go shopping unless you wore a hat and gloves,” recalled one longtime resident.6 By the mid-­1960s, Austin was the last all-­white neighborhood on Chicago’s West Side, but it seemed it wouldn’t remain so for much longer.7

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“We knew that transition was going to start coming,” OBA member Mary Volpe recalled. “In cities like Chicago, you can tell where the transition’s going to be” based on the trends visible to local people.8 White Austinites described a sense of creeping racial change with reference to the specific streets that served as the neighborhood’s racial boundaries. Cicero Ave­ nue seemed impenetrable during the mid-­1960s because, as OBA member Ed Bailey put it, locals assumed that the white homeowners west of Cicero would “resist” new black residents. Bailey, one of the first black homebuyers on his block, recalled the “rumor” he heard “when one or two families moved in across on the west side of Cicero.” The sense in the neighborhood was “Well, the blacks done broke the barrier,” he said, “and that started the whole stampede of whites moving out and blacks moving in.”9 The “transition” of racial change came late to Austin, and the timing mattered because Austin’s residents had already witnessed other Chicago neighborhoods undergo racial change. As historian Amanda Seligman has shown, the West Side had a “block by block” pattern of racial change that began in the southeast corner of the area and moved northwest toward Austin, at Chicago’s westernmost boundary.10 Black southerners moved in great numbers to northern cities in the wake of World War II. In Chicago, real estate agents “steered” new arrivals only to blocks where other black families already lived, or to the blocks just adjacent. Black residents first moved to the neighborhoods east of Austin: East Garfield Park, then North Lawndale, and finally West Garfield Park, which shared a border with southeast Austin. These neighborhoods never actually integrated, however. Instead, most whites fled, and the demographic shifts were dramatic. North Lawndale, for example, jumped from less than 1 percent black in 1940 to 91 percent black in 1960, and 96 percent in 1970.11 With other West Side neighborhoods showing similar trends, observers noted that the end point of block-­by-­block racial change was “resegregation”—­a nearly complete turnover from a white block to a black block. “The history of racially changing communities,” a local journalist said, “bears out the grim fact” that racial change “breeds not integration but resegregation.”12 Most white West Siders identified panic peddlers, or “blockbusters,” as the primary agents that ensured that so-­called racial transition ended in resegregation. By the time Austin began to integrate, as Seligman has shown, real estate dealers had a well-­established process for changing the racial composition of resident blocks in Chicago.13 They combed one small area at a time in search of anxious white homeowners, stoking fears that

beyond the backlash

21

black residents would soon be moving in. Some whites sold because they refused to live near black neighbors. Others sold because they thought the presence of black residents would make their property values decline. Many whites accepted low offers on their homes based on a perception that the longer they waited to sell, the lower their property values would fall.14 With the titles in hand, panic peddlers sold those homes to black families, whom they could charge more owing to the “dual housing market.” In the block-­by-­block pattern of racial change, black buyers could only purchase homes in area that had already been “busted.” This racial steering in the real estate market created a smaller supply of available homes for black people, thus driving housing prices up. As a result, a black family paid the panic peddler much more to purchase a home than the white family who previously owned it had received for the sale. Real estate agents reaped enormous profits in these deals, at times selling a home for more than twice what they paid for it.15 In many ways, Chicago’s Austin was not a unique neighborhood in the 1960s United States. At the same time Mary Volpe and Ed Bailey discussed Austin’s future as a transitional urban neighborhood, other residents in other cities had similar conversations. In Buckeye-­Woodland, a Hungar­ ian neighborhood on Cleveland’s East Side, white residents believed their community would soon “transition” based on their city’s trends.16 In northeast Baltimore, white neighbors assumed the same. Indeed, in the mid-­1960s, nearly every older industrial city in the Frost Belt corridor had at least one white neighborhood, if not several, that locals believed was on the verge of racial change: the northwest Bronx in New York City, a stretch of Michigan Avenue in Detroit, Jamaica Plain in Boston, Bond Hill in Cincinnati, Federal Hill in Providence, a North Side neighborhood in Wilmington, a South Side neighborhood in Minneapolis. The list went on and on. In these places, which occupied both a spatial and an imagined middle ground between the suburbs and the “inner city,” conditions were ripe for the white racial backlash that historians have documented in neighborhoods in Detroit, Boston, and more. But conditions were also ripe for other responses—­for democratic experiments in integration, for interracial community organizations, for creative solutions to combat real estate abuse. Indeed, white racial backlash to black in-­migration was not predetermined. Rather, the way that whites responded to racial change was shaped by the specific people and specific ideas that gained the power to define neighborhood problems in their specific communities. In other words, white responses hinged on the options in front of them. And at a

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time when the movement for black freedom gained achieved its most visible national victories, some urban whites embraced the vision of black and white Chicagoans living together in neighborhoods like Austin not only as a pragmatic option that allowed whites to stay put, but also as the only moral option in a racist society.17 So when blockbusting panic peddlers appeared in such neighborhoods in the mid-­1960s, white residents faced a choice. They could move to another all-­white community, which many did. Between 1950 and 1960, over 399,000 whites in Chicago alone fled to nearby suburbs. Alternatively, whites could resist the arrival of black families, which many also did. In nearby West Garfield Park, that choice took the form of a homeowners’ rights organization called the United Property Group that closed ranks against black newcomers in the name of protecting property values. Several went so far as to target black families with violence, “firebomb[ing] a black family’s home” in one case and hanging an effigy on a black family’s porch in another. But still another option was stay in their neighborhoods and live among new black neighbors. Whites made their choices by weighing circumstances specific to their households—­the cost of buying a new home versus paying down an existing mortgage, ties to the neighborhood church, proximity to friends and family—­but within the larger context of the dominant assumption among whites that racial integration drove down property values. Many of these choices were discussed in private conversations that have been lost to the historical record. But some whites had these conversations in public. And in some of these older urban neighborhoods, residents left a paper trail that provides a glimpse into one way that “transitional” communities responded to racial change, which would soon reshape national conversations about the relationships among race, risk, and neighborhood in urban real estate markets. They worked across racial lines to form community organizations that fought real estate abuse instead of their new neighbors.18 The Austin priest Monsignor John E. Egan was a driving force behind the formation of OBA. He believed that community organizing could achieve what some sociologists called “managed integration.”19 He thought it would give whites an alternative to irrational fear and flight, while giving black people a vehicle for becoming part of the neighborhood and gaining a sense of belonging.20 Egan had first become interested in community organizing when he met renowned community organizer Saul Alinsky in 1954, while attending an organizer training for Chicago priests. “I was attracted to Saul,” Egan said, “because he wanted to do for people what I

beyond the backlash

23

believed God wanted done—­to give them freedom and some say over the things that affected them the wrong way.”21 As a priest working in Austin’s St. Angela’s parish during the mid-­1960s, Egan became interested in how an Alinsky organization might unite new and old residents, with racial change on the horizon.22 By the time Egan sought a solution to Austin’s racial transition, the Alinsky method was well known to community organizers around the country. As historian Mark Santow put it, Saul Alinsky “almost single-­handedly invented a new political form” with his “People’s Organizations.”23 The strategy put a heavy emphasis on pragmatism; organizations should only pursue goals that could be won. By this logic, ordinances about dog waste or demands for particular bus routes were fair game, but abstract ideals like peace or racial equality were not. Alinsky’s method grew from his training as an urban sociologist and a labor organizer. After meeting Congress of Industrial Organizations organizers who worked to unionize Chicago’s packinghouses in the 1930s, Alinsky began adapting labor organizing to build power among urbanites where they lived rather than where they worked. Usually, local leaders, especially priests like Egan, hired a trained, professional community organizer to work in a geographically defined neighborhood. The organizers built an “organization of organizations” from existing local groups like block clubs and churches and created new groups when none existed. At the same time, organizers canvassed the neighborhood to find out what residents thought needed improvement. Organizers then convened a “congress” wherein local residents voted to set the group’s agenda. To achieve these agendas, Alinsky organizers were known for their confrontational tactics. They used their strength in numbers to stage direct actions, or “hits,” against city leaders who had the authority to make the changes residents wanted, from increasing garbage pickup to filling potholes.24 Egan was part of a larger trend among Catholic priests who believed that community organizing might not only prepare white neighborhoods for integration but might also position the church to better support urban parishioners facing a range of struggles. In 1962, the Catholic Church held its first ecumenical council in nearly a century. The declarations that emerged from that meeting called for greater Catholic engagement with the modern world, and many pastors saw an opportunity to answer that call in cities. Priests like Egan understood their duty as holy men to include supporting urban communities that grappled with issues from racial change to job loss to political alienation.25 Catholic magazines such as

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Franciscan Message and Church in Metropolis published flattering profiles of Saul Alinsky, emphasizing the links between the organizer’s philosophy and that of the post–­Vatican II church. “What Alinsky promotes is not far removed from the Vatican Council’s views of progressive programs for social justice,” wrote one Catholic reporter.26 During the mid-­1960s, Egan enlisted several Catholic and Protestant clergymen to support an Alinsky-­ style group to prepare Austin for integration.27 After a failed first attempt, they formed the Committee for a Better Austin in 1966 and hired Tom Gaudette, one of the few organizers in Chicago whom Alinsky had personally trained, to build it.28 A former World War II pilot, Gaudette had cut his teeth as an urban activist combating panic peddlers in his own Chicago neighborhood of Chat­ ham during the 1950s. Gaudette, then a corporate executive, thought the situation smacked of unfairness. He joined “seven old Jewish ladies down the street, some African American families, and a few others” in protesting exploitative real estate practices. Looking back, he said that “real-­ estate syndicates created racial hatred” before black and white people could attempt to build community.29 When Austin’s clergy hired Gaudette to “keep these neighborhoods stable,” he was explicit that he would not build a group that equated stability with whiteness. “I told [the Catholic priests], ‘If you are hiring me to keep out the blacks, then I don’t want the job,’ ” Gaudette recalled.30 Gaudette arrived in Austin in the summer of 1966. He set up an “old storefront” with “a few old desks, a mimeo ma­chine, and a row of telephones” and hired his first organizers, all of them white.31 The shared racial identity might have helped his organizers win the trust of white Austinites they hoped would not move away from the neighborhood. Over time, Gaudette and his early staff recognized the value of having organizers who shared racial identities with new black Austinites, and they actively sought to hire black organizers and staff. Gaudette faced the challenge of building trust between Austin’s whites and the new black residents who had already started moving into southeast Austin.32 Consonant with Alinsky’s pragmatic approach to power, Gaudette pursued a two-­track organizing strategy that recognized the different interests within the neighborhood: one approach for racially changing blocks, and another for blocks dominated by longtime white residents. Gaudette sent his most eager, committed organizers to South Austin, where black families were moving in and where renters outnumbered homeowners two to one. New residents often had weak ties to existing institutions, so Gaudette’s organizers helped South Austinites to meet each

beyond the backlash

25

other and build new block clubs.33 These street-­level groups held regular meetings to address the most local issues—­“insufficient trash pickup, lack of tree trimming, or inadequate tenant screening”—­and build relationships among old and new neighbors. A sociologist studying Austin noted the “high incidence of block-­club membership in the black community” within South Austin due to the organizers’ efforts. Gaudette’s staff were “ready and waiting when the blacks arrived,” he said.34 Gaudette took a different approach in North Austin, where homeowners dominated and where whites assumed block-­by-­block racial change to be rather far off. North Austin had many civic groups affiliated with its Catholic parishes, and the organizers invited these existing institutions to join the organization. However, Gaudette only sent one organizer to knock on doors there, presumably because he did not expect enthusiastic participation from North Austin’s whites. And he was right. One observer confirmed that North Austin whites “were generally unwilling to work with an OBA organizer because of the OBA’s involvement with blacks.”35 Organizers learned which whites they could work with when they started holding meetings. Those who showed up were self-­selected folks willing to cooperate with new neighbors, whereas white protectionists or apathetic residents chose to stay home. Shel Trapp proved himself one of Gaudette’s most ambitious organizers. Trapp came to community organizing after serving as a Methodist minister in a mostly white church in Chicago’s Lake View neighborhood. There, he first saw civil rights demonstrations on television. “I remember watching coverage from Birmingham of police unleashing dogs on people,” Trapp said. In 1965, he and seven other ministers had traveled to Jackson, Mississippi, to show their support for the black freedom struggle. They brought a black colleague with them to Sunday worship and, upon entering the church, they were arrested and held for a week. Trapp believed he should have been praised for his convictions, but instead, his supervisor chastised him. That marked “the beginning of the end” of his ministry. Trapp had previously met Gaudette at a conference for inner-­city pastors, and he now heard that his acquaintance was hiring organizers to build an interracial group in Austin. When Trapp was hired, he was “wet behind the ears,” but he impressed Gaudette by learning quickly. After four months, Gaudette moved him to a transitional area in South Austin where “every block had an issue.” There, “young black families were moving in thinking they had moved to heaven.” Instead, South Austin’s “abandoned cars, slum buildings, [and] residential streets without stop

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signs” looked more like “hell was outside their front door.” Trapp spent the next several months working “to build a new fabric of old and new families” in South Austin, a job that he preferred to the ministry.36 During the year that Gaudette spent building the organization, he and his colleagues became lightning rods for debates over whether an Alinsky-­ style operation could help the neighborhood through its “transition.” The organization soon had the reputation of a “liberal” group that helped black families moving in to Austin. Indeed, the bulk of the group’s growing membership came from new black members joining block clubs in South Austin. A Northwestern University sociologist studying OBA around this time provided a glimpse into why so many newcomers joined. As he saw it, Gaudette’s organization attempted to unite a local community through place, whereas organizations such as Operation PUSH, led by Jesse Jackson around the same time, built their base around a racial community that sometimes felt too abstract. Indeed, new and old Austin­ ites expressed a strong interest in local issues. “My concern is the local community,” one said. “I have always lived here and I love it.” Another said that citywide and national groups were “not community located or oriented,” in contrast to Gaudette’s growing group. “Groups like SCLC [Southern Christian Leadership Conference] and NAACP [National Association for the Advancement of Colored People] are concerned with problems on a national scale,” a third said. “I care more about local problems.” A few members had “nominal memberships” in “civil rights organizations” at the city or national level but focused more of their energies on the “local community.”37 Gaudette’s committee also gave some white residents a way to imagine being part of an integrated Austin, in contrast to a resegregated majority-­ black Austin.38 Indeed, hundreds of white residents joined Gaudette’s interracial organization at a moment that historians have shown was rife with street-­level racism. Gaudette’s success with many Austin whites might be explained by organizers’ emphasis on pragmatic appeals to whites’ self-­ interest, as Alinsky called it. By that, Alinsky and his followers meant that organizers validated residents’ concerns and did not try to change their views. Instead, organizers used residents’ own understandings of their self-­ interest to recruit them into the group. The pragmatism behind discussing racial integration as a practical, rather than moral, issue ignored crucial questions of fairness and equality, but it proved effective for recruiting some white members. As one organizer put it, organizers avoided “selling people on what is right.” Instead, the organizers stressed the importance of

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cooperation, arguing that new and old residents, black and white, needed to work together to keep Austin as a good place to live. If neighbors grew to respect and even like each other in the process of organizing, the organizers considered that an added bonus. But racial harmony was not their primary goal. One Austin organizer, Ed Shurna, found this approach “a life-­changing idea.”39 Others, like Trapp, came around to it slowly as they struggled to reconcile such pragmatism with a personal commitment to racial justice. Gaudette told Trapp to put his convictions aside in order to do his job. “You’re going to hear some things” from whites that might outrage you, Gaudette told him. “Just keep your damn mouth shut.” His task was to listen—­and then connect residents.40 As this exchange suggested, racism remained an ongoing problem in Alinsky organizing where organizers’ emphasis on pragmatic, winnable goals foreclosed more radical conversations about how to transform systems built on racial injustice.41 Even though organizers avoided the moral issues at stake in racial integration, some white Austinites joined Gaudette’s group precisely because they cared about them. Mary Volpe, for example, “worked a little with the civil rights movement” before joining Gaudette’s group.42 Another white Austinite, a self-­described “liberal from the suburbs,” moved into Austin as a form of activism for racial justice. “We listened to Tom Gaudette and we were activists,” she recalled, “and we thought that this would be a good thing to do. So we sold our [suburban] house and moved onto the West Side.”43 Mary Shimandle was a child when her parents joined OBA. They took her to Soldier Field to listen to Martin Luther King Jr. speak in 1966. For her family, local organizing complemented their support for civil rights.44 These white racial liberals described their involvement with the community organization as more intimate than their work with the “movement.” Volpe said of the civil rights movement, “I had never gotten into it that deep. I was always on the outskirts.”45 Gaudette’s group was also helped by the perception that the black families moving in to Austin tended to share a class background with South Austin’s whites. Many were renters and homeowners of modest means who hoped to avoid “ghetto” conditions, a racialized term that new and old residents often used to describe an overcrowded area with “population pressures.”46 Austin’s new black families were, as one sociologist explained, “black middle-­America” whose members had “moved every few years in order to stay at the ghetto’s edge.” After interviewing 277 Austinites, the sociologist found that the “typical South Austinite [was] young, black and

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[had] a high school education,” with “median income similar to the national median income.” Their jobs were “almost evenly divided between white and blue-­collar occupations.”47 When Gaudette’s team stressed the overlapping interests of white and black residents in South Austin, these common class markers likely helped. Organizer Ed Shurna, for example, considered Austin’s white protectionists to be off base because they adopted a “keep-­’em-­ out strategy” that “focus[ed] on someone like you, just a different color.”48 As its success in South Austin suggests, Gaudette’s group was not the exclusive voice of Austin’s black and white homeowners. It also built its base by incorporating the needs of tenants. As organizers saw it, tenants moving into “bad buildings” suffered from the same broken housing market that created opportunities for powerful people, in this case landlords, to profit from neighborhood decline. As the organizers gathered information on the neighborhood’s problems from local residents, they heard about “overcrowding” and “high concentration” that created “slum conditions.” Rather than echo whites’ ideas about black inferiority, which, as historians have well documented, shaped white racism during this moment, Gau­ dette’s group highlighted different causes. They charged that decaying rental housing resulted from “absentee owners, poor janitorial services,” and a failure by Chicago’s housing court to hold absentee landlords accountable.49 Austin tenants joined Gaudette’s organization through parish councils, such as St. Thomas and Resurrection, that served Austin renters, and through block clubs. Tenants’ concerns about “bad conditions” and economic exploitation became issues on the group’s growing platform.50 Here, organizers emphasized shared interests that were shaped by place and did not hinge on one’s homeownership status. While some new and old residents found hope in Gaudette’s efforts to unite “all Austin,” black or white, tenant or homeowner, many white Austinites watched warily as Gaudette’s group gained momentum. They worried that the organizer’s vision for Austin did not resemble the neighborhood they called home. Many Austinites remained suspicious that the organizers were “outsiders” with a hidden agenda, a common complaint about social justice activists who did not live in the communities where they worked. “We do not need someone to come in and tell us we’re disorganized,” one Austinite said. Another suggested that the tactics Gaudette had learned from his Alinsky training did not mesh with the sensibilities of Austinites; protests, sit-­in demonstrations, and other “faith shattering tactics” were out of step with their respectable community. Several Austin businessmen attempted to build their own “unification council” in

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opposition to Gaudette’s group, charging that Gaudette was “too controversial.”51 Some Austinites went so far as to create the Town Hall Assembly, a rival community organization with a white protectionist impulse, which also pledged to unite all of Austin.52 Indeed, antiblack racism had a strong pull among many Austin whites, just as historians have shown it did in transitional neighborhoods throughout the United States.53 During his first several months in Austin, Gaudette’s success building an interracial organization to stop resegregation was by no means guaranteed. But in June of 1967, one year after the priests hired Gaudette, nearly eight hundred delegates representing church groups, civic associations, and block clubs met in the Austin High School auditorium to officially form the Organization for a Better Austin. Children ran around the room sporting sashes and waving flags that displayed the names of their local churches and block clubs. Participants recalled feeling as though they had just created a new form of government. “This convention was just like the founding convention that made the United States of America,” the white newly elected president, Justin McCarthy, recalled.54 “A lot of people joined, black and white,” member Ed Bailey said.55 Trapp’s hard work in racially changing South Austin had paid off: while only around 15 percent of Austin’s population was black at the time of the congress, an impressive half of the meeting attendees were black.56 The founding convention served as a coming-­out party for Gale Cincotta and other “native leadership” that Gaudette and his team had cultivated during the previous year. In keeping with the Alinsky method, Gaudette and his organizers stayed behind the scenes while local people served as visible leaders. They found a charismatic, hardworking leader in Gale Cincotta. When Gaudette and his organizers first approached Cincotta at a meeting about overcrowding at May Elementary School, where her son’s kindergarten classroom had become overcrowded, she hesitated to join. “Oh, Christ, a bunch of other do-­gooders!” Trapp remembered her saying.57 But Cincotta was looking for an opportunity to keep Austin a decent place to live. She was no newbie to activism. According to a close friend, she grew up listening to her parents and their friends discuss leftist politics at the restaurant her family owned. They had voted for Socialist Party of America presidential candidate Norman Thomas in the 1930s. Cincotta also had a strong preference for urban living. She didn’t drive, so life in the car-­oriented postwar suburbs sounded miserable. She enjoyed the wealth of leisure activities available in ur­ ban neighborhoods, such as art lessons and neighborhood bingo nights.58

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What’s more, Cincotta and her husband, Ray, owned a two-­flat home where they lived with their six sons in the upper unit. Her aging parents lived downstairs—­an arrangement that would have been decidedly more difficult in a single-­family home in the suburbs. “We all take care of each other,” she said, and staying in the neighborhood where her large extended family could live under one roof was important to her.59 She was also not one to shy away from a challenge. Looking back, she recalled that she “got angry” that the quality of life in Austin was declining, whether she and her neighbors liked it or not. “The only way you could really take care of your family,” she said, “was to take care of the environment, your home, your neighborhood.” She refused to be “pushed out” of Austin.60 So, despite her initial skepticism about the community organization, Cincotta kept listening to the organizers and soon was onboard.61 Cincotta quickly developed a reputation as an outspoken leader. “Gale would come out like a street fighter,” Mary Volpe said.62 Another Austin leader described Cincotta’s “militant passions and her eloquence in bargaining and representing a voice of the people.”63 Cincotta was also a woman whose physical appearance drew attention. Photographers and journalists flocked to her. One journalist described her as “a large, fast-­moving woman with a kind of huge Wayne Cochran bleached blonde bouffant hairdo that is noticeable all by itself.”64 Cincotta proved an invaluable resource for organizers. “You must search until you find a leader who can cut through the petty bitterness and get the job done,” one organizer said of cultivating res­ ident leaders.65 Cincotta, her neighbors concurred, fit the bill; she was a “natural” leader who “was really born for the role she played in this organi­ zation,” and she worked hard to make the most of those natural talents.66 Cincotta reflected a larger pattern: women became OBA’s most consistent participants, in part because many believed it was in their families’ interest to improve the conditions of the neighborhood. Mary Volpe recalled first becoming an activist not out of concern for a specific issue but because of “boredom.”67 Like many middle-­class white women during the 1960s, Volpe had an urge to make an impact outside her home in part because the gendered expectation for women of her class was to serve and support her family rather than enter the paid workforce, but she wanted more than what domestic work offered her. “You could eat off my floors,” she said of her time before OBA. “The garden was etched. Everything was perfect. That’s all I had to do.”68 Another local woman ap­ proached her pastor with concerns about “youth crime.” He sent her to Shel Trapp, and she soon organized OBA’s campaign on the issue.69 Organizers often counted on Austin women to help OBA’s small paid staff

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with tasks ranging from basic clerical work— ­copying flyers, stuffing and stamping envelopes, making phone calls—­to organizing campaigns that stemmed from OBA’s agenda. Their position as mothers also made Austin women assets in hits against local power brokers, as organizers encouraged them to bring their children to these confrontations. For example, activist Mary Wallace “would always bring her kids” to direct actions “to disrupt things.” Wallace sometimes said that “if she could teach them to throw up on call” in protest, she would do it.70 Cincotta and her fellow Austinites built an organization that united black and white residents behind a place-­based, expansive platform. Delegates to OBA’s founding conference passed resolutions to fight school overcrowding, to develop new youth programs, and to improve local hous­ ing conditions. OBA established committees—­a housing committee, a real estate practices committee, a youth committee, an education committee, and thirteen others—­to research local issues, and used each committee’s findings to make concrete demands on local power holders.71 During 1968 alone, organizers attended 1,601 community meetings. OBA reported that 34,144 different people attended at least one of them, with an average of 21 attending each meeting, and with some of Austin’s most active residents each attending 200 meetings over the course of the year.72 While Cincotta, Volpe, and most of the male organizers were white, OBA nonetheless developed a reputation as organization that served Austin’s growing black community. As new black families continued to move into Austin, OBA’s largely white leadership decided to hire more black staff. By its second year, the group’s agenda included race-­conscious resolutions, such as “preserv[ing] Austin for Negro and White people alike, as one of the most desirable communities in which to live.”73 The strategy seemed to be working. “Not always have we found ourselves in agreement with OBA,” said a columnist for Austin’s local paper, but OBA deserved recognition for becoming “the first community organization in Austin that [had] drawn an appreciable grass-­roots membership” that “actively work[ed] to attain objectives” rather than “merely furnishing names for a roster.”74

Using Power to Shape the Market While the Organization for a Better Austin pursued a broad local agenda, its most important work, which would later help launch a national movement for urban reinvestment, came in the realm of real estate abuse. If OBA was going to pause racial change at the point of integration and

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thwart resegregation, its leaders understood that it had to address the neighborhood’s panic-­peddling crisis. Indeed, local housing markets animated activism and reoriented political worldviews throughout the postwar metropolis. But how housing markets shaped politics was not universal.75 In the case of OBA members, community organizing gave urbanites a framework to make sense of racial change through a lens of power relations rather than one of racial difference. OBA activists targeted specific power brokers—­panic peddlers—­rather than new or old neighbors whose racial identities differed from their own. As Cincotta recalled, she wanted to understand “who made the decision” that “there would be a black or brown movement” into Austin, and to confront those people who profited from the neighborhood’s panic sales.76 Combating real estate abuse meant identifying targets and explaining what it was that the targets were doing wrong. In protesting local real estate agents, activists articulated their assumptions about how local housing markets should work and how agents changed those markets during a neighborhood’s integration. From their protests emerged an analysis of housing markets that were shaped not by the race-­neutral meeting of sup­ ply and demand but, rather, by the monopolistic power of racially dis­ criminating panic peddlers. OBA members tried to coordinate a collec­ tive, democratic approach to the local real estate market that would pro­tect ordinary Austinites of any race from financial exploitation. Unless they coordinated their approach to the market, they reasoned, individual, atomized buyers and sellers would have to fend for themselves against panic peddlers. By OBA’s logic, the panic peddlers did not simply profit from the sales that occurred as whites sold their homes and black buyers purchased them: they “cause[d] unrest and panic” where it might not have existed before.77 Given this understanding, members had no shortage of insults for panic peddlers. Panic peddlers were “money hungry realtors, intoxicated by the smell of easy money in Austin” who “invaded our communities to get rich overnight.” They were “vermin” that “flooded our blocks with scare literature and other tactics designed to panic residents into selling their homes cheap.” They had done the same to other neighborhoods, with disastrous results. “This same scum has panic peddled whites out of Lawndale” and other West Side neighborhoods, one OBA resolution said, “and re-­sold property to blacks at inflated prices.” Analogies sometimes involved violence. Panic peddlers intended to “rape our community and walk away with fists full of money,” one resolution said. OBA members also referred

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to panic peddlers as “real estate rats,” “merchants of racial fear,” and “barbarians.”78 OBA did not label all real estate agents as panic peddlers, however. Its members affirmed they would “work with realtors if and when they prove themselves trustworthy.”79 OBA’s criticisms were usually against the “outside real estate companies” without roots in Austin, and the agents who arrived only when the neighborhood began its “transition.” These agents, one activists said, “[came] here to prey on the racial fears of people living in a changing community.” They “descended on Austin for the sole purpose of making big, quick, panic money off of each and every one of our Austin home buyers and sellers.”80 It was the “big-­league money makers,” not longtime Austin agents, whom OBA members targeted.81 OBA members argued that in exploiting a “dual housing market,” panic peddlers made it impossible for sellers and buyers to find each other in Austin’s real estate market. Instead, panic peddlers created what activists saw as artificial supply, by scaring white sellers, and artificial demand, by concentrating black homebuyers in restricted “busted” markets. As organizers and residents met month after month to discuss the trends visible in different areas of the neighborhood, they gained new knowledge about the way that racial steering manipulated the housing market. For example, several black Austinites went to Gaynor Realty in 1969 asking to see homes in North Austin, the segment of the neighborhood that had not yet been “busted.” “I told Mr. Gaynor that I was looking for a house in an area other than South Austin,” where many black families already lived, one black activist recalled. But Gaynor told him that he “had very little elsewhere” and took the activist to view a house in South Austin. Though Gaynor had a record of serving black homebuyers and had even become the target of white protectionists’ protests a decade earlier, Austinites assumed that his refusal constituted racial steering rather than an actual shortage of North Austin listings.82 Walter Brooks, a black block-­ club president, had a similar encounter at Solem Realty. When he asked Mrs. Solem to see a home in North Austin, she said “there was nothing available for him” there.83 In addition to racial steering, OBA also alleged that real estate agents bent the local housing market to their whims by charging black and whites buyers different amounts for similar homes. Because the housing supply available to black buyers was restricted by segregation, so that demand far exceeded supply, real estate agents could charge them higher rates—­ a “black tax,” as historian Keeanga-­Yamahtta Taylor puts it, that many

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would pay out of desperation for better housing. The activists’ conclusion was that these agencies created two separate markets based on race and thus manipulated what might otherwise be a fairer, “stable” real estate market.84 OBA tried various strategies to use the power of the government to rid the neighborhood of panic peddlers. At times they used the courts, filing at least two lawsuits against peddlers.85 They also filed complaints with the Chicago Commission on Human Relations (CCHR), the body charged with enforcing the city’s weak ordinance against panic peddling.86 But fighting panic peddling through the CCHR proved difficult. Activists found it challenging to distinguish panic selling from selling in general. The question of legality vexed activists each time they filed complaints with the CCHR. “Many people feel any type of solicitation by a real es­ tate broker in a changing neighborhood is panic peddling,” one commissioner said, “but this is not what the law states.” Real estate agents only violated the city’s anti–­panic peddling ordinance when they referred ex­ plicitly to racial change, or when they explicitly told sellers that their property values were about to decline. “It is up to the individual to decide to sell his house, and he can sell it to whomever he please,” a commissioner explained in response to an OBA complaint. “There are a number of reasons why he may want to sell other than pressure from panic peddling.”87 In one instance, when a lawyer representing a real estate agency told 250 OBA protestors that his client had not broken the law, Cincotta responded, “These are laws of the people of Austin we are defending—­ moral laws that [the agent] has violated.”88 But such “laws” did not hold up in court. OBA’s confrontational tactics often proved more effective than pursuing their goals through the institutions of government. Pushing a case through the courts or the CCHR might take several months, but protest brought faster results. OBA pressured “targets” to sign agreements to end their work in Austin, effective immediately. A typical OBA strategy to win such agreements was to “set up” a panic peddler. In a set-­up, a resident called a real estate dealer to express interest in selling his or her house, inviting the agent to come to the home. When he arrived, members of OBA would surprise the panic peddler with “20–­30 people in the basement” who yelled at him to stop working in Austin, “surround[ing] him so he couldn’t get up the stairs.” “Sometimes I was a little nervous that we were going to get assault charges,” Shel Trapp recalled. “It got pretty testy.”89 OBA members also confronted real estate agents at community

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meetings or their offices with demands that they sign agreements to “refrain from panic peddling” in Austin. Real estate salesman Robert Collier, for example, signed an agreement not to practice real estate in Austin for three years after the group picketed his office and pressed charges against him for “making threatening and lewd phone calls” to white potential home sellers.90 OBA members reasoned that if they could put panic peddlers out of business one by one, none would be left to harass white homeowners and exploit black buyers. But that proved a difficult strategy. By the end of 1968, the group had celebrated victories over a dozen agents, yet hundreds more panic peddlers remained in business.91 In addition to their hits against individual panic peddlers, members of OBA also attacked the neighborhood’s most visible markers of neighborhood change: “For Sale” lawn signs that lined Austin’s streets as white homeowners chose to move away. OBA met with individual brokers to request that their firms stop using the signs. Some Austin real estate brokers agreed to the request quickly, recognizing that the perception of decline was not good for their business anyway. One firm went so far as to agree not to solicit real estate in Austin whatsoever for one year. But others rejected OBA’s demand, explaining that it would hamper their ability to advertise their services. In one heated exchange, broker LeRoy Rhoades told OBA members, “Signs are not the problem,” and said removing them would not change the fact that “the neighborhood was going down.” When OBA members fought back, Rhoades lost his composure. “I’ll put colored right next to you,” he told a group of white Austinites.92 When faced with accusations that panic peddlers created racial animosity, real estate agents protested. In their rebuttals, they claimed that they merely responded to conditions of the local housing market; they did not create them. Real estate agents also charged that OBA misunderstood the way a housing market worked. Under pressure from activists, agents formed West Side Real Estate Board to coordinate a response. Its members would be happy to work outside of the “expanding ghetto,” one spokesman said, but they “just [didn’t] have the buyers” to do so. The only active market within the neighborhood existed where racial change occurred, and conducting business where the conditions were ripe simply made sense.93 “All I ask people is, are they interested in selling their homes,” explained another agent. “I never use scare tactics.”94 The vice president of the Real Estate Research Corporation argued that white Austinites were selling their homes because the neighborhood was declining, not because agents had pressured them. He attributed worsening

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conditions to black residents moving in. “These people don’t have the capacity to keep up the standards,” he said.95 Because of the slow pace of targeting one panic peddler at a time, OBA soon broadened its strategies for addressing the problem. Activists embarked on a new project to become grassroots real estate agents in order to give potential home buyers an alternative to panic peddlers. Illa Daggett, a black Austinite who moved from nearby Lawndale, where she had witnessed a similar pattern of integration and resegregation unfold, explained why: “We want to keep this community integrated,” but that would only happen if agents “show[ed] listings to both Negro and white buyers.”96 OBA created a housing center “to help find homes for minority families in white communities and suburbs” while placing whites in South Austin. The service received the assistance of the Leadership Council for Metropolitan Open Communities, a civil rights organization started by Martin Luther King Jr.’s Chicago Freedom Movement. “We picked Austin instead of a community such as [majority-­black] Lawndale,” explained a Leadership Council spokesman, “because we feel a person who is looking for housing in Lawndale is not likely to be as receptive to moving into an all-­white community.”97 OBA used word-­of-­mouth advertising to find its clients, encouraging residents to spread the word about the referral office’s work to friends and neighbors. It worked to combat the image of Austin as a community on the decline, torn by racial tension. The referral office created pamphlets that instead featured exemplary members of the neighborhood, such as Jim Chesney, a social worker, and Norman and Ann Rutherford, married college students who were raising Norman’s two young brothers. These profiles sought to draw new residents by suggesting the kind of new neighbors one would find in Austin: compassionate, charitable, responsible community members. The pamphlet also painted Austin as a community successfully adapting to integration, rather than resegregating. The young Rutherfords “especially like[d] the idea of living in an integrated community,” one pamphlet explained.98 The referral program met a demand for whites looking to move into Austin who found few real estate agents willing to help them, and for black buyers who could easily find an agent in South Austin but did not want to live there. A columnist for Austin’s local paper praised the office, noting that “OBA is the only group actively working to bring new white families in to the less stable parts of Austin in an attempt to fully stabilize those areas.” The columnist was right to recognize the needed service, but he ignored that OBA helped both white and black Chicagoans, and

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he misinterpreted the rationale behind the housing center, conflating stability with whiteness.99 In any case, within five months, the office received so many visitors that OBA replaced its volunteer staff with a full-­time employee. The group boasted 250 families who found their new homes through the service. “The demonic work of scavenger realtors who profit from changing communities has been offset,” an OBA resolution proclaimed in celebration of the center.100 OBA complemented its referral work by joining campaigns to open Chicago’s suburbs to black homebuyers. Members lobbied neighboring suburbs to pass open-­housing ordinances so that the referral center could coordinate with local leaders there, strengthening their efforts to help black families find quality housing outside of the areas to which panic peddlers racially steered them.101 If the suburbs passed and, more importantly, actually implemented open-­housing ordinances, OBA members reasoned, black families could move into Austin as well as nearby suburbs such as Oak Park and Forest Park, thus increasing the housing supply and making prices fairer for black buyers.102 The fight against panic peddlers forced the group to walk a thin line, conducting what might be called reverse racial steering, while accusing real estate agents of steering for profit. Real estate agents recognized the seeming contradiction that OBA protested steering at some times but advocated it at others. “OBA is the only panic peddler there is in Austin,” one agent charged. Their work had the effect of “driving every legitimate real estate man out of Austin and keeping the business all for themselves,” he argued, suggesting that OBA had opened the housing center for profit.103 But OBA sought to place black families in homes that agents had designated as part of white areas, and white families in agent-­designated black areas. The organizers knew that this tactic was “tricky . . . because of the risk that some people would interpret our work as wanting to keep blacks out of the community,” explained Trapp.104 The group defended its decisions as pragmatic, economic ones aimed to reduce white fear about property values while expanding black homebuyers’ opportunities to purchase decent homes. “We can validate our position for people who feel uneasy about it,” explained a Jesuit organizer. “It is in the real estate dealers’ own financial interest to show certain areas only to blacks, but we will go after them and demand they be shown to whites, too.” In justifying the tracked referral services for white and black home seekers, the Jesuit organizer explained, “We attempt to direct [black homebuyers] to the suburbs for a decent deal for them,” as black families who bought a home from a panic peddler were “not getting a decent deal.” A black organizer named James

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McNeil concurred: “The Negro who finds Austin attractive also wants the neighborhood to remain integrated” rather than resegregated as an exclusively black community, and that would require that residents exercise power in the local real estate market.105 OBA’s reverse racial steering soon put it into conflict with not only real estate agents but also civil rights advocates. In 1969, OBA began to criticize the Leadership Council, the organization that had first helped found the referral center, for disagreeing with OBA’s approach. The coun­ cil’s leaders argued that OBA’s strategy to counter panic peddlers was itself discriminatory, as it restricted the opportunities for black buyers and renters in South Austin. They had a point— ­OBA’s refusal to help black families rent or buy there meant that black families who wanted to live in South Austin would be forced to work with panic peddlers. But OBA fought back by criticizing the Leadership Council for what Austin activists charged was choosing the wrong fight. The Leadership Council had been out in front of open-­housing campaigns in Chicago and its inner-­ ring suburbs, but OBA argued that local open-­housing ordinances meant nothing unless black families actually moved into the communities that had “opened.” That meant working to increase the number of black people who actually moved into predominantly white spaces, which was what the housing center aimed to do.106 At the peak of the conflict, OBA passed a resolution charging that the Leadership Council had shirked its duties. It claimed the council “was brought into being to open up the suburbs for Blacks,” but instead it “did nothing.” OBA criticized the group for spending too much money on an expensive office space nearby when it should have been using its money for “mortgages for Black families who want to buy in Oak Park” or “suitable neighborhoods anywhere.” In keeping with its confrontational style, OBA even went so far as to demand a complete audit of the Leadership Council’s savings, which should be “withdrawn and put to work in the Black community.”107 OBA’s conflict with the Leadership Council suggests how many of its members understood the relationships between race, place, and the real estate market. They did not rely on open housing alone as a strategy to end panic peddling. An open-­housing strategy was rooted in the assumption that once the market was rid of racial discrimination, the market would more effectively connect buyers and sellers, regardless of race. But OBA members did not trust real estate agents to implement open housing as a race-­neutral policy, should it become law. The group’s own frustration with an existing panic-­peddling ordinance already made its members distrustful of the capacity for the law to stop real estate discrimination.

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Instead, OBA’s strategy of countersteering was based on the understanding that the real estate market was fundamentally a color-­conscious market and that those who wanted to end exploitation within it needed color-­ conscious strategies. Racialized assumptions that conflated blackness with declining property values and separated black and white borrowers into a “white market” and a “Negro market” had proven resilient, even when the law banned the codification of such assumptions. There was no guarantee, then, that “opening up the suburbs” to black buyers would lead to integration. Panic peddlers had already shown that the race-­neutral language of supply and demand, and of consumer preference, provided cover for their exploitation of fear.108 Soon, OBA’s reputation for a savvy approach to combating real estate abuse began to spread through informal networks of community organizers. As Ed Shurna recalled, some of OBA’s visibility grew from word of mouth. Community organizers in other cities, especially in the Midwest, often knew one another. And it was not uncommon for new organizers to visit other cities to train at an established Alinsky organization before returning to the neighborhood in which they would work. Shurna recalled a Cleveland organizer coming to Chicago to learn from OBA for a summer, and then bringing lessons with him to put into practice back home.109 By 1969, OBA activists looked optimistically at the progress made by their referral agency and hoped it might help Austin become a community in which racial change stopped at integration. “The pattern of racial change in South Austin has been drastically cut own by the Housing Referral office,” OBA reported to its members that year. The service “has dramatically demonstrated its worth by placing over 750 families in homes and apartments in Austin and still is not able to keep up with the demand it has created.” Assumption Greek Orthodox Church often worked with the service to “plac[e] families within its parish,” and OBA expanded the service to work more closely with that church. What’s more, the service “expand[ed] its advertising across the city, push[ing] hard in universities, medical schools, neighboring industries, and with the leadership of the Greek community, both in Austin and Greek Town.”110 Advocates for racial justice also looked at the OBA experiment with hope. The attorney and civil rights ally Thomas Foran, for example, came to OBA’s third congress with a message that OBA “prove[d] black and white can live together with love,” according to one attendee’s notes.111 Yet despite these successes, their efforts weren’t enough to end real estate abuse. The group helped nearly a thousand Chicagoans find homes outside of the racial boundaries that the dual housing market prescribed

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for them, but a thousand was a small number compared to Austin’s nearly forty-­five thousand housing units. Whites continued to move out of Austin. By the 1970 census, the number of Austinites living in the same home they had occupied in 1965 was nearly fifty thousand, compared to the over seventy thousand who were living in a different house than in 1965. As OBA members assessed their strategy, they began to ask new questions about panic peddling. They understood the way that real estate speculators made profits from panic sales. They became convinced that perceptions of risk normalized by panic peddling were subjective rather than fact. The city of Chicago seemed only to bolster the perception that Austin was a neighborhood on the decline. Members of OBA argued that the city’s political leadership made the panic worse by failing to invest in their neighborhood’s future. Properties designated for federally funded urban renewal projects sat abandoned, with no telling when land would actually be cleared. These vacancies were not only eyesores but were also dangerous. In the summer of 1970, OBA members took officials from the city’s Department of Urban Renewal (DUR) on tours of Austin’s thirty-­two-­ acre “pocket of blight,” which had been designated as an urban renewal area and subsequently abandoned by its owners. Broken glass, piles of bricks and wood, exposed wiring, and falling plaster created “a dangerous playground for neighborhood children” while the city delayed clearing and rebuilding on the land. OBA charged that the city had become another “slum landlord,” leaving the urban renewal area to rot, with little regard for how its inaction affected Austinites’ property values, safety, or sense of pride in their neighborhood.112 The DUR eventually agreed to open an office in Austin and place a security guard at the abandoned area, but the land still sat abandoned.113 In the meantime, panic peddling worsened in Austin as more indepen­ dent dealers replaced professional real estate agents in the neighborhood. They combed local blocks with a simple mission: to turn over homes quickly for profit. Panic peddlers spread outward from the southeast corner of the neighborhood, papering the area with flyers telling homeowners to sell fast. Their numbers exploded, jumping from only 40 brokers in 1962 to 150 in 1968, eventually reaching 300 by 1971.114 OBA researched the extent of real estate profits in the neighborhood and found jaw-­dropping figures. One Austin broker, Jerry Rusin, bought a home for $5,000 from a white seller and sold it for $16,500 to a black buyer.115 Sky Realty, the largest operation in Austin, sometimes earned a $17,000 profit in a white-­to-­ black sale, much more than agents typically made at that time.116 As one

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Jesuit priest working with OBA explained, “the people who lose that money, both seller and buyer, are the people who can least afford that loss.”117 The growing urgency of panic peddling was reflected in the resolutions that OBA passed at its annual conventions. It directed only two resolutions toward panic peddling at the first conference in 1967, but nine— ­one-­fifth of its entire agenda—­to the issue in 1971.118 Organizers likely expected that as the organization grew and its protests against panic peddlers intensified, they would become more effective in driving panic peddlers out of business. But local real estate abuse instead increased. The community organizers had a puzzle on their hands. Several current and former OBA organizers working in nearby neighborhoods turned to coalition building as a new strategy against real estate abuse. By 1970, Shel Trapp was running the nearby Northwest Community Organization,119 and another OBA organizer named Al Velto worked at Our Lady of the Angels parish. These men joined forces with Gale Cincotta and a few others to form a multineighborhood organization called the West Side Coalition against Panic Peddling (WSC). The organizers met frequently at a local Italian restaurant to outline campaigns against “fast-­buck” real estate agents. Because panic peddling was not confined within neighborhood geographic boundaries, the organizers reasoned that their campaigns should not be either. Trapp called the coalition “somewhat revolutionary” because the “basic concept” in community organizing was to form groups with “clearly defined geographical boundaries,”120 yet this group would cross those boundaries. WSC campaigns against panic peddling looked like the confrontation tactics that OBA had deployed against Austin’s speculators, just bigger. They protested individual real estate agents to drive them out one by one. The WSC campaigns against Sky Realty provide an illustrative example. Sky had a reputation for peddling on the West Side, with four offices spanning the area. One white woman reported that a Sky agent approached her at home and warned her to sell before black families infiltrated her block. “Just look around you,” he told her. “The neighborhood is changing and this is the time to get your money’s worth out of your property.”121 Sky sent mailings to Austinites instructing them to call “if you want to be a former neighbor fast.” One salesman unabashedly explained that while civil rights laws made panic peddling more difficult, he could still convince white homeowners to sell. “What you do is tell them something that gets the same idea across,” he said.122 In the WSC’s efforts to remove Sky from the West Side, the group staged five consecutive weeknights of hits

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against Sky: four led by each WSC member organization, capped off with a Friday parade of six hundred marchers from across the West Side. But in the end, all this work only resulted in Sky closing one of its four offices.123 Journalist Alyssa Katz likened the progress to “sending a posse out to hit termites with sharp knives.”124 The problem was systemic. As early as 1968, some Austinites had noticed that at the same time that panic peddlers had poured into the West Side, the neighborhood’s relationship with its local banks had begun to change. Austin’s “banks and other lending institutions” had “restricted making money available for mortgages in changing neighborhoods,” OBA said, despite thrifts’ heavy involvement in making new mortgages over the last two decades. Worse, “unscrupulous speculators” had “flock[ed] to Austin” to take their place. OBA thus resolved to “approach the lending institutions in this area to make mortgage money available to qualified families who are seeking to locate in this community.”125 They began investigating why local homebuyers now had to buy their homes through unregulated speculators and mortgage houses rather than the local savings and loan associations that had facilitated the expansion of the neighborhood’s homeownership for the prior two decades.126

The Neighborhood Roots of Financial Common Sense To understand why OBA members began asking questions about the disappearance of their local banks, one must consider what banking in a white neighborhood looked like during the postwar period. Like many white urban neighborhoods, Austin was home to several savings and loan associations (S&Ls), or thrifts, that many residents saw as part of the social fabric of their community but that seemed to disappear from the home financing market as the neighborhood began its racial transition. Residents likely had a relationship with a thrift—­Sterling Savings and Loan, Austin Federal, Laramie Federal, Talman Federal, or St. Paul Federal. Many visited their S&L once a month to make their mortgage payment in person. In 1970, homeowners made up as many as 83 percent of the residents of one North Austin census tract, and while it’s possible that some of these people banked near their work, many would have enjoyed the convenience of banking near home.127 Many white Austinites, homeowners and renters alike, also went to the thrift after getting their paychecks to deposit their earnings into a passbook account, where they

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could expect to earn modest but steady interest on their savings. These institutions were more than just places to borrow and save. They also provided other community services for Austinites, like special accounts to teach children the merits of saving and art competitions for local youth.128 In Austin and other white urban neighborhoods around the country, it was savings and loan associations that shaped people’s financial common sense—­their ideas about how banks ought to behave. Thrift officers sat down with white homebuyers and gave them an opportunity to purchase a home through an affordable mortgage. And thrifts gave whites in Austin and throughout the country a safe place to save their money— ­one that provided more interest than the zero percent they would receive on money hidden under a mattress, but one that was just as secure because it came with federal deposit insurance. The financial common sense forged after the Depression defined the relationship between people and their banks as a two-­way street: members of the community supplied a capital base through their savings, and thrifts lent money as mortgages to neighbors in the same community. Through this financial common sense, white residents saw savings and loans as a special kind of business that prioritized community service and that had a stake in the fate of the communities outside their offices. Beyond their personal encounters with thrifts, white Austinites also likely developed their financial common sense from popular culture. Frank Capra deserves significant credit here. He memorialized thrifts in his 1946 film It’s a Wonderful Life. In the movie’s famous bank-­run scene, Capra’s protagonist George Bailey made a pitch for the communal ethos at the heart of the neighborhood thrift. When a horde of customers rushed the building to withdraw their cash, Bailey told them they could not simply take it. “The money’s not here,” Bailey said. “Your money’s in Joe’s house, that’s right next to yours. And in the Kennedy house and Mrs. Macklin’s house and a hundred others.” Bailey’s monologue was oversimplified, to be sure. Thrifts did not employ a one-­to-­one ratio of dollars deposited to dollars lent—­a neighbor’s dollar could not be traced directly to Joe’s mortgage. Rather, thrifts created money by extending credit, keeping small reserves while issuing loans in greater quantities than cash on hand would allow. OBA members didn’t seem to discuss the specifics of reserve lending, but they did understand these institutions as part of their neighborhood’s social fabric.129 Throughout the postwar period, the self-­fashioning of savings and loans nationwide reinforced the idea that these institutions held a special status

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as community lenders that made the American dream of homeownership possible. The stories that S&L executives told about themselves in industry newsletters and handbooks stressed that their institutions had grown from humble origins and had remained “community institutions” with an emphasis on “service.”130 “Almost universally the motive in [S&L] organization has been community service,” said one representative 1938 industry text.131 Many S&L trade publications and training manuals highlighted the origin story of Oxford Provident Building Association, the 1831 Philadelphia association recognized as the first building and loan, memorializing its founders as merely a “group of neighbors” trying to “assist each other in obtaining ownership of their own homes.”132 When thrift executives chartered new institutions, they often included the word “home” in their organization’s names, or the name of their neighborhood (Austin Federal), their Catholic parish (St. Paul Federal), or a nearby major street (Laramie Federal). The iconography of the S&L industry further reinforced the connection between the community and the local thrift, as S&Ls’ logos often included sketches of their offices and single-­ family homes.133 While OBA members likely did not think about it, it was Depression-era federal banking laws that governed thrifts’ business model and thus shaped residents’ financial common sense.134 The Federal Home Loan Bank (FHLB) Act of 1932 encouraged white homeowners in Austin and around the country to obtain their mortgages from thrifts rather than other kinds of financial institutions such as commercial banks or mortgage houses. As one scholar put it, the regulatory framework for savings and loans was “deliberately and elegantly engineered to channel social resources into homeownership,” while other kinds of financial institutions had their own turf and expertise.135 Federal law required that thrifts devote 80 percent of their assets to residential mortgages.136 Federal policy also encouraged white Austinites to choose to save at a thrift rather than another financial institution: Regulation Q, another post-­Depression reform, capped the amount of interest that commercial banks could pay on savings deposits, in order to prevent “cut-­throat” competition for consumers’ business.137 But Regulation Q did not apply to the standard passbook savings accounts at Austin’s thrifts until 1966. The higher interest that S&Ls could pay to savers helped keep thrifts steady and growing during the postwar period.138 New Deal legislation further codified thrifts’ community orientation by ensuring that S&Ls in Austin and elsewhere actually had a designated community, mandated by federal policy.139 Thrifts’ charters tied them to a

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“primary service area” within a fifty-­mile radius, wherein the bulk of mortgages would be made.140 Banking laws in some states, including Illinois, reinforced thrifts’ exclusive turf. Indeed, white Austinites came of age in one of the few states that maintained a unit banking system throughout the postwar period, where bank branches were prohibited entirely. The fact that so many savings and loans existed in Austin, then, was a testament to the reality that state and federal regulators recognized significant demand for thrifts’ services in the neighborhood. Beyond establishing S&Ls as local institutions dedicated to homeownership, the New Deal financial regime also standardized a specific kind of mortgage that OBA’s white members likely took for granted by the 1960s: the long-­term, fixed-­rate self-­amortizing loan. These new mortgages were friendlier to borrowers than their pre-­Depression counterparts and had the effect of extending homeownership to millions of Americans—­and thousands of white Austinites—­for the first time. Before New Deal legislation, interest rates on mortgages could change from one year to the next. A buyer might have to pay half or more of the cost of the home as a down payment, and then repay the loan in as few as five or ten years.141 The reforms of the Depression era transformed the lending landscape. Created in 1933 to save a collapsed housing market, the Home Owner’s Loan Corporation (HOLC) bought defaulted mortgages from banks and reissued the loans at terms easier for borrowers to repay. The agency fixed interest rates, lengthened loan terms, and made mortgages fully amortizing, meaning the borrower paid down the principal over the life of the loan rather than facing one large payment at the end. The next year, Congress created the Federal Housing Administration (FHA) to provide insurance on mortgages with the goal of reducing the risk to lenders if homebuyers defaulted on their loans. The HOLC changes to mortgage standards, combined with the FHA’s promised security for lenders, made getting a mortgage easier for white Americans. Borrowers could obtain a government-­insured loan with as little as 10 percent down, for terms as long as twenty-­five years, and at interest rates as low as 5 percent. Furthermore, by standardizing the long-­ term, fixed-­rate loan for buyers of modest means, the federal govern­ment changed industry standards. Lenders soon updated their conventional loans, or non-­FHA loans, to resemble FHA-­insured loans.142 Access to thrifts and their services, like many other state benefits created by the New Deal, hinged on whiteness well into the postwar period. The FHA and the thrift industry together excluded black Americans from the benefits of the New Deal financial regime. The FHA codified prevail­ ing racialized assumptions that black residents drove down property values,

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and it refused to insure mortgages on homes in neighborhoods that were not homogenously white.143 Thrifts followed the industry standards set by the FHA and excluded black buyers from access to conventional mortgages as well. Without these avenues to homeownership, black buyers often purchased outside the regulated S&Ls or FHA lenders, instead buying homes “on contract,” which not only cost more but also prevented black buyers from building equity as they made payments. Black buyers who missed one payment often lost their home, with nothing to show for any of the payments they had made prior.144 As Austin began to integrate, OBA gathered anecdotal evidence from members and neighbors that suggested the neighborhood’s relationship with its local thrifts had started to change. The thrift system that had long served Austin’s white residents gave way to one that instead relied heavily on contracts and exploited black buyers. OBA began organizing against “unethical contract sales” that had been “robbing black families.” They discussed strategies to work with black contract buyers to “rid themselves of these unfair payments” and instead convert their loans to “reputable mortgage agencies.” They added contract sales to their complaints against panic peddlers. “Any realtor taking part in contract sales” would be “exposed and harrassed [sic] by direct action,” one OBA resolution pledged. “We do not want vermin like this in Austin.” OBA also reached out to the Contract Buyers League of Lawndale, an organization of black homeowners also on the West Side, to coordinate their efforts to protest contract sales on large rental properties.145 But OBA’s goal of converting black buyers’ contracts to mortgages stalled. According to “rumors,” Austin’s local thrifts had “refused mortgage money” to interested homebuyers, leaving no alternative to contracts. Activists were particularly offended that the thrifts in North Austin had refused to lend, because “North Austin people bank and save at these institutions,” and so, they reasoned, those institutions should serve the community they relied on for their business. Not only did thrifts’ refusal to issue mortgages force Austin homebuyers to buy on contract, but their decision to stop lending worsened panic. It signaled to residents that the local financial institutions no longer believed that the neighborhood had a viable future with stable property values. When thrifts didn’t lend, OBA charged, they “start[ed] a panic situation.” OBA demanded that “representatives of all Savings and Loan institutions” in the neighborhood appear at an OBA meeting to refute “with documentation” the rumors that they wouldn’t lend in Austin anymore. It’s unclear whether any thrift representatives ever did so.146

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Meanwhile, as Cincotta and WSC leaders intensified their work to understand the relationship between panic and home financing, OBA’s efforts to integrate Austin came to an end. OBA worked to convince white Austin­ ites that there was a place for them an integrated Austin, but its organizers could do little to combat other factors that drew whites to the suburbs—­ racism, well-­funded school districts, newly constructed homes, and the higher property values attached to homogenously white communities. What’s more, separating the local housing market into “white sellers” and “black buyers” soon ceased to map onto what was actually happening in Austin. By 1971, organizers reported that “blacks are now selling to blacks,” trying to escape a community they had only recently entered. Some local businesses organized a council to “stabilize” the community, but they admitted, “The area is not as good a place as it used to be.”147 Many other businesses followed their white constituents or simply closed their doors. “Some merchants have installed heavy black iron gates in front of their shops. Others have chosen not to renew their leases,” one report read. Austin’s “social organizations” changed, too. Churches closed or moved. Signaling that black members were now the majority and in leadership, the Elks Lodge changed its name to the Medgar Evers Lodge in honor of a civil rights activist killed in Mississippi in 1963. The Masons, “usually viewed as unfavorable to blacks,” left the neighborhood entirely. “There is panic,” one organizer explained. “Houses have changed owners maybe three times in the last 10 years.” And OBA said it knew why. “The real estate brokers get triple their 6 percent commission” in a hot market with panic on the rise.148 Meanwhile, as Austin’s population became increasingly black, so did OBA’s membership and politics. The shifting demographics posed new challenges for the organization. In 1970, the organizer and minister Mike Thompson wrote to Tom Gaudette, expressing concern that black members had questioned whether he and other white organizers had their best interest in mind. “There’s something new that is happening in South Austin,” Thompson wrote that fall. “The blacks are discarding their integration mentality and are becoming, let’s call it, nationalistic.” OBA’s black members were “feeling their power as black people” and rejecting any “dependence on North Austin,” where whites still lived.149 Ed Bailey confirmed this assessment in hindsight. “I think that we became nationalists,” he said of himself and other black Austinites. Upon becoming close to a majority, he explained, many felt, “Why should we have white folks running our neighborhood? We should run our own affairs.”150 Some white OBA leaders agreed that as the organization changed, they should step aside in support of black leadership.151 OBA was not alone in this shift.

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As historian Jeffery Helgeson has shown, black nationalism took root in other community organizations around the city during the second half of the 1960s, often manifesting as “a hopeful vision of democratic planning” wherein local black activists worked to define community development for their own communities.152 Around the same time, OBA elected a black leader, Mark Salone, to the presidency. But Salone was no representative of OBA’s black members. Rather, he was an undercover police officer keeping tabs on the organizers. During the late 1960s and early 1970s, under the orders of Mayor Richard J. Daley, the Chicago Police Red Squad targeted local political organizations like OBA that threatened to undermine the power of the local political machine. As part of this initiative, Salone disrupted OBA’s work by skipping meetings and neglecting his work. Trapp often coached Salone before public protests, for example, but Salone often botched these tasks, likely with the intention of reducing the group’s effectiveness. With internal divisions and compromised leadership, OBA was a fractured organization by 1971.153 OBA leaders switched gears, focusing on improving living conditions rather than the racial “balance” of the community. The Chicago Tribune noted, “Discussions of integration are becoming less common, but everyone who has resolved to stay in Austin, whites and blacks alike, agree that the only way to have a good neighborhood is to check rapid change and stabilize the community.”154 Black organizer James McNeil said, “We’re not segregationist anymore but neither are we integrationist. All we can do is bring people together to work for common answers to common problems.”155 He didn’t see the organization’s job as keeping whites from leaving, per se, nor would OBA’s new crop of leaders mind too much if they did. “If Austin is going to be an all-­black community,” he said, “it’s going to be a damn good black community.”156

Conclusion OBA did not create an integrated Austin, but its fights against panic peddling had two important implications. First, the mere act of organizing proved transformative for many members, white and black alike, and revealed the power of place to bridge renter-­homeowner and racial divides and offer an alternative to the white homeowner politics that historians have revealed to be so powerful at this same moment. OBA members’

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experiences hint at what one sociologist has called the “more intangible gains of grassroots participation” that “ordinary citizens” experienced through Alinsky-­inspired organizations.157 Many OBA members described the sense of empowerment and satisfaction they gained from participating in the group’s local campaigns. “The political machine is so vast and centralized that it has become impersonal,” one activist explained, so that “a community such as ours becomes merely a dot or pin in a map on a wall downtown.”158 OBA changed that. “I have more influence as a part of a group,” one member said.159 As one black Austinite explained, “I get the reward of knowing that through me a problem was solved.” Some believed the organization created an opportunity to achieve genuine integration. One white activist, for example, described the “greatest satisfaction” in “realizing that black and white can live together if the whites will only make an effort to help and understand.”160 Second, OBA’s focus on real estate abuse, rather than on neighbors whose racial identities or occupancy status differed from their own, raised new questions about the larger structures supporting panic peddling. Over the course of this work, OBA members began to research and understand the mechanisms of home financing—­that is, which institutions helped homebuyers marshal the resources they needed to purchase a home. Indeed, they discovered that the arrival of panic peddlers was a sign that the financial institutions white Austinites had relied on to purchase single-­ family homes had ceased to issue the bulk of the neighborhood’s mortgages. What started as a fight to end panic peddling soon expanded, putting urban activists on a collision course with the thrift industry over the role it ought to take in combating the urban crisis. As the next chapter will show, Cincotta, Trapp, Shurna, and a core group of West Side organizers did not give up their fight against real estate abuse when Austin resegregated. OBA continued to evolve as a black community organization while the West Side Coalition shifted its focus, conducting new research and developing new strategies to end real estate abuse. As they continued to look for the sources of power undergirding the dual housing market, they found that the relationship they had come to expect with their local thrifts now seemed dysfunctional. They also found that their experience was not an isolated one. As they would soon discover, the patterns of real estate abuse that they witnessed on Chicago’s West Side looked a lot like what happened in transitional neighborhoods in Cleveland, Boston, Providence, Milwaukee, Baltimore, and many more cities across the United States.

chapter two

The FHA in the City Red Lines and the Origins of the Urban Reinvestment Movement

I

n 1970, in the midst of the ongoing battle with panic peddlers, Shel Trapp led members of the West Side Coalition against Panic Peddling into the offices of Chicago’s second-­largest savings and loan association, Bell Federal. The group had a meeting scheduled with the bank president to ask why his institution wasn’t lending in their neighborhood, leaving new homebuyers at the mercy of panic peddlers and contract sales. Several West Siders came to Trapp complaining that the bank had rejected their applications for loans with no explanation. Trapp reasoned the best way to get answers was to confront the president face to face. That afternoon, when the West Siders huddled into the banker’s office, they saw something that changed their understanding of what was going on in their neighborhood. Covering most of one wall hung a map of Chicago in which several of the city’s streets had been traced with a red marker, creating borders around old, integrated, or majority-­minority neighborhoods. One of the outlined areas was the West Town neighborhood, where some mem­ bers of the WSC lived. When asked about the map, the bank president explained that his institution only made long-­term, fixed-­rate “conventional” loans outside the delineated areas. Inside those red lines were “FHA areas,” where the bank only granted mortgages guaranteed by the Federal Housing Administration’s new urban homeownership initiatives. In organizer lore, this episode marked the birth of the term “redlining” to denote geographic discrimination by financial institutions on the basis of a neighborhood’s age or racial composition. Though the term had been

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used in policy circles before 1970, the meeting introduced the concept to activists working to uncover what caused panic and property devaluation in their racially changing neighborhoods.1 What the Chicagoans began to call “being FHAed” was the street-­level manifestation of a larger shift in urban home financing that they had yet to fully understand. The Housing and Urban Development (HUD) Act of 1968, which expanded FHA insurance to urban mortgages, reconfigured the relationship between urban homeowners and the institutions that capitalized their mortgages. It began to dismantle the thrift-­centric New Deal financial regime that many white Americans took for granted by the late 1960s, but it did so primarily in older urban neighborhoods and inner-­ring suburbs, rather than evenly throughout the metropolis. Created to stabilize a mortgage market rocked by the Great Depression in 1934, the Federal Housing Administration provided lenders with insurance on mortgages so that lenders would be protected from loss if a homeowner defaulted. Many historians have documented the extent to which the FHA’s bias toward new housing in homogeneously white areas played a crucial role in building the white suburbs in the decades following World War II. What most scholars have yet to consider, but Trapp and other urbanites soon discovered, is that the FHA had become a different institution by 1970.2 In the wake of the 1960s urban rebellions, policymakers created new FHA initiatives to expand homeownership to urbanites in hopes of bringing stability to cities. As this chapter shows, those programs created a separate and unequal urban home financing system in older and racially changing areas, on the premise that such neighborhoods constituted “risky” investments, while white neighborhoods and suburbs maintained their relationships with their local thrifts. Through the FHA, the federal government insured urban mortgages, protecting investors’ capital regardless of whether a homeowner could repay the loan. In a strange reversal of traditional mortgage lending, in which thrifts wanted buyers to pay back their loans, the FHA inadvertently created incentives for mortgage lenders to issue loans to people who could not afford them.3 Real estate agents flipped the same houses again and again, making fees on the commissions, while mortgage houses collected fees for closing costs and servicing the loans, and investors received the insurance payouts for defaults. In the FHA’s aggressive efforts to bolster urban homeownership, its new programs stimulated the supply side of the mortgage market with little consideration for how the programs would unfold at the street level. By 1973,

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five years after the passage of the HUD Act, a low estimate put the number of affected homes nationwide at 250,000 and the payments to FHA speculators at $3.6 billion.4 In addition creating the conditions for this abuse, the FHA programs also severed the local relationship between urban neighborhoods and the thrifts that had been their primary source of mortgage capital. Mortgage-­backed securities changed the role of thrifts like Bell Federal in urban mortgage markets, replacing neighborhood savings and loans with a system in which thrifts joined mortgage houses in selling loans to investors through a secondary market that had no stake in the fate of the particular neighborhood where the loan was originated. In transitional urban neighborhoods, the New Deal financial regime disappeared. Trapp and his fellow organizers took the logic of the New Deal financial regime for granted by the 1960s. At first, they didn’t cite the reforms of the Depression era as the reason they expected long-­term, fixed-­rate mortgages from local savings and loans like Bell Federal. What they did talk about was what had changed in what seemed to them the natural order of things, and why that change was bad for their neighborhoods. In their struggle against the FHA insurance programs, they questioned why local thrifts had stopped lending. In so doing, they began to articulate their assumptions about what lenders should do. Their convictions about the proper role of lenders, combined with their organizing worldview, animated the urban reinvestment movement in the early 1970s. The new FHA programs changed more than the relationship between urban borrowers and their lenders. They also prompted Trapp and other West Siders to break with their training as neighborhood-­based community organizers in the Alinsky tradition and go national with their campaigns. Discovering that federal, not local, policies like the FHA’s had worsened recent real estate abuse raised awareness in Trapp and fellow organizer Gale Cincotta that the same federal programs were likely enabling speculators in other “transitional” neighborhoods nationwide. In 1972, they called a conference of community groups from around the country to discuss their shared experiences with real estate abuse. The gathering marked the beginning of the national urban reinvestment struggle, a multiracial social movement of “urban survivors” who sought fair access to credit for previously redlined neighborhoods. But that would come later. At the time Trapp and the urbanites met with Bell Fede­ ral, they were just beginning to learn about the home financing mecha-

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nisms that enabled panic peddling in transitional urban neighborhoods like theirs.

We’ve Been FHAed At the 1970 meeting with the Bell Federal banker, organizers got a glimpse of the larger structures that supported panic peddling at that particular moment. West Side Coalition against Panic Peddling (WSC) members learned that the FHA’s new urban programs had changed their local mortgage market by separating “stable” neighborhoods from “risky” ones that were aging or racially changing. The entrance of FHA insurance into a neighborhood, organizers realized, marked a kiss of death. Its presence stigmatized neighborhoods, labeling them risky places on a guaranteed path toward property devaluation and decline. The organiz­ ers hypothesized that panic peddling was not the problem but, rather, a symptom of a larger problem. “We thought [stopping panic peddlers] was the answer,” Cincotta later recalled. “But when we started digging into the problem we found the whole community was under FHA. The only mortgages that were being made were FHA. We discovered that the banks and the savings and loans were pulling out of the area and the FHA was coming in to fill up a vacuum. The realtors were coming in and using FHA to move people from old ghettos to the new ghetto. The whole problem became more complicated.”5 How, then, did the FHA “move people” between ghettos? How did this federal agency, well known for its role in building up the suburbs, operate in urban neighborhoods? How had the FHA’s role changed during the years when the WSC organized, and why did urbanites charge that the agency was aiding panic peddlers? The answers lie in the competing goals built into the 1968 Housing and Urban Development Act that created the FHA urban insurance programs. The FHA aimed to lift up the urban poor through homeownership, on one hand, and to attract investors wary of “risky” urban lending, on the other. And it did so on the assumption that thrifts, the primary source of mortgage credit under the New Deal financial regime, were unlikely to lend in such “risky” markets due to the era’s tight credit. To make sense of why new FHA programs so infuriated community organizers calls for zooming out to see the broader picture. It requires understanding why the FHA replaced thrifts like Bell Federal in transitional neighborhoods in the late 1960s and early 1970s.

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Trapp and Cincotta did not know it, but the reciprocal relationship that urbanites expected from their local savings and loans was in danger by the time the organizers saw the map hanging in Bell Federal. The New Deal financial regime began to strain as the result of a global credit crunch in 1966, which began out of the view of urban activists. An imbalance between foreign and domestic demand for dollars prompted the Federal Reserve Board to raise interest rates and cut bank access to federal reserves. The credit crunch reduced lending in all sectors of the economy, but home financing felt it worst. At the peak of the crunch, mortgage funds dropped 40 percent from their 1965 levels. And the psychological fallout proved lasting. As historian Louis Hyman has shown, when the Fed expanded the money supply and credit began flowing again in 1967, many lenders continued to operate with a mind-­set of credit scarcity despite improved conditions. Tight money continued.6 The credit crunch particularly endangered the business model of the local thrifts like Bell Federal—­the community-­based institutions that Trapp and his white neighbors relied on for home financing before panic peddlers flocked to the West Side. Interest rates increased due to tight credit, and they soon passed the interest rate ceiling, which was set by a federal rule called Regulation Q, that thrifts were allowed to pay on passbook accounts. The most calculating savers recognized they could earn a higher return on their money by investing in securities markets rather than keeping their money in a regulated low-­paying passbook. Many savers withdrew money from their accounts and shrunk thrifts’ capital base, a process that bankers called “disintermediation.” The credit crunch was not the first time that disintermediation had pained thrift executives, but this time was different because the crunch seemed to have no end. It jeop­ ardized thrifts’ business model and forced them to increase efforts to attract the savings accounts that had long been virtually guaranteed. A sampling of local advertisements reveals how thrifts sought to attract savers despite the below-­market returns they offered on passbook accounts. As incentives for opening new accounts, Chicago thrifts promised savers new luggage, new silverware sets, new dinner plates, and even new hairpieces. But what they couldn’t promise, because of Regulation Q, was higher rates on savings deposits.7 Thrifts thus had a business model that was in jeopardy by the time Cincotta and Trapp began looking deeper into the problem of panic peddling. Executives like the president of Bell Federal were understandably reluctant to issue mortgages given the threat of disintermediation. But West

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Side residents noticed that thrifts had stopped making loans at the precise moment when black neighbors had begun moving in, which seemed like no coincidence to local community organizers. Cincotta and Trapp charged that thrifts reneged on their social obligations to the communities outside their offices because those communities changed, not because business was bad. Thrift executives blamed tight money, but activists instead saw evidence that savings and loans, the community institutions they believed should help local people build wealth and become homeowners, were abandoning their communities when they integrated. What’s more, panic peddlers seemed to have access to plenty of money to purchase homes from whites to sell to black buyers. Where did this money come from? What Trapp and Cincotta did not know was that the Johnson administration was planning new initiatives to expand urban homeownership through private investment right as the activists were mobilizing against real estate abuse on Chicago’s West Side. It was this expansion that gave panic peddlers new access to capital during this moment of tight money. And it was this expansion that invited different forms of mortgage credit—­through institutional investors like pension and insurance funds—­to skirt the New Deal savings and loan system. While the goal was to enlist new capital to meet the enormous supply of new housing the administration envisioned, policymakers didn’t foresee that bringing the imperatives of finance, specifically offering investors competitive returns so they would choose FHA mortgages over other investments, would begin to undermine savings and loans themselves. But it did. And this mattered for activists because savings and loans were the financial institutions that traditionally had a stake in the future of the neighborhood, too. The FHA’s expansion into urban neighborhoods was the federal government’s response to late-­1960s urban rebellions, which had peaked during Johnson’s tenure: more than 300 in over 250 cities between 1964 and 1968. In this context, many national policymakers concluded that the federal government had a responsibility to prevent future rebellions in the “inner city.” Reports and commissions that aimed to identify the causes of unrest in black neighborhoods, most famously the Kerner Commission, pointed to a complex set of interrelated problems, including low wages, poor housing, police abuse, and a general sense of “hopelessness.”8 The sense of urgency during the late 1960s was palpable. As one congressman explained, his colleagues had better “act quickly” in light of daily reports about “the things that are boiling in the ghetto areas.” It was imperative to “avoid the summer of conflicts that might take place.”9

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It was in this changed context that a bipartisan consensus of policymakers prescribed a new policy framework for homeownership, outside the New Deal savings and loan system, as a solution to turn black urbanites from frustrated second-­class citizens to beneficiaries of the American dream. As a growing chorus of Republicans and Democrats argued that homeownership, above all else, would give African Americans a property stake in their communities that policymakers assumed they did not have,10 the idea gained traction in the Johnson White House. Johnson was receptive to the logic that the state could expand urban homeownership as an antiriot strategy. As a longtime politician whose career, as historian Bruce Schulman put it, “traced the path of modern American liberalism,” Johnson believed that government had the capacity to improve the lives of Americans. He worked closely with Congress to enact his ambitious Great Society reforms, securing the passage of civil rights, health, and welfare initiatives.11 Johnson was also well known for his propensity for big initiatives. And he did not like to be outdone by political rivals. It happened that the two senators most vocal in their calls for homeownership, Robert F. Kennedy and Charles H. Percy, both had their eyes on Johnson’s job.12 In 1967, Johnson sought new legislation that would enlist private investors, not local savings and loans, to finance new housing for American cities. To that end, he appointed the President’s Committee on Urban Housing to develop the recommendations and rationale for increasing private sector involvement in urban housing production. The commission did not disappoint. Chaired by the industrialist Edgar Kaiser, the commission was dominated by representatives from the private sector who centered the needs of builders and home financiers as they developed what became the Housing and Urban Development Act of 1968 (the HUD Act).13 As part of their task, commission members drafted recommendations that would satisfy the Johnson administration’s need to reduce federal spending; the costs of the war in Vietnam and the Great Society, combined with recent tax breaks, left little enthusiasm for increased federal expenditures for ambitious new housing programs. The federal budget constraints gave commission members an opening to propose “creative new action by many institutions and agencies,” and “especially by private enterprise,” to bring homeownership to the urban poor. The HUD Act called for the construction or rehabilitation of 26 million housing units, including 6 million low-­ income units, over the next ten years. The private sector, not the federal government, would play the leading role.14

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The HUD Act proposed a new financing mechanism for older, mostly urban, neighborhoods, a changed system that Cincotta and Trapp would soon be forced to navigate. To circumvent tight-­fisted savings and loan associations—­so central to the New Deal financial common sense—­ and get new credit flowing to the new urban mortgages, the act recommended an alternative financial instrument: the mortgage-­backed security. Mortgage-­backed securities promised to decrease dependence on thrifts by tapping new sources of money, namely, “institutional investors” like pension funds and insurance companies that controlled the large supplies of capital needed to finance the act’s ambitious goal of 26 million housing units. These investors had thus far been absent from mortgage lending because owning a mortgage was a headache for those unfamiliar with the business of home financing. To own mortgages meant tracking payments and monitoring paperwork for each individual mortgage. Local thrifts like Bell Federal had loan officers who kept records of individual borrowers and their creditworthiness; institutional investors did not. To own mortgages also demanded significant local knowledge. Local thrifts like Bell Federal had a sense of neighborhood demographics, unique aspects of the housing stock, and awareness of trends in local home sales; institutional investors did not. Unless owning mortgages became easier for institutional investors, the growth of the mortgage market would be restricted by the capacity of the existing savings and loans.15 Mortgage-­backed securities promised to make the investment process easier for the sought-­after institutional investors by simplifying the process of mortgage purchasing. Instead of requiring that investors make individual mortgages, a third-­party mortgage company could bundle many mortgages into a security and sell that security to the institutional investors. Fannie Mae and Ginnie Mae, the government-­sponsored enterprises that directed the secondary market of FHA-­insured mortgages, facilitated the bundling and buying and selling. Essentially, mortgage-­backed securities made homeowners’ mortgage payments function more like other standardized, interest-­earning investments, such as bonds. Pension funds and insurance companies would no longer need a staff of mortgage experts if they wanted to invest in the mortgage market.16 The HUD Act also protected these FHA investors from financial loss. This was not new. Indeed, as I showed in chapter 1, since its creation in 1934, the FHA had protected the mortgage issuer’s investment, based on the logic that banks and mortgage companies would be more likely to grant mortgages after the Great Depression if they knew that the federal

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government would pay investors if buyers defaulted. That premise was at the heart of Section 203, the traditional insurance program that had helped to build the suburbs over the previous twenty years. But during the 1960s, the FHA became an increasingly urban agency. It expanded Section 203 insurance to urban neighborhoods that had previously been denied the insurance, and by 1967, 51 percent of FHA’s outstanding 203 loans were located in the “central city.”17 The HUD Act then created what one journalist called a “number soup” of programs—­Section 235, Section 236, Section 223-­3—­that were for low-­income housing only, much of it in urban centers.18 These programs were based on the premise that there was something particularly risky about urban lending, and that investors needed guarantees to put their money there. “What the FHA does for the mortgage lender is to insure him against any possible loss in the event of foreclosure,” one journalist said. “It makes FHA loans a sure thing for investors.”19 The HUD Act’s reliance on investor-­owned FHA loans rather than mortgages from savings and loans would mark a departure in communities like those on the West Side of Chicago.20 While much historical scholarship rightfully spotlights the role of the FHA in setting mortgage industry standards, it was actually non-­FHA, or “conventional,” loans that drove the postwar expansion of homeownership, supplying capital for two-­thirds of mortgage loans.21 Most thrift executives preferred conventional loans over FHA loans for two reasons. First, since FHA loans were governed by a federal agency, they were standard across the nation. This standardization meant that lenders who issued FHA loans had to navigate red tape and train staff accordingly, and many thrifts decided that this cost was not worth the benefit. Second, thrift executives had “some very ideological reasons” to stay out of FHA, as many did not “believe that government should in any way be involved in the risks of home mortgage lending.” As they saw it, a good loan should not require the FHA’s insurance against default.22 These pragmatic and ideological concerns kept thrifts out of FHA lending, with FHA loans comprising only 6 percent of all thrift-­issued mortgages in 1959, compared to 81 percent conventional loans. The two types of mortgages also had different implications for local communities. Mortgage houses that traditionally originated FHA loans sold those mortgages on the secondary market soon after origination, and thus they had no long-­term stake in the loans they made. In contrast, when a thrift made a conventional loan, it typically kept the mortgage in its portfolio until the mortgage reached maturity, ensuring that the thrift

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had a stake not only in the loan’s repayment but also in the economic viability of the neighborhood.23 In 1968, whether investor-­backed FHA loans could eclipse conventional loans and provide the needed capital for the HUD Act’s proposed 26 million housing units hinged on one policy detail: the interest rate on FHA mortgages. The President’s Commission on Urban Housing proposed a dramatic change in which FHA loans, for the first time, would increase alongside market interest rates rather than being capped by federal regulation. By law, federal policy capped the interest rate on FHA mortgages nationwide at 6 percent, on the logic that these federally guaranteed mortgages should be affordable for the moderate-­income homebuyers that the FHA was created to serve. Yet after the credit crunch of 1966, market interest rates hovered closer to 7.5 percent, and many observers expected the market rate to stay above the FHA cap. If the 6 percent FHA interest cap remained in place, the lower return on capital would deter investors from the FHA market, and the expansion of urban homeownership under the HUD Act would fail.24 With little opposition, Congress decided to change policy and allow the HUD secretary to use his discretion to raise the FHA interest rate as needed to keep it competitive with other investments. During the hearings on the HUD Act, there was virtually no concern about possible consequences of creating a separate home financing structure for American cities, one that privileged returns for institutional investors while simultaneously guaranteeing zero loss through FHA insurance. Members of Congress across party lines, representatives from the housing and mortgage industries, and fair housing advocates came to a near consensus that the primary goal of the legislation should be to recruit new capital into the urban mortgage market, and all other priorities were secondary. The housing advocates who testified expressed concerns about whether low-­income buyers could afford their monthly payments, but not about the reliance on investors.25 “So long as we come up with a means to tap capital that is not now available to the housing market,” said a spokesman of the American Federation of Labor and Congress of Industrial Organizations (AFL-­CIO), organized labor would support the law. His sentiments reflected a much broader consensus.26 When the HUD Act became law in the fall of 1968, observers expressed hope that it would pull the housing industry out of a stubborn slump from which it had suffered since the credit crunch of 1966.27 But the HUD Act did more than promise a boost to the housing and mortgage industries.

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As Gale Cincotta and Shel Trapp would realize in 1971, the legislation also significantly restructured the home financing system in urban America. By relying on mortgage-­backed securities, the HUD Act severed the proximate relationship between the homebuyer and the local savings and loan association that, under the New Deal regime, had usually held that homebuyer’s mortgage on its books and thus maintained a stake in seeing the loan paid off. Securities backed by FHA mortgages replaced conventional thrift-­held mortgages in older, racially changing neighborhoods.

The FHA in Urban Neighborhoods Trapp and Cincotta were not yet aware of the HUD Act when it passed in 1968. It would take three more years for the effects of this new investor-­ oriented mortgage system to become visible on Chicago’s West Side. But the national media celebrated the law’s passage immediately. When nine families in Washington, DC, became the city’s first to purchase their homes through an FHA program, the Washington Post’s Carl Bernstein ran a celebratory story about their move. The families, with an average income of $5,500 a year, moved into their “handsome, neo-­Victorian brick homes that were completely refurbished” by a local nonprofit. “The wage earners of the nine families— ­domestic workers, laborers, barbers, TV repairmen, maintenance men and unskilled workers—­will pay less a month toward the purchase of their new homes than they formerly paid to rent deteriorating houses in the same neighborhood,” Bernstein reported.28 Three months later, the Chicago Defender ran its own story on the FHA urban programs, featuring a photo of two black women signing their mortgages under Section 235, the FHA’s interest subsidy program. The two women “made tremendous social history” as they signed, the Defender explained, and more cases were sure to come. Given that “thousands of low-­income people” were expected to “buy existing homes and build new homes if they choose,” there was reason to celebrate the HUD Act as a victory for the urban poor.29 Soon after, the 1968 election ushered in a new administration to oversee the law’s implementation. More than their predecessors, President Nixon and his HUD secretary, George Romney, thought that FHA mortgages should operate by free-­market principles, despite the enormous government funding required to keep the FHA’s insurance fund solvent and to pay for new interest rate subsidies that the HUD Act made available to

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low-­income homebuyers. Romney moved quickly to bring the FHA interest rate in line with the market rate. During January 1969, his first month on the job, he raised the rate a full percentage point—­from 6.5 percent to 7.5 percent. One year later, he increased the rate again, to 8.5 percent.30 Builders and other observers feared that the rate increases would have ripple effects beyond the FHA market, bringing up conventional rates and slowing down the housing market again. But the Mortgage Bankers Association, the trade association that represented unregulated, nonbank mortgage companies that traditionally sold mortgages to Fannie Mae, celebrated that the rate increases would invite more investors into the market.31 In Chicago, this last rate hike had a dramatic effect on the local home financing market when the FHA rate crept higher than the Illinois state usury law allowed, which helps explain why activists found a constituency ripe for organizing against the insurance programs in that city. The state had capped the interest rate on conventional, non-­FHA mortgages at 8 percent, but it had recently passed a law exempting FHA mortgages from that limit. When Romney brought the FHA rate to 8.5% and it surpassed the state usury law by half a percent, the financial landscape shifted dramatically. Whereas unregulated mortgage companies had long been active in the FHA market, and whereas institutional investors had begun buying securities since the passage of the HUD Act, this last rate hike brought many of Chicago’s savings and loans into the business of FHA mortgages. In January of 1970, Chicago thrifts announced they would start making FHA-­insured loans in large quantities, ending their long-­ standing preference for conventional loans. One Austin neighborhood savings and loan explicitly credited mortgage-­backed securities, and the new opportunity to sell securitized FHA mortgages to the secondary market, for the sudden flurry of interest.32 The executive director of the Cook County Council of Insured Savings Associations reported that about one hundred institutions—­half its membership—­were about to start issuing FHA loans for the first time and that many had already begun bundling FHA loans into mortgage-­backed securities.33 With FHA rates promising higher returns than conventional mortgages in Illinois, new investors rushed into Chicago’s FHA market. In Austin, the classified ads in the local paper suddenly began listing “FHA approved” and “FHA only” homes for sale. Some thrifts even started to advertise, suggesting that they had more credit available than they had homebuyers. Others hired more staff. “I have to increase the number of

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loan solicitors from one to three to find the projects,” one reported.34 William Stresser, the president of Telegraph Savings and Loan Association, said that in recent months he, too, had more money to lend than borrow­ ers to take it. He turned to the FHA after conventional loans had “dried up.” He pledged to loan $1.5 million in FHA-­insured mortgages to keep his business running. “I think the public just assumes there is no mortgage money around so they think ‘why bother’ and don’t even look for a house,” he explained. But in the FHA mortgage market, there was plenty of money on hand to lend, and he and other thrift executives began spread­ ing the word.35 Thrifts joined the real estate firms and unregulated mort­ gage companies already making FHA loans.36 Many Chicago savings and loan executives saw FHA lending as a strategy to help them survive the tight credit conditions. Stresser himself entered the FHA market because he “could see [the conventional mortgage market] was headed for periods of time in which there would be no new money.” So what should a firm like his do? “Close the doors and say you’re out of business? I don’t think so,” he concluded. Stresser noted the ease with which a savings and loan could make the transition, thanks to mortgage-­backed securities. He simply started to bid for loan commitments at Fannie Mae auctions. He named a sum he’d agree to lend—­say, $200,000—­and agreed to distribute that money within a specified time period—­say, ninety days. “You don’t have to be a genius at market strategy to participate,” he said. The problem, he said, “is to make people aware of the fact.”37 In other words, getting the capital to make the FHA mortgages was easy. The difficulty came in finding local homebuyers who needed the mortgages. But thrift outreach brought results. With thrifts’ new enthusiasm for the higher return on FHA-­backed mortgages, the volume of FHA lending exploded in the Chicago area. In the surrounding county, from June 1969 to June 1970, the amount of outstanding FHA-­ insured loans increased by $12 million while outstanding conventional loans decreased by $41 million.38 The local media reported on the influx of FHA money into Chicago’s West Side as a blessing for low-­income people in need of a decent place to live. Julio Cotto, a Puerto Rican migrant to Chicago, purchased a house for his family of twelve with the FHA’s 235 program in early 1970. Though he only earned $126 a week as a machine operator, FHA insurance allowed Cotto to obtain a loan on a $19,000 home with eight rooms, two bedrooms, a full basement, and a two-­car garage. FHA programs made purchases like Cotto’s possible because they required a minimal down

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payment. The $200 he needed up front was paid by a local Catholic Charities organization. A spokesman for the realty office that sold Cotto the home echoed the sentiments of the Washington politicians who had created the programs. “It’s amazing what happens to large families that finally move into decent housing—­where they have a place to move around and be comfortable,” he said. “The whole family seems to change and gain new perspective.”39 The FHA also gave community organizations and nonprofit groups a funding source for affordable-­housing projects. In Lawndale, one group purchased eight apartment buildings with an FHA loan in order to rehabilitate the blighted structures for low-­ and middle-­income families.40 Trapp’s own Northwest Community Organization began using the program, too, adding a housing development arm to its operation. In August of 1970, the organization broke ground for new single-­family homes to be built on six of the neighborhood’s vacant lots with FHA’s Section 235 program.41 As the volume of FHA lending grew in the Chicago area, however, complaints began to seriously undermine the initial sanguine reports. Beulah Perkins’s story provides a telling example of what many first-­time homebuyers experienced in Cincotta’s Austin neighborhood. Perkins, a mother of nine children, bought an FHA home in Austin in 1970 with the money she received from the federal Aid for Families with Dependent Children program. She paid $100 a month on an $18,000 home, but she discovered soon after moving in that the home needed thousands of dollars in repairs. “My bathroom sink and toilet don’t work right,” Perkins said. After paying her mortgage and making other essential purchases, Perkins had no money leftover at the end of the month to replace her rotting window frames and decaying roof. “The people who sold me the house told me to find someone to do the work for a reasonable price, but I ain’t got any reasonable money,” she said. That same year, FHA buyer Ramon Vasquez purchased a home in West Town, near the territory of Trapp’s Northwest Community Organization. The real estate agency that sold Vasquez the home had promised to make repairs to the building’s structure. Upon moving in, Vasquez found the firm had done nothing more than cosmetic plastering; he spent his limited savings to make repairs. “It took us 20 days just to clear the rats out,” he said.42 Thanks to the appeal that FHA programs had to both institutional investors and savings and loans, the supply of available mortgage credit outpaced the supply of safe and decent housing in transitional neighborhoods like these, explaining why a home with such a rat infestation was

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deemed creditworthy in the early 1970s city. The 1968 programs also “liberalized” the FHA’s long-­standing appraisal rules, deeming thousands of shoddy homes insurable and “enabl[ing] real-­estate speculators to sell [them] to the poor.”43 With the glut in mortgage money and the FHA’s loosened rules came neglect and outright fraud in local FHA offices, furthering real estate abuse. The HUD Act tasked the regional FHA offices with overseeing the FHA’s ambitious expansion into urban lending, but it failed to provide the funding or support for those offices to hire and train new staff. A 1971 government report found that in some regions, the job of an FHA appraiser was “basically a patronage job” for which most hires were “not adequately trained.” When HUD sent instructions to regional offices to begin checking the wiring and plumbing in urban homes before granting FHA insurance, word came back that appraisers had “no competence or training in these subjects.” The directive had no effect, reflecting the larger trend of unqualified appraisers who deemed decaying housing worthy of FHA insurance.44 The problem was larger than understaffed offices dealing with new challenges. The same government report also noted a problem with the “attitude” of many FHA staffers in that they adopted a “buyer beware” approach, shirking their responsibility for assessing properties. First-­time, low-­income homeowners, often black or Latinx, who were “desperate for housing,” were forced to navigate the home buying process with no counsel, the report concluded. The FHA’s failure to help first-­time buyers “contributed as much if not more than anything else” to FHA abuse. Indeed, many low-­income buyers understandably interpreted “FHA approved” as evidence that the federal government vouched for the quality of the home. But in reality, “FHA approved” meant nothing of the sort. “So often we’re asked, ‘How can people be so stupid to buy a building without seeing all of it first,’ ” a West Side organizer said. “But the people aren’t stupid. They’re just so desperate to get out of the ghetto and they presumed they were dealing with honest people, and that the buildings were free of defects.”45 Without meaningful oversight by the FHA, the prospective homeowner had no protection from “the real estate broker whose only interest is a commission and, in the inner city, is more likely than not a speculator.”46 The sale of faulty homes to poor buyers resulted in an enormous spike in foreclosures and abandoned houses in FHA-­dominated areas, like Austin and West Town, when buyers could not afford the cost of owning an old home that required expensive repairs. Once the ink dried on their

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mortgage forms, homebuyers like Beulah Perkins and Ramon Vasquez assumed responsibility for bringing their homes up to local housing code. Often, the costs of holes in roofs, broken furnaces, faulty plumbing, and pest infestations were so high that the homeowner had no choice but to default or apply for a second mortgage to pay for repairs.47 Indeed, one congressional investigation found that most of the FHA’s urban foreclosures resulted from the agency “insuring mortgages on rundown houses” that were not livable.48 Once a home went into foreclosure, the Department of Housing and Urban Development assumed responsibility to repurchase the house. As Trapp soon learned, HUD’s oversight presented its own set of problems. The sheer volume of FHA foreclosures created an inventory glut, so homes sat vacant for months. These crumbling homes became HUD’s responsibility to fix, but understaffing and lax oversight shaped outcomes here, too. The same investigation found that “work contracted and paid for is not performed so the houses are not put in livable condition” while under HUD’s care, either. Between 1969 and 1971, HUD sold only sixty-­ six of the hundreds of the deteriorating urban houses it now owned.49 After that day at Bell Federal in 1970, Cincotta and Trapp learned about FHA abuse from local papers and from evidence in their own neigh­ borhoods. Seeing the connection between the influx of FHA-­insured panic sales and the physical deterioration of neighborhood housing stock, the West Side organizers began to argue that the FHA caused neighborhood decline. Indeed, the concentration of FHA mortgages cost entire neighborhoods their viable housing stock. As FHA lending in “blighted central city areas” increased from 3 percent in 1964 to 17 percent by the decade’s end, foreclosures and abandonments followed.50 Observers called FHA neighborhoods “ghost towns.” One study found that during a five-­year period in one Chicago neighborhood, 85 percent of homes were sold with FHA insurance, and over 12 percent of those FHA homes were demolished or abandoned by the sixth year. That meant an average of two or more homes on each block were vacant or became empty lots.51 In Detroit, a federal auditor revealed that the local FHA office reduced its inventory of HUD-­owned abandoned homes, which had increased from 810 in 1969 to 6,521 in 1971, by “razing” hundreds of them. Media soon picked up the story. “Blockbusting Tactics by Appraisals Charged against FHA,” ran a headline in the Economist. “How Low Cost Housing Ran into Trouble,” reported the Detroit News. A series of congressional and Government Accountability Office investigations, as well as hundreds of

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complaints by low-­income homebuyers, made the FHA programs a full-­ blown scandal.52 When the scandal escalated and Congress called HUD secretary Romney in to account for the program’s abuse in 1971, three years after it went into effect, Romney pointed to the unprecedented task that Congress had created by asking the agency to meet the 26-­million-­unit goal while also moving into such risky lending.53 He stressed FHA’s difficulty navigating “innercity” lending, suggesting that the urban market was fundamentally different from FHA’s usual work in “middle-­class America.” His agency’s standards “had been developed to reflect middle-­class incomes and middle-­class response to the responsibilities of homeownership,” and, he implied, those did not map neatly onto low-­income, racially changing city neighborhoods.54 Many policymakers, FHA officials, and bankers shared Romney’s assumption that mortgage markets worked differently in urban neighborhoods because of the “risky” people living there. Cincotta and Trapp would attack such “perceptions of risk” as antiurban, race-­based prejudice, rather than the race-­neutral logic of the market, as their oppo­ nents often pledged.55

FHA Reform and Financial Common Sense Trapp, Cincotta, and other West Side organizers developed their critique of the FHA by comparing the agency’s approach with how they thought that urbanites ought to be able to obtain mortgage credit. When urbanites bought homes with conventional, non-­FHA financing, they expected to go to the local thrift to obtain long-­term, fixed-­rate mortgages. They expected to get those loans from bankers whose institutions depended on community savings accounts for part of their capital base, and who would offer compassion and flexibility should borrowers meet unexpected hardships such as a major illness or job loss. But when urbanites bought homes through the FHA insurance programs, they often obtained their mortgages from unregulated mortgage houses such as Advance Mortgage—­the 1970s version of today’s storefronts like Countrywide Financial— ­or from a thrift that planned to sell the FHA mortgage to Fannie Mae. Should the borrower face an unexpected hardship while trying to pay off an FHA mortgage, there was no thrift loan officer whose institution owned the mortgage and who could of­ fer loan forbearance. Instead, a borrower could expect “fast foreclosure”

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so the investor could collect an insurance payment from the federal government and the mortgage company who serviced the loan could collect a fee when he originated a new mortgage on the very same property. And fast foreclosure, urbanites said, led to personal suffering for the borrower and neighborhood decline when properties sat vacant.56 Because Cincotta, Trapp, and their allies evaluated local problems in terms of power relations, they saw these perverse incentives in urban home financing as the real obstacle to control over their neighborhoods’ futures. Once West Side neighborhoods were “under FHA,” the “risky” location of the home trumped the creditworthiness of any specific borrower. Anyone who wanted to purchase a home inside the red line had no choice but to buy through FHA or contract sales. It was this concentration, activists argued, that mattered. If middle-­class people wanted to move into a neighborhood like Austin, being “under FHA” ensured that they could not obtain conventional loans. Being under FHA virtually guaranteed that only low-­income people could move into Austin and that they would do so under predatory conditions. “We saw the connection between bad FHA loans and the lack of an alternative,” explained Trapp. “If neighborhood borrowers had non-­FHA options available to them, the problems of the scandal-­laden program would not have been so disastrous.”57 Activists weren’t opposed to the FHA per se, and many recognized its usefulness for expanding homeownership to minority buyers who previously had no option but to buy on contract because thrifts historically denied them access to conventional credit. “Our feeling here is, we don’t want to kill FHA,” Cincotta said. “We want to clean it up because we had contract buying before which is pretty damn bad or worse.”58 But the speculation showed that FHA’s urban lending had serious flaws. Organizers’ fight against panic peddling thus became a fight for FHA reform. They first worked to slow FHA lending. Cincotta and Trapp began targeting their local FHA office in Chicago, demanding that officials stop FHA abuse. At first it appeared the Chicago office might be responsive to activists’ demands because a sympathetic director, John Waner, was in charge. When Waner assumed his position as the local FHA director in April 1971, he promised reform. A journalist who investigated FHA abuse labeled Waner an “honest” man who ran “the only truly open FHA office in the country.” Upon taking office, Waner pledged to keep Chicago’s FHA office from the same fate as Detroit, which, by the time Waner took office, had a reputation for the worst FHA abuse in the country. “When I came into office last year, it was no secret that a good many of the brokers

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throughout the city were taking advantage of the liberal programs that came as a result of the 1968 Housing Act,” Waner recalled.59 The West Side Coalition activists brought their demands to Waner so frequently that he would later say that when his staff heard Gale Cincotta’s name, “shivers [ran] down their backs.”60 In the fall of 1971, activists convinced Waner to prohibit his staff from paying outside appraisers, or freelancers, to inspect FHA-­insured homes. HUD used these fee appraisers when the volume of business increased and existing staff could not handle the incoming applications.61 The WSC accused many of these non-­FHA appraisers of “helping real estate dealers jack up the prices,” which meant FHA panic peddlers could collect higher fees. By restricting appraisals to FHA staffers only, the WSC assumed, Waner’s office would have more control over the appraisal process and better accountability. He agreed. “In one case, there was a fee appraiser on our staff who was operating at the same time a real estate business,” Waner later acknowledged. “They all belong to the same club, so to speak, and I doubt that they could give the buyer a fair shake.”62 He also acceded to the WSC’s demand that FHA inspectors be required to at least record building code violations when the FHA insured shoddy homes.63 But these were small victories relative to the scale of FHA abuse. They did nothing to change the fact that investors continued to finance FHA-­insured loans and that mortgage companies and thrifts continued to originate them, increasing the supply of FHA mortgage credit with no regard for how their actions incentivized fast foreclosure and rapid turnover that exploited residents and deteriorated housing stock in transitional neighborhoods. After a year of working with Waner, organizers shifted their attention to the FHA at the national level. Shel Trapp recalled the day that Waner “called Gale and me in” to explain that the Chicago office had reached the limits of its authority, and any further reforms would have to come from Washington. Waner told the organizers that he agreed with “everything you’re asking for,” but his hands were tied. Trapp and Cincotta listened to Waner explain that even faced with a demonstration of ten thousand people, he could do no more to address their problems with the FHA. “If you want anything more out of me,” Trapp remembered him saying, “you got to go to Washington and change national policy.”64 Sharing a bottle of whiskey at an organizers’ conference soon after, Cincotta and Trapp asked each other, as Trapp recalled, “Holy shit! What are we going to do?” They discussed whether they should build a national network of urban neighborhood groups that suffered the same real estate

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figure 3.  A Chicago protest against abuse of the Federal Housing Administration Sec­ tion 203 insurance program. Courtesy of People’s Action

problems, which could together bring pressure to solve what they now saw were national problems. “We go up to one of our rooms. We were sitting there drinking and talking about this,” Trapp explained, “and one of us said, ‘Well, let’s have a national conference!’ About four o’clock we go to bed.” The next morning Cincotta and Trapp rehashed the scheme to determine if it sounded as feasible after a night of sleep. “Still sound good to you?” Trapp asked her. “Yeah,” Cincotta replied. “It sounds better.”65

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A Meeting of City Survivors Cincotta and Trapp were departing from the turf-­based Alinsky tradition in which they were trained. Few community organizers working in the early 1970s had faith that uniting beyond the neighborhood level could work. After all, Alinsky had taught that local issues had the best potential to pique an individual’s sense of self-­interest, a condition that most organizers found essential for convincing a potential recruit to attend a meeting. National— ­or even regional— ­organizations were unlikely to home in on the specific problems that residents in any given neighborhood experienced firsthand. National organizations, many had then thought, were likely to pursue ill-­defined issues unlikely to resonate with ordinary people on a level personal enough to bring them out to the streets. But Cincotta and Trapp had begun to question the unwavering attention to the local. If different West Side neighborhoods shared each other’s problems, and if those problems were created in large part by FHA insurance, it seemed likely that there would be some neighborhoods in every American city that had housing and home financing problems that paralleled those on the West Side.66 Besides, Waner had flatly told them they must go beyond Chicago to get redress. Cincotta and Trapp began recruiting community groups from cities around the country by drawing on the relationships they had with other community organizers. Many organizers were linked into professional networks affiliated with the institutions that had trained them early in their careers. Tom Gaudette, for example—­the Alinsky protégé who trained many organizers on Chicago’s West Side—­started his own training school in Austin in 1970. Two years later he expanded his role as a trainer of organizers and founded the Mid-­America Institute for Community Development. At a time when organizers could not simply search for one another on the internet or consult an authoritative organizers’ di­ rectory, such centers proved essential for introducing them to one another. In addition to training institute-­based networks, organizers also built pro­ fessional relationships when groups hired other organizers as consultants. Seasoned organizers offered their expertise when a less experienced counterpart needed assistance executing a particular campaign, building membership, or training leaders. Shel Trapp began working as a consultant before the 1972 conference, and he had already established a name for himself as a good one. Dozens of invitees to the conference were or-

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ganizers that Trapp or Gaudette already knew from such training and con­ sulting work.67 The conference organizers invited other groups based solely on their names. Trapp sent a few young activists, likely VISTA volunteers, to Chicago’s O’Hare airport to compile a list of groups that sounded like they might work on similar urban issues. The organizers figured that the airport was the nearest location that housed the phone books of all major American cities. The volunteers were instructed to scour the phone books for listings that appeared to be community organizations based on names that included such words as “housing” or “community.” Organizer Helen Murray recalled “call[ing] any organization from any neighborhood in the country asking: ‘Do you have this problem in your neighborhood?’ ”68 In 1972, those calls would have been a significant expense. Anne Marie Douglas, Trapp’s assistant who did the office management work central to planning the conference, compiled the list of over six hundred invitees from the volunteers’ airport research. While the transcribing was tedious work, Douglas joked that it gave her an opportunity to improve her poor typing skills.69 In their assessment that real estate speculators, not racial integration, caused neighborhood decline, organizers found kindred spirits in Monsignor Geno Baroni and his staff at the National Center for Urban Ethnic Affairs (NCUEA). The interracial housing conference was an ideal project for Baroni, an Italian American urban priest from Washington, DC, who believed that raising the political consciousness of white urban ethnics was the first step toward meaningful interracial cooperation within the working class. Baroni argued that the problems facing white ethnic neighborhoods in the early 1970s—­including a “growing gap between local businesses and financial institutions” and the neighborhoods they served—­were common to “many black neighborhoods as well.” He believed that urban ethnic whites had a common interest with people of color that could be the basis of a powerful coalition.70 Calling housing a “possible convergence issue” between white and black urbanites, Baroni offered to cosponsor the conference. As Anne Marie Douglas recalled, Ba­roni’s endorsement gave Cincotta and Trapp increased credibility among white ethnic community organizations that knew about the priest and respected his work.71 When West Side Coalition organizers met with Baroni’s staff in 1972 to plan the conference, they agreed that the meeting should focus on problems related to “inner-­city financing” in “changing neighborhoods.” “The

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Chicago groups have done fairly extensive research on the abuses of area realtors,” one NCUEA staff member reported, “and now understand that they must focus on larger financial institutions.” Baroni’s staff noted the “important development” in urban coalition building that the conference represented. “Many inner-­city residents now understand that, regardless of race or ethnic group, they share a common status near the bottom of the socio-­economic ladder which makes them common targets for exploitation,” a staffer said. The conference reflected the “determination” of residents in “racially-­mixed, changing neighborhoods” to “end their role as pawns in big city politics and economics.” One of the challenges for the conference, however, would be “sensitizing the press,” which had so far “viewed the so-­called ethnic or white working class response to racial change as a ‘backlash.’ ” The conflation of white ethnics with white racists was precisely the oversimplification that Baroni’s group sought to counter. The conference that Trapp and Cincotta proposed thus provided an excellent opportunity to “demonstrate that specific segments of society [were] profiting from urban suffering” that affected “most inner city residents without regard to race or ethnic group.” Baroni’s staff agreed to help the West Siders by co-­organizing the conference and planning its press strategy.72 In making invitations, conference organizers sought to educate invitees about the impact of FHA programs on urban mortgage markets, assuming that urbanites from other cities would recognize the patterns they described. Conference promotional materials described “the FHA problem” as “intricate and confusing” but lying at the root of the urban crisis. “It is the largest force in the change and deterioration of neighborhoods,” one flyer claimed. The organizers explained that FHA fee appraisers often worked hand in hand with mortgage brokers and that “code violations, bad boiler, etc. [were] conveniently over-­looked” when a broker and appraiser were in cahoots. As a result, urbanites often bought homes requiring repair costs so enormous that they could “destroy a family that is just trying to get itself on its own two feet.”73 If something like this happened in your neighborhood, Cincotta and her colleagues suggested, it was part of a larger injustice that required national action to fix. Conference organizers explained the complexities of the FHA programs so that other urbanites might understand that the key players within the home financing industry—­not new black neighbors or fleeing whites—­undermined neighborhood stability. They broke down FHA’s “point system” for invitees in which sellers paid extra fees for selling their

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homes through FHA, thus prompting most sellers to prefer conventional loans if they had the option. Points discouraged suburbanites from selling their homes with FHA financing, especially since newer, whiter areas still had the option to use conventional financing. This situation ensured the concentration of FHA loans in transitional neighborhoods where sellers often became desperate to unload their properties.74 The organizers also described the tactics of panic peddlers, warning readers that if they recognized these practices in their own communities, their neighborhoods had likely been “FHAed” by the unscrupulous real estate agents. A panic peddler, they explained, “often knowingly sells a house with thousands of dollars in code violations, by refusing to show the entire house to the buyer, saying: ‘We can’t see the bathroom because it’s being used right now,’ or ‘We can’t look at the basement because they keep vicious dogs down there.” Urbanites should also be suspicious if the real estate agent hid FHA appraisal documents from buyers and sellers, a common prac­­­­­­ tice that allowed the agent to “juggle the prices.”75 Cincotta and her col­­­­ leagues also informed conference invitees that savings and loans had aban­ doned urban communities, leaving them vulnerable to FHA abuse. Bank­ers’ assumptions that transitional neighborhoods were declining made it “practically impossible” to afford the limited credit available for homes in their communities, thus “effectively eliminat[ing] conventional money from the inner city and forc[ing] everything to be FHA.”76 The organizers urged the invitees, many of whom were career organizers trained in the neighborhood-­based Alinsky tradition, to see that their local real estate problems had national roots and thus required national power. “The problems we face here are representative of the problems facing all cities,” they explained, “and investigation shows that we must extend our fight to the national level to stop what seems to be a conspiracy to destroy our communities.”77 If real estate abuse was common to racially changing neighborhoods, the organizers reasoned, a national meeting could also help community groups share best practices with one another. “We think that some of the things we did [on the West Side] can be done elsewhere,” Cincotta explained.78 At the conference, the urbanites would “gather national evidence to strengthen [their] cases” and demand policy changes. Finally, conference organizers envisioned creating an expansive network of community organizations that could exert national pressure when necessary from outposts around the country. It would “promote a common understanding within all organizations of the underlying forces of change and deterioration” that would unify groups that had not yet

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worked together. A conference goal, then, was “to develop a platform of action for all organizations, nationally, so that pressure for change comes from all cities, not just 1 or 2.”79 When the WSC organizers sent out the conference invitations and materials, neighborhood groups from around the country confirmed that a similar process was taking place in their communities. “We have read with great interest the literature you have sent us, and we agree with your efforts 100%,” wrote the coordinator of a low-­income housing coalition in Washington State. “The government agencies supposedly established to assist poor people in their housing needs are too often co-­opted into that great American tradition—­the rip-­off.”80 A nun from a housing organization in Denver wrote that she was hopeful that the conference might “bring about some good legislation.”81 An organizer from St. Louis was “very interested to say the least”; he began recruiting other “people from a local community organization” to travel with him to Chicago for the conference.82 Some urbanites saw press about the conference and wrote to the organizers for more information.83 National Neighbors, a “national organization of interracial neighborhoods” based in Philadelphia, sent the WSC a directory of its member groups so the conference organizers could invite all the listed members.84 By blaming the fear and instability in racially changing neighborhoods on the FHA and the panic peddlers that used it, conference organizers bridged racial and ethnic divisions at a time when mutual racial suspicion plagued changing neighborhoods. Here, the fledgling social movement reflected a larger trend in class-­based interracial organizing during the 1960s and 1970s.85 In community organizing fashion, they identified a common enemy—­the “money interests”—­whose exploitation of the real estate market led many urbanites to distrust those outside their own racial, ethnic, or religious groups. “These groups have been unable to work together because the system they are fighting seeks to divide them,” Cin­ cotta stated. “They have split up Protestant and Catholics, black and white.” But urbanites were starting to close those splits through new understandings of the housing problems they faced.86 A press release called the conference a gathering of “the survivors of the cities” who would “control their own destinies” and take power out of the hands of “the greedy hands of speculators.”87 Conference materials said of attendees, “Their composition is Black, White, Brown and Ethnic,” and they shared a common “anger over the lives of their neighbors being shattered through the incompetence of government agencies and the greed of mortgage houses, insurance

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companies, and realtors who are more concerned over the fast buck than the life of the city.”88 To the conference conveners, uniting a diverse population of urbanites did not require ignoring racial differences and embracing the color-­blind discourse that was becoming increasingly resonant among middle-­class suburban whites. Instead, organizers paid attention to how urbanites’ racial and ethnic identities influenced their experiences of neighborhood decline, and sought to appeal to them accordingly. In an effort to reach out to urban “Hispano families,” for example, conference organizers produced a targeted brochure entitled “The Inhumanity and Injustice of the City,” which drew a parallel between the “oppressive and exploitative conditions” of urban real estate abuse with those of “colonies from the past.” The pamphlet identified institutional racism and white supremacy as the root causes of “Hispano” suffering in the city. “Just as all the institutions in this country—­finance; business; government; insurances; real estate; education; etc. advance the life of the anglo citizen,” its author wrote, “we are systematically excluded; exploited and ripped off.” Such appeals illustrate one strategy that conference organizers adopted to unite the victims of racism and the beneficiaries of white racial privilege. They acknowledged the role of racism in creating exploitative conditions for minorities living in cities, but they framed the crisis as one facing all people exploited by those institutions, thus leaving open the opportunity for interracial coalition building around place-­and class-­based interests.89 While the focus on FHA reform and increasing access to conventional mortgages addressed the concerns of homeowners and homebuyers, organizers framed real estate abuse in broader terms centered on urbanites’ shared stake in place that transcended one’s status as homeowner or renter. Neighborhood decline mattered for reasons beyond the value of an individual’s property, as they saw it. Cities often reduced services in the same neighborhoods that had been FHAed. Residents shared the experience of living in transitional neighborhoods, regardless of whether they owned their homes. Activists also included renters’ issues in their literature, arguing that negligent landlords and deteriorating rental properties also contributed to what they generally called the “housing crisis.” The Chicago conference organizers invited tenants’ groups who organized against slum conditions and groups of seniors living in federally subsidized rental housing.90 In the weeks leading up to the conference, during the first months of 1972, the group received a boost from politicians who endorsed their efforts.

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US Representative Dan Rostenkowski of Chicago offered his support. A self-­described “lifelong resident of the northwest side of Chicago” and “a man who is very proud of the community in which I was born and still live,” Rostenkowski echoed activists’ argument that “fraudulent and unethical real estate practices by unscrupulous realtors” caused urban decline. He also expressed frustration with “banks” that “fail to show their confidence in the neighborhoods by refusing to lend conventional money for mortgages.” The results, the congressman said, were “entire neighborhoods being written off as bad risks without consideration of individual cases involved.”91 Another Chicago representative, Democrat George Collins, agreed to attend the conference and to conduct a fact-­finding tour to see the effects of FHA insurance firsthand.92 Meanwhile, a Democratic Party official investigating the “growing crisis in housing” agreed to meet with conference organizers to discuss a potential resolution for the 1972 Democratic platform, and two Democratic candidates for president, George McGovern and Fred Harris, agreed to attend.93 Not all politicians were so responsive. Dozens of national leaders declined invitations to the conference, including Senators Hubert Humphrey, Edward Kennedy, Walter Mondale, Edmund Muskie, and over two dozen others who claimed their “rough schedules” or “prior commitments” would keep them away. Organizers framed these as weak excuses given that “our nation’s cities are dying” and deserved their full attention.94 On March 18, 1972, the conference organizers watched over fifteen hundred people pour into the auditorium of St. Sylvester School in Chicago’s Logan Square neighborhood to discuss the urban housing crisis. The room became so crowded that a volunteer set up live-­stream televisions in the basement so the overflow group could still watch the speakers. Some white attendees sported buttons that said “I’m Staying” to indicate that they would not join the white out-­migration from their neighborhoods. Over the course of two days, attendees drafted resolutions demanding an end to FHA abuse and a return to conventional financing. They affirmed that savings and loans had an obligation to use local savings accounts to fund local mortgages, regardless of how the neighborhood outside their offices changed. That these institutions lent neighborhood money outside of their communities broke the social contract between thrifts and their members and made them “leaches [sic] in our community” who took savings “out of the community to invest in the suburbs to make more money and sap our community of its resources.”95 Testimony from attendees also revealed that insurance companies charged two to three times more for

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figure 4.  Gale Cincotta with Senator George McGovern (right) at the founding conference of National People’s Action on Housing. Courtesy of People’s Action

homeowners’ insurance in racially changing neighborhoods. The attendees decided on a name for their new organization: National People’s Action on Housing (NPAH). They agreed to meet again in Baltimore in six months to determine next steps to attack real estate abuse at both the local and national levels. “What for so long has been considered a natural phenomenon”—­the deterioration of “central cities”—­was “not natural,” Cincotta announced from the podium that day. “Somebody’s making a lot of money out of changing neighborhoods.”96 Conference organizers cohered around a message that “real estate abuse” constituted the real urban crisis. The dominant media coverage of urban racial conflict was short-­sighted, they explained, mistaking racism as inevitable rather than an effect of manipulative real estate institutions. Indeed, the idea that urban neighborhoods were crippled by ingrained racial divisiveness was pervasive in popular media. It had only been six years since the national coverage of the 1966 campaign for open housing that Martin Luther King led on Chicago’s West Side, not far from the neighborhoods where Cincotta and Trapp organized. Television viewers watched a crowd of over five hundred white Chicagoans throwing rocks,

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carrying swastika signs, and shouting racial slurs at marchers during King’s nonviolent protest against a local real estate office.97 By the late 1960s, such stories of interracial conflict were accompanied by reports of opinion polls that sorted respondents neatly along black-­white lines and described worldviews purportedly shared by all white or all black people. Headlines like “Whites Blame Blacks” or “Industrialists Told Why Blacks Distrust Whites” were not uncommon.98 On the eve of Cincotta and Trapp’s housing conference in March 1972, national media coverage highlighted busing for school integration as the latest arena of black-­white conflict. During the first three months of 1972 alone, the New York Times and Washington Post each printed over one hundred articles on busing, ranging from brief mentions of its role in the presidential election to full coverage of the busing plans recently proposed in Detroit and Richmond. President Nixon had just delivered a statement in opposition to busing the night before the housing conference began.99 What this housing meeting suggested, however, was that coverage that spotlighted black-­white divisions missed a great deal. One Baltimore organizer asserted that the media paid too much attention to the “phony issue” of busing for school integration, suggesting that these urbanites cared less about busing than their counterparts in the suburbs might. Instead, they charged that the “dual housing system,” now sustained by FHA insurance, was the “burning issue” facing American cities. Some local and national newspapers recognized the significance of this convergence of urbanites bridging racial divisions to unite against the problem of real estate abuse. The Baltimore Sun described the conference participants as “ethnically mixed residents of changing inner-­city neighborhoods” who were victims of real estate abuse, noting that the meeting was “the first national conference of its kind.”100 The Washington Post ran a front-­page story on the coalition of “blacks, Spanish-­speaking representatives, and poor and middle-­class whites,” dubbing them “unlikely militants.” Notwithstanding the antiblack racism that permeated the worldview of many whites and that supported the shift of economic and political power toward the all-­ white suburbs, the conference experience suggested that residents of many transitional neighborhoods bridged racial divisions to improve the places they lived.101 Attendees did not immediately unite across racial lines, however. In one instance, according to one reporter, a “Spanish-­speaking delegate” took the microphone and demanded that the conference include proceedings in Spanish. “You are discriminating against Latin people here,” he

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charged. In response, “another Latino delegate” argued that such protests were “just what the man wants us to do—­fight among ourselves.” Instead, he suggested, attendees should remember that “we are here to fight the big-­businessmen.” At that point, the protestor “calmed down,” but he had made the compelling point that white organizers had not considered which of their decisions created obstacles for the full participation of nonwhite attendees. The issue of FHA financing also threatened to split the conference along racial lines before the end of the first day. Many white attendees demanded an end to FHA programs on the basis of their experience of borrowing from savings and loans at fairer terms. But for nonwhite attendees who had been excluded from thrift lending, FHA programs provided a long-­awaited alternative to contract buying. Whites’ call to end the FHA programs, some black and Latino attendees charged, looked like a “racist” proposal that would ensure minorities’ continued reliance on contract sellers.102 Here, conference organizers validated competing perspectives and struck compromises. “Each of us is different, and we recognize that,” conference organizer and reverend Richard Dodaro told the crowd. “The only way we can pull people together is to reidentify the enemy.” Adopting the ra­ tionale of many nonwhite attendees, conference organizers supported and passed a resolution calling for FHA reform, rather than a moratorium. Conference leaders then pushed through a second resolution against discrimination in conventional lending to provide “Black families” an alternative to FHA, calling on thrifts to make mortgage money available for homebuyers in communities outside their offices, regardless of race.103 Cincotta explained the rationale behind such compromises. “You know, the National Housing Conference was all have-­nots—­white, brown and black,” she told a reporter. “And it’s not all sweet cream.” But they identified issues around which they could work together. “The people there don’t have to like each other, as long as we remember that it’s the guy over there, not each other, who’s giving us the problem,” she said.104 In another resolution, conference leaders singled out one particular “guy over there” who all attendees could agree was “the enemy”: HUD secretary George Romney, whose agency had overseen the worst FHA abuse. They called for his resignation, charging that Romney shirked his public duties by responding to “the pressure of speculators” but not to the people in our dying cities.”105 Organizers’ focus on attendees’ shared opponents created a sense of common ground that trumped internal conflict at the conference.

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The new organization gained the attention of politicians who saw its members as an urban constituency ripe for courting. Before the conference, organizers sent invitations to several Democrats who were vying to be their party’s 1972 presidential candidate, as well as to Illinois’s senators and congressional representatives. Geno Baroni helped here, too, as his National Council on Urban Ethnic Affairs advised Democratic contenders to consider the “ethnic vote,” of which white members of many invited organizations were a part.106 Several Democratic candidates appeared at NPAH’s conference to blast President Nixon for ignoring the needs of urbanites. Senator George McGovern attacked Nixon for “abandoning the inner city,”107 and commented that the President “would have us believe that the greatest threat to the nation is the school bus, when right in front of his eyes is the collapse of the whole urban environment.”108 Soon after, McGovern campaign circulated memos on how to appeal to urban ethnic voters that echoed themes from the conference, suggesting that McGovern should frame domestic issues in terms of “family and neighborhood problems.”109 Presidential hopefuls Fred Harris and Eugene McCarthy also attended the conference, as did a representative from the Democratic Party Platform Committee and a staffer from the Senate Antitrust Committee. Senator Charles Percy, the Republican from Illinois who had promoted homeownership as an antiriot strategy five years earlier, made an appearance as well. The senator repeated activists’ concerns about “serious defects” in the properties with FHA insurance, and joined the “growing number of public officials” calling for an investigation into the programs.110 The “city survivors” had found policymakers who might be receptive to their demands. Without losing their local focus, they began envision how Washington could help.

Conclusion The urbanites who attended the first National People’s Action on Housing conference revealed the centrality of the urban housing crisis in animat­ing a social democratic political worldview in transitional urban neighbor­hoods that, through its place-­and class-­based populism, aimed to bridge racial divides. As they watched panic and exploitation remake the neighborhoods they called home, they mobilized. As they connected with urbanites in other transitional urban neighborhoods, they discovered that the perverse incentives and perceptions of risk in their local real estate markets

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were not particular to their communities. Rather, their local experience revealed the ways in which the FHA reflected and reinforced antiblack bias in local real estate markets that equated whiteness with value and homogeneity with stability. The common patterns were striking and convinced members of the fledgling reinvestment movement that their local problems were national problems and thus required national solutions. As the next chapter will show, NPAH pursued two national strategies to combat the urban housing crisis. First, members lobbied to reform FHA lending to bring it in line with their financial common sense; they wanted mortgage lending that prioritized neighborhood survival instead of incentivizing fast foreclosures and ghost towns. Second, NPAH affiliates mobilized in their neighborhoods to pressure local thrifts to recommit to the stability of their communities, regardless of the age of the housing stock or the racial demographics of their membership. Their demands on their local financial institutions put them on a collision course with the thrift industry and with policymakers who thought the New Deal banking regulations—­the very regulations that made thrifts the community-­ oriented institutions that activists expected them to be—­had become antiquated in the context of the era’s limits and thus needed to go.

chapter three

It’s Our Money Defending Financial Common Sense in a Collapsing New Deal Order

U

pon its founding, National People’s Action on Housing mobilized its coalition of “city survivors.” They sought to reverse the impact of being “FHAed” by increasing thrifts’ conventional lending in their neigh­ borhoods. In their meetings with local thrift executives, activists brought a powerful weapon: data confirming a new iteration of the dual housing mar­ ket, with racially integrating neighborhoods “under FHA” and white neigh­ borhoods dominated by conventional lending. In one instance, activist Ed Stefaniak pointed to a recent real estate study that showed that during the previous eighteen months, out of all mortgages that Chicago’s second-­ largest thrift, First Federal Savings and Loan, had issued on Chicago’s West Side, only 6 percent were conventional. The other 94 percent were FHA-­insured loans. “Even though First Federal says its policy is to give mortgages regardless of neighborhood,” Cincotta charged, the evidence suggested something very different. Reinvestment activists assumed the problem was even worse than the data suggested. Some residents re­ ported that they had been turned away from the savings and loan before making a formal application. It seemed likely that the data underreported persistence of the dual housing market because it didn’t include an un­ known number of potential homebuyers who were denied credit verbally, were discouraged from submitting a formal loan application, and thus left no paper trail.1 Throughout the early 1970s, reinvestment activists sought evidence of met­ ropolitan lending patterns to prove that residents of white neighbor­hoods

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and suburbs continued to enjoy a two-­way relationship with thrifts that activists came to expect under the New Deal financial regime, while thrifts “wrote off” city neighborhoods, leaving them to FHA lenders. This prac­ tice, they charged, was rooted in bankers’ assumptions that urban neigh­ borhoods constituted risky places when housing stock aged or people of color moved in—­assumptions that many urbanites did not share. And the consequences of issuing or denying loans based on such dubious as­ sumptions left residents of transitional neighborhoods without access to conventional credit, regardless of their race. Activists called this outcome “geographic discrimination.”2 In essence, urban neighborhoods were sub­ ject to the financial equivalent of the “one-­drop rule,” in which Ameri­ cans assigned blackness to people with any trace of African American ancestry, no matter how many generations back.3 In American cities, ap­ praisers and lenders seemed to apply a similar one-­drop logic to neigh­ borhoods, as the arrival of any nonwhite residents signaled that the en­ tire area was nonwhite and thus risky. As activists saw it, all urbanites suffered some effects of institutional racism when they chose to live in neighborhoods that weren’t heterogeneously white. Banks practiced geo­ graphic discrimination when they denied mortgages or home improvement loans outright or lent at harsher terms that included higher down pay­ments, higher interest rates, and shorter payback periods.4 A primary objective of reinvestment activists’ organizing thus became increasing the supply of conventional mortgages at terms on par with the suburbs—­a return to the kind of lending they had come to expect under the New Deal financial regime. During the 1970s, National People’s Action on Housing (NPAH) orga­ nized to defend their financial common sense in two primary ways. First, they lobbied for FHA reform. They mobilized member organizations, pressuring local FHA administrators and proposing new federal legisla­ tion to bring the federal agency in line with their financial common sense. Second, and at the same time, activists demanded that local banks, es­ pecially thrifts, strengthen their ties to local communities, regardless of the age of their housing stock or the racial identities of residents. Mem­ bers of NPAH wanted local banks to “reinvest” by committing losable, uninsured capital to neighborhoods that had been denied access to New Deal–­style thrift lending. The language of “investment” implied a long-­ term relationship in which the financial institution had something at stake in tying its fate to the future of the neighborhood. As they organized to achieve these two goals, their efforts to push banks to lend in transitional

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neighborhoods hinged on their ability to show patterns of the FHA-­ conventional divide. Access to banks’ lending data, or “disclosure,” thus be­ came a rallying cry for reinvestment activists during their first three years of organizing. The call for FHA reform and for banks to help resolve the urban hous­ ing crisis would launch NPAH onto the national stage, where they entered ongoing conversations with members of Congress who proved sympathetic to their demands for disclosure. These legislators, primarily white men, had also come of age in an era of thrift dominance, and they shared activists’ financial common sense. Particularly, the idea that thrifts ought to serve their local communities resonated with important lawmakers in the Sen­ ate Banking Committee, who became allies to the reinvestment movement through the struggle for disclosure. Support for disclosure was by no means universal. Thrift executives and their trade associations rejected activists’ charges of redlining that provided the rationale for disclosure, instead arguing that the era’s inflation and tight credit, not racial discrimination, explained thrifts’ disappearance from transitional urban neighborhoods. Free-­market enthusiasts in Congress also opposed disclosure because they saw reinvestment activists’ demand for lending data as the first step toward credit allocation—­state-­mandated lending to “social purposes” that vio­ lated free-­market principles. But reinvestment activists had more support than their opponents at this moment. The majority of legislators who over­ saw federal banking policy shared the belief that banks—­both thrifts and commercial banks—­were special quasi-­public institutions whose decisions about how and where to lend had implications not just for their customers but for the nation. Given the mid-­1970s popularity of this financial common sense, the idea that banks should play a role in solving the urban housing crisis found enough support from Washington policymakers to turn disclo­ sure into the law of the land in 1975.

Building a National Movement against the Housing Crisis Organizers faced a challenge at the end of the first conference in 1972. Alinsky-­style community organizing prescribed that local people decide which issues to tackle to create an agenda of pragmatic, winnable cam­ paigns. But this emphasis on the local was in tension with Cincotta and Trapp’s conviction that to combat what they called “the housing crisis,” urbanites needed a national organization that could exercise power at the national level. With little sense of how to move forward, Cincotta and

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figure 5.  A National People’s Action publication on redlining highlights the growing num­ ber of cities that had NPA affiliates. Courtesy of People’s Action

Trapp simply planned another meeting. Six months after the first confer­ ence, in the fall of 1972, four hundred activists from two hundred local groups came to Baltimore to decide, as organizer Helen Murray recalled, “how we were going to work together in the future.” While in Baltimore, just forty miles from Washington, DC, the Chicago activists coordinated

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the first time their group had appeared as congressional witnesses, a role they would assume again forty times over the next two decades.5 The group also staged its first “hit” against Washington policymakers, a sur­ prise protest that would become a regular part of the movement’s tool kit. Trapp and others hit a Republican fundraiser where Housing and Urban Development Secretary George Romney was the guest speaker, disrupt­ ing the evening’s affairs with their demand for FHA reform. “We just got some buses and went over there, hit it,” Trapp recalled. The group won no specific policies, “but people were all juiced up,” which helped morale and encouraged them to commit to the new group. Going forward, Trapp and other Chicago organizers would use their annual national meetings to strategize campaigns with affiliates and to demonstrate their strength in numbers at times when hundreds of neighborhood activists were together in Washington, DC.6 After the Baltimore meeting, with some pro bono legal help, the Chi­ cago organizers made their new group permanent by officially forming two separate but overlapping organizations: the Housing Training and Infor­ mation Center (HTIC) and NPAH. HTIC was a “legit” 501(c)(3) nonprofit organization with “a board and all that stuff,” one organizer explained. It had permission to collect tax-­deductible donations, which would help the organizers fund their work. However, tax law prohibited such nonprofits from lobbying, which would have disarmed organizers of their most prom­ ising tactics—­pressuring lawmakers, testifying in front of Congress, and staging protests against policymakers. Trapp and Cincotta thus created NPAH as a 501(c)(4) that could lobby without restrictions. With no for­ mal structure, board, dues, or staff, NPAH was “a testament to imagina­ tion,” in one organizer’s words. One ally called the fledgling federation of community groups “the phantom organizing organization.”7 In practice, the separation between HTIC and NPAH meant little. Helen Murray, a Chicago organizer who worked with NPAH at its founding, explained that she and others “were out there really to shake the trees and whatever name we could go by, we would do that.”8 The leaders also created a third entity called the Metropolitan Area Housing Alliance, a coalition of Chi­ cago community organizations that served the local branch of NPAH’s national network. As a phantom organization rooted in Alinsky-­style organizing, NPAH respected the autonomy of its nearly two hundred member organizations in neighborhoods around the country. In Alinsky fashion, local organi­ zations crafted campaigns around issues that their local members chose,

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even as the Chicago leaders focused on housing. In Delaware, Wilming­ ton United Neighborhoods worked for new parks and better policing. In Detroit, a neighborhood group pressured “slumlords” and the Depart­ ment of Building and Safety to support its members in local housing re­ habilitation.9 In New York City, one tenant organization worked on rent control and co-­op conversion.10 While affiliates did the daily work of im­ proving the places where they lived, NPAH coordinated national protests and DC-­based lobbying to address “the many facets of our prevailing housing crisis,”11 which they defined broadly as having a “tenant half” and a “redlining part.” Working on “the two issues together,” the Chicago leaders said, was “crucial if our cities are to be viable places to live,” with “decent housing for all.”12 To combat the housing crisis, NPAH estab­ lished an annual nationwide housing conference in Washington, to which affiliate organizations usually sent several representatives. They also held occasional regional conferences. Both types of meeting provided oppor­ tunities for training organizers around housing issues and for planning national action. NPAH leaders conducted research on redlining and dis­ investment and helped member organizations conduct their own local housing studies. They disseminated findings in inexpensive publications.13 Two years after NPAH’s creation, organizers also began issuing a free monthly newsletter called Disclosure that collected and published stories from organizations around the country to keep members informed of de­ velopments in national housing campaigns. Meanwhile, Cincotta and Trapp built a national office in Chicago that prioritized adaptability and camaraderie. All organizers worked “elbow to elbow” in one large room rather than separate offices, which organizer Ted Wysocki said gave staff the sense that “you are in this together.”14 Cincotta and Trapp planned campaigns through a variation of Alinsky’s “leader-­ organizer” model wherein the community leader, Cincotta, became the spokesperson while the organizer, Trapp, remained behind the scenes.15 Fellow organizers recall a partnership that was built on mutual respect and “implicit trust,” but also on periodic power struggles. Cincotta at times had a vision for how an issue might be resolved quickly through decisive ac­ tion and would become frustrated by Trapp’s “organizer instinct” to solve problems collectively and through processes.16 Nonetheless, their different approaches proved complementary, organizer Bud Kanitz remembered. When Cincotta and Trapp decided to pursue “national public policy stuff,” Trapp’s response was “You do the politics; I’ll do the organizing.” In Ka­ nitz’s view, the two were “absolutely the ying [sic] and yang.”17

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Here, Trapp and organizer Helen Murray played crucial roles. Murray began working with NPAH as a VISTA volunteer and soon earned the title of “Issue Consultant,” the organization’s lead researcher on redlining issues. It was her mastery of the policy intricacies that helped produce the policy critiques and suggestions that organizers then used in their campaigns.18 Trapp’s on-­the-­ground work building the federation then spread NPAH’s understanding of the urban housing crisis to the network’s growing number of member affiliates. Trapp trained leaders and organizers in community groups around the country, especially in the Northeast and Midwest, and built the NPAH network as he went. He recalled, “I was on the road 20– ­25 days a month, all out,” focusing on local organizations’ issues.19 He some­ times flew to a city and back on the same day.20 Trapp helped local groups research neighborhood demographics, housing stock, and local foundations that might support their work.21 He advised local community organizers on staffing issues. He cultivated relationships with organizers who coordinated NPAH campaigns in their own cities—­Joe Fagan in Iowa, Joe Mariano and Karen Nielsen in Cleveland, Richard Gallagher in the Bronx, and dozens more. As Trapp visited, he subtly raised awareness of the problems cre­ ated by slum landlords, FHA-­insured urban mortgages, and the loss of New Deal–­style thrift lending. “When I went on the road, I always told groups, ‘I work for you. I’m here to deal with dog shit, dogs, pigeon shit. I don’t care what the issue is,’ ” he remembered. At the same time, he alerted them to larger forces behind neighborhood decline. “Before I’d leave I’d say, ‘You know, have you heard about this thing, redlining?’ ” Trapp explained. “In a month or two, I’d come back there. Usually after about the third trip somebody else was saying ‘Gee, the banks don’t seem to be doing much.’ ”22 Combining support for local issues with the Chicago organizers’ grow­ ing expertise on the urban housing crisis found Cincotta and Trapp a great deal of support from urbanites around the country. “For so long,” one public interest lawyer wrote to Cincotta, “low-­and moderate-­income folks  .  .  . have been beset by the most confounding and virulent hous­ ing problems.” The lack of “a strong, activist umbrella organization” was “a primary cause of their repeated failures,” but NPAH changed that.23 Now neighborhood groups around the country could act together. New groups wrote requesting to join the network, seek the organizers’ advice on local problems, or receive updates about NPAH’s national housing campaigns.24 “Our area has been blighted and developers are planning to build homes beyond our poor people’s income,” wrote an urban nun. NPAH helped keep communities like hers “informed about housing.”25

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NPAH also connected with established civil rights organizations working on urban issues.26 By 1975, the National Urban Coalition recognized Cin­ cotta as “one of the outstanding housing experts in the country,” and “the expert on redlining” in particular.27 NPAH became a primary vehicle for a growing national reinvestment movement—­a collective, sustained effort by urbanites around the country and their allies in government, acade­ mia, and sympathetic organizations who aimed to reverse the impact of disinvestment in transitional city neighborhoods.

Organizing for National FHA Reform With this new federation of community organizations, NPAH set out to combat FHA abuse through changes in federal policy. Despite the anger that many activists felt toward the FHA, they aimed to reform, not elim­ inate, its financing. As the clash between whites and people of color at the first conference had revealed, urban homebuyers could benefit from better versions of the programs if they allowed borrowers to circumvent panic-­peddling real estate dealers and contract sellers.28 “Every once in a while here in Chicago we have a scandal in the police department,” Cin­ cotta told a group of senators. “No one has ever even entertained the idea that abolishing the police department would solve the problem.”29 During NPAH’s first year of organizing, the FHA scandals turned into a national crisis. By the fall of 1972, HUD owned more than fifty thousand foreclosed homes that had FHA insurance, up 70 percent from the prior four years.30 In 1972, twenty-­eight HUD employees were indicted “for il­ legal activities” in which they allegedly exploited low-­income homebuy­ ers.31 Facing bad press, congressional investigations, and the growing cost of the programs, President Richard Nixon declared a moratorium on all federal housing programs, including FHA insurance, pointing to the scan­ dals as justification.32 For NPAH affiliates, the moratorium meant there would be no new mortgages made in their neighborhoods under the pro­ grams. Potential low-­income neighbors who might have benefited from a reformed version of the program lost this financing option. What’s more, the moratorium didn’t change the fact that thousands of urbanites had al­ ready purchased homes through the programs. Their problems didn’t dis­ appear with Nixon’s announcement. NPAH activists living in transitional neighborhoods that had been FHAed found that the agency’s procedures violated their financial common

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sense in at least two ways. First, many FHA-­insured homes created incen­ tives for real estate agents and mortgage granters to sell decrepit proper­ ties rather than decent homes. Many were in serious disrepair and would not have been deemed sellable by conventional lenders.33 FHA home­ owners reported leaky roofs, warped plywood paneling, faulty electrical wiring, broken toilets, pipes insulated with newspapers, loose windows, rotting porches, missing furnaces, doors off their hinges, and rat infesta­ tions.34 The low-­income homeowners who qualified for the FHA urban programs were the people who could least afford to pay for the repairs.35 To compensate victims, NPAH demanded “FHA payback” in which the federal government would directly pay homebuyers for the cost of making such repairs.36 Second, the investors who owned FHA mortgages had in­ centive to foreclose on homeowners and collect insurance checks, rather than help homebuyers stay in their homes and repay their loans, as thrifts usually did. So did the panic-­peddling mortgage companies, who stood to earn commissions and fees by originating mortgages on the same run-­ down homes again and again. Activists thus demanded “standard forbear­ ance procedures” on FHA loans to stop “fast foreclosure.”37 In both cases, these criticisms of “FHA abuse” reveal the activists’ ex­ pectations for how mortgage granters ought to behave. That a homeowner might be sold a house he or she couldn’t afford, often with dangerous struc­ tural defects, appalled them. And that lenders showed little to no compas­ sion for borrowers in distress—­indeed, that lenders had incentives to fore­ close on borrowers— ­contradicted the relationship that Cincotta, Trapp, and other activists had come to expect from bankers at local thrifts. NPAH thus organized against “FHA abuse” by identifying policy solutions to help FHA homeowners, as well as residents of neighborhoods with high concen­ trations of FHA lending, receive the compassion and the stake in neighbor­ hood survival that they expected from the thrifts. In their efforts to reform the FHA, the reinvestment movement found important congressional allies who had also come of age under the New Deal financial regime and who shared activists’ outrage that the federal government had allowed such perverse effects for borrowers. NPAH found its strongest ally for FHA reform in Illinois senator Adlai Stevenson. Ste­ venson met repeatedly with Chicago reinvestment leaders to learn about the problems of FHA homebuyers. He made FHA reform an issue of con­cern during the Senate confirmation hearing of HUD secretary Carla Hills.38 Soon, he helped turn NPAH’s FHA proposals into federal policy. After activists gave him a tour highlighting FHA homes with structural

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defects, he sponsored the first legislation to enact “FHA payback” to peo­ ple who had purchased homes with FHA insurance.39 Other members of Congress representing urban districts and senators with particularly noisy NPAH member organizations within their states also developed re­ lationships with reinvestment activists through the group’s campaign for FHA reform.40 When Congress passed FHA payback as a provision of the Housing and Community Development Act of 1974, one congressional staffer affirmed that reinvestment activists were “instrumental” in turning the idea into federal policy.41 FHA payback taught members of NPAH new lessons about the ob­ stacles that urbanites faced even after winning a federal-­level legislative victory. It seemed nearly impossible to actually get the federal funding for FHA payback into the hands of the homebuyers it was intended for. FHA homeowners had one year to apply for FHA payback, but six months later, HUD had not yet written regulations for the program, nor had it created an application form.42 When HUD finally released the form, NPAH lead­ ers coordinated its affiliate groups around the country to pressure their local FHA offices to distribute the form and published a copy of it in Disclosure. After an FHA “hit” in Chicago, HUD agreed to give activists a list of local FHA homebuyers, whom NPAH staff then contacted to tell them they were eligible to receive money through the payback program. It’s diffi­ cult to know how many acted in response to NPAH’s outreach, but overall, only eight thousand of Chicago’s estimated forty thousand qualified FHA buyers submitted their forms. Hurdles remained for those applicants, too. NPAH’s research found that not one person had been reimbursed or even given a new FHA inspection to assess how much HUD owed them. Again, NPAH’s Chicago activists staged a hit. About seven hundred homeowners confronted an FHA official in the “packed basement” of a Chicago church, but they gained no traction. The official responded that he had neither the personnel nor the funds to process the reimbursements so could do nothing. “HUD had money enough to pay mortgage companies . . . who are fast foreclosing on us and our neighbors,” said NPAH’s Marie Bryant, stressing the hypocrisy of the official’s response, “but when it comes to the people they can’t find a dime.” For reinvestment activists, the struggles around payback revealed that the implementation of a law was often more important than its passage. They took this lesson into future campaigns for legislative solutions to the housing crisis.43 In addition to FHA payback, activists also demanded that HUD draft new forbearance regulations to end fast foreclosure. They researched the

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existing HUD guidelines and found that they did allow forbearance for struggling homebuyers. However, the guidelines lacked the “force of regu­ lation,” and most FHA lenders had ignored them.44 NPAH proposed that HUD provide every homeowner the relief, even if it meant the agency taking the mortgage from the investors who owned them.45 Activists re­ quested that any lender who wanted to use FHA insurance should submit to HUD written confirmation that they pledged to follow forbearance pro­ cedures before foreclosing on a homeowner. NPAH also demanded that HUD set up a “special office” in Chicago for legal assistance and counseling for “victims of fast foreclosure by unscrupulous [mortgage lenders],” the agents who collected mortgage payments on behalf of investors to whom they had sold the loans.46 In the meantime, activists pressed HUD to stop all insurance payments to such mortgage houses, noting that rogue firms were responsible for the majority of FHA complaints.47 The mid-­1970s economic downturn created a growing sense of urgency for NPAH leaders, as member organizations reported a growing number of fast foreclosures and many homeowners found themselves unemployed and behind on mortgage payments.48 Nationally, unemployment had risen from 4.9 percent in 1973 to 8.2 percent in 1975. A growing number of FHA homeowners defaulted on their loans. By the summer of 1975, the FHA owned 3,579 vacant homes and abandoned lots in Chicago alone, with another 5,000 to 7,000 on the verge of foreclosure. Nationally, the number of FHA-­owned homes reached 74,000; they cost the federal gov­ ernment $20 million a month to maintain.49 “FHA Scandal Spreads across Nation,” read one Washington Post headline.50 “The Once-­Proud FHA is Beset by Scandals and Lots of Red Tape,” announced the Wall Street Journal.51 “Abuses Mar Home Loan Plan” in Boston.52 These and dozens more stories reported on the continued FHA abuse, despite the moratorium that had been in place since 1973.53 In transitional neighborhoods, the con­ centration of FHA foreclosures created what one NPAH organizer called “ghost towns waiting for the HUD bulldozer.”54 The FHA scandal peaked in the summer of 1975, when two Chicago Tribune reporters ran a seven-­part series on the “$4 billion federal hous­ ing scandal” that drew national attention and soon drove the FHA to ac­ tion.55 Reporters George Bills and Chuck Neubauer called FHA abuse “a hidden disaster” that was “more destructive to America’s cities and towns than any tornado, hurricane or earthquake on record.”56 They described falsified loan applications and insurance granted on unlivable homes. The series article also credited NPAH for the research that uncovered the cost

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of FHA abuse to the federal budget.57 In July of 1975, two congressional subcommittees called hearings to investigate FHA abuse, one focusing on Chicago housing specifically.58 Senator Stevenson came to Chicago again, this time to tour Roseland, a neighborhood with a strong NPAH affiliate and a concentration of FHA foreclosures. There, he publicly echoed rein­ vestment activists’ criticism of HUD as an unresponsive agency that hurt transitional neighborhoods more than it helped. “I recommend that in­ stead of [HUD secretary Hills] listening to these people in Washington,” he said, she should come to Chicago and “find out firsthand the disastrous effects these programs have had.”59 Eventually, the attention that reinvestment activists’ drew to the Chi­ cago scandal drove HUD to action. Hills created a task force to explore “nationwide reforms” of the FHA programs “as the result of irregulari­ ties disclosed in Chicago.”60 She sent thirty federal agents to investigate fraudulent mortgage companies there.61 Hills also made immediate policy changes, including spot-­checking FHA loan applications for fraud and in­ specting FHA-­foreclosed homes before paying insurance claims on them.62 Hills also promised to deliver something activists across the country had been asking for: data on the concentration of FHA loans and default rates, which would make FHA lending patterns visible.63 Meanwhile, as the task force investigated the Chicago scandal, NPAH’s network kept the pressure on HUD for FHA reform. On October 8, 1975, NPAH coordinated a “HUD Hit Day” in which activists from twelve cit­ ies protested their local FHA offices.64 The next month, activists won a landmark victory when Hills’s FHA task force affirmed that the abuses highlighted in the Tribune series “did in fact exist” and were “not limited to Chicago,” thus requiring federal action.65 As a result, Hills announced immediate policy changes, including “a crackdown on unscrupulous mort­ gage companies.”66 New FHA reforms also addressed activists’ concerns about fast foreclosure. Under new FHA policy, foreclosure proceedings did not go into effect until a buyer was three months late on payments, mortgage granters were required to accept partial monthly payments from struggling homeowners rather than count them as missed payments, and lenders had to “confront [borrowers] in person” if their loans became sixty days delinquent. Hills even created a mortgage review board to rule on charges against mortgage brokers, building unprecedented public account­ ability into FHA lending.67 By the end of 1975, four years after reinvestment activists first learned what it meant to be “FHAed,” their dogged organizing pushed the FHA

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to change its practices by ending fast foreclosures, promoting forbear­ ance for struggling borrowers, and monitoring mortgage houses. In other words, reinvestment activists had succeeded in pressuring federal law­ makers and FHA officials to bring the agency closer in line with the fi­ nancial common sense of the New Deal financial system. But the sheer volume of FHA abuse, combined with the difficulty activists experienced as they sought to implement the payback legislation, ensured that a deep distrust for the Department of Housing and Urban Development became a feature of reinvestment movement culture for decades to come—­for good reason.68 The reinvestment movement’s campaigns for FHA reform changed not only the FHA’s procedures but also the agency’s public explanation for the deterioration of blocks on blocks of urban neighborhoods during the 1970s. Hills’s admission that mortgage companies abused the programs stood in stark contrast to the agency’s initial response to activists’ charges of FHA abuse in 1972, when her predecessor, George Romney, blamed low-­income homebuyers.69 Reinvestment activists’ explanation for the physical deterioration of urban housing stock—­that real estate interests ex­ ploited their neighborhoods for profit—­had become credible within HUD itself as officials found evidence that supported activists’ complaints. De­ spite popular memory that attributes abandoned buildings and vacant lots to the fallout of the 1960s urban rebellions, 1970s FHA insurance deci­ mated the housing stock in the transitional neighborhoods where it was most concentrated.

Conventional Mortgages by Unconventional Means As reinvestment activists organized to end FHA abuse, they also sought the return of non-­FHA, thrift-­style conventional mortgages to their neighborhoods. Here, NPAH leaders and affiliates around the country worked to negotiate with local financial institutions, ready to deploy hits if banks declined to meet. In Hartford, for example, a local hit led to “vol­ untary agreements” with thirty-­three thrifts and commercial banks. Each institution pledged to at least consider conventional mortgage applica­ tions from “low-­income neighborhoods” that they previously dismissed based on their perceptions of risk.70 Boston activists won a similar pro­ gram in the Jamaica Plains Investment Plan. There, five hundred commu­ nity members participated in a “greenlining” drive wherein they pledged

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to move their savings into the local financial institution that agreed to lend in the area, which led to a $500,000 agreement—­about $2.2 million in 2019 dollars—­for local mortgage and home improvement loans.71 In Baltimore, a local group won a “Dedicated Dollars” program from Balti­ more Federal Savings and Loan, in which individual savers could choose the neighborhoods where their bank would lend money.72 Protests against individual thrifts and banks brought new mortgage commitments to neigh­ borhoods in Denver, Oakland, and more.73 Groups from around the coun­ try sent Trapp and Cincotta clippings and reports of these local victories, which they published in their newsletter, Disclosure.74 Activists also won access to non-­FHA home financing by working with sympathetic state governments and private charities. In Illinois, for ex­ ample, state housing officials created a program in the winter of 1974 that gave funds to Chicago financial institutions to encourage them to invest in “their community’s housing market.” State officials were explicit that the move was an attempt to “bring an end to the mounting number of ‘redlining’ complaints.” Pennsylvania’s Housing Finance Agency intro­ duced a similar program, and in Boston, activists won a comparable ini­ tiative at the municipal level.75 In San Antonio, the Mexican-­American Unity Council enlisted a local nonprofit to “insure the supply of credit to low-­ and moderate-­income homeowners in the city” through an indem­ nity fund that insured home improvement loans in the city. The fund was based on the same principle as the FHA insurance programs in that it covered loans that financial institutions claimed were not “bankable,” but with the crucial difference that the insurance came from a charity working with a community organization, not the FHA.76 Other local philanthropic organizations and the Ford Foundation funded similar projects in cities around the country that coaxed banks into urban lending.77 Because their training prompted organizers to identify personal targets for their campaigns, simplifying issues to rally their constituents against specific “enemies,” activists often framed thrift executives and bankers as the “bad guys.” But a closer look at these local strategies reveals that activ­ ists often appealed to bankers’ concerns that they might find themselves tied to neighborhoods in which property values declined. The activists’ train­ ing in self-­interest organizing, after all, suggested that bankers would resist unless activists made the case that something was in it for them. Reinvest­ ment activists thus worked to persuade bankers that neighborhood people and local financial institutions had a shared interest in preserving older neighborhoods. And as these cases show, bankers were no monolith. Some,

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especially within the thrift industry, took seriously their industry’s mission to serve the local community and spread homeownership, even as others main­ tained that if they allowed activists with no banking expertise to influence their lending policies, they might find themselves insolvent. One reinvestment project called Neighborhood Housing Services (NHS) highlights the common ground that activists and some bankers found in their desire to improve redlined neighborhoods. First formed in Pitts­ burgh in 1968, NHS brought financial institutions, the city government, and local residents together for an all-­hands-­on-­deck approach to revital­ ize one specific community. All three parties had a unique role to play. Fi­ nancial institutions agreed to make conventional loans to “qualified bor­ rowers” in the neighborhood and contribute to the administrative cost of the program. Local residents found qualified borrowers for mortgage and home improvement loans. They coordinated home repair workshops and street beautification campaigns. Residents also made up the majority of the NHS board, and in that capacity they recruited foundations and chari­ ties to donate to a high-­risk revolving loan fund for borrowers who did not qualify for conventional loans. The municipal government did its part by making necessary improvements to public amenities such as streets, lights, and curbing, and also granting NHS participants flexible terms as they brought their houses up to local housing code.78 William Whiteside, a federal thrift regulator, took interest in this Pittsburgh experiment in 1970 and made the program grow. As the head of the Center for Executive De­ velopment in the Federal Home Loan Bank Board (FHLBB), Whiteside was sympathetic to the problems of urban America and believed the thrift industry should do more. He thought the Pittsburgh program could be adapted to other neighborhoods that had a sound housing stock and an organized community. In 1974, he created the Urban Reinvestment Task Force within the FHLBB to provide the initial funding and programmatic support to replicate the Pittsburgh experiment. That year, Whiteside’s task force started NHS projects in fifteen urban neighborhoods around the country. By the end of the 1970s, that number reached 121.79 While commercial banks participated in many of these partnerships, NHS was ultimately a thrift pet project that centered the industry’s communal ethos and commitment to homeownership. It embodied a refurbished version of financial common sense. Cincotta and Trapp’s desperate need for funding initially led National People’s Action on Housing to participate in the new Neighborhood Hous­ ing Services program. The Ford Foundation’s Anita Miller, who would

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later become a member of the Federal Home Loan Bank Board, agreed with NPAH’s mission and wanted it to succeed. At a breakfast with Cin­ cotta and Trapp, likely in 1974, she learned that the two leaders barely earned a salary and benefits. To support NPAH organizers, Miller told the two that they should identify concrete programs for which they could write grant proposals that Ford could then fund. Given Ford’s interest in NHS, and the fact that NHS promised the increased conventional loans that NPAH sought, Miller recommended that NPAH adopt the FHLBB’s new program. When Cincotta later submitted, in Miller’s words, “the worst proposals I ever saw,” Miller rewrote NPAH’s submission in order to bet­ ter meet the foundation’s expectations.80 It worked. By the middle of 1974, NPAH’s member organizations became champions of the NHS program, with dozens forming their own NHS chapters locally.81 NPAH member groups in Philadelphia, Salt Lake City, Atlanta, and more soon pushed their municipal governments to support their efforts to bring the program to their neighborhoods.82 One of Chicago’s NHS sites provides a representative example of how NHS worked in practice. In the Near North West NHS project, the city committed funds for three blocks worth of new sidewalk and issued a de­ cree of demolition on an abandoned building that residents wanted torn down. Facing the decree, the owner of the decrepit building sold the prop­ erty to a local carpenter who then obtained a conventional loan from a lo­ cal savings and loan participating in NHS. During the rehab process, local residents involved in NHS volunteered to guard the property and keep metal scrappers and vandals away. After the carpenter fixed the build­ ing, he turned it into a rental that provided new affordable units to the area. A ripple effect followed. As residents saw the new city sidewalks going in, fourteen homeowners hired the same construction company to work on their homes, interpreting the city’s and carpenter’s improve­ ments as indicators that the neighborhood would remain a decent place to live. For residents like these, the stabilizing effect that NHS had on the neighborhood eased their concerns about investing their own money into their properties—­a concern that many residents had when it seemed that their neighborhood’s property values might soon decline. It made little sense for homeowners to invest money in houses they might soon sell if appraisers’ perceptions of the neighborhood’s value mattered more than the condition of the home itself. But if a neighborhood’s housing values seemed to stabilize, then residents became less eager to move away and more willing to increase their stake in the neighborhood’s revitalization.

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NPAH member organizations used NHS programs in creative ways to preserve their aging housing stock and combat popular assumptions that integrating, older neighborhoods like theirs were doomed to decline. In Pittsburgh, the local NHS began a preventative maintenance program in which local residents paid $8 per month in order to gain access to an NHS tool-­lending library—­a truck that carried “every tool in the book.” The two men hired as the designated NHS work team, who lived in the NHS neighborhood, drove the neighborhood streets ready to repair “every­ thing from loose screws to leaky faucets to chimneys and aluminum sid­ ing.”83 In Cleveland, the NHS office facilitated local preservation efforts in a different way. It created a “preservation manual” for homeowners, contractors, and lenders to encourage housing rehabilitation that would maintain the Near West Side’s “distinctive visual character.”84 In Buf­ falo, the NHS decided that rehabilitating storefront properties on Bailey Avenue would indicate neighborhood turnaround more effectively than starting with home improvements, so they prioritized their loans accord­ ingly.85 The list goes on. In urban neighborhoods around the country, local residents partnered with city governments and local financial institutions to tailor revitalization efforts that met the specific resource needs of their particular communities. In city after city, stories emerged that revealed NHS offered residents much more than an opportunity to revitalize property. It gave many ur­ banites a new avenue to live their lives in dignity. Thomas Jones, the direc­ tor of the original Pittsburgh NHS, stressed in one congressional hear­ ing that Neighborhood Housing Services was not a housing program but, rather, a “people program.” To make his point, he recounted the story of an elderly woman in Pittsburgh living “in a very small humble home” with a total income of $130 a month. After surviving cancer, the woman turned to the task of repairing a deteriorating home for which she still owed monthly mortgage payments. According to Jones, the woman paid a local contractor to rebuild the steps in her home for the shockingly high amount of $4,000, taking out a new loan to afford the cost of that work. After paying her mortgage and home improvement loan each month, the elderly woman only had $13 left for everything else, including her medical treatments. That’s when NHS intervened. Her neighbors learned of her struggles and contacted the local NHS, which renegotiated her loans so she paid only $35 a month (possibly paying more in interest over the life of the loan, but Jones neglected to discuss that point). “She lived eight years longer because of that, I think,” Jones told the senators. “How do

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you evaluate the cost effectiveness of something like that?”86 Jones re­ flected a sentiment shared by reinvestment activists and other urbanites who participated in local NHS programs during the 1970s. The impact that NHS had on the quality of life for low-­ and moderate-­income resi­ dents of older, transitional neighborhoods could not be measured in dol­ lars and cents alone. It offered them a way to regain control of their fates, which for too long they felt had been ceded to financial institutions and city governments who had written them off. In these local reinvestment efforts, NPAH members revealed two ways in which the financial common sense forged through their relationships with thrifts shaped their ideas about banks in general. One was the over­ simplified view of banks as intermediaries that merely moved people’s money around. This intermediary framing echoed George Bailey’s speech from the bank-­run scene in It’s a Wonderful Life. It was also how thrift executives talked about their own business. But it was not historically ac­ curate. The intermediary framing ignored the reality that financial institu­ tions provided a far more important state function—­they created money when they debited a customer’s account. The amount of money a bank debited to its customers’ accounts did not reflect the amount of cash it held on-­site in a vault. Instead, a debit brought into existence new, spendable money that was backed only by a smaller dollar amount held in reserve. Activists seemed to misunderstand the role of banks as creators of state-­ backed money. As Baltimore’s “Dedicated Dollars” campaign reflected, reinvestment activists often framed their demands as those of depositors, ordering recompense based on the idea that financial institutions held “their money.” Activists charged that banks were “taking mo­ney from people living in the city” without “put[ting] it back to work in the com­ munities where these people live.”87 These consumer-­based demands re­ flected the narrow terms that the intermediary framing had normalized—­ that banks were only accountable to people who held accounts with them, not to the general public. This intermediary framing was part of activ­ ists’ financial common sense, and it kept them from reviving the idea of money as a public good, as Populists had done during the late nineteenth century.88 Second, activists extended their ideas about how thrifts ought to behave to commercial banks. Activists conflated commercial banks with thrifts in large part because, recently, commercial banks seemed to be acting a lot like thrifts. Starting in the early 1960s, commercial banks struck blows to thrift dominance in both mortgage lending and consumer savings. Commercial

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banks took advantage of new regulations during the 1960s that liberal­ ized their lending powers and allowed them to make residential mortgages comparable to those of the thrifts. Commercial banks also lobbied the Federal Reserve Board to change Regulation Q in 1954 so they could bet­ ter compete for consumer savings. By 1965, commercial banks captured 60 percent of new savings, compared to thrifts’ 19 percent.89 And so NPAH’s national campaigns and their affiliates’ local protests often hit thrifts and commercial banks together, despite the fact that commercial banks did not have the same community ethos, nor regulations that positioned their role in spreading homeownership as the justification for their very existence. Over the course of the 1970s and 1980s, trying to bring commercial banks in line with the service ethos of the New Deal financial common sense would prove particularly difficult.

Organizing for Disclosure The community-­bank partnerships that activists won, like Neighborhood Housing Services, produced many successes. Yet obstacles remained. To activists’ charges of geographic, race-­based discrimination, many unco­ operative bankers responded that the patterns visible were the result of market forces rather than prejudice. By framing home buying as the result of the choices made by atomized buyers and sellers, these bankers main­ tained that they responded to consumer preferences and market condi­ tions but did not create them. When activists demanded that one banker explain why his institution failed to lend in one Chicago neighborhood, for example, he did not deny activists’ charge that his bank made almost no loans in a seventeen–­zip code area. But he claimed this outcome was the result of consumer preferences shaping the market, not discrimina­ tion. One bank president asserted that his institution “did not redline” because it technically had “no policy that restricts or forbids [lending] in any of the geographical sections of the community we serve,” he said.90 There was just no business in those neighborhoods. As the bankers’ remarks suggest, many financial institutions pointed to the absence of explicit references to race or place in their official poli­ cies on loan refusals. But NPAH leaders did not find such evidence per­ suasive. Instead, as leaders and affiliates learned more about urban lend­ ing, they identified nearly a dozen distinct “methods of redlining” that were more nuanced than banks’ outright denial of conventional loans.

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From evidence of members around the country, they heard that poten­ tial homebuyers in transitional neighborhoods had been redlined through banks demanding higher down payments, higher interest rates, higher closing costs, and shorter payback periods. They also found that some financial institutions had policies against lending on homes of a certain age and homes that didn’t cost enough to make a loan worthwhile for the banks. NPAH leaders also found stalled appraisals, low appraisals, and strict appraisals posed obstacles for potential borrowers. It was more than the absence of conventional loans that caused redlining, they said. Redlining also occurred when financial institutions offered conventional loans at un­ reasonable terms.91 Despite their growing knowledge about how redlining worked, activ­ ists were keenly aware that they needed more information to prove that the lack of loans in their neighborhoods resulted from discrimination rather than a lack of interested buyers. In their struggles to convince bankers to make fair conventional mortgages, activists pointed to NHS and other mortgage programs from local thrifts as counterevidence to show that there was indeed demand for mortgages in transitional urban neighborhoods. But such evidence was usually anecdotal. Activists fre­ quently described “gut feelings” and “understandings” that banks redlined their communities, but such claims were even less convincing.92 To per­ suade bankers, their regulators, and lawmakers that financial institutions had reneged on their obligations to serve their communities required more than accusations. “Yelling out is not going to help you,” one senator later told activists, but “concrete evidence” would.93 As one activist put it, it seemed “the biggest obstacle” to saving NPAH’s neighborhoods was “our own lack of knowledge.”94 Access to lending data—­what activists called “disclosure”—­thus became a central demand of the reinvestment movement. If activists were going to bring banks back in line with their financial common sense, they first had to document that bankers had dis­ appeared from the urban mortgage market, even though there were good loans to be made there. In the early 1970s, the lack of available public information about thrifts’ assets and deposits was striking. In congressional hearings, meetings with city officials, and talks with bankers, activists learned that the data they sought about where thrifts issued loans, and to whom, was simply unavail­ able to the public because it was the private property of thrifts. Reinvest­ ment activists tried to compile this data on their own by researching public records. In Chicago, NPAH staff spent days examining deeds on microfilm

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at City Hall to uncover which financial institutions granted mortgages in which neighborhoods. They collected newspaper clippings to support their hypotheses that urban thrifts lent more money in suburbs—­still within the regulated fifty-­mile radius—­than in their older, urban communities. But ac­ tivists’ data was incomplete. To gain a comprehensive view of the distribu­ tion of conventional and FHA loans in metropolitan areas throughout the country, activists demanded “national mandatory full public disclosure.” They envisioned a massive, nationwide ledger that would present the geo­ graphic locations of loans made on one side, and the geographic locations from where thrifts drew their deposits on the other.95 NPAH first took their demand for disclosure to the Federal Home Loan Bank Board—­the federal regulator with authority over the savings and loans. When activists researched who had the power to police their local savings and loans, they found the FHLBB was already in charge of granting charters to new thrifts and conducting regular “safety and sound­ ness” examinations. Given its authority, activists reasoned that the board could easily add data collection to these existing procedures. NPAH lead­ ers demanded that the FHLBB conduct a survey of thrifts in Chicago to make public the geographic distribution of loans in relation to savings. The survey, activists hoped, would prove that thrifts were “taking money out of certain communities but not returning it in the form of mortgages.” In the summer of 1973, Cincotta requested a meeting with the FHLBB’s housing and urban affairs director and a board official from Chicago’s Federal Home Loan Bank branch to discuss the disclosure survey. Regu­ lators expected a small meeting, but when they found themselves con­ fronted by large group of demanding activists, they left.96 NPAH leaders next hit another FHLBB official at his home, demanding the survey. That hit did not work, either. One month later, activists finally made headway when a third attempt to pressure an FHLBB official publicly conceded, “Redlining occurs but we don’t know what to do about it.” With an of­ ficial on record that thrifts indeed redlined, the FHLBB agreed to survey all savings and lending data from Chicago thrifts between 1971 and 1973. One sympathetic regulator called the survey a “milestone” because, be­ sides one study of a single savings and loan in Pittsburgh, “no similar tar­ geted gathering of [lending] data had taken place around the country.”97 The Ford Foundation credited NPAH’s “highly publicized” hits against the FHLBB for its decision to take new action.98 While the survey was a significant victory, several of the provisions made it less than ideal for NPAH’s purposes. Participation was voluntary;

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savings and loans could opt out. It was also anonymous. Even the thrifts that agreed to participate would not be identified by their names, leav­ ing activists no way to determine which S&Ls completed the survey and whose lending record was whose. Furthermore, the FHLBB aggregated the data, lumping together all loans made by participating thrifts and re­ porting the number of loans and dollar amount by zip code. While the activists gained some sense of the geographic distribution of loans, they protested that a zip code was too large a unit to reveal any meaningful lending patterns. One zip code could include neighborhoods of varying income levels and racial demographics, so activists instead wanted data organized by census tract. Yet despite its limitations, the FHLBB survey proved essential for the activists’ ongoing fight for disclosure. Some thrift executives and regulators protested that to collect lending data would be too costly, in both time and dollars. But when 65 percent of Chicago’s savings and loan associations—­127 thrifts in total—­voluntarily shared their savings and lending data, their participation undermined the claim that disclosure created such a burden.99 As NPAH pressured the FHLBB, its local affiliates also lobbied for disclosure through municipal ordinances and state laws. With NPAH lead­ ers heading the efforts in Chicago, that city’s disclosure campaign became a model for others. The Chicago effort received a boost from the pow­ erful Mayor Richard J. Daley, who became a reinvestment ally on this issue. Not usually one to work with confrontational organizations, Daley saw the reinvestment movement’s goals as compatible with his own effort to reshape Chicago. Because the city was losing residents and their tax dollars to the suburbs, it was in his interest to slow that exodus. If disclo­ sure could reduce white flight by eventually increasing Chicagoans’ ac­ cess to home improvement loans and mortgages, Daley would support it. “Too many institutions have followed negative and hostile lending prac­ tices which have undermined entire neighborhoods,” Daley told activists, “senselessly writing off whole sections of the city.” As a longtime resident of Chicago’s working-­class Bridgeport neighborhood, Daley likely saw the activists as representing his constituency. “I live in an old neighbor­ hood, and I’m happy to say a good neighborhood,” he said. “It would be wrong for any bank or lending institution to prevent a young couple from moving in or an old couple from fixing up their place,” the mayor told them, avoiding activists’ framing of redlining as race-­based geographic discrimination.100 Activists hypothesized that Daley also supported them because, as Trapp put it, “he recognized power,” and the neighborhood

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groups working on reinvestment activism knew how to wield it.101 Daley later testified alongside Cincotta in congressional hearings about the di­ sastrous effects of FHA mortgages and the need for urban conventional financing.102 The Chicago disclosure ordinance resulted from effective organizing, but also from a coincidence that became part of reinvestment movement lore. When Daley attended an NPAH conference in April of 1974, rein­ vestment activists asked him to make a statement about redlining. Da­ ley’s speechwriter called Trapp to discuss the mayor’s remarks. As Trapp described “banks not making loans,” the speechwriter connected some dots from his own life and was shocked. “You mean banks will make a loan in one neighborhood but not in another?” Trapp remembered him saying. “Damn. That happened to me when I came to Chicago.” Banks refused the white speechwriter’s request for a mortgage in Hyde Park, a racially inte­ grated South Side neighborhood, so he bought a house in Lincoln Park, a more affluent and majority-­white neighborhood. The speechwriter’s new­ found anger influenced the mayor’s enlivened remarks. At the conference the next week, Daley condemned “lending institutions which take money from communities and then refuse to have anything to do with the com­ munity.”103 In a surprise move, the mayor promised to introduce an ordi­ nance to the City Council to require any bank with city deposits to reveal where they collected savings and where they issued loans. The activists had not asked the mayor for such an ordinance, but the speechwriter must have “transferred his anger to Daley,” who supported a new initiative.104 Daley’s pledge turned into an “innovative city depository program” that required all financial institutions holding city funds to take an antiredlin­ ing pledge and to disclose their deposit and lending information by census tracts.105 NPAH leaders then added a state-­level victory. Not to be outdone by the big-­city mayor, Illinois governor Daniel Walker created a task force to study redlining. The report’s section on “methods of redlining” copied NPAH’s eleven-­part definition of redlining verbatim, and cited the orga­ nization in doing so.106 The report’s recommendations became new state laws that outlawed redlining and required disclosure.107 NPAH’s organizing enabled a sudden flowering of activism for dis­ closure around the country, with impressive victories. The Chicago or­ dinance and Illinois state law soon became models for NPAH affiliates working to pass their own state and local policies.108 NPAH held work­ shops on what disclosure offered and how to win it. The Chicago leaders

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created glossaries of lending terms—­assets, FHA 203(b) program, Fannie Mae, advanced commitment, appraisal, and so on—­to educate affiliate or­ ganizations about how home financing worked so they could better define their disclosure demands. In 1975, reinvestment activists had either won or were in the midst of campaigns for disclosure laws in nine states: Illi­ nois, Michigan, California, Indiana, Pennsylvania, Minnesota, Ohio, Mas­ sachusetts, and Wisconsin. Local groups mobilized behind city ordinances in Rockford, Illinois; Hartford; Denver; and Cleveland at the same time. Activists in Massachusetts made disclosure a gubernatorial campaign is­ sue, with Governor Francis Sargent and challenger Michael Dukakis pledging to support a state law should they be elected.109 Their success re­ vealed that policymakers shared their conviction that banks owed some­ thing to their communities. What’s more, bank-­based solutions to the ur­ ban housing crisis also required no municipal or state spending, making bank reinvestment an attractive solution to a so far intractable problem. “The lending industry is going to have to change its attitude about the value of investing in our nation’s urban communities,” one activist said, because new disclosure laws and ordinances showed that policymakers “throughout the country [were] beginning to respond.”110 In addition to winning disclosure policies, activists pieced together their own lending reports by researching data on local home sales and gathering redlining stories from prospective homebuyers. For example, activists from People Acting through Community Effort (PACE), an NPAH affiliate in Providence, staged a hit with the goal of obtaining data from individual banks when they had no state or local disclosure laws. Members of PACE protested at both the home and office of the president of the Old Stone Bank until he agreed to meet with them. At the meeting, the bank president agreed to a new policy to put in writing “all mortgage requests, approvals and refusals.” This victory was significant because be­ fore this policy, the bank could have rejected a person over the phone or in person without leaving any paper trail of their interaction, and without providing any specific reason for the rejection.111 Efforts for disclosure were further helped by a growing number of urban scholars who lent their research and expertise in support of reinvestment activists’ explanation for the urban crisis. NPAH leaders in Chicago estab­ lished relationships with several academics who had credibility as urban experts. The urban sociologists Calvin Bradford and Darel Grothaus and the legal scholar Leonard Rubinowitz bolstered NPAH’s claims in an influ­ ential 1975 essay called “The Urban-­Suburban Investment-­Disinvestment

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Process,” which argued that older urban neigh­borhoods declined not be­ cause of inevitable processes but, rather, because of the “ideologies and perception” of “a relatively small number of private sector actors”—­ institutional investors, developers, and mortgage bankers—­who believed such places to be declining and had the power to create self-­fulfilling proph­ ecies.112 The sociologists George Sternlieb of Case Western University and Art Naparstek of the National Center for Urban Ethnic Affairs also produced “activist scholarship” in support of reinvestment claims, as did others. As evidence from government, academic, and ad hoc disclosure analy­ ses stacked up, the patterns revealed a striking gap between the dollar amount and number of loans issued in older, racially changing neighbor­ hoods and those issued in their wealthier and suburban counterparts. The PACE study claimed that only twelve mortgages were made in an older Providence neighborhood, while 104 were made in one nearby suburb alone.113 A study of St. Louis banks showed that local savings and loan investment in the city dropped from about $30 million in 1960 to about $14 million in 1972, even as deposits made by urban savers increased by 35 percent in the early 1970s.114 Local studies drew media attention that put activists’ claims in headlines. “Lenders Stuff Suburbs, City Starves,” one Chicago Tribune article put it.115 While activists and bankers contin­ ued to debate the explanation for that gap, NPAH members had a mount­ ing case that lending disparities did exist between “transitional” neigh­ borhoods and others, and those disparities needed explaining. The media further elevated activists’ charges that the lending dispari­ ties constituted discrimination. Indeed, the change in the media’s use of the term “redlining” gave new credibility to activists’ charges of antiur­ ban, racial bias. Before the reinvestment movement began, Americans had no consensus definition of redlining. Observers during the 1960s of­ ten defined it as an insurance practice. Redlining “refers to the practice of marking off certain areas in a city or town to indicate that property in such areas is uninsurable,” one paper put it.116 By the early 1970s, redlin­ ing was a “problem of the ghetto” wherein banks “refus[ed] to grant loans to inner city projects.”117 Such accounts were for the most part descriptive, explaining what these institutions did—­without much critical analysis re­ garding why. By the second year of NPAH’s disclosure activism, however, the press’s definitions of redlining began to stress that banks’ perceptions of urban decline were subjective. The Tribune, for example, described redlining as denying loans to “areas believed to be deteriorating.”118 Other

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definitions affirmed activists’ argument that locations could be victims of discrimination. Reporters defined redlining as “financial discrimination against an area”119 or said that banks refused to lend “solely because of the location of the property.”120 They were also explicit in connecting race and place in describing redlining as the “systematic refusal” to lend in neigh­ borhoods that were “changing,” “racially changing,” or “rundown.”121 Even coverage that questioned whether systemic geographic discrimination took place nonetheless included activists’ analysis. When an Illinois Legislative Investigating Commission found “no proof” of redlining in one 1974 report, for example, the Tribune responded with skepticism. “Tell that to someone who has tried to sell his home or fix his porch or roof in one of these ar­ eas,” one reporter wrote, “and you’ll get an argument.”122 By the spring of 1975, local studies and national headlines had made the charges credible.123 Activists remained committed to a federal disclosure policy that applied to all financial institutions because it would be tedious—­and impossible—­for community groups to win data bank by bank.

The Role of Reinvestment in Debates over Financial Reform The reinvestment movement’s demands for increased access to conven­ tional loans and for loan disclosure posed new problems for thrifts and commercial banks, but most especially for the savings and loan execu­ tives who already had plenty to worry about. Indeed, in pressuring banks to lend in redlined neighborhoods, activists unknowingly inserted them­ selves into a decade-­long debate about reforming the New Deal financial system, and the role of local thrifts within it, that had little to do with cities. Instead, these debates in Congress and among financial regula­ tors were about strain on the entire financial system. Before the credit crunch of 1966, the system that ensured thrift dominance in mortgage making was rather stable, and thrifts had easy access to capital. Regula­ tion Q gave them an advantage over commercial banks by limiting the amount of interest that commercial banks paid to depositors while set­ ting no such restriction on thrifts. Thrift executives cited this edge as “the primary reason” that savings associations grew faster than other banks during the postwar period. This growth, combined with their mission to finance homeownership, secured thrifts’ dominant position in residen­ tial mortgage markets for a generation.124 The inflation and bouts of high interest rates that followed the 1966

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credit crunch, however, raised questions about the viability of the New Deal system and challenged the rationale for thrifts’ special treatment. Congress identified competition for savers’ business as one reason for the crunch, believing that as thrifts had outbid commercial banks for deposits, they had helped drive up interest rates. Congress thus extended Regula­ tion Q in 1966 to cover thrifts to reduce this competition. But this legisla­ tion changed, rather than eliminated, thrifts’ privileged position over the banks. Congress gave thrifts the authority to pay a slightly higher inter­ est rate to savers, called “the differential,” on the rationale that as the nation’s home financiers, thrifts needed secure access to the funds that they turned into mortgages.125 The differential, however, did not stabilize interest rates. In early 1970, another jump in interest rates suggested that policymakers did not yet have the problem under control.126 And even during moments of interest rate stability, contemporaries were skeptical that such stability would last. As activists sought to slow FHA abuse and win conventional credit by unconventional means, policymakers in Washington debated what kind of government intervention would both stabilize the financial system and en­ sure high rates of homeownership. Free-­market enthusiasts and commer­ cial bankers found common ground in calling for deregulation, arguing that increased competition was best for the new postcrunch reality. The first comprehensive plan that endorsed overhauling the New Deal regime in favor of a free-­market approach emerged in 1971 from a Nixon-­era presidential commission convened to investigate the persistent inflation of the late 1960s. The Commission on Financial Structure and Regulation, or the Hunt Commission, crafted “recommendations that would improve the functioning of the private financial system.”127 The commission rec­ ommended that the system move “as far as possible toward freedom of financial markets and equip all institutions with the powers necessary to compete.” Its authors wrote, “The public will be better served by such competition” because “markets will work more efficiently in the alloca­ tion of funds” to meet all credit needs, including the need for homeowner­ ship.128 So the commission wrote at the moment that Cincotta and Trapp combated panic peddlers back in Austin. In step with the Hunt Commission’s arguments about the efficiency of market competition, mid-­1970s advocates of financial deregulation stressed that New Deal regulations, written in the wake of the Great Depression and concerned with stopping bank runs, were outdated and cumbersome. Commercial bankers and their allies in Congress charged that existing

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regulations did not help financial institutions to navigate today’s crisis, which was created by tight credit rather than Depression-­like bank runs. The “over-­protected financial system is not suited to efficiently meet the nation’s current demands,” one bank regulator said.129 Recent advances in technology also made old regulations obsolete. The past decade had wit­ nessed the emergence of electronic bank transfers that would allow money to cross geographic boundaries quickly, if not for all the outdated state and federal bank laws and regulations that kept it from doing so. To avoid the same issue in a future generation in which other unforeseen problems might arise, 1970s regulators felt it was best to scrap Depression-­era rules entirely. “We are reminded of the English ferry operators who petitioned the Parliament to forbid the building of bridges when cast iron structures became economically feasible,” two financial experts wrote in the com­ mercial bank trade publication American Banker. Lest contemporary regulators seem just as foolish as the world changed around them, these and other deregulation advocates recommended an end to “prohibitive legislation.”130 Yet the idea that financial institutions needed regulation to avoid crisis remained strong among federal policymakers. The Hunt Commission’s vision for deregulation gained little support outside of the commercial bank industry and free-­market proponents when it released its report in 1972.131 While free-­market enthusiasts prescribed freeing the New Deal sys­ tem of its regulations, many liberal policymakers called attention to the social effects of persistent inflation, which they charged resulted from too little congressional intervention in credit markets, rather than too much. These advocates of “credit allocation” got closest to resurrecting the money question of the turn of the century. They argued that in the cur­ rent regime of high interest rates, credit flowed to people and institutions that could afford its high price, rather than to people and institutions that most needed it. As it stood, the unelected Federal Reserve Board, not the democratically elected members of Congress, had the power to de­ termine the nation’s credit flows by its manipulation of interest rates. But the nation’s credit was a resource too important to be managed by an un­ elected Fed. Liberal members of the House and Senate banking commit­ tees, led by Representative Wright Patman and Senator William Proxmire, argued that without “selective credit controls,” vulnerable but important sectors such as housing, farming, and small business—­the nation’s “so­ cial priorities”—­had to fend for themselves in a competitive, expensive lending marketplace. The solution, these interventionists proposed, was

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to curb the Fed’s power, giving democratically elected policymakers the ability to allocate credit. In their view, credit was a public resource that should be directed to achieve social objectives, and it therefore required governmental intervention.132 As policymakers debated which of these competing prescriptions might best fix a struggling financial system, the savings and loans that reinvest­ ment activists had been protesting preferred neither. Competition was al­ ready bad enough, and deregulation promised to make it worse. Commer­ cial banks increasingly captured new savings accounts and had increased their share of the mortgage market over the 1960s. The FHA insurance programs that reinvestment activists protested also increased competition for thrifts by expanding the activities of unregulated mortgage houses. The US League of Savings Associations, the largest thrift trade association, warned that a free-­market prescription might allow these other financial service providers to make even more headway into thrifts’ traditional busi­ ness at a moment when they were already struggling.133 Yet credit alloca­ tion sounded just as bad. Savings and loans executives found it increasingly unsustainable to hold long-­term, fixed-­rate mortgages in an era of tight credit and high interest rates. Homeowners who took out mortgages be­ fore the credit crunch had locked in low interest rates, and as interest rates rose during periods of tight credit, thrifts could not adjust those mortgages to keep up with climbing rates. An economist put it in stark terms, claim­ ing that thrifts “face[d] a lingering death” if they couldn’t balance their portfolios.134 Thrifts proposed several solutions to this problem—­among them permission to issue variable-­rate mortgages with interest rates that increased over time, and permission to diversify their lending portfolios to rely less heavily on mortgages.135 Activists were unsympathetic to, or perhaps unaware of, these larger obstacles facing the thrift industry in the wake of the 1966 credit crunch. But to acknowledge the obstacles facing the savings and loan industry is not to downplay the role that racialized assumptions of risk played in de­ termining whether and where local thrifts made loans.136 The US League and many thrift executives argued that it was tight credit that made them stop lending in transitional neighborhoods, but archival evidence reveals that some lenders indeed considered the race of an applicant or the racial demographics of a neighborhood at the same time NPAH demanded dis­ closure. One California savings and loan even used the term “deroloc” (colored spelled backward) as a code on mortgage applications as late as 1976. Many thrift officers, too, rejected arguments by “politicians and

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consumer groups” who said that racial integration should not influence property appraisals. To the contrary, “when the ethnicity of the people that make up a given marketplace is unstable, i.e., in a state of rapid change,” one thrift appraiser wrote, “the value base is likewise unstable” and therefore risky. To claim otherwise contradicted best practices in the industry and would “compromise [appraisers’] consciences” as well as “their civil rights.”137 This rationale conflated stability with racial ho­ mogeneity and value with whiteness, thus dismissing the value that rein­ vestment activists assigned to racially integrated and majority-­minority neighborhoods. It’s impossible to disentangle which of the thrifts’ lending choices were shaped by the strains that high interest rates put on the industry and which were shaped by the logic of white supremacy. Explicit references to blackness such as the “deroloc” coding were few and far between. But both factors mattered. And in the era of tight credit, reinvestment activ­ ists pointed to patterns of uneven lending, arguing that the disappearance of mortgage money was not shared equally throughout the metropolis. Indeed, at the same time NPAH affiliates staged hits for more mortgage money, suburban builders had found plenty. Some had even overbuilt and could not repay their debts, so they lobbied Congress for homebuyer sub­ sidies in an effort to find buyers for new suburban homes.138 Older commu­ nities undergoing racial transition thus bore the brunt of the era’s credit scarcity. Reinvestment activism against thrifts raised the alarm of many savings and loan executives. Grassroots activists demanded new urban lending, seemingly without full knowledge of the challenges facing the industry. Instead of supporting thrifts’ efforts to diversify and change the structure of the fixed-­rate mortgage, National People’s Action on Housing joined with labor unions and consumer advocates to protest thrifts’ variable-­rate mortgages, fearing that rates would only rise and squeeze borrowers. Cin­ cotta and her colleagues expected thrifts to return to an old way of do­ ing business that savings and loan officials saw as unsustainable. To thrift executives, reinvestment demands sounded not only like the allocation of credit but like the allocation of credit that would make their institu­ tions responsible for lending to the least profitable borrowers. If Cincotta, Trapp, and their colleagues made headway, they might force thrifts not only to stick with a failing business model but also to do so in a credit market with low returns and, worse, with collateral that market trends suggested would decline in value. Some thrifts had already moved out

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of cities and renamed themselves to avoid becoming enmeshed in neigh­ borhoods where property values promised to fall. For example, Austin’s Laramie Federal, which had served Cincotta’s neighborhood, moved to a nearby suburb and renamed itself First Federal of Schaumburg.139 Much to the dismay of the thrift industry, and seemingly outside the purview of activists, the advocates of credit allocation had momentum in the years following the credit crunch. Congress passed the Credit Con­ trol Act in 1969, which gave the president “stand-­by power” to “institute voluntary programs of credit restraint.”140 After passage, and as NPAH organized for conventional credit, several developments suggested that Congress might choose to experiment with credit allocation. In 1973, Con­ gress directed the Congressional Research Service to report on how other nations used their central banks to allocate credit for “social needs,” sug­ gesting that Congress was looking for best practices to mimic.141 During the ninety-­third Congress alone, 96 credit allocation bills were sponsored by 147 members of the House of Representatives who thought credit al­ location was necessary to assist industries and borrowers who could not afford high interest rates. The Hunt Report, in contrast, garnered little se­ rious attention.142 When its principles resurfaced in Nixon’s 1973 Financial Institutions Act, and again in a Ford administration bill in 1975, legisla­ tors thought deregulation too risky.143 In the midst of local redlining struggles and national debates over fi­ nancial reform, the 1974 midterm elections ushered in a new Democratic congressional majority that furthered momentum for credit allocation. In the wake of the Watergate scandal, Democrats swept the House and Senate, enjoying significant majorities in both, and new leadership gained control of the congressional committees that oversaw the nation’s finan­ cial system. Congressman Henry Reuss of Wisconsin took over the House committee on banking and vowed to turn the committee into an active agenda-­setter. “We have jurisdiction over price controls, the money sup­ ply, credit allocation, the financial institutions, housing and the allocation and rationing of fuel” and should use that jurisdiction, he said.144 William Proxmire became chairman of the corresponding Senate committee. He already had a reputation as being sympathetic to consumer and housing issues, supporting truth-­in-­lending legislation, advocating the reinstitution of HUD programs after President Nixon cut them in 1973, and introducing his own credit allocation proposal in the spring of 1971. “New Congress to Stress Public Interest,” warned a front-­page headline in American Banker magazine.145

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Reinvestment activists seemed not to have known that the congres­ sional banking committees were in the midst of another round of debates about the relationship between credit and social priorities in the spring of 1975, around the same time that they asked the Senate for a law requiring disclosure of banks’ lending records. That March, House Chairman Reuss introduced the newest credit allocation proposal, the Lower Interest Rate Act of 1975, with the goal of “reduc[ing] the cost of credit in general” as well as “allocat[ing] credit to priority areas and away from nonpriority areas of the economy.”146 Yet Congressional support for all-­out credit al­ location remained too tepid for Reuss’s bill. The chairman submitted a new, weakened version of the bill, requiring that banks simply “report” their lending in “national priority” sectors so legislators could at least un­ derstand where credit flowed, even if they could not allocate it. In other words, his weakened bill called for disclosure in a different context. Reuss scheduled the new hearing for May 12, 1975. But just one week before Reuss’s hearings began in the House, on May 5, activists won their Senate hearing on a national mandatory dis­ closure bill: the Home Mortgage Disclosure Act (HMDA, pronounced “humda”). As the bill’s preamble put it, the act would “improve public understanding of the role of depository institutions in home financing.” It would force banks to draft reports for consumer use, describing where they made their loans. This requirement to report on lending sounded a lot like Reuss’s new reporting bill. It sounded like credit allocation in dis­ guise. Representatives from the National Savings and Loan League and the US League of Savings Associations, as well as the chairman of the Federal Home Loan Bank Board, prepared for yet another congressional debate about whether financial institutions should direct credit to “social priorities,” and specifically what responsibility savings and loans had in solving the urban housing crisis.147

HMDA Hearings Activists won their day in Congress due to the growing acceptance that red­ lining contributed to urban decline, but they were further helped by relation­ ships they forged with the Senate Banking Committee. Cincotta and Trapp found new allies in Ken McLean and Robert Kuttner, two sympathetic staffers working for Senator Proxmire. McLean, who became the Bank­ ing Committee’s staff director when Proxmire assumed the chairmanship,

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had grown up on Chicago’s Southwest Side and “understood the neigh­ borhood’s problems.” He had introduced Cincotta and other NPAH ac­ tivists to Proxmire in the spring of 1974. “We were in his office—­he was one of the many lawmakers we had visited” during a trip to Washing­ ton, Cincotta recalled. Proxmire “was familiar with the progress of our Milwaukee affiliate in fighting redlining in his home state”; he said “that if we [NPAH] wrote a bill calling for disclosure, similar to what we had proposed in Chicago, he would introduce it.”148 Seeking an investigative journalist to serve as the Committee’s chief investigator, McLean and Proxmire hired Kuttner. A self-­described “hopeful, idealistic left liberal,” he had already worked on Capitol Hill before leaving for a career in jour­ nalism and becoming active in “consumer movement politics.”149 Activists wrote a draft of a national disclosure bill at an organizer conference and delivered it to Proxmire. Trapp called the original version, which has since been lost, a “beautiful thing” that “got chopped to shit,” first by Proxmire and then by the committee. But he nonetheless called Proxmire’s bill “a fairly decent piece” of legislation.150 On the first day of hearings on the bill, Proxmire opened discussion of the Home Mortgage Disclosure Act with a passionate appeal that echoed the language of the reinvestment movement, suggesting more was at stake than mere information. He stressed the unfair consequences of redlining for urban customers who saved at their local institutions. Banks “welcome their business at the deposit window,” the senator explained. “They save their pennies, but when it comes time for the dream of homeownership,” urban savers “find they live on the wrong side of the tracks.” Proxmire described “blockbusters” who took advantage of “changing” neighbor­ hoods, stressing that redlining was “bound up with racial change.” He also reiterated activists’ assertions that bankers’ misguided perceptions of risk, not the objective value of urban neighborhoods, ruined “stable middle-­class neighborhoods.” He continued, “When we add up all of these individual lenders’ supposedly rational decisions, they are irratio­ nal taken as a whole, and viable neighborhoods die for lack of mortgage credit. That is redlining.” Cincotta couldn’t have said it better herself.151 Activists took the stand first. In demanding that banks disclose savings and lending data, they drew on the intermediary framing to claim their “right to know” what happened to the “money we invest.”152 Cincotta said, “We as citizens have the right to know how we are being denied the ben­ efits of our work, blood and sweat,” charging that urban neighborhoods, as the “backbone of this country,” were being “crushed by this stoppage

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figure 6.  Gale Cincotta and other NPA leaders testify in front of the House Banking Committee. Courtesy of People’s Action

of life-­supporting funds.”153 The activists suggested that they maintained ownership over “their money” in the form of deposits. Banks were “stew­ ards of our savings accounts,” in their view.154 “All we are asking for,” said Cincotta, “is a fair return on our savings.”155 One reinvestment organization said, “If our money is good enough to put in their banks, then our neighbor­ hoods are good enough to get some of it back.”156 The speakers stressed the value of their current communities and in­ terpreted the withdrawal of neighborhood bankers as a betrayal of those who trusted local banks with their savings. Cincotta described a “financial man from Chicago” who would only conduct urban appraisals if he had two police escorts. By treating the neighborhood like a dangerous place, she suggested, he was “spreading the big lie” that her community was in decline even though “people want to live there.”157 Ann Hanlon of In­ dianapolis described living in an “older” but “cherished” neighborhood where residents had nearly been “FHAed to death” when lenders stopped issuing conventional mortgages there.158 “When they cut off money from a neighborhood and invest only in the suburbs,” another put it, “they are stabbing the community in the back.”159

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Activists told Congress that in refusing to lend in racially changing neighborhoods, bankers made racial integration nearly impossible and encouraged resegregation through white flight to the suburbs. The wit­ nesses stressed that theirs were the neighborhoods where integration was actually working, but banks were making it difficult to maintain such communities. Alice Chase of Providence described her neighborhood as a “very heterogeneous area” where “people of all races and all social classes live.”160 Theodore Snyder from Milwaukee described his as a “working-­ class, integrated, fringe area [that] bordered the so-­called inner city.”161 But mounting evidence suggested that lenders’ perceptions of these ar­ eas as declining had created disincentives for new families to move into them and for current residents to upgrade their homes. Several activists described their research findings on urban-­suburban disparities, includ­ ing surveying local homebuyers and sending testers into local banks to document unequal loan terms. And their evidence suggested a separate and unequal real estate market that divided majority-­minority or racially changing neighborhoods from the rest of the metropolis. In Chicago, for example, banks demanded as much as a 50 percent down payment on a mortgage in a transitional neighborhood, compared to 5 or 10 percent in the suburbs. The standard thirty-­year mortgage urbanites expected from New Deal– ­era thrifts also disappeared from their communities. Banks instead expected urban borrowers to pay back their loans in ten or fifteen years, which made monthly payments higher. Sometimes bankers would not even accept a borrower’s application for a mortgage in an integrated neighborhood, guaranteeing the potential homeowner would have to buy elsewhere or seek an FHA loan.162 These “subtleties and difference[s] in terms,” Cincotta charged, skewed incentives in favor of suburban living.163 A group from Milwaukee said that such disparities “force[d] families to move to the suburbs” when they might not have otherwise.164 The ad hoc redlining studies that activists produced proved crucial for persuading some members of Congress that their testimony revealed dis­ criminatory lending patterns, not isolated anecdotes. One Cincinnati re­ investment group presented findings from a study in which they examined mortgage deeds for three sample neighborhoods that had similar housing stock. They presented the evidence of neighborhood-­level lending dis­ parities. The majority-­white Oakley neighborhood received 86 percent conventional funding from local banks, whereas majority-­black Bond Hill received only 16 percent conventional. The bulk of home financing there came from FHA loans instead. Activists tested seven variables—­income,

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education, occupation, condition of housing, average value of nearby prop­ erties, percentage of owner-­occupied homes, and race—­to explain the difference, and they found that the first six variables mattered little. “The racial composition of the three communities,” the activist-­researchers concluded, “must be seriously considered as the major determining fac­ tor.”165 Chicago’s NPAH affiliate conducted a similar study that traced the mortgage practices of three neighborhoods over twenty-­five years. The two neighborhoods they claimed were redlined, Roseland and West Englewood, experienced “racial transitions,” while the third, Jefferson Park, remained almost entirely white. Roseland and West Englewood had a high concentration of FHA loans and high numbers of defaults and foreclosures—­1,203 in Roseland, 483 in Englewood. Jefferson Park, in contrast, maintained a steady rate of conventional lending, and activists could not find evidence of a single foreclosure there. Cincotta brought photos from all three neighborhoods to show the senators what these pat­ terns meant in human terms. In Roseland, an FBI sign hung on the door of a foreclosed home, while Jefferson Park homes looked well cared for.166 Without credit to purchase and repair existing housing stock, the activists charged, their neighborhoods were doomed. Through these surveys, reports, and personal testimonies, activists challenged the explanation they often heard from bankers that the ab­ sence of loans in their neighborhoods resulted from lack of demand there, not from discrimination. Questioning the free-­market premise that supply and demand naturally met each other in urban housing markets, one rein­ vestment group explained that even when “buyer and seller have agreed to a price,” the bank “says that it won’t grant a mortgage for that amount,” thus sabotaging the sale.167 Redlining “alter[ed] the real estate market, making inner city neighborhoods and housing less than competitive with the suburbs,” said another activist, suggesting that bankers’ choices did not merely reflect market conditions but instead fundamentally shaped them.168 Furthermore, when bankers denied loans in transitional neigh­ borhoods, they perpetuated racial discrimination in housing. The Civil Rights Act of 1968 had made racial discrimination in housing illegal when it affected individuals. But denying a loan on the basis of location allowed lenders to refuse credit without any explicit reference to the race of the buyer. The end result was the same—­a lack of credit to neighborhoods with residents of color. As one activist said, “There are no equal oppor­ tunity lenders.”169 But the data that HMDA offered, another said, would help urbanites “untangle this snarl of facts and fiction and half-­truths

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and innuendos” that perpetuated forms of racial discrimination not yet banned by legislation.170 In offering their support for HMDA, reinvestment allies in Congress did not emphasize its importance for proving connections between race-­ and place-­based discrimination. Rather, legislators homed in on activists’ charges that local financial institutions, especially savings and loans, were not behaving like the community institutions they were chartered to be. Indeed, policymakers across the political spectrum shared activists’ ex­ pectations that thrifts should act as local institutions because they, too, had come of age under the New Deal financial regime. “I have the old time feeling about savings and loan associations,” Senator John Spark­ man said, “that it is a community affair” and ought to “serve that com­ munity from which it gets its savings.”171 Senator Jake Garn, who was adamant that bankers should not be blamed for urban decline, nonethe­ less confirmed that Congress should “consider carefully the role of the financial intermediaries, particularly the thrift institutions” in neighbor­ hood decline. Thrifts “are chartered by the Government to provide both a safe place for the small investor’s dollar as well as a source of financing for the homeowner,” he said. They indeed “owe an obligation” to serve those constituents “while at the same time maintaining a financially solvent institution.”172 The testimony of NPAH’s allies in state government also suggests that the whiteness of many reinvestment activists proved an asset in making the case that the organizers did not come from “risky” neighborhoods, and therefore thrifts had no good reason to stop lending in them. “There is really no evidence that you are talking about a higher risk in these neigh­ borhoods,” Illinois governor Walker testified. “Most of the impact of this legislation is going to be in these ethnic middle-­class neighborhoods and not in what people think of as the inner-­city neighborhoods.”173 When the hearings ended, it was unclear whether activists would win their demands for disclosure. As they returned home to their communi­ ties, NPAH affiliates around the country mobilized to pressure the finan­ cial trade associations to change their positions and support the bill. The week after the hearing, they protested the US League at its Chicago head­ quarters. Twenty activists, led by “feisty Chicago housewife” Cincotta, asked the League to draft a report outlining strategies to “un-­redline our communities and all other urban neighborhoods which have the flow of conventional funding cut off.” The trade association agreed to do so. But when the activists demanded that the League publicly support the HMDA

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legislation, the thrift leaders refused, claiming not only that disclosure would lead to “a new numbers game—­some arithmetic relationship be­ tween lending volume and the amount of savings deposits in particular zip codes” but also that the data could prove “misleading or meaningless” if activists misinterpreted it. Perhaps most important, the data could place “community group spokesmen” in a “position to attempt to influence the loan decisions of particular institutions.”174 To activists, that was exactly the point. In the end, HMDA passed both because of legislative compromises, including a five-­year sunset provision, and because its proponents deem­ phasized the bill’s potential to force bankers to make loans they would not have made otherwise. Proxmire drew on a language of consumer rights that resonated with policymakers during the third-­wave consumer move­ ment, when, between the 1960s and 1980, Congress enacted dozens of laws to protect the victimized consumer from harmful products, corpo­ rate monopolies, and discriminatory lending policies.175 In the same vein, Proxmire stressed that HMDA provided little more than access to infor­ mation that would help consumers make informed decisions about where to save their money. Indeed, it was a “free-­market alternative” to recent credit allocation proposals, which could have forced financial institutions to earmark a certain lending quota for cities. The informed choices of consumers, not the heavy hand of the state, would help end redlining. What’s more, HMDA dodged the questions at the heart of ongoing de­ bates over financial reform, as it prescribed neither financial deregula­ tion nor credit allocation. It offered a way to redirect credit to those who needed it without demanding an overhaul of the New Deal financial re­ gime. Unfortunately for thrifts, the law also left the industry’s mounting problems unresolved. The House approved the Home Mortgage Disclosure Act soon after the Senate did, and President Gerald Ford signed the legislation in Janu­ ary 1976. Depository institutions—­both thrifts and commercial banks—­ had to file their disclosure reports by September 30 of that same year. As Proxmire put it, the bankers’ “series of generalized impressions” con­ vinced fewer legislators than did NPAH’s claims as consumers, supported by “strong documentation.”176 While a casual observer might have seen the law as demanding little more than new paperwork for financial institu­ tions, Gale Cincotta celebrated HMDA’s passage as a landmark victory for urban neighborhoods. “It’s like having a baby, or at least a kidney stone removed,” she said of her relief. “Few people may realize it yet, but

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this legislation represents an awfully big victory for the neighborhoods of Chicago and other cities across the country. It could guarantee their survival.”177

Conclusion When NPAH formed in 1972 to combat “real estate abuse,” members’ concerns led them to lobby for FHA reform and for increased access to conventional credit in urban neighborhoods. They were motivated to bring home financing in transitional urban neighborhoods in line with their financial common sense. But that task proved difficult. Their efforts revealed that activists needed access to lending data in order to make a plausible case that bankers had stopped issuing mortgages in transitional urban neighborhoods even as white neighborhoods and suburbs still enjoyed the benefits of conventional lending. Activists scored impres­ sive victories for mortgage disclosure at the state and local levels, creat­ ing new accountability from financial institutions that had never before had to explain their reasons for lending in some neighborhoods but not others. They then won disclosure at the federal level through the Home Mortgage Disclosure Act, granting the public access to banks’ lending information that had long been private. In large part, these surprising suc­ cesses were possible because the proposal to enlist banks to help resolve the urban housing crisis resonated with policymakers. For one, it meshed with the era’s financial common sense, as these local, state, and federal officials also came of age in an era of thrift dominance and believed that banks owed something to the communities outside their offices. But per­ haps more important, calling on banks to do their part in reversing urban decline fit easily with the 1970s as an era of limits. In an era characterized by bouts of inflation, credit crunches, and budget cuts, urban revitaliza­ tion through the banking system added no new costs to municipal, state, or federal budgets. But as the next chapter will show, the 1970s also posed new challenges for NPAH’s urban constituencies, who suffered from more than a lack of loans. City neighborhoods continued to bear the effects of the mid-­1970s recession, when unemployment reached 8.5 percent. Housing abandon­ ment increased with job loss. Chicago, meanwhile, used up its annual de­ molition budget halfway through the calendar year. Mortgage disclosure could not solve larger problems facing urban neighborhoods, including

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the flight of jobs from cities and the loss of tax revenue as whites moved to the suburbs.178 At times, Cincotta told readers of Disclosure, the “housing crisis” seemed “lost among our other economic woes.”179 In a telling move in response to the growing list of urban problems that banks couldn’t solve, the Chicago leaders in late 1975 consciously chose to “broaden [their] perspective” beyond housing. They renamed the Housing Train­ ing and Information Center as the National Training and Information Center, and they dropped “on Housing” from the NPAH name, becoming simply National People’s Action.180 As the 1976 election approached, NPA geared up to put a broader vi­ sion of urban reinvestment on the political agenda, calling for a larger role for the federal government to address resource disparities within the me­ tropolis. HMDA helped, but residents of transitional urban neighborhoods needed more. “Viable, decent neighborhoods,” Cincotta said, suffered from “neglect” by “Washington politicians and bureaucrats.” Activists called on Washington to take “responsibility for the decline of our cities” with bold new action—­a national neighborhood reinvestment policy.181

chapter four

Communities Must Be Vigilant The Financial Turn in National Urban Policy

O

n April 3, 1976, Gale Cincotta testified at a Democratic Party plat­ form hearing in Newport, Rhode Island. She joined activists from People Acting through Community Effort (PACE), a Providence affili­ ate of National People’s Action (NPA), to tell the Democratic committee members that the neighborhood groups she represented, over three hun­ dred at the time, needed help from the federal government. For too long, she said, the nation had gotten its priorities wrong. “Bankers and bureau­ crats have tried to sell us the concept of a ‘throw away’ society,” she said, which presumed “older neighborhoods, older homes, and older people” were “expendable” and “disposable.” Alice Chase of PACE agreed. She noted how useful the recent passage of the Home Mortgage Disclosure Act (HMDA) had been for groups like hers to prove that “geographic discrimination” by banks had made it hard for her neighbors to live in dignity. Now it was time to talk about solutions. “The damage is done,” Chase said. The federal government “must reverse this damage with a decisive policy to save inner city neighborhoods.” The sixty reinvestment activists in attendance that day came to ask for targeted federal spend­ ing through community development funds, better anticrime programs through the federal Law Enforcement Assistance Administration, federal generic drug legislation to help urban seniors, and “lifeline” utilities sup­ port through the Federal Energy Administration. They said these federal initiatives, together with a federal antiredlining law, would constitute a “National Neighborhood Reinvestment Policy.”1 The late 1970s proved a crucial moment for the reinvestment move­ ment— ­one in which their calls for reinvestment gained attentive audiences

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among national policymakers like those Democrats at the Providence hearing. NPA affiliates around the country and other community groups began deploying HMDA and had remarkable successes. They used mort­ gage data to demonstrate lending disparities in the metropolis and goaded local banks into partnerships for resident-­led revitalization. And Washing­ ton politicians took notice. The specter of new community-­bank part­nerships combating the urban housing crisis sparked the interest of pres­idential candidates during the 1976 election and of many liberal policymakers in Congress who saw bank-­based reinvestment as a viable strategy to meet the needs of their low-­and moderate-­income urban constituents without adding tremendous new expenditures to the federal budget. In 1977, re­ investment ally Senator William Proxmire proposed a new law, the Com­ munity Reinvestment Act (CRA), as the next step after HMDA. The CRA promised to empower community groups to act as grassroots finan­ cial regulators who could police redlining financial institutions at the local level, with the goal of increasing the capacity of community-­bank part­ nerships to turn struggling urban neighborhoods around.2 Soon after, the newly elected Carter administration embraced a vision of finance-­centric reinvestment through “New Partnerships,” the administration’s proposed comprehensive national urban policy. National-­level Democrats’ enthusi­ asm for bank-­based urban revitalization during the Carter years informed the federal government’s urban policy approach in which financial in­ stitutions played a newly expanded role in reversing the urban housing crisis. But as the platform hearing reveals, activists’ vision of urban reinvest­ ment became much more capacious over the mid-­1970s. Cincotta and her allies wanted more than urban revitalization through increased bank lending. Feeling the effects of the 1970s economic downturn on their communities, activists defined the term “urban reinvestment” to mean coordinated public funding combined with bank financing to divert new resources to neighborhoods that had suffered from “disinvestment.” To them, reinvestment meant a combination of federally mandated lending through the banking system and targeted, well-­funded federal programs for low-­ and moderate-­income urbanites. Only these substantial new re­ sources, they believed, could rebuild their redlined neighborhoods, with their aging housing stock and stalled economies. Activists included fi­ nancial institutions in their prescriptions not because they lacked faith in the government but, rather, because they believed that the “private sec­ tor” controlled “much more [resources] than any government agency,”

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meaning banks’ failure to cooperate could undermine any new govern­ ment reinvestment efforts.3 As this chapter will show, the trajectory of national urban policy dur­ ing the Carter years was a result of Democrats’ choice to respond to in­ novative community organizing for reinvestment. But federal policymak­ ers embraced policies that supported bank-­based urban reinvestment, not the more robust vision that activists had in mind. The Carter years witnessed several new finance-­centric urban initiatives—­the Community Reinvestment Act, the Urban Development Action Grant, and the Fed­ eral Home Loan Bank Board’s Community Investment Fund (discussed in chapter 5). These initiatives, based on a faith in financial institutions to do right by low-­ and moderate-­income urbanites, marked a financial turn in national urban policy wherein policymakers looked increasingly to the financial sector to support urban revitalization, while framing fed­ eral funding as “seed” money to “leverage” financing from private lend­ ers and investors. This urban policy approach lacked consideration for how relying so heavily on finance might create new obstacles for low-­and moderate-­income communities. It reflected a broader 1970s shift toward austerity4 that ultimately limited the power of the movement to define what urban reinvestment meant in practice. Policymakers worried that increased federal spending would thwart efforts to fight the era’s persis­ tent stagflation—­the high unemployment and rising inflation that domi­ nant economic theory said should not occur at the same time, creating an economic conundrum for the Carter administration and members of Congress. Bank-­based reinvestment, particularly the Community Rein­ vestment Act, reflected the limits that the 1970s economic downturn im­ posed on postwar liberalism. By the end of the 1970s, urban reinvestment activists understood that to make the most of the limited tool they found through bank-­based reinvestment, their “communities must be vigilant” to ensure that local banks would fulfill their obligations to help rebuild and sustain transitional neighborhoods at a time when the federal govern­ ment had reduced its role.

Organizing for a National Neighborhood Reinvestment Policy In 1976, building on three years of local community organizing campaigns and the recent HMDA victory, leaders of National People’s Action set their sights on something bigger. They envisioned a national urban policy

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comprised of federal policies that prioritized the revitalization of neigh­ borhoods suffering from disinvestment, led by the people who lived in them. It was more than an end to racially coded, place-­based lending dis­ crimination that activists wanted—­more than an end to redlining. In es­ sence, the movement called for a form of affirmative action for older seg­ ments of cities that had suffered from being denied their fair share of public and private resources, of which mortgage redlining was only one example. Reinvestment activists began demanding remediation based on the conviction that, like bankers, national policymakers also made impor­ tant choices about resource allocation with an antiurban bias. Congress and past administrations had deployed the power of the federal govern­ ment to support the expansion of the suburbs and the Sun Belt at the expense of the older industrial corridor where NPA’s base was strongest, a pattern subsequent historians have documented. And within the metrop­ olis, federal policies incentivized and subsidized suburban development while neglecting the urban core.5 Activists hoped to reorient, not eliminate, federal action in urban neigh­ borhoods by creating meaningful mechanisms for democratic participa­ tion. Demanding a national urban policy built around neighborhoods, activists rejected previous federal urban programs as being “top-­down” or out of touch. Most fresh in their minds were the FHA home insurance programs, the abuses of which led to the founding of National People’s Action. Echoing the “maximum feasible participation” mandate of the Johnson-­era War on Poverty, their policy agenda prioritized local control so that urbanites could combine their neighborhood knowledge and ex­ pertise with the public and private funds that ordinary people could not accumulate through their savings alone. As Cincotta wrote, “The piece that has always been missing from every governmental program that has failed is the people.” Local residents must be involved in “the develop­ ment, the planning, the implementation and the evaluation” of any urban programs, she said.6 After all, more than the preservation of urban in­ frastructure and housing stock was at stake. So were people’s homes and communities—­their very identities.7 In 1976, NPA’s agenda included not only increased access to mortgages but also anticrime initiatives, reduced utility costs, and increased financial support for the many senior citizens who lived on fixed incomes in aging cities.8 As they demanded an increased role in determining in how federal funds were spent, reinvestment activists also articulated a view of the fed­ eral government’s proper role in the economy. Based on their experience

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with local real estate markets and their disagreement with deregulation enthusiasts during the campaign to win HMDA, activists distrusted free-­ market solutions to urban problems. Instead, they argued that the govern­ ment should direct resources into places and projects that had social value but that might not deliver the highest return on investment and so would be passed over in a market driven by profit alone. Activists asserted that the money the federal government spent in cities through block grants and other programs should target declining neighborhoods, not cities in general, and should be used as seed money to leverage new private in­ vestment. When activists talked about reinvestment, they sometimes drew an analogy to the Marshall Plan that helped Europe recover after World War II as an example of making “a national decision” about “top priori­ ties.” What activists liked about the Marshall Plan was the planning— ­the “short-­term and long-­term strategies”—­as well as the dollars “allocated to make it work.” Activists argued that it was unfair for the US govern­ ment to invest in European citizens after the war while leaving contempo­ rary American citizens to struggle on their own in the nation’s cities. “The older cities, the older neighborhoods and the older people of Europe were not considered disposable,” Cincotta argued. Now that “America’s neigh­ borhoods [were] in crisis,” it was time to craft federal policy “to save our neighborhoods” and allocate funding for it.9 With the 1976 election on the horizon, NPA leaders, energized from recent victories, looked to leverage the “neighborhood vote” to win a national urban policy.10 They created their “People’s Platform” around the slogan “Neighborhoods First” and pressured both political parties to adopt its planks.11 Trapp began coordinating a six-­month campaign that he hoped would end with a “freedom train” of three to four thousand activists converging in Washington, DC, for NPA’s annual conference in July of that year. In early 1976, NPA leaders convened a kickoff meet­ ing in Cleveland with the leaders of member organizations from around the country. There, they discussed capitalizing on the tourism that Wash­ ington, DC, would likely see during the bicentennial celebrations. They planned tourist maps that would highlight the capital city’s slums, pointing out the “dichotomy” of “an elite government on one hand and neglected problems on the other.”12 At the same time, they asked affiliate organiza­ tions to hold local meetings in their own cities with the goal of “sharpen­ ing issue demands.”13 In February, they began contacting key politicians to request that the People’s Platform be included in the platforms of both major political parties.14 They also held a press conference in front of a vacant house in Providence to announce the platform’s major goals.15

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figure 7.  Cincotta and Trapp lead a meeting of NPA-­affiliated organizers. Courtesy of People’s Action

In March, a neighborhood meeting led to a breakthrough in commu­ nications with the Democratic Party. Illinois representative Dan Rosten­ kowski came to a Chicago meeting to endorse the Neighborhoods First campaign and invited the Chicago leaders to testify at the party’s plat­ form hearings the following month.16 NPA leaders testified at the regional Democratic Party Platform Committee hearings in Rhode Island, Kansas City, and Denver the following month, where they “raised the issues which victimize low and moderate income people, destroy our neighborhoods, and threaten the very existence of our cities.”17 Cincotta also accepted several invitations to speak at the annual conferences of local commu­ nity organizations around the country in an effort to shore up support for the Neighborhoods First campaign,18 and NPA reached out to other par­ ties concerned with the “urban crisis,” including civil rights organizations and local unions.19 “We need a National Neighborhood Reinvestment Policy that includes a federal law against redlining on the basis of geo­ graphical discrimination,” Cincotta said. But an antiredlining law would need to accompany federal “programs and incentives to reinvest in our neighborhoods.”20

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A key premise of the People’s Platform was that neither the federal government nor financial institutions could achieve meaningful reinvest­ ment alone if either party had already written off a neighborhood. The growing list of concerns coming from constituents made it obvious that banks couldn’t solve all their problems. What’s more, the success that NPA affiliates had with Neighborhood Housing Services had shown that rein­ vestment efforts worked best when community groups, financial institu­ tions, and government together made a commitment to the revitalization of a neighborhood, and when the three parties coordinated their resources. To that end, activists saw the Community Development Block Grant program (CDBG) as an opportunity to coordinate federal and financial reinvestment during the mid-­1970s. In step with the broader goals of Nixon and Ford’s New Federalism, which decentralized government pro­ grams, Congress created CDBG in 1974 to replace Title I slum clearance and the War on Poverty’s urban initiatives.21 Many reinvestment activists complained that power skipped them and went straight to the mayor’s office, a return to the days before the War on Poverty directly allocated funds to community groups through its community action programs. Lo­ cal officials drafted proposals to spend CDBG money for “redevelop­ ment plans for higher income areas” and downtowns, ignoring commu­ nity needs.22 In Waterloo, Iowa, where the city pledged CDBG funds for housing rehabilitation, one reinvestment activist complained that the city failed to publicize that the funds existed, keeping them out of most resi­ dents’ reach.23 An NPA affiliate organization in Wilmington, Delaware, reported that the city allocated $800,000 for home rehabilitation loans, but after two years, not a dollar had been distributed.24 Stressing the re­ investment movement’s call to coordinate financing and funding, Helen Billings of Providence said that CDBG funds “should be used to spur pri­ vate reinvestment by local banks,” perhaps through interest subsidies for local banks that agreed to charge lower interest on mortgages for rehabil­ itating older housing.25 As part of the People’s Platform, NPA called for “double dollars,” wherein HUD would give twice as much CDBG money to cities that used their federal funding for “affordable housing rehabili­ tation” rather than to “pad administrative budgets and satisfy a growing web of political patronage.”26 In building the People’s Platform, activists articulated a cohesive so­ cial democratic populism that grew out of their experience as community organizers— ­one that called for an active role for the state to ensure that federal resources went to those most in need. Their community organizing

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training and their experience with FHA reform and CDBG spending convinced many that democratic participation required vigilance beyond elections, and even beyond the passage of legislation. It required atten­ tion to the ways that federal bureaucrats implemented policies after leg­ islation went into effect. After all, the FHA insurance programs and the CDBG both passed with explicit goals to help low-­and moderate-­income people. But both federal programs revealed that when it came to policy implementation, loopholes could siphon federal funding to very different constituencies—­real estate speculators, in the case of the FHA, and city governments and developers, in the case of CDBG. “Unaccountable bu­ reaucratic policy makers do not necessarily represent the best interest of our neighborhoods,” one activist put it, so low-­and moderate-­income ur­ banites had to keep them accountable.27 To that end, NPA leaders learned to use the Federal Register to interpret the regulations that put federal urban legislation into practice. They held workshops to train organizers on urban policy and learn from organizers navigating federal programs in their own cities. They also published useful strategies in Disclosure.28 NPA also hit the bureaucrats responsible for policy implementation: HUD sec­ retary Carla Hills; Willis Atwell, of the Department of Health, Education, and Welfare’s Administration for Aging; David Meeker, HUD’s director of the Community Development Block Grant program; Paul Horowitz, the director of research at the Federal Deposit Insurance Corporation; and many more. Most were not well-­known public figures, but they be­ came household names for reinvestment activists. Indeed, these officials found themselves the targets of NPA’s hits more often than elected poli­ ticians because they had the authority to influence how legislation took shape on the ground, and activists did not have to wait for an election to pressure bureaucrats for policy changes. Reinvestment activists’ social democratic populism was also rooted in a shared identity that recognized the intersection of place, race, and class. Their experience with CDBG reinforced what they first learned in their efforts to combat the “housing crisis,” namely, that powerful people wrote off entire neighborhoods seemingly because of perceptions about who lived there. Older, transitional neighborhoods with integrated or majority-­minority communities suffered not only from bank redlining but also from their cities’ failure to allocate CDBG funds to improve their homes. As activists saw it, where people lived shaped their access to resources—­both bank financing and federal funding—­regardless of their race or their status as homeowners or renters. Bankers and federal

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officials essentially “raced” and “classed” entire neighborhoods by con­ flating the age of their housing stock and their racial demographics with the neighborhood’s value. It was also through their encounters with fed­ eral officials that activists came to talk of their communities not just as “transitional neighborhoods” but as “low-­ and moderate-­income com­ munities,” which, as they learned, was the designation that HUD used to refer to the places where its programs intervened. This race-­conscious, place-­based, and class-­tinged analysis struck a chord with a diverse group of urbanites around the country, as the number of NPA affiliate organi­ zations reached upward of three hundred by the late 1970s. Photos of Neighborhoods First platform meetings and annual conferences reveal a multiracial group of attendees and speakers. NPA’s Chicago leader took every opportunity to celebrate “the dedication and persistence of the multi-­racial and ethnic” coalition they had built.29 But uniting urbanites across racial divides took more than just vision—­it required strategic or­ ganizing, too. Trapp put interracial organizing on the agenda of many of his organizer training sessions, and he talked explicitly with organizers about how to convince an interracial constituency to participate in one organization. In the summer of 1976, at the Washington, DC, NPA annual conference that was the capstone of the Neighborhoods First campaign, the group’s connections to the Senate Banking Committee proved vital to scoring a major victory. Reinvestment ally Senator Proxmire and sometimes-­ adversary Senator Jake Garn of Utah, a conservative Republican with a strong interest in urban policy that had developed when he was mayor of Salt Lake City, cosponsored legislation to create the National Commis­ sion on Neighborhoods and invited NPA members to testify in its support. During this reelection year, President Ford’s campaign staff encouraged the president to announce his own neighborhood strategy to “preempt Senator Proxmire and any other Democrats,” and to do so before “the People’s conference,” a reference to NPA’s annual meeting to be held in Washington, DC, that June.30 Proxmire attributed his legislation to pressure from NPA and the de­ sire to better understand the role of federal policy in creating neighbor­ hood decline. The 1975 Home Mortgage Disclosure Act hearings had left unanswered questions about the complex, interrelated problems facing ur­ ban neighborhoods beyond redlining, Proxmire explained. In part, Prox­ mire said, the neighborhood commission was a response to “the bankers who testified last year” who “complained they were being made scapegoats

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figure 8.  NPA’s annual conferences created opportunities for organizers not only to lobby Washington, DC, policymakers but also to celebrate victories and build solidarities with other members. Courtesy of People’s Action

of a much broader problem of neighborhood decline.” Proxmire wondered if they had a point. “Many programs like Urban Renewal, highway tax subsidies for new construction, intentionally or inadvertently, have made it more difficult for neighborhoods to survive,” he said. Proxmire echoed the reinvestment movement’s language when he called neighborhoods “a national resource to be conserved and revitalized” that should be “backed by public policy.”31 Proxmire’s committee invited seven members of NPA’s network to testify in favor of the commission while several hundred “ob­ servers” cheered them on from the audience.32 As the jockeying around which party would be the first to announce a “neighborhood strategy” suggests, presidential candidates from both po­ litical parties made neighborhoods central to their urban policy proposals in 1976. Both parties included in their platforms a pledge to develop a “national urban policy,” the only time in the postwar period that both par­ ties made such a pledge.33 Republicans emphasized decentralization and participation but without the new funding that NPA wanted. “Addressing neighborhood problems is very much in keeping with the Ford philosophy of returning the decision-­making power to the people,” one policy advisor

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urged in a White House memo about NPA.34 NPA might have agreed with Ford’s administration that “we do need better coordination of programs,” but they also wanted more federal funding for their neighborhoods.35 Soon after Proxmire introduced the neighborhood commission legislation, Ford announced his own domestic council on neighborhoods in an effort to outdo the Democrats. But with zero neighborhood residents appointed to Ford’s Committee on Urban Development and Neighborhood Preser­ vation, activists saw the president’s initiative as an empty gesture.36 Whereas Republican’s New Federalism urban policy approach failed to win over NPA activists, several Democrats courted reinvestment activ­ ists by arguing that neighborhood reinvestment should become a national policy priority. Several presidential candidates attended a March 1976 meeting on the People’s Platform where they endorsed a national urban policy rooted in neighborhoods. A “comprehensive program” must be based on “neighborhood action, on neighborhood revitalization, on neigh­ borhood strength,” candidate Sargent Shriver said. Fred Harris “brought the crowd to its feet” with his claim that existing federal policies favored the suburbs. “We need a President who will make a firm commitment to the cities as places to live instead of just as places to work for a lot of people who live out in the suburbs,” he said. Morris Udall stressed that Republicans had their policy priorities wrong, quipping, “You cannot be for the Pentagon and be for the cities.” Yet even as Democrats echoed activists’ call to make neighborhoods a national priority, they also revealed that an antiredlining law, which put urban reinvestment squarely on the shoulders of financial institutions, resonated loudest for national politicians in the mid-­1970s. “The specific thing that needs to be done,” Shriver said, “is to end once and for all the obscene practice of redlining.” Harris echoed, “The first thing we have to do is change the lending pattern of banks and S&L’s.”37 In June, the Democratic Party Platform Committee added a plank to “take all neces­ sary steps to prohibit the practice of redlining.”38 White politicians com­ ing of age during an era of thrift dominance and stability in the banking system shared the financial common sense forged by New Deal banking regulations, and so many agreed that financial institutions owed some­ thing to the community’s outside their offices. The danger for activists was that while bank-­based reinvestment gained traction, their call for state-­ mandated, coordinated public and private reinvestment would not find as receptive an audience. Although candidates promised to make a neighborhood policy a prior­ ity, national politicians struggled to situate reinvestment activists within

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their established political categories. Many assumed that the urban whites in the coalition embraced the backlash politics that historians have de­ scribed as central to 1970s political realignment.39 No incident was as telling as candidate Jimmy Carter’s remarks about honoring the “ethnic purity” of city neighborhoods. In early April, Carter visited Indianapolis and South Bend, Indiana, where he discussed urban issues. In response to one question about scatter-­site public housing, Carter responded that he had “nothing against” communities “trying to maintain the ethnic pu­ rity of their neighborhood.” He also used the terms “black invasion” and “alien groups” in his answer and indicated that neighborhoods could be hurt by the “inject[ion]” of a “diametrically opposite kind of family” or “a different kind of person.” Two days later, Carter apologized for his comments at a press conference, but papers around the country had al­ ready reported extensively on the incident. Soon after, Carter announced his support for the Humphrey-­Hawkins Full Employment Act, a legisla­ tive proposal from the ongoing civil rights struggle for guaranteed jobs.40 Carter had thus far been silent on the bill, and given the timing, the choice to endorse the bill was likely an effort to appeal to black voters who saw Humphrey-­Hawkins as a priority. The political calculus reflected by Car­ ter’s choices presumed that voters’ worldviews were derived primarily from race-­based identities. Yet the assumption that black and white political interests were separate and opposed to each another belied the politics of the reinvestment movement’s interracial constituency that had helped to put neighborhood reinvestment on the 1976 agenda. The movement’s neighborhood politics rejected the framing that black and white interests were at odds and instead emphasized the intersection of race and place. But this was an understanding that presidential candidates did not incor­ porate in their campaign messaging.41 As politicians, pundits, and the media increasingly paid attention to NPA, many political observers interpreted reinvestment activism, wrongly, as a new iteration of white working-­class “ethnic” politics defined largely by backlash to the black freedom struggle. Pundits speculated about how this constituency, long central to the New Deal coalition, would vote in the 1976 election since recent elections had suggested loosened ties to the Democratic Party, with many white ethnics voting for Republican Richard Nixon in 1968 and 1972. Some likely mistakenly characterized the group as white ethnics because while the rank and file members were multira­ cial, its two most visible leaders, Cincotta and Trapp, were white. As one NPA activist said, “The media may still be talking about the ‘ethnic vote’ or the ‘Catholic vote’ or the ‘blue collar vote,’ ” but it failed to recognize that

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“the neighborhood vote has developed beyond the old socio-­economic factors” to instead focus on “crime, jobs, and housing”—­the most press­ ing problems facing urbanites regardless of race.42 Carter reframed his take on urban problems later in the campaign, and his new tone led reinvestment activists to see him as a potential ally. When he campaigned in Philadelphia five months later, he met with a local NPA affiliate called Community Organizations Acting Together. Rather than discuss ethnic purity and black invasion, Carter instead spoke their lan­ guage by highlighting the relationship between neighborhood survival and federal policy. “Neighborhoods and families are the living fiber that holds our society together,” he told the group. “Until we place them at the very top of our national policy, our hopes for the nation and our goals for our private lives will not be attained.” Echoing the People’s Platform slogan, Carter said the nation must revitalize “our neighborhoods first.”43 Carter visited other several communities with active NPA affiliates with a similar message. In Cleveland, he sported a “Neighborhoods First” but­ ton and echoed activists’ argument that “we don’t have an adequate fed­ eral housing policy,” and he pledged his support for bank-­based reinvest­ ment, generic drugs, full employment, and more.44 Like his Democratic opponents, Carter proved receptive to activists’ antiredlining proposal. “No government that cared about neighborhoods would let their life­ blood drain away through redlining,” he said. Given Carter’s emphasis on neighborhoods and volunteerism, as well as his comments against redlin­ ing and for policy reform, activists hoped that his administration might democratize federal urban policy to an extent that the Great Society and New Federalism initiatives had promised to, but had not done. And while the candidate spoke to a broad group of urban constituencies—­mayors, governors managing urban-­rural resource disparities, national civil rights organizations—­many members of National People’s Action took Carter’s messages to heart and became optimistic that the movement had the ear of a frontrunner in the presidential race. By the time Carter took office in January in 1977, activists had new avenues to federal power that would have been hard to imagine a decade before, when many had been primarily focused on getting panic peddlers out of their neighborhoods. Through the National Commission on Neigh­ borhoods and the Carter administration, they hoped to push national lawmakers to commit to low-­ and moderate-­income neighborhoods as a national priority. They called for the federal government to direct new public and private resources to disinvested neighborhoods—­the places and people that a system based on maximizing profits would ignore.

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The Origins of the Community Reinvestment Act As Carter settled into the White House, the Senate Banking Committee redirected NPA’s organizing efforts away from the broad national agenda of the People’s Platform and instead to a narrower urban banking law. Senator Proxmire’s staff began working on what they saw as the logical next step after the HMDA legislation. Now that regulators and commu­ nity organizations had access to banks’ lending data through HMDA, Proxmire and Banking Committee staffer Bob Kuttner wanted to make that data useful to the public by creating a legislative tool that would give urbanites standing to hold redlining banks accountable. Brainstorming sessions among Senator Proxmire, his key staffers, and reinvestment allies in academia, in the wake of grassroots reinvestment organizing, produced the legislation that became the Community Reinvestment Act (CRA) of 1977. “With the victory over HMDA, [Proxmire] got interested in the neighborhood movement and the problem of neighborhood disinvest­ ment,” staffer Ken McLean recalled. “Senator Proxmire really invented CRA in pretty much the form it took.”45 That form was to allow members of the public to file a challenge with federal banking regulators to oppose a bank merger or acquisition if that financial institution failed to meet the credit needs of the low-­and moderate-­income communities located near its office. In effect, the proposed CRA would extend state power to com­ munity groups, empowering them as grassroots financial regulators who policed their local banks. Proxmire’s idea grew from success that NPA had already had through HMDA, which they had used since the day after it went into effect the previous year. That day, when financial institutions should have filed their first HMDA reports, NPA organizations in several cities planned protests against whichever large local bank failed to submit data on time. They crowded teller lines and bank lobbies until executives agreed to hand over lending data.46 When banks did comply, NPA groups used HMDA data as leverage to win new mortgage commitments from local thrifts and banks. One Chicago organization, for example, used mortgage data to document that most lending by two neighborhood financial institutions occurred in “a few select census tracts” in the city, and most of those loans were is­ sued to purchase expensive single-­family homes. Both conceded that they failed to loan in the group’s neighborhood and pledged to make amends. One allocated $3 million for the purchase and rehabilitation of neighbor­ hood homes, and the other, smaller institution committed $100,000.47 But

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these victories hinged on the goodwill of particular lenders. Results would be uneven and unpredictable so long as they were achieved through indi­ vidual protests. Proxmire’s proposed CRA would instead codify the con­ sequences for damning HMDA reports. If it passed, a community group could enlist the power of federal financial regulators to deny mergers and acquisitions when HMDA data showed that financial institutions hadn’t lent in their communities. The effectiveness of the CRA as Proxmire conceived it hinged on activ­ ists’ ability to interpret the HMDA data alongside their knowledge of the racial and class-­based geography of their cities. Federal regulators, with responsibility to monitor every federally chartered financial institution throughout the country, could not reasonably be expected to understand which neighborhoods were aging, integrated, or majority-­minority in each and every city. Only locals had that knowledge. Only they could make the case to regulators that when banks stopped lending in these neigh­ borhoods, they likely did so because they conflated a neighborhood’s de­ mographics with “risk” and “decline.” Proxmire’s proposal would thus empower community groups that were better equipped to identify local lending discrimination than the federal regulators.48 Its drafters wrote the legislation to be intentionally vague, in hopes that its open-­ended nature would make it most useful to neighborhood groups who would be tak­ ing on this enormous task. CRA would demand banks “do something,” McLean explained, but Proxmire’s staff “never quite precisely defined what it is they had to do.” That way, “no matter what,” activists could always claim that banks “really ought to do more.” Proxmire’s staff did not want to set the bar too low for bank involvement and instead hoped to give community groups significant leeway to identify where new loans should be made and what kinds of lending policies local banks should adopt to be most useful to specific community credit needs.49 When Proxmire’s staff began drafting the bill in December of 1976, the senator reached out to NPA leaders to ask whether his legislation met their organizing needs. Neighborhood participation was crucial if the law was going to work, the senator understood. As McLean put it, “it was kind of a political process that we set up.” The idea was that “the neighborhood groups” would be able to challenge a merger, acquisition, or branch appli­ cation “on the grounds that that particular bank didn’t have a very good lending record.” In light of a challenge, regulators “would have to listen” to a neighborhood complaint and consider it when deciding whether to approve the financial institution’s request. “Our idea was essentially to

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empower the neighborhood movement,” McLean said plainly.50 Proxmire sent the first draft of the Community Reinvestment Act to Cincotta to seek comments. He asked her and her colleagues to review legislation, “both with respect to the concept and the proposed statutory language.”51 As it stood, his draft empowered community organizations to police their local banks by encouraging community groups to testify at hearings on new bank charters, mergers, acquisitions, and new branch requests. In his vision, activists would give regulators “a better picture of community credit needs.” But more importantly, it would give activists the authority to decide which banks needed reprimanding. The CRA would thus “sys­ tematically” use a regulatory process to “reward those institutions with a good record of community service” and punish those without one.52 While NPA leaders and rank and file worked to make neighborhood reinvestment a national priority, they recognized the CRA’s potential to help toward that end. Indeed, many reinvestment activists saw the CRA as an opportunity to win “affirmative action” for previously redlined neighborhoods, an approach articulated during the neighborhood com­ mission hearings in the summer of 1976. As they saw it, affirmative-­action policies delivered results, rather than simply promises, to the people such policies were designed to help. In contrast to laws that lacked meaning­ ful enforcement clauses, affirmative action put an emphasis on goals and timetables to promote measurable change and accountability. Cincotta explicitly demanded that urban reinvestment take place through “an af­ firmative program similar to . . . the policy of hiring minorities.” What she liked about the approach was “when there was a decision to hire minori­ ties under the Civil Rights Act, it wasn’t good enough for an institution to say, yes, we will hire” but never actually do so. Instead, companies “had to show an affirmative program of advertisements, marketing, training, and percentage of people hired by them”—­all measurable indicators. Such concrete metrics could go a long way toward ending geographic discrimina­ tion by banks. And now that activists were armed with lending data under the Home Mortgage Disclosure Act of 1975, they could use bank informa­ tion to similarly determine whether urban lending promises turned into re­ sults.53 So while the Senate staffers did not want to set the bar low, reinvest­ ment activists wanted an explicit directive to set the bar high; they wanted the measurable outcomes that existing affirmative-­action policies had. While NPA leaders agreed with the thrust of Proxmire’s bill, they feared the proposed CRA’s vague mandate could become a toothless call for bank-­based reinvestment with no means for implementation. NPA

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leader Helen Murray suggested that the legislation specify the actions bankers should take to reverse the effects of redlining, offering sugges­ tions from the experience of member organizations who realized how dif­ ficult it was to prove geographic discrimination when smoking guns were so rare. After years of being ignored by financial institutions, many urban­ ites no longer thought of banks and savings and loans as institutions that would grant them mortgages; many city borrowers instead went directly to the unregulated mortgage bankers that issued FHA mortgages. As one activist put it, “whispering in your own office” that loans are now avail­ able, as the CRA might allow banks to do, “is not enough to overcome ten years of no mortgages.”54 The way the CRA stood wouldn’t work, Mur­ ray charged, without more explicit requirements for banks. “The imple­ mentation measures [were] too broad,” and there were “no concrete criteria” for financial regulators to enforce. In addition, the bill’s stated purpose was to “encourage” banks to meet local credit needs. The weak language of “encourage” would give financial institutions too much lee­ way for complying with the letter of the law. “The thrust of a solid Rein­ vestment Act should be to assure that credit needs of local communities are met,” she said, not merely to encourage.55 Given the shortcomings of Proxmire’s CRA draft, NPA’s Chicago lead­ ers treated it as an opportunity to write a better piece of legislation. They reached out to member organizations and allies in the winter of 1977 for input on an alternative version.56 These included Ron Grzywinski, a banker who founded the Chicago community development bank South Shore; urban sociologist Cal Bradford, whose research had been crucial in making the case for HMDA; and Andy Mott of the Center for Com­ munity Change, a Washington, DC, organization with roots in antipoverty activism that had become renowned for its own housing and antiredlining advocacy.57 Proxmire introduced the bill in March of 1977, before receiving the activists’ amended version, so NPA leaders were privately disappointed with its content. Their primary concern was that bankers and federal policymakers alike could point to the CRA and claim that the problems of redlining and disinvestment had been solved, thus sidestepping larger questions about credit allocation and resource targeting to help neighbor­ hoods most in need. The CRA’s passage could also kill the momentum behind a national neighborhood policy that put racial and geographic in­ equality at its center. In speaking to outside audiences, however, activists were more pragmatic about the legislation’s potential. They testified on its

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behalf and did not criticize the bill harshly in public. Activists recognized the CRA as a victory because, at the bare minimum, it extended the New Deal financial common sense to transitional urban neighborhoods by cod­ ifying the relationship between financial institutions and the communi­ ties outside their offices, particularly low-­ and moderate-­income neigh­ borhoods. The CRA also undermined bankers’ claims that there was no demand for lending in NPA neighborhoods.58 But at the same time, Cin­ cotta and her colleagues worried that any fanfare around the proposed CRA might make policymakers in Washington, even their ally Senator Proxmire, feel that Congress had solved the problem of disinvestment by passing the law, when transitional neighborhoods needed much more than a new banking regulation to revitalize their aging housing stock, to keep rising energy costs in check, to secure jobs for local people, and to support the many aging seniors who called their neighborhoods home. When Congress held hearings on the Community Reinvestment Act in March of 1977, Proxmire opened with two “widely shared assumptions” that revealed the persistence of the financial common sense of the New Deal financial regime not only for reinvestment activists but also for the members of Congress who served on its banking committees. Commer­ cial banks and thrifts, he explained, directed the lion’s share of the na­ tion’s capital through the “private sector,” as they should in a free-­market system. “Government through tax revenues and public debt cannot and should not provide more than a limited part” of the resources that cities needed, he said. “Financial institutions in our free economic system must play the leading role” because they controlled vastly larger resources than the federal budget. At the same time, however, banks’ public charters “convey[ed] numerous benefits” like a limited monopoly, federal deposit insurance, access to low-­cost advances, and, in the case of thrifts, other special treatment like the Regulation Q interest rate differential that al­ lowed them to maintain dominance in the postwar mortgage market. All these advantages made it “fair for the public to ask something in return.”59 Thrift executives and commercial bankers thought the CRA was far too much to ask of their institutions. Bankers framed their opposition in terms of how the CRA, and credit allocation in general, might prove coun­ terproductive to the goal of national economic recovery. By 1977, when the hearings took place, the persistence of inflation and high interest rates gave new credibility to arguments that the “something in return” the public should demand from banks was lower interest rates and looser credit to jump-­start the national economy, rather than merely help aging

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and integrating urban neighborhoods that had been redlined. The CRA threatened to tie bankers’ hands right when the nation needed their ser­ vices and expertise for this national goal.60 To aid the struggling 1970s economy, the trade associations for the nation’s financial institutions and their allies in Congress argued that banks ought to serve a national, rather than local, public good through a national, rather than local, market.61 “From the standpoint of the welfare of the nation as a whole,” Senator John Tower, a free-­market enthusiast from Texas, said, “economic effi­ ciency is maximized if credit is given to those productive borrowers willing to pay the highest interest rates” because those borrowers “will use the available credit for the most productive purposes.”62 In other words, the financial system should distribute credit solely through the market, not direct any credit to certain sectors or locales. Proxmire and his staff understood the CRA as the next logical step after HMDA, as did activists, but bankers saw the CRA as more prob­ lematic than its predecessor because it looked a lot like state-­mandated credit allocation. When HMDA first became law, activists thought it was “very weak” because it required no centralized reporting to federal regu­ lators, no geographic analysis of where banks drew their savings accounts, and no provision that banks take corrective action to lend where there were not lending already. Instead, it put the burden of proof on citizens to visit banks of interest and request HMDA reports in person. “It’s un­ believable,” Cincotta said at the time, “that all of these data won’t be ac­ cumulated and analyzed.”63 Bankers were relieved that HMDA indeed required reporting and nothing more. Furthermore, federal regulators quickly pledged not to make HMDA reporting more painful for finan­ cial institutions. Two months before the first HMDA reports were due, for example, an official from the Federal Home Loan Bank Board, the thrift regulator, met with the leading thrift trade association and calmed its members’ fears that HMDA would force them to lend where com­ munity groups demanded. “I don’t think we’re going to make an objec­ tion,” said one FHLBB official, if savings and loans “give us a reasonable answer” explaining why they didn’t loan in certain areas. The Federal Re­ serve Board, a regulator of commercial banks, likewise confirmed that nothing in HMDA was “meant to encourage unsound lending practices or the allocation of credit.” Instead, Congress intended the law to provide “sufficient information” for regulators to determine whether a financial institution met its “obligations” to local communities—­nothing more.64 All regulators required was that thrifts and commercial banks issue the

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reports, not that they change their lending practices. HMDA need not “be all that onerous,” explained Savings and Loan News.65 Perhaps bankers’ concern during the 1975 HMDA hearings had been for nothing. But the CRA was a different story. Encouraging that financial institu­ tions meet the credit needs of nearby “low-­and moderate-­income commu­ nities” might mean credit allocation through forced lending if regulators adopted the most radical interpretation of the spirit of the law. The CRA might require lending to those whom bankers understood as the least prof­ itable borrowers, and in the words of one spokesman from the US Sav­ ings and Loan Associations, “mandatory allocation of credit fouls things up.”66 Savings and Loan News warned that the CRA might force thrifts to open new offices in neighborhoods where they never intended to work. “A charter to go broke,” said another representative from the US League, “is no charter at all.”67 Indeed, bankers feared that the CRA was an effort to put too great an emphasis on their social function, making them dan­ gerously close to social service agencies rather than financial intermediar­ ies able to earn reasonable returns on capital. The FHLBB warned that the CRA might even cause thrifts to back out of Neighborhood Housing Services, the important community-­bank partnership program that many NPA affiliates had eagerly created in their neighborhoods, because thrifts would be tied up meeting new obligations under “mandatory” programs instead.68 Proxmire and other senators who supported the CRA stressed that bank-­based reinvestment had the potential to enlist more resources than federal funding could, especially at a moment of inflation when policy­ makers looked warily at government spending. Indeed, at this moment of economic instability and inflation, Proxmire argued that the CRA created a mechanism for urban revitalization without new federal spending—­an imperative condition at a time when policymakers feared that increased government spending would make inflation worse. “This won’t cost the Federal taxpayer a nickel,” Proxmire said. “It may cost something to the banking institutions,” he admitted, “but that is something that you as a banker can assume. But the important thing is whether you want to solve this problem with Government funds, or with as little Government funds as possible. If we are going to succeed, we have to enlist the private sector.”69 Proxmire pointed out that the CRA relied “first on the private sector,” taking the cost of urban revitalization away from the federal government. By the term “private sector,” Proxmire actually meant “depository insti­ tutions”; he frequently conflated the two, despite the fact that depository

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institutions enjoyed government charters and federal deposit insurance, making them quasi-­public in a way that other private firms were not. He also ignored the reality that depository institutions acted as agents of the state when they debited accounts, as this action actually created money. But in his framing, banks were “the private sector” and not “the government.” At another moment, he repeated, “This bill is designed to get the banks to do the job rather than have the federal government do the job,” drawing a sharp distinction between the two.70 As activists took the stand, they made their case for codifying their fi­ nancial common sense and making clear to financial institutions that the relationship between a community and its bank was a two-­way street. Cin­ cotta described a recent conversation with an official of the US League in which the official told her the three rules of real estate appraisal were “location, location, and location.” When she pressed him to admit that perceptions of the value of locations were subjective, he responded that appraisal “wasn’t subjective,” but rather was “an honest effort to guess what’s going to happen.” When thrift executives ignored the value of “historically underserved” neighborhoods, Cincotta replied, the result “force[d] private capital—­savings— ­out of the very neighborhoods” that needed help. The prominent consumer rights advocate Ralph Nader, tes­ tifying alongside Cincotta, agreed. When it came to mortgages, he said, “a laissez-­faire approach” failed to achieve “optimum social results.” And social results mattered, Nader stressed, because bank deposits, as Louis Brandeis had said sixty years prior, were “other people’s money.”71 Even constrained by this intermediary framing, activists used the hear­ ings to push the amended, stronger version of CRA that they had worked with their allies to draft— ­one that would extend the New Deal financial common sense to disinvested neighborhoods through something more like affirmative action, with explicit directives explaining the activities that would be required of banks. They submitted for the record an amended version of the CRA that linked race and class discrimination to the bill’s emphasis on geographic discrimination. The amended version stipulated that to be in compliance with the CRA, banks must do more than simply lend nearby; they must lend nearby in “historically neglected” communi­ ties. Activists also demanded that regulators consider the race and class of a neighborhood when assessing lenders’ CRA compliance, proposing that the CRA define “underserved areas” as the nearby census tracts “char­ acterized by minority and racially changing populations, lower income households, or older housing stock.”72 The amended bill also demanded

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that federal regulatory agencies allow “community, consumer, or similar organizations” to testify during all routine bank examinations, not just at the time of mergers and acquisitions. These and other suggestions, Cin­ cotta told Senator Proxmire, “were the result of months of discussion not only with community organizations in the NPA national network, but [also of] academics and administrators who are seen as leaders nationally in reinvestment research and regulation.”73 Proxmire thanked her for the suggestions. “I feel that your suggested changes would tend to improve the bill,” he said, though he did not “yet know what final language [would] be adopted by the Committee.” But he pledged to Cincotta that Kuttner would “consult with you” and promised that the Senate staff would “take seriously your recommendations.”74 While they held out hope that a strong CRA might bring more re­ sources to their neighborhoods, the leaders of National People’s Action re­ mained deeply suspicious of the idea that bankers would lead the charge for reinvestment unless they had a direct federal mandate to do so. Only a few months had passed since activists gained access to bank lending in­ formation through the first HMDA reports, and what they found during that time infuriated them. Urban savings and loan associations, the insti­ tutions activists most expected to align with their financial common sense, seemed to be passing over transitional neighborhoods for more lucrative markets. In Salt Lake City, an NPA affiliate found that United Savings and Loan lent over $11.5 million to “non-­redlined areas” while issuing only $11,000 in mortgage money in the group’s neighborhood.75 Activists from around the country sent reports to NPA’s headquarters in Chicago, where NPA researcher Phil Page compiled a damning snapshot of their findings. In twenty-­five cities, HMDA data from two institutions per city showed what Page called “drastic patterns of redlining and disinvest­ ment.” A redlined neighborhood on Baltimore’s West Side had received $100,000 in home loans from two banks, while nearby Towson, a more affluent neighborhood, had received $2.6 million from the same institu­ tions. In Lincoln, Nebraska, the corresponding numbers were $50,000 and $1.2 million. Activists reported instances in which financial institutions made loans in transitional neighborhoods with higher down payments, higher interest rates, and shorter repayment periods. They also learned why bankers preferred large new developments rather than home im­ provement loans, loans for infill housing, or even making one mortgage at a time as they did in older urban neighborhoods. In several cases, the banks that activists investigated provided both the “front money” for a

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new development and a pledge to make all the individual mortgages on the units within the development, providing favorable terms on both ends to ensure the success of the project. These advance commitments, Page argued, “clearly and simply” constituted “credit allocation” away from older communities.76 Further showing their unwillingness to have a stake in older neighborhoods, the US Savings and Loan League had recently lobbied for coinsurance legislation that would require the federal govern­ ment to provide insurance on loans within high-­risk urban areas, a pro­ posal that reinvented the central problem with FHA insurance.77 It was difficult to imagine that banks would suddenly and willfully reverse these patterns with the passage of the CRA, especially in Proxmire’s weak form. Activists also distrusted bank-­based reinvestment because HMDA data revealed the ways in which commercial banks, which reinvestment activists paid less attention to when they first started organizing against redlining, had directed credit away from transitional urban neighbor­ hoods. As they learned more about commercial bank loans through com­ mercial bank HMDA data, Cincotta and her colleagues discovered that the growth of real estate investment trusts (REITs) had been directing credit to luxury urban housing. Commercial banks created and then in­ vested in these independent trusts to serve as intermediaries between banks and real estate developers and to get around regulations that lim­ ited banks’ direct investment in real estate. NPA criticized the speculative nature of REITs, as the media reported large REIT losses from big com­ mercial banks including Continental Illinois, Fidelity, and Chase Manhat­ tan. Many of those losses resulted from expensive urban condominiums that were built but never had buyers.78 NPA leaders had also been fol­ lowing reports that large commercial banks issued loans to developing nations, many with federal or corporate guarantees, while they rarely orig­ inated mortgages in the nation’s aging neighborhoods. Headlines in lo­ cal and national media amplified activists’ concerns: “U.S. Loans: Hidden Burden/Payoffs Cost Taxpayers Billions” from the Cleveland Plain Dealer, “Debts of ‘Deadbeat’ Nations Causing Alarm” from the Chicago Tribune. “The fate of our neighborhoods is in the hands of a few unelected, un­ accountable bankers who are speculating in foreign debts with our sav­ ings money,” Cincotta said four months before the CRA hearing, “with governmental guarantees with our tax money [through FDIC insurance]” on top of that.79 In this context, leaders of NPA stressed that the pending CRA, and bank-­based reinvestment in general, would not revitalize transitional ur­

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ban neighborhoods on its own. Only coordinated federal funding and fi­ nancial reinvestment could do that. Banks needed to lend, yes, but federal funding and programming needed to target low-­ and moderate-­income neighborhoods that needed much more than new debt. Cincotta said that federal funding needed to go to cities to service “existing older neighbor­ hoods, in capital improvements, rehabilitation loans,” thus complement­ ing the bank-­based reinvestment that the CRA might produce. At the same time financial institutions “evacuated” older neighborhoods, “the city services, the Board of Education and the garbage and all of that have an aftereffect” as municipal governments reduced services there, too. But if federal spending targeted neighborhoods suffering from disinvestment, it would help change bankers’ perceptions that these places were declin­ ing.80 It was more than the banks that had disinvested in neighborhoods like Cincotta’s, so more than the banks would have to put new resources into those communities to help them recover. How seriously the senator took NPA’s recommendations to strengthen the CRA in light of these concerns is difficult to determine; I found no evidence of Senator Proxmire’s deliberations in his archival papers, and National People’s Action seemed to have kept no record of further discus­ sion. What’s clear is that the activists’ amendments were not included in the final Community Reinvestment Act. Indeed, it wasn’t activists’ moral claims that won the day. Instead, it was legislative maneuvering and an as­ sumption that, like HMDA, the vague legislation might not require banks to change very much. The CRA passed with “little fanfare,” one former savings and loan regulator noted, as a result of Proxmire’s savvy legisla­ tive strategy rather than an outpouring of grassroots pressure. The sen­ ator attached the CRA to the Housing and Community Development Act when it came up for reauthorization in 1977 because, as staffer Ken McLean recalled, “he realized that CRA could never get through as a stand-­alone measure” because “the banks had too much political power.” After a series of negotiations and one attempt by a senator allied with the savings and loan lobby to strike the bill, it passed the Senate. It never went through the House, however. Instead, it went to conference. There Proxmire agreed to include new spending on HUD programs in order to appease Rep. Lud Ashton (D-­OH), chairman of the House Subcom­ mittee on Housing, who threatened to otherwise oppose CRA. Its vague language did not guarantee credit allocation, as bankers feared. Nor did it spell out specifics for how banks should serve historically neglected communities nearby, as reinvestment activists wanted. Instead, the CRA

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said that depository institutions had an “affirmative obligation” to “meet the credit needs” of all surrounding areas, including “low-­and moderate-­ income neighborhoods,” and the act “encouraged” banks to meet those needs. But how all of these terms would be defined by regulators was un­ clear.81 The bill was adopted in conference committee in early October of 1977, and soon after, both chambers approved the report. Carter signed it on October 12, 1977. Reinvestment activists and bankers both understood that the vague language meant that administrative rule-­making would be particularly important.82 CRA’s impact would be determined by the way four federal financial regulators—­the Federal Home Loan Bank Board, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, and the Federal Reserve Board—­wrote the regulations. The agencies planned public hearings for the spring of 1978. In the meantime, NPA began co­ ordinating with allied organizations to propose strict regulations with the specifics that the law lacked.83 As reinvestment activists strategized how to get the most from CRA, NPA devoted increased time and energy to shaping its regulations and implementation. NPA leaders recognized its potential, given that many community groups in their network already knew a lot about collecting mortgage data, analyzing discriminatory pat­ terns, and protesting local banks and thrifts to win new partnerships. But this new opportunity came with a cost. It cut into much-­needed orga­ nizing efforts for the national urban policy rooted in neighborhoods for which reinvestment activists had been lobbying. It also signaled to the Carter White House that bank-­based reinvestment was gaining traction and could become an important component of the president’s much-­ anticipated comprehensive national urban policy.

The Financial Turn in National Urban Policy “Something is happening,” NPA told readers of its newsletter in the fall of 1977. In the midst of their campaign for a stronger CRA, evidence sug­ gested that NPA’s demands for a national urban policy were receiving not only attention but action in Washington.84 That March, at the same time NPA leaders testified on the CRA, President Carter created the Urban and Regional Policy Group (URPG), a cabinet-­level unit, in order to turn the president’s urban campaign promises into policy recommendations.85 The URPG started with founding principles with which reinvestment ac­

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tivists likely agreed. Stressing the role of past public policies in creating spatial resource gaps, it pledged to address “the effects of suburbaniza­ tion, the continuing blight of disadvantaged central city groups, and the growth disparities among different parts of the country.”86 In the mean­ time, NPA leaders began planning a “State of the Neighborhoods” con­ ference in Washington, DC, in June of 1977 that they hoped would influ­ ence the president’s agenda. The momentum that leaders felt in the early months of Carter’s presidency is difficult to overstate. Cincotta and Trapp began to talk about NPA as “playing the same role for the neighborhood which Ralph Nader plays for the consumer and which Dr. Martin Luther King, Jr. played for the civil rights movement.”87 Something indeed seemed to have changed in the two years since the HMDA battle. The public conversation about redlining had shifted. The data that activists won from HMDA made it difficult for the movement’s opponents to claim that the practice did not exist. “Until a few years ago, most bankers actually denied the existence of redlining,” as one business writer put it. “But because studies by citizens’ groups and agencies have confirmed the fact of geographic discrimination in lending,” such “deni­ als” lost credibility.88 Carter’s urban policy group had its own Redlining Task Force. Included among its key assumptions was that “there is, in fact, real demand for financing by creditworthy people” in neighborhoods where the housing needs of “black, Hispanic, and other minority poten­ tial borrowers” had not been met.89 In December of 1977, when Carter’s urban policy group was in its ninth month of meetings, the reinvestment movement received a symbolic boost when Cincotta joined nineteen other activists, academics, and elected of­ ficials as a member of the newly formed National Commission on Neigh­ borhoods (NCN), the group created by Proxmire and Garn’s 1976 legisla­ tion. Cincotta recognized the appointment as showing “that our issues are important and that neighborhoods are finally being prioritized in national policy.”90 The commission’s primary aim was keep the problems of neighborhoods on the Carter administration’s radar as the URPG so­ licited suggestions from a broader constituency—­mayors, governors, business—­as it crafted the national urban policy. The NCN echoed the reinvestment movement’s critique that past federal programs had made conditions worse for cities. Federal efforts had taken a “bricks and mortar approach,” one early committee paper claimed, rather than a “neighbor­ hood focus” that was attentive to policy impact in “human terms.”91 The NCN had five task forces, and reinvestment was one of them.92 Cincotta

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figure 9.  Gale Cincotta meets with HUD secretary Patricia Harris (right) and President Jimmy Carter (second from right) as a member of the National Commission on Neighborhoods. Courtesy of People’s Action

led the Neighborhood Reinvestment Issue Forums, in which the commis­ sion investigated “how lenders and appraisers determine risk” in urban neighborhoods, and how to best expand credit to neighborhoods with un­ met “loan demand.”93 Beyond Cincotta, the reinvestment movement was well represented on the commission. Bob Kuttner, the Senate staffer ally, became its executive director.94 One observer called the NCN the “anti-­ redlining mafia.”95 While redlining headlines and appointments to the NCN suggested NPA had potential to influence Carter’s urban policy, in reality the re­ investment movement and its allies on the NCN were only one constitu­ ency of the many that hoped to influence Carter’s urban policy. Carter also appealed to big-­city mayors during his campaign. Democratic mayors rejected early drafts of Carter’s national urban policy’s “neighborhood-­ based strategy” because it threatened to reduce their power to control federal funds.96 State-­level policymakers hoped the urban policy would give them greater control over economic redevelopment, so they sought to increase their role as intermediaries between the federal government and the cities.97 Southern governors and members of Congress also lob­ bied the president to prioritize the unique urban needs of their commu­ nities. Early talking points from the team crafting Carter’s urban policy originally emphasized aid to “distressed communities,” using a formula that measured the spatial mismatch between people and jobs. This crite­ rion boded well for NPA’s affiliates in older, transitional neighborhoods

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suffering from deindustrialization. But defining distressed communities this way threatened to favor older industrial cities over the growing Sun Belt cities, so southerners lobbied the URPG to instead measure “dis­ tress” by pockets of poverty that were characteristic of southern cities.98 Compounding the conflicting agendas of urban interest groups, “jurisdic­ tional disputes” among the URPG’s members made its work all the more difficult. Some cabinet members “had no interest in participating,” some demanded a bigger role, and some feared HUD secretary Harris planned to use the group as a HUD power grab. Internal fighting led to delays in decision-­making, and the group missed the president’s deadline for its report.99 Members of National People’s Action grew increasingly impatient as the months passed without any comprehensive urban policy coming from the administration. “In his campaign, President Carter mentioned the importance of preserving our neighborhoods,” said Lenora Rodgers of Chicago. “Now the President has an opportunity to re-­emphasize the im­ portance of neighborhoods.” They wanted at least a gesture, suggesting that the president declare a “Neighborhoods First Week” for the summer of 1977.100 Charging the president for prioritizing foreign policy over do­ mestic concerns, Ted Wysocki, a member of NPA’s core leadership, said that “if Carter really wants to support ‘human rights,’ ” he should consider “the ‘human rights lending’ needs of Americans.”101 Disclosure began to publish excerpts from the Samuel Beckett play Waiting for Godot, liken­ ing its portrayal of endless waiting to their own experience with the Carter administration. In the meantime, when NPA held its fifth annual conference in Wash­ ington, DC, thirty members of NPA met with Carter’s advisor for domes­ tic affairs and policy, Stuart Eizenstat, to raise their concerns about the stalled urban policy. Their demands revealed just how much their agenda had grown since 1972, when solving the urban housing crisis was their sole objective, and just how important they considered federal funding to the recovery of their neighborhoods. One activist from Philadelphia opened the meeting by expressing concern that law enforcement spending through the Law Enforcement Assistance Administration had prioritized “exotic hardware equipment” at the expense of meaningful efforts to com­ bat crime.102 One from Massachusetts stressed the rising cost of utilities. Others highlighted the continued problems with FHA payback and the misallocation of community development funds. An activist from Albany argued that CDBG-­subsidized housing assistance padded the pockets of

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developers while doing little to ensure that renters lived in decent hous­ ing. Several reiterated the group’s conviction that redlining posed one of the largest obstacles to urban redevelopment. They asked for a national antiredlining law, stressing that “neighborhood credit needs are not being covered by present laws.” But redlining was only one problem of many that activists argued federal resources were needed to solve.103 When Carter finally announced his long-­awaited “comprehensive plan” for a national urban policy in March of 1978, it reflected the ways in which reinvestment activists had shaped policymakers’ perceptions about what was happening in redlined neighborhoods. The plan, called New Partner­ ships, proposed an expanded role for the financial sector and for commu­ nity groups that was rooted in the assumption that cities were hyperorga­ nized places where existing networks of urbanites were ready to partner with their local financial institutions. Most significant was the president’s use of the word “investment” as a solution to urban decline—­a term that came up eighteen times in his speech announcing the urban policy. The “most critical responsibility” of the federal government was not to fund and implement big new programs in the vein of urban renewal or the Great Society. Instead, the government should “act as a catalyst to en­ courage investment and contribution from the States, local governments, the private sector, and individuals.”104 His urban policy echoed activists’ claims that the solution to the urban crisis was not to tear down old places and build new things but, rather, to redirect resources to cities where it had disappeared—­to “reinvest.” The president’s public remarks implied a shift from federal funding to private financing, as did the stated principles in the document that out­ lined the national urban policy. “The Federal government does not have the resources to solve urban problems on its own,” the principles stressed. “Only the private sector can provide the capital needed for rebuilding and growing.” One overarching recommendation was to “provide a pack­ age of financing incentives to influence the private sector to invest in dis­ tressed cities” because “current federal aid does not provide a package of incentives to influence the location of private investment.” And while the document used the language of the “private sector,” a closer read suggests that the Carter team imagined the financial sector specifically would play a leading role.105 Specific policy prescriptions, too, reflect ongoing successes that the ur­ ban activists—­NPA affiliates as well as a growing number of organiza­ tions making use of HMDA—­had in partnering with financial institutions

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for locally led redevelopment. The New Partnerships plan proposed that some new funding be distributed directly to “neighborhood groups.” The plan also included three new initiatives showed how important financial institutions were to this urban policy package. The first was an Institute for Community Investment within the Federal Home Loan Bank Board that would recommend new guidelines for urban lending and train “urban lending specialists.” The second was a pilot program called Neighborhood Commercial Reinvestment Centers, which adapted the Neighborhood Housing Services program to business loans rather than mortgages. The third was a National Development Bank to aid distressed cities, collo­ quially called the “Urbank.” The proposed institution, run by the HUD and the Department of Commerce, would guarantee investments of up to $11 billion through fiscal year 1981. It required significant federal guaran­ tees, but it relied on loans rather than direct federal grants to pursue urban revitalization. When Carter announced the plan, he simultaneously called for an investigation into redlining and encouraged “strong, consistent and effective regulations” for the Community Reinvestment Act, which regulators were still in the process of writing. Carter’s New Partnerships thus signaled something new as it imagined a central role for the financial sector to prop up the planks of his national urban policy, marking a shift away from funding to financing for urban redevelopment. New Partner­ ships suggested that the federal government should direct resources to cit­ ies but that it should do so by creating new infrastructure and incentives to goad the financial sector into supporting urban redevelopment. Despite this new emphasis on the financial sector, many contemporary observers saw the 178-­page document as a laundry list of initiatives without any clear focus.106 New Partnerships drew heavily from evidence that neighborhood activ­ ists and financial institutions could work toward common goals, but NPA leaders recognized that Carter’s finance-­centric plan made no guarantees that urban revitalization would serve low-­ and moderate-­income people who most needed new resources. They called it a “double cross” that made “some partners”— ­city halls and the private sector—­“more equal than others.” The plan did include antiredlining recommendations, which NPA leaders called “the only bright spot.”107 But the emphasis on redlin­ ing in New Partnerships drove home the same lesson the passage of the CRA did. NPA found a receptive audience for bank-­based reinvestment from Democrats in Washington who saw this approach as an opportu­ nity to serve their low-­and moderate-­income urban constituents without

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adding new expenditures to the federal budget—­an attractive option at a moment of high inflation, but one that would not deliver resources at the scale that struggling urban communities needed, nor ensure targeted sup­ port for low-­and moderate-­income urbanites. Most of the New Partnerships recommendations never became law. Within a year, political and economic constraints killed Carter’s propos­ als. Suburban and Sun Belt representatives and governors united against the industrial corridor to undermine New Partnerships in Congress. In­ stead of enacting a comprehensive national urban policy, Carter issued four executive orders to implement the least controversial elements of it. Worries about inflation by the beginning of 1979 caused the admin­ istration to pull its support for the legislative proposals still pending. As one historian explained it, “the U.S. economy continued to sputter in the late 1970s under the weight of soaring energy prices, low productivity, high unemployment, and elevated interest rates, forcing the president to subordinate his urban programs and policies to the need for fiscal re­ straint.”108 When the administration announced its budget plans for the 1980 fiscal year, it included cuts to the Section 8 rental assistance program, public housing modernization, and new public housing construction, and it stipulated no new spending for housing rehabilitation.109 The policies of austerity ensured there would be no national neighborhood reinvestment policy. Contemporaries and historians have paid a great deal of attention to the failure of New Partnerships, but the focus on that failure belies the fact that the Carter administration did oversee the implementation of several new urban initiatives. Several of those efforts relied on bank-­ based reinvestment to support American cities. Carter supported a new program called the Community Investment Fund, a little-­known urban lending program by the FHLBB (discussed in the next chapter) that put the power of the state behind bank-­led reinvestment. The administration also celebrated the Community Reinvestment Act as a cornerstone of the president’s urban policy and pointed to its passage as evidence that the president was committed to improving the nation’s urban centers. These examples of bank-­based reinvestment were the key tenets of what the ad­ ministration called “Jimmy Carter’s ‘greenline.’ ”110 Even more significant in scope was the Carter-­era Urban Develop­ ment Action Grant program (UDAG), an ambitious new federal urban redevelopment program that relied on private financing and created new obstacles for low-­ and moderate-­income urbanites to revive redlined

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neighborhoods on their own terms. The UDAG program passed as part of the 1977 Housing and Community Development Act, the same law of which the CRA was one title. As its supporters saw it, UDAG created a new and improved mechanism for rebuilding downtowns now that the era of urban renewal and slum clearance was over. When the Community Development Block Grant program replaced urban renewal in 1974, it provided funds for housing development and rehabilitation, but it did not help with the massive infusion of capital needed for large-­scale downtown redevelopment. UDAG addressed this shortcoming.111 Under the UDAG program, the stated purpose of federal funding was to recruit private financing. HUD awarded federal UDAG grants in rela­ tively small amounts to local economic development projects that prom­ ised to create jobs and, more importantly, to enlist substantial new pri­ vate financing for urban revitalization. Program guidelines said that the primary goal of federal UDAG funding was to act as “seed” money to “leverage” new private development to the city. Indeed, HUD would only award a UDAG if private investors had already committed significant financing to the project. As a result, UDAG put the priorities of com­ mercial real estate developers, rather than local residents, at the center of federal revitalization efforts. UDAG’s legacy is pervasive, if not well known. Many centerpieces of today’s urban landscape received UDAG funding, including San Antonio’s River Walk, Boston’s Faneuil Hall, Bal­ timore’s Inner Harbor, and Chicago’s Printers Row. When tourists and conferencegoers visit the nation’s downtowns, they often stay in luxury hotels also financed by UDAG awards. In theory, UDAGs had the potential to help the reinvestment move­ ment’s aims to marshal public and private funds in support of locally led redevelopment for the urban nonelite. The original legislation called for a balance between commercial, industrial, and “neighborhood” redevel­ opment grantees. But that potential never materialized. When HUD announced the first round of UDAG recipients, activists were outraged that commercial projects, especially hotels, received the lion’s share of the awards.112 Activists stressed the injustice inherent in using federal funding to support fancy amenities for “out-­of-­towners” rather than furthering “the needs of the neighborhoods.” A reinvestment ally in the Buffalo city council said, “Instead of building hotels,” UDAGs should “build some living rooms, kitchens and bathrooms.” An activist from Baltimore called hotel development “a real slap in the face to poor people” who needed assistance. “I sure couldn’t afford no $60 a night room,” she said, “and

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neither could half of the people in Baltimore.” Another activist from Wilmington, Delaware, said UDAG-­funded hotels constituted “welfare for the rich.”113 In Chicago, in Cincotta’s Austin neighborhood, the South Austin Coalition Community Council asked the mayor to include $25,000 for their still struggling neighborhood in the city’s UDAG application, but the mayor refused, saying that Austin’s business leaders must pledge “seed funds” up front if they wanted federal funds to match.114 As one critic put it, “the overwhelming portion of the UDAG subsidy is not help­ ing the poor but the Trumps of the world.”115 HUD and city officials defended UDAG’s commercial project favorit­ ism by stressing their capacity to produce entry-­level work, thus fulfilling a UDAG goal of creating jobs for the urban poor or unemployed. They often pointed to UDAG hotel projects to make this case. But activists stressed that hotel work in particular was often a “dead-­end job” and pointed to anecdotal evidence that some city hotels had recently laid off employees rather than hiring new ones. Hindsight reveals that activists had good rea­ son to worry, as federal participation in commercial redevelopment did indeed change the nature of employment in UDAG-­winning cities. Be­ tween 1977 and 1987, for example, UDAG-­winning cities reported more retail employment than their counterparts. In the most dramatic case, Albany, New York, saw a 75 percent jump in retail employment during that period, despite the loss of a fifth of its retail jobs during the decade prior.116 And jobs in the retail sector often did not promise promotion and advancement, as activists had warned of hotel jobs. While NPA affiliates did not convince their cities to stop using UDAG money for commercial projects, their protests to demand better jobs from UDAGs expanded NPA’s agenda still further by convincing activists that dignified employ­ ment was necessary for a national neighborhood reinvestment policy.

Conclusion Though most of New Partnerships failed to transpire, historians have none­ theless noted that its emphasis on public-­private partnerships enabled the devolution and privatization of federal urban policy during the last third of the twentieth century. Some saw Carter’s national urban policy as symbolic of a shift in the dominant political ideology of the 1970s, call­ ing New Partnerships a “bridge between the expansive liberalism of the 1960s and the anti-­statism of the 1980s.”117 But Carter’s New Partnerships

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proposals look different when one considers the administration’s aware­ ness of the reinvestment movement’s successes in enlisting financial capi­ tal for resident-­led development projects by 1978. Inviting financial insti­ tutions to absorb the cost incurred by decreased federal spending in cities did not look like such a repudiation of liberalism when the administration believed that federally encouraged lending might channel new resources to struggling urban neighborhoods. Even so, within two years of launching their “Neighborhoods First” campaign, the members of National People’s Action had given up hope that the Carter administration’s national urban policy would help low-­and moderate-­income neighborhoods in particular. New federal programs and funding would not complement bank-­led reinvestment in commu­ nities most in need. The Carter administration turned toward austerity but remained receptive to the idea that financial institutions had a bigger role to play in urban revitalization. And so while the Community Rein­ vestment Act was a victory for the movement, it was ultimately a narrow victory that came from Washington policymakers’ enthusiasm for bank-­ based reinvestment, not from activists’ vision informed by their experi­ ences living in disinvested communities. In this context, the substance of the in-­progress CRA regulations became all the more important to the reinvestment movement, as that law seemed the only remaining option to channel new resources to resident-­led neighborhood revitalization. Na­ tional People’s Action leaders set to work mobilizing their existing net­ work and joining new alliances to push for strong CRA regulations.

chapter five

Reinvestment for Whom? The Limits of Bank-­Led Reinvestment

I

n 1978, as the members of National People’s Action grew frustrated with the Carter administration’s failure to adopt a national urban pol­ icy that addressed resource disparities among neighborhoods, they gained momentum in pursuing urban reinvestment through the financial system itself. Four federal financial regulators—­the Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation, the Federal Re­ serve Board, and the Federal Home Loan Bank Board—­began to con­ sider the new mandate that reinvestment legislation created for all banks that held savings deposits. With the passage of the Home Mortgage Dis­ closure Act in 1975 and the Community Reinvestment Act in 1977, the writing was on the wall: Congress validated activists’ claims that financial institutions had an obligation to meet the credit needs of the communi­ ties outside of their offices, and federal regulators, somehow, had to en­ sure that banks fulfilled that obligation. In particular, the CRA, with its provision that the public could challenge bank mergers, acquisitions, and branching requests, gave activists the best chance to recruit new capital to their specific aging, integrating neighborhoods. It looked like the reg­ ulations would be weak, but savvy reinvestment activists found ways to use them to make their case and win new mortgage agreements for their neighborhoods. If financial institutions took the spirit of the CRA seriously, the finan­ cial common sense of the New Deal era might yet be upheld; it could prove an important banking law. But activists recognized that when it came to the CRA’s role in a national urban policy, the law’s strategy of depending on banks to finance urban reinvestment had severe limitations.

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For one, it relied on the very institutions that had stopped lending in ur­ ban neighborhoods as their communities integrated and as their housing stock aged. What’s more, Congress had shown its hesitancy to use the fi­ nancial system to allocate credit, suggesting that thrifts and commercial banks would continue to enjoy a lot of freedom over their lending poli­ cies. There were no guarantees that financial institutions would serve ur­ banites most in need without specific and aggressive regulations. Over the course of the 1970s, bank-­based reinvestment revealed the limitations of asking financial institutions, and thrifts specifically, to act as genuine partners in neighborhood-­led urban revitalization efforts. Under a new chairman, the Federal Home Loan Bank Board embraced urban reinvestment in principle, but it did so in a way that opened opportunities for thrifts to serve increasingly affluent urban homebuyers. This set the stage for gentrification, or what activists called displacement.1 Just as im­ portant, the persistent inflation and high interest rates that characterized the years immediately following the passage of the CRA created an open­ ing for financial deregulation, which members of Congress had rejected over the previous decade. At the end of Carter’s term, the Depository In­ stitutions Deregulation and Monetary Control Act began the process of thrift deregulation, setting the stage for further regulatory changes in the 1980s that would undermine thrifts’ potential to serve as the community lenders that activists expected them to be.

Organizing for Strong CRA Regulations Reinvestment leaders did not have much confidence that bankers and their regulators would effectively work together to prioritize the needs of low-­ and moderate-­income urbanites. Looming large on activists’ minds was a recent scandal involving President Carter’s chairman of the Office of Management and Budget, Georgia banker Bert Lance. In the summer of 1977, journalists broke the story that Lance had used his position as a large stockholder in two Georgia commercial banks, and as the president of one of them, for personal gain. He and his family members reportedly benefited from one bank’s willingness to ignore overdrafts, which allowed nine of Lance’s family members to withdraw upward of $450,000 beyond what they held in deposits. Reinvestment activists followed news cover­ age and clipped almost one hundred stories about Lance’s misdeeds. They were enraged to learn that at a time their neighborhoods were desperate

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for credit, Lance personally owned four homes, which were valued at over $1.3 million dollars collectively. Media coverage and subsequent govern­ ment reports also revealed that one of Lance’s banks had issued Jimmy Carter’s peanut-­warehouse operation in Plains, Georgia, a $4.7 million loan with no collateral, raising questions about whether Lance’s Office of Management and Budget appointment had been, as activists put it, “polit­ ical payback.” Journalist William Safire, in a Pulitzer-­winning New York Times article, called Lance a “bankitician” whose interests as a banker could not be disentangled from the new political power he’d been granted. The sketch comedy show Saturday Night Live ran a segment poking fun at Lance’s corrupt borrowing in which comedian John Belushi, as Lance, appeared as a spokesman for a credit card that allowed him to “borrow hundreds of thousands of dollars without paying interest.” When Lance resigned in September of 1977, Carter fought back tears as he announced the resignation. “I know him personally, as well as if he was my own brother,” Carter said in defense of the disgraced chairman, adding that “without any doubt in my mind or heart,” Lance was a “good and honor­ able man.”2 To activists, the lesson of the Lance scandal went beyond the evidence that bankers could manipulate their access to capital in order to win po­ litical appointments. Rather, it was also the problem that bankers like Lance refused to acknowledge the social responsibilities of financial in­ stitutions. While the shady overdrafts and peanut loans grabbed national headlines, activists zeroed in on a less racy story that, in their eyes, showed that bankers like Lance aimed to thwart regulations that tied banks to lo­ cal communities and instead leave the financial system unaccountable to the people—­the exact kinds of regulations they hoped to secure now that the CRA had passed. Specifically, Bert Lance had violated an agreement he made during his Senate confirmation in which he pledged not to weigh in on any pending banking legislation until he sold his stock in the afore­ mentioned Georgia banks. Instead, Lance took a public position against the pending Community Reinvestment Act, writing to the House and Sen­ ate conference committee then considering the Housing and Community Development Act of 1977, and urging the removal of the CRA as Title IV of that law. Arguing that redlining was a housing issue and not a bank­ ing issue, Lance explained that he supported the “objectives” of the CRA but not its “means.” To reinvestment activists, Lance wrote the letter out of self-­interest, as a stockholder of two commercial banks who would fall under the CRA’s jurisdiction and who assumed that kind of local lending

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mandated by the law would harm the bottom line. “What has become lost amidst the headlines is not whether Lance is guilty of a crime,” one activ­ ist wrote in the summer of 1977, “but whether the banking laws of this country are designed in the best interest of the public.” As they saw it, Lance, speaking on behalf of bankers in general, opposed the only pend­ ing piece of legislation that might create meaningful reinvestment for red­ lined communities.3 While the Lance scandal deepened activists’ suspicions that bankers ignored the public good, early signs from the federal financial regulators also raised red flags that those agencies might ignore the opportunity to create meaningful reinvestment through the CRA and instead opt for weak CRA regulations. Soon after the CRA’s passage and before regu­ lators wrote the CRA’s new rules, representatives from the federal finan­ cial regulators made public statements that the CRA should retain “flex­ ibility” and “non-­specificity” in its guidelines. Activists interpreted these remarks as telling bankers not to worry; big changes were not coming their way.4 In this context, National People’s Action leaders mobilized their net­ work to pressure regulators to adopt strong CRA rules. NPA leaders in Chicago coordinated member organizations to attend the six public hear­ ings that the financial regulators held in the spring of 1978 in Boston, Chi­ cago, Atlanta, Dallas, San Francisco, and Washington, DC. Members of the NPA network traveled from Wilmington, Delaware, and Philadelphia to attend the first hearing in the nation’s capital, and Cincotta came out from Chicago. At the hearing, a minister and reinvestment activist from Wilmington pleaded with regulators to make the law mean something. “Strong wording of CRA” could ensure that “lending institutions take a greater responsibility for the plight of our communities,” he said. And it was crucial that they take responsibility since they worsened that plight when they “left the city housing market to the government for [FHA] fi­­ nancing,” creating “a disaster.”5 A key component of their organizing for strong regulations, NPA lead­ ers joined with over thirty representatives of “community, civil rights, and labor organizations, public interest groups as well as mayors, state officials, and local housing authorities and labor” to develop a set of “Citizens’ CRA Guidelines.”6 Over the course of the 1970s, organizations like Ralph Nader’s Public Interest Research Group, the National Urban League, the Center for Community Change, and dozens of others had also become ac­ tive in antiredlining and reinvestment advocacy, often coordinating with

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NPA to lobby federal legislators and share research. The Citizens Guide­ lines created by this coalition revealed the concerns that NPA and its al­ lies had about allowing banks too much control over defining reinvest­ ment through the imperfect CRA. The guidelines stressed that the law held “considerable potential” for “credit-­starved” communities because if regulations were strong, it could reverse the “outflow of capital from these communities,” delivering affirmative results to redlined neighbor­ hoods. But there was a danger that the law might only ban individual cases of geographic discrimination, a limited approach. For one thing, activists maintained that it remained difficult to prove whether bankers denied loans solely because of race-­based and age-­based bias against a neighbor­ hood, which the regulations might ban. Bankers could act on their bias while claiming that other reasons, such as tight money, kept them from lending. If bankers made a persuasive case to regulators that they weren’t discriminating, the CRA might not change urban lending patterns at all. However, if the CRA regulations went beyond discrimination and instead required the allocation of resources to places suffering from disinvestment and measurable results, it would have a far greater impact. It could cre­ ate an affirmative-­action policy for previously redlined neighborhoods—­ remediation for the places that had been victims of disinvestment. With this goal, the coalition that crafted the CRA guidelines proposed strategies to make sure the flexible statute didn’t become “so flexible as to be meaningless.” The group offered ten “basic principles” for crafting CRA regulations that would be loose enough to account for the specific credit needs of diverse communities, while at the same time directing CRA lending to the underserved urbanites. First, the activists argued that “credit needs” under the CRA should refer only to loans that furthered community preservation and revitalization, not to just any loan within the banks’ primary service area, as the service area might also include “the office of a multinational [corporation] or a suburban country club.” They also suggested that regulators, not self-­reporting bankers, should have the primary responsibility for assessing community credit needs in order to have meaningful oversight. Likely worried that banks would include do­ nations for, say, Main Street Christmas lights and little league jerseys as evidence of service to their communities, the coalition also argued that the regulations should specify which “affirmative actions” banks had to take in order to be in compliance with CRA. It also argued that regulators should take “CRA corrective action” with all regulated financial institu­ tions, not just those applying for new privileges, in order to ensure that

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redlined communities without mergers and branch applications would still benefit from the law.7 In its plea to regulators to add specificity to the law, the authors of the Citizens Guidelines also echoed the analysis that reinvestment activists had made repeatedly during the Neighborhood First campaign—­that affirmative action in lending ought to work in tandem with targeted federal programs that aimed to help low-­ and moderate-­income people. “CRA is Title VII of the Housing and Community Development Act,” they re­ minded regulators, and this fact in itself revealed that the law was crafted as part of a federal initiative to address problems in those policy areas. “[The CRA] was passed because Congress realized that there was a ‘vital interconnection between successful community and housing development programs and  .  .  . the availability of private capital,’ ” the authors said, quoting the legislation. Local people complained about the lack of re­ sources for housing, small businesses, and community development. The CRA was a response to those complaints. Much as NPA had done in its efforts to win a national urban policy rooted in neighborhoods, the au­ thors of the Citizens Guidelines stressed that public spending and bank reinvestment ought to be coordinated so the lack of one would not under­ mine the potential of the other.8

Urban Reinvestment through the Federal Home Loan Bank Board Many leaders of the nation’s savings and loans watched NPA’s CRA orga­ nizing with concern. During the legislative campaigns for HMDA and for the CRA, Savings and Loan News reported regularly on NPA’s protests, and executives worried that Congress showed too much support for urban agitators who didn’t understand the problems facing their industry. The new reinvestment regulations posed further obstacles to thrifts as they continued to struggle under 1970s inflation. As many in the industry had feared throughout the decade, the new regulatory push toward urban re­ investment might create cumbersome new rules that would force many thrifts to tie their fates to nearby communities that seemed to be on the decline. This possibility emerged right at the moment when most thrift executives were arguing that the industry instead needed new powers and privileges to survive the threats that inflation and commercial bank com­ petition posed for their institutions.

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During the spring of 1978, the US League of Savings Associations called on all savings and loan executives to become political—­if they hadn’t already. “The biggest single problem our business has,” said US League public relations director William O’Connell, “is its political vulnerabil­ ity.”9 The US League argued that their own policy goals and those of ur­ ban America were at odds. Before Carter announced his urban program in March of 1978, the league listed Carter’s urban policy as one of the most important legislative issues facing the industry that year, under­ standing that savings and loans would likely have a mandated role to play. It warned members that “the initiatives will represent a response to in­ tense pressures from black and liberal groups to ‘do something’ about inner-­city decay.”10 By that fall, Savings and Loan News devoted twenty-­ two pages of its newsletter to instructions on how thrift executives could “Get Involved!” in “political action,” with articles profiling new members of Congress, tables listing the members of the key congressional com­ mittees, and instructions on how to do their own “grass-­roots organiz­ ing.” The impacts of reinvestment activism, as well as other new consumer protections, were visible in the opening paragraph of the segment. “Un­ used mortgage disclosure reports, impractical loan settlement procedures, meaningless truth-­in-­lending data, anti-­discrimination regulations” and more.  .  .  . “Enough!” The “ill-­conceived legislation” and “over-­zealous regulation” had to end, the league told its members. It was time for members of the savings and loan community to “become active in local elections, in party organization, in fund raising, and in policy delibera­ tions”11 to take momentum away from the reinvestment movement and other organizations that threatened to turn thrifts into urban social ser­ vice providers. As the US League began its efforts to better educate its members about the political process, it paid close attention to changes within its regula­ tor, the Federal Home Loan Bank Board. Indeed, what urban reinvest­ ment would look like for the nation’s thrifts would be shaped not only by thrifts’ capacity to shape legislative debates but also by the leadership of the FHLBB chairman during the late 1970s, when the CRA had just been passed and the reinvestment movement reached its peak of influence. That chairman was Robert McKinney, an Indianapolis savings and loan president and a former Naval Academy classmate of President Jimmy Carter. When Carter nominated McKinney to the position in the summer of 1977, he was the sixth man to be nominated in only nine years. The president stressed the crucial role that the FHLBB would play in helping

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the administration meet its goals of urban reinvestment. He emphasized McKinney’s ability to address the housing problems of “inner city lend­ ing.”12 McKinney’s confirmation became a referendum on the FHLBB’s record on combating redlining, and the role that this former S&L presi­ dent would play to improve it or make it worse. Reinvestment activists protested his confirmation on the grounds that McKinney’s former thrift had redlined aging and integrating neighborhoods in Indiana. Three years prior, an FHLBB confirmation hearing had lasted a mere fifteen minutes, but McKinney’s hearing lasted three full days as NPA joined the Ameri­ can Federation of Labor and Congress of Industrial Organizations and the National Association for the Advancement of Colored People in pro­ testing his appointment.13 Civil rights organizations, consumer groups, and the Congressional Black Caucus wrote to Carter to oppose the nomina­ tion based on McKinney’s potential impact on urban America. NPA’s al­ lies, including the National Urban League, the National Association of Neighborhoods, and consumer advocate Ralph Nader, cosigned a letter to the president that spotlighted the FHLBB’s poor record on urban lend­ ing to date, arguing that McKinney, as an industry insider and an urban lender himself, would do nothing to change the agency’s course at a cru­ cial juncture. “The FHLBB has stood idly by while S&L managements have abandoned older urban neighborhoods,” they wrote. McKinney’s nomination “would be interpreted by citizens’ organizations as a sign that the FHLBB is to remain a captive of S&L management.” They cited the research conducted by an NPA affiliate in Indianapolis as evidence that the FHLBB nominee was himself a redliner.14 Many S&L executives and builders wrote in support of the nominee, with one arguing, “Consumer groups mean well, but they do not know what is needed for the industry.” But McKinney, a thrift executive himself, surely did.15 Despite these criticisms, McKinney soon convinced key legislators on the House and Senate Banking Committees, who were most influential in shaping S&L reform during the tough inflationary moment, that his agency and the industry it regulated were prepared to turn over a new leaf on urban lending. After his confirmation, McKinney instituted sev­ eral policy changes that suggested the FHLBB would no longer fight ac­ cusations of redlining, as it had during the HMDA hearings and in con­ tests with neighborhoods groups around the country since then. Instead, McKinney suggested that the FHLBB would make amends and take seri­ ously its obligation to police geographic discrimination.16 In the months before the CRA went into effect, McKinney banned from S&L real estate

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appraisal trainings all instructional materials that assigned lower values to racially changing neighborhoods or neighborhoods with the “varied architecture” common to urban streetscapes but not to suburbs.17 McKin­ ney also introduced new nondiscrimination regulations for S&Ls that, for the first time, explicitly prohibited denying a loan because of the age or location of the home. These initiatives won liberal legislators’ trust. Sena­ tor Proxmire noted that after McKinney’s rough confirmation, the new chairman “turned into a real tiger on the redlining issue.” Vice President Walter Mondale agreed, calling McKinney’s initiatives “the strongest ac­ tion ever taken [by a federal agency] to prohibit mortgage credit practices which discriminate against older neighborhoods.”18 McKinney seemed to set a new tone for the industry. As a result, many savings and loan executives who had recently sup­ ported McKinney during his confirmation changed their tune on the new chairman. They met McKinney’s new urban lending regulations with great alarm and interpreted them as indicators that the chairman had caved under the pressure of urban community groups, at the expense of their struggling industry. As many thrift executives saw it, McKinney implied that urban reinvestment was the industry’s responsibility, while most in the industry maintained that their institutions reacted to, but did not cause, urban decline.19 One thrift executive criticized McKinney’s FHLBB for “its emerging position as the government’s preeminent urban housing agency,” implying that the regulator had taken on a mission best left to HUD. Savings and Loan News reported that the “activist FHLBB” was “intent to fashion the type of ‘partnership’ sought by Carter,” suggesting that the new chairman tried to help his old friend politically rather than prioritizing industry needs.20 One Chicago executive criticized McKin­ ney’s new antiredlining initiatives as ill conceived: “Anyone who would want to live in one of those neighborhoods doesn’t need a banker; he needs a psychiatrist.”21 At the same time, some thrift executives recognized that their record in urban America had given them a public relations problem and that McKinney’s FHLBB might help them fix it. “Fairly or unfairly,” one article said, “the image of neglect by urban associations and other financial institutions exists.” Perhaps McKinney would “demonstrate that associations do have a heart and the resources to finance the preservation and rehabilitation of urban America.”22 But McKinney never intended to put the responsibility for revitalizing declining urban neighborhoods squarely on the shoulders of the nation’s savings and loans, as the most panicked thrift executives feared. Instead,

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he sought to build goodwill with Congress by showing the FHLBB’s new enthusiasm for urban reinvestment at a time when the congressional bank­­­ ing committees had been so responsive to the demands of urban commu­ nity groups. Looking back at the end of his term, McKinney acknowl­edged as much. “When I came in, the bank board was too close to industry,” he said. “As a result”—­in his view, as a direct consequence of this coziness—­ “Congress had to pass consumer laws” like HMDA and the CRA. Under his leadership, the need to pass consumer laws disappeared. By his own account, through new initiatives in urban lending, McKinney convinced both of the congressional banking committees that the FHLBB could meet the credit needs of those it served without any additional rules, and thus it did not need to “rely on Congress to legislate necessary changes.”23 His efforts to bolster the FHLBB’s image as receptive to the demands of urban activists accomplished two important goals. First, they helped thrifts pursue urban reinvestment on their own terms, before activists or legislators demanded further new regulations for the industry and before the CRA regulations had been finalized. Second, McKinney’s proven re­ cord on urban lending gave him political capital to ask Congress for new lending permissions that would help thrifts survive the era of inflation. Over the course of his tenure, McKinney used the goodwill that his agency had accumulated from Congress in order to win untested, and risky, thrift powers and privileges that he believed would help thrifts weather the in­ flationary decade. Indeed, in the wake of activists’ most important legislative victory through the Community Reinvestment Act, the thrift industry moved away from the financial common sense of the New Deal era, rather than recommitting to community lending as the CRA might have forced it to do. Under Chairman McKinney, savings and loans acquired new powers and privileges that made the largest of them function more like commer­ cial banks rather than community lenders. One new banking law that passed in part due to McKinney’s efforts, the Financial Institutions and Interest Rate Control Act of 1978, gave thrifts new investment powers to help them balance their books at a time when threats of inflation meant thrifts had to reconcile long-­term, fixed-­rate mortgages with short-­term, rising payments on deposits—­a recipe for disaster. Though “a relatively minor measure,” as one historian put it, the law allowed thrifts to invest 5 percent of their assets in land development, construction, or education loans—­moving their portfolios ever so slightly away from mortgage lend­ ing and foreshadowing changes to come in the 1980s.24 Over the course of

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his tenure, McKinney oversaw other changes aimed to help thrifts survive inflation, including liquidity reductions for thrifts, permission for some large thrifts to issue commercial paper (a privilege previously reserved for commercial banks), authority for thrifts to issue graduated mortgages in which interest rates increased over the course of the loan (causing home­ buyer payments to increase), and more. Given these and other new “good­ ies” that his FHLBB delivered to the nation’s savings and loans, activists called McKinney “Santa for thrifts.”25 The goodwill that the FHLBB and the savings and loan industry built with Congress by participating in urban reinvestment proved crucial to winning these new powers for thrifts. In no case was this connection more apparent than in the FHLBB’s successful effort to pass an “urban lend­ ing” law in 1978. The campaign for the Urban Lending Act began in the winter of 1977, when the FHLBB convened an Urban Lending Task Force to consider amendments to the Home Owners Loan Act, which by that time enumerated thrifts’ lending permissions. Internal memos from the FHLBB reveal that the 1978 legislative strategy was to first pursue “social responsibility” legislation early in the year, and then move on to “industry strength” initiatives.26 One can infer that the board expected that its ef­ forts to demonstrate that thrifts were socially responsible would generate the necessary congressional support for further thrift reform. The task force began its work with the premise that “most lenders believe that ur­ ban lending creates greater risk to the institution than their normal lend­ ing policies” and thus required “insulation” from “direct exposure,” an assumption that reinvestment activists had protested for a decade by this point.27 As it stood, the Home Owners Loan Act restricted thrift lending in “urban renewal” areas, segments of cities that received federal funding through Title I of the 1949 Housing Act, to 5 percent of an institution’s assets. Given the new congressional enthusiasm for thrifts to reinvest in urban centers, and the fact that Title I had been replaced by the Commu­ nity Development Block Grant (CDBG), the FHLBB saw an opportunity increase the 5 percent cap, while at the same time requesting other new permissions for the savings and loan industry, all in the name of helping struggling neighborhoods. One of those new permissions weakened the relationship between ur­ ban neighborhoods and urban lenders. Namely, the Urban Lending Act allowed savings and loans that lent in CDBG areas to invest up to 2 per­ cent of their assets in service corporations. Service corporations, as inde­ pendent financial entities, were not thrifts per se, so they stood outside

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of FHLBB regulations. As a reward for lending in urban areas, the new Urban Lending law allowed thrifts to move their assets to these unregu­ lated service corporations, which could then invest thrift capital in for-­ profit ventures that savings and loans could not. These ventures included the lucrative business of purchasing real estate for development, sale, or rental. Urban lending through service corporations was a far cry from reinvestment activists’ financial common sense, in which local financial institutions invested in nearby communities to link the fate of one to the other. But the move pleased thrift executives who worried that the FHLBB might goad them into “risky” urban lending. Soon, the US League began to talk about the FHLBB’s leadership in urban America as savvy, rather than short-­sighted. McKinney’s agency decided to take “initiative to combat redlining charges,” its newsletter explained in June of 1978, acting preemptively to show that the indus­ try could reinvest in cities on thrifts’ own terms. After all, if the FHLBB failed to squash the redlining accusations, Congress might respond “in an even heavier handed way than it ha[d] through the Home Mortgage Disclosure Act and the Community Reinvestment Act.”28 Over time, un­ der the guise of meeting the credit needs of urban communities, service corporations would give savings and loans an opportunity to, as one legal scholar put it, engage in “experimental lending not otherwise permissible for savings associations.”29 Within a year of the Urban Lending Law’s pas­ sage, National People’s Action argued, hyperbolically, that it “completely rewr[ote]” the “basic thrift regulatory legislation.” More accurately, they noted that through service corporations, thrifts enjoyed “greatly expanded powers to make nonmortgage loans” due to the new law that McKinney had “hyped” as urban lending legislation.30 NPA leaders saw these new permissions as moves that favored the larg­ est thrifts, which behaved increasingly like the commercial banks that no­ toriously cared very little for the fate of redlined neighborhoods. The smaller savings and loans, many of which joined community-­bank partnerships like Neighborhood Housing Services, suffered not only from high inter­ est rates and commercial bank competition but also from the threat of being acquired by the growing number of industry giants in states that al­ lowed thrift branches.31 These new thrift powers that McKinney had won, NPA leaders warned, were “bad news for neighborhoods.” Thrifts were “becoming larger, more remote, and even less affected by neighborhood economics,” they said, meaning few would have a stake in the survival of their specific communities.32 They pointed to the “increasingly large gap

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between the interests of the lenders and the needs of many American citizens,” which would especially hurt “neighborhoods.”33 Indeed, as the thrift historian David Mason has shown, when larger savings and loans consolidated over the 1970s, their interests grew distant from those of their smaller counterparts within their industry.34 In addition to these new powers that McKinney won to help the in­ dustry weather the era’s high inflation, the FHLBB under McKinney also embraced new urban initiatives that caused activists to fear that savings and loans had adopted a very different definition of reinvestment than the one activists had given it over the past decade. During the late 1970s, the FHLBB helped its industry capitalize on more profitable loans to af­ fluent urban homebuyers and for-­profit developers, rather than low-­ and moderate-­income urbanites. The board’s most important new program to that end was the Community Investment Fund (CIF), a $10 billion pool of capital intended to reduce the cost of urban lending to savings and loans. Upon its announcement, NPA members saw the CIF as a cooptation of the reinvestment concept. This new FHLBB initiative emphasized urban lending in general, rather than targeted lending for low-­ and moderate-­ income people. It did so in the name of demonstrating that thrifts had taken independent initiatives to meet urban credit needs and thus didn’t need further CRA-­like legislative mandates to do so. “The only goal of CIF is to produce an image of improvement,” one reinvestment activist wrote. It was “an obvious puff job from square one,” not reinvestment for redlined neighborhoods.35 The FHLBB’s program aimed to use finance, rather than federal fund­ ing, to revitalize urban America, in step with Carter’s urban policy ap­ proach as discussed in chapter 4. The CIF was “a major effort by free en­ terprise to respond to the president’s call for the revitalization of our communities,” the chairperson said when he announced the initiative. Mc­ Kinney used the same financial language central to Urban Development Action Grant and the New Partnerships proposals, speaking of the CIF as a “catalyst” and seed money to “leverage” further private investment in urban neighborhoods, meaning its “potential impact” was much larger “than the $10 billion face amount of the fund.” Tapping into the anti-­ HUD sentiment that NPA shared with many other urban advocates, McKinney also argued that the CIF was no “HUD-­type program,” with their “red tape” and strict guidelines. He also spoke the reinvestment movement’s language of flexibility: “The beauty of this is that it is so flex­ ible it will allow each bank district to tailor the programs” because “the

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problems of New England are so different from the problems of Southern California, and so on.”36 Perhaps most importantly, McKinney stressed that the CIF money would be raised through capital markets, rather than paid by tax dollars. “This is not a government subsidy program,” McKin­ ney said on one occasion. The fund “will not use tax dollars,” he said on another. The president echoed the message. “These are not appropria­ tions from Congress,” Carter stressed.37 Indeed, the president was grate­ ful that the FHLBB’s pledge meant less federal spending on urban pro­ grams. In a handwritten note to his old college friend McKinney, he wrote “P.S. Thanks for the $10 billion!”38 The press reported the financial turn behind the CIF as evidence of progress, rather than problematizing the move away from funding urban programs through a federal budget pro­ cess that was accountable to the public. Highlighting the shift from gov­ ernment funding to thrift financing, the New Orleans Times-­Picayune cel­ ebrated that the “tax-­free infusion of funds” would not “come down from Washington” but would come “from the local capital invested” through the FHLBB system.39 On its surface, the Community Investment Fund seemed to endorse ur­ ban activists’ proposals for meaningful urban reinvestment, but through a creative initiative that appealed to thrift executives. As a regular practice, savings and loans borrowed funds, called “advances,” from the FHLBB in order to maintain the level of liquidity required by federal regulations. The CIF program allowed S&Ls to borrow advances at a lower interest rate if the S&L performed one or more specified urban lending activities: hire community lending specialists, market low-­ and moderate-­cost hous­ ing in “mature communities,” counsel low-­ and moderate-­income buy­ ers, or participate in government revitalization programs.40 After a thrift received the reduced-­cost funds, it could implement its urban lending programs however it saw fit. If the FHLBB discovered that thrifts were accepting the discount advance rate but did nothing to promote low-­and moderate-­income borrowing, the regulator had the authority take away the discount. From the outset of the program, Cincotta and her colleagues doubted that the CIF would help urban reinvestment for low-­and moderate-­income urbanites. For one thing, the FHLBB funds would be distributed geo­ graphically without considering the different capital needs of each of the twelve designated regions. Instead, the CIF linked the allocated funds to the net worth of each region’s banks, meaning, as activists plainly put it, “rich regions [would] get more than poorer regions.” The FHLBB slated

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the Western region to receive $2.3 billion of the funds, while the North­ east region, “with 50 percent more people and many more urban areas,” would receive $340 million less.41 What’s more, the strings attached to the new money were weak. To receive CIF money, S&Ls only had to put what the FHLBB called a “reasonable emphasis” on at least one of four aforementioned strategies. As activists saw it, an S&L could adopt any of these strategies superficially, thus winning access to new resources with­ out necessarily demonstrating any results that helped low-­and moderate-­ income urbanites. Finally, the CIF proposal to coax savings and loans to increase their urban lending with the carrot of advances seemed unlikely to work given that advances from the FHLBB were not hard to come by and thus were unlikely to prove meaningful incentives. Even before the CIF went into effect, advances to S&Ls had increased by nearly 70 per­ cent in 1978 alone. In other words, the CIF “does nothing to actually get S&Ls to write more mortgages in redlined neighborhoods,” activists con­ cluded. Worse, it could create new obstacles for activists who hoped that thrifts would help end the urban housing crisis. “The extensive publicity” around the program “may convince legislators and others that it is the ‘big fix’ for mortgage redlining,” which might discourage Washington from taking any further action to bring meaningful reinvestment to redlined communities.42 How local savings and loans would use the Community Investment Fund remained to be seen. What was clear was that McKinney’s strategy of linking new thrift powers to urban reinvestment initiatives changed ideas about urban lending within the savings and loan industry. The FHLBB’s urban initiatives promised to bring financing into American cit­ ies, but with few requirements that the new resources would improve the lot of low-­and moderate-­income urbanites. This place-­based, rather than people-­based, approach created new obstacles for urban reinvestment activists before they had a chance to start testing the possibilities of the Community Reinvestment Act.

CRA Regulations Released As McKinney’s FHLBB and the savings and loan industry worked to show Congress that they could pursue urban reinvestment on their own terms, the members of National People’s Action eagerly awaited the announce­ ment of the Community Reinvestment Act regulations. In July of 1978,

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the federal regulators released the new CRA rules that would go into effect in November. The new regulations were weak but significant. On the one hand, the preamble to the regulations said that the CRA rules would “encourage institutions to become aware” of local credit needs and to “make a sincere effort to meet those needs.” Depository institutions would determine credit needs by “seek[ing] the views of all segments of their communities,” rather than doing so internally.43 Come November, the CRA would require that each financial institution draft a “CRA state­ ment,” a formal declaration explaining its plan to meet community credit needs. The CRA statement would have to include a map of the institu­ tion’s primary service area and a list of the types of loans it offered. Regu­ lators would also require that financial institutions post a “CRA notice” on-­site, informing the public that the bank had an obligation to meet local credit needs. Despite these requirements, the absence of other specifics alarmed ac­ tivists. As they saw it, the CRA regulations did not require that financial institutions actually do anything. Rather, banks had to state that they would hypothetically make loans in low-­and moderate-­income communities, with no burden to prove that any loans had actually been made. Activists ac­ cused the federal agencies of “gutting” the rules, requiring a “set of mean­ ingless statements” rather than a change in lending policies.44 “What are the regulators supposed to do?” one quipped. “Will they pray for the bank” and hope that “banks will see the light on mortgages and loans in low and moderate income neighborhoods?” NPA demanded revised rules based on the Citizens Guidelines, which set “specific criteri[a] for determining a com­ munity’s credit needs.”45 But the regulators had made up their minds—­the July regulations went into effect in November with no significant revisions. As Proxmire’s staff had hoped, even the weak regulations created the regulatory standing that empowered community groups to disrupt busi­ ness transactions such as mergers and acquisitions when a bank failed to lend in low-­ and moderate-­income neighborhoods. Soon, the federal regulators would rely on such community protests by NPA and other or­ ganizations in order to enforce the CRA. In so doing, these federal agen­ cies empowered neighborhood groups as grassroots financial regulators, expanding state regulatory authority to neighborhood activists by giving them the authority to interfere in banks’ business deals if the banks failed to meet social obligations to nearby communities. Indeed, the CRA became a useful tool for neighborhood groups ow­ ing to emerging changes in the banking industry that permitted a wave

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of mergers and acquisitions. The late 1970s witnessed the early signs of a turn away from local and toward national and international banking that accelerated over the course of the 1980s and that endangered the mutually beneficial relationships that reinvestment activists hoped to strengthen with banks. New practices such as interstate banking and the abolition of state usury rates reconfigured the financial system. Perhaps most importantly for reinvestment activists working to ensure that banks maintained a stake in local communities, thrifts began to look less like George Bailey’s building and loan, with its community service ethos at its center, and more like competitive financial institutions in search of new savings and lending powers that would expand their customer base. This shift resulted in part from a boom in mergers and acquisitions that bankers and regulators hoped would make the nation’s struggling finan­ cial system more “efficient.”46 Because mergers and acquisitions triggered the CRA, they gave activists an opening to challenge banks’ requests. In other words, the tide of bank consolidation had the ironic consequence of creating new opportunities for neighborhood groups who hoped to keep banks local. These long-­term consequences were not yet clear, but one implication of CRA was that community groups now had a role to play in the federal financial regulatory regime. National People’s Action organized to make the most of it. Cincotta, Trapp, and other NPA leaders educated affiliate groups around the country that the new law had passed and that they could use it to win new resources for their communities. As soon as the CRA regulations went into effect in November 1978, NPA published in its newsletter a step-­by-­step guide that explained how to deploy the new leg­ islation, illustrated with stick-­figure drawings to suggest that the process was simpler than community groups might expect. “Hold a community meeting. List credit needs,” explained the article. Then “go to the lender. Give them your group’s list of credit needs.” If the bank failed to respond to the list, NPA leaders explained which regulator community groups should contact for which kind of bank, and they gave instructions on how to file a formal CRA complaint.47 NPA also created elaborate CRA guide­ books with examples of demands to make, texts of the agency regulations, and a glossary of lending terms to assist activists struggling with banker jargon. Trapp convened trainings and workshops for community organiz­ ers whose neighborhoods had been redlined and might benefit from fil­ ing local CRA challenges. One Pittsburgh organizer later credited NPA for teaching his organization to leverage new loans for “low-­moderate

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income neighborhoods” through one CRA challenge.48 An activist from Roanoke noted that NPA was “a big reason why we’ve gotten into redlin­ ing.” His organization was “aware now, unlike six months ago, that there are laws on the books” to combat disinvestment, and NPA had shown his neighbors “here’s how to go about doing it.”49 In these efforts, NPA leaders in Chicago were helped by their rela­ tionship with Shore Bank, a community development bank on the South Side of Chicago. Four community bankers founded the bank in 1973 in re­­ sponse to redlining and economic decline in the South Shore neighbor­ hood, so the institution shared with NPA a vision of banks recommitting to previously redlined communities to help end the urban housing crisis. One of the banks’ founders, Ron Grzywinski, testified alongside Cincotta in favor of HMDA in 1975. After HMDA’s passage, staff from Shore Bank helped NPA leaders understand what a reasonable demand on a bank might look like. Shore Bank staff taught NPA leaders some “rules of thumb” of their industry, specifically, how much profit their institution typically expected from different kinds of deposits and how those depos­ its usually “translated into loans.” One large deposit of $1 million might make the bank $10,000 a year, for example, whereas the $1 million from checking deposits might yield $30,000. On the other side of their balance sheet, staff explained that they often required $10,000 in profits to make $370,000 in loans. NPA staff used these figures to help shape their loan demands in Chicago. They also used these calculations to train affiliate organizations on how to make loan demands that would sound reasonable to the financial institutions they approached.50 In the final months of 1978, two NPA affiliates in New York gave re­ investment activists around the country hope as they won the first-­ever CRA challenge. Reinvestment activists from Against Investment Discrim­ ination and Bank on Brooklyn filed a complaint with the Federal Deposit Insurance Corporation (FDIC) that Greater New York Savings Bank red­ lined the neighborhoods they represented. Using independent research combined with HMDA data, they made a strong case that the bank col­ lected $594 million in deposits—­80 percent of the bank’s total liabilities—­ from their area of Brooklyn but invested only $7.5 million in mortgage loans there. More importantly, the data revealed that a striking 78 percent of the bank’s assets went out of New York State entirely. FDIC regulators assessed the evidence and agreed with activists, denying the bank permis­ sion to open a branch in the more affluent borough of Manhattan.51 With that, the New York commercial bank became the first institution in the

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nation to be denied a banking privilege for its failure to comply with the CRA. The US League took note of the decision, predicting that the CRA would bring “big problems” for thrifts and banks alike.52 But a setback soon followed the New York victory, suggesting that CRA enforcement would be uneven and would hinge on how effectively community groups could issue formal CRA challenges. In February of 1979, the first round of CRA statements—­the map delineating a lender’s primary service area and list of its available loan products— ­came due. Many activists in NPA’s network spent “CRA Day” visiting local banks and thrifts to collect these new documents, with one New York affiliate alone collecting statements from over thirty financial institutions. The ac­ tivists found them abysmal. Most CRA statements were “brief and vague,” with one bank even misspelling “reinvestment” several times. An activist from Toledo called his city’s CRA statements “miserable” and “worth­ less,” arguing that “no one has gone a step beyond what is absolutely re­ quired.”53 Financial institutions met the bare minimum regulatory require­ ments with their maps and loan lists, but few provided any evidence that they had issued, or planned to issue, any loans in the low-­and moderate-­ income communities outside their offices. CRA regulations also required that financial institutions post a “CRA notice” in their offices to inform the public of its obligation to meet local credit needs, yet activists found that some institutions managed to water down even this minimal require­ ment. In Kansas City, MO, for example, one thrift posted its CRA notice in the men’s bathroom, rather than the lobby, where customers might see it. A few bright spots stood out, however. One bank in Chicago sent out a questionnaire to community groups, asking local residents to identify what kinds of loans their neighborhoods needed most. But the dominant trend, according to over one hundred community groups who sent reports to NPA’s Chicago headquarters, was that lenders had not bothered to contact neighborhood organizations to “learn firsthand of their commu­ nity credit needs.”54 Given bankers’ lack of outreach, activists wondered exactly what information they used to draft their CRA statements in the first place. Bankers’ weak statements resulted in part from advice that they re­ ceived from their trade associations. American Bankers Association (ABA), the largest trade association of commercial banks, informed members that the Federal Reserve Board, their federal regulator, had promised to make it easy to meet the law’s requirements. Despite NPA leader Helen Murray’s warnings when Senator Proxmire first asked for feedback on the

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CRA legislation, the legislation used the word “encourage” with regard to the activities banks should do to meet local credit needs. “Encourage” was a far cry from “demand” or “require.” And trade associations re­ minded their members as much. The week before CRA statements were due, American Banker, the ABA’s newsletter, published an article re­ counting a recent meeting between the ABA and the Federal Reserve during which Fed regulators promised to give banks considerable leeway in how they could meet their new CRA obligations. As part of their rou­ tine bank examinations, regulators would provide CRA ratings on a scale of one to five, with one being the best. But rather than provide local com­ munity groups with any damning information about banks’ performance, these ratings would be kept private. What’s more, federal regulators had been candid that they “sometimes will approve an application [to merge, branch, or acquire a new bank] despite a negative CRA record.” Recog­ nizing that members of NPA and other reinvestment organizations would likely invoke the CRA in battles with bankers, the Federal Reserve ad­ vised that “banks start and maintain a nonpublic CRA compliance file” in order to defend themselves from “protests from community groups.”55 For NPA and its allies, who subscribed to bank trade publications as a way to keep tabs on the industry, these signs pointed to an uphill battle for meaningful CRA enforcement. From NPA’s headquarters in Chicago, Cincotta and Trapp recognized that if the federal financial regulators did not proactively enforce the CRA through their routine examinations, the law’s potential lay entirely on the ability of community organizations to leverage new lending commitments from filing a bank merger or acquisition challenge through the CRA. It would not come through proactive efforts by financial institutions; nor would it come from the federal regulators, who did not seem eager to in­ clude meaningful urban reinvestment to their supervisory duties. Surpris­ ingly, the CRA statements that so disappointed activists in February 1979 soon created a new organizing opportunity for activists to make good use of the law. Indeed, CRA statements shaped activists’ credit demands by making transparent the gaps that often existed between the credit needs of low-­and moderate-­income communities and the loan products that local banks and thrifts offered, or claimed to offer. In the Northwest Bronx, for example, North Side Savings Bank listed no loans on multifamily dwell­ ings, but those types of buildings dominated the deteriorating blocks of one NPA affiliate. The group soon discovered that North Side had an ex­ plicit policy not to make such loans, so reinvestment activists demanded a

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change in that policy.56 In Brooklyn, NPA affiliates learned that one thrift demanded a 50 percent down payment on the small multifamily buildings throughout their borough but required a smaller, more manageable down payment on single-­family homes found in the suburbs. In many cases, data from the Home Mortgage Disclosure Act proved crucial for proving dis­ crepancies between the services a bank claimed to offer on its CRA state­ ment and a bank’s actual lending record. In one case, the CRA statement of an Indianapolis S&L alleged that the thrift issued home improvement loans to nearby communities, which owners of aging homes desperately needed, but the thrift’s HMDA data revealed that it had originated zero such loans over the previous year.57 CRA statements gave activists new information with which to make specific demands on their local banks. Within a year of the CRA’s enactment, NPA affiliates from Toledo, Ohio; St. Louis; and several other cities used the CRA to win new neigh­ borhood resources from local banks and thrifts that sought permission to merge or to open new branches, despite lax enforcement by federal regulators.58 As even an FHLBB member admitted, activists rarely filed CRA challenges out of vengeance, simply to punish banks. Instead, re­ investment activists filed CRA challenges with specific, measurable de­ mands that banks could meet in order to meet local credit needs. For ex­ ample, the Center for New Corporate Priorities, an NPA affiliate in Los Angeles, used a CRA challenge to win new bank branches in low-­income or majority-minority communities that previously had none.59 Others won commitments from banks to allocate a specific portion of their as­ sets to loans in underserved communities. As NPA affiliates and other community organizations learned to use the CRA and bankers learned how challenges worked, the mere threat of a CRA challenge became a tool in itself. CRA threats often led to negotiations between community organizations and banks because even when a regulator granted a bank permission to merge or branch, a CRA challenge absorbed considerable time and money. Regulators had to at least weigh the credibility of activ­ ists’ complaints, which took time. Together, CRA challenges and threats brought a growing number of bankers to bargain with reinvestment activ­ ists and expanded the law’s reach. Member organizations from across the country reported their CRA victories to NPA’s headquarters in Chicago, using the organization as a clearinghouse for information on reinvestment movement strategies. From Prince George’s County, Maryland, an NPA affiliate called Neighbor­ hoods Uniting Project sent word of several gains that came out of a CRA

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threat. Activists compiled HMDA data to show that their local thrift, Per­ petual Savings and Loan, had made only 35 mortgages within the pre­ dominantly black Inner Beltway communities in 1978, while it had made 616 suburban home loans despite having not one bank branch in those areas. After five weeks of negotiations, the bank agreed to an affirmative marketing program that highlighted the bank’s new willingness to make Inner Beltway loans, as well as new outreach to real estate agents whose clients might need a mortgage. Perpetual also assigned two full-­time loan officers to its urban branches and donated funds to support a local coun­ seling program for homebuyers.60 A survey of two dozen CRA agree­ ments during the late 1970s reveals that Neighborhoods Uniting Project’s outcome was representative of NPA member groups. CRA threats and actual CRA challenges together led to local victories that included af­ firmative marketing programs to raise awareness of available credit, new loan officers in low-­income areas, new minority and bilingual loan offi­ cers, loans to fix up abandoned buildings, home improvement loans for target neighborhoods, friendly loan terms for nonprofit developers of multi­ family housing, and more.61 Activists achieved impressive results from the law that financial insti­ tutions first suspected would be weak. Their success can be explained in part by NPA members’ knowledge of how housing markets worked, which had grown increasingly sophisticated since the 1975 fight to win the Home Mortgage Disclosure Act. At that time, activists received pushback from bankers and some members of Congress that the lack of mortgages in their “transitional” urban neighborhoods was not a form of race-­based geographic discrimination but instead resulted from a lack of demand—­ there simply were no buyers who wanted to move to such places, HMDA critics claimed. Activists from all over the country heard the “no demand” argument again and again after HMDA’s passage. NPA affiliates gath­ ered stories of loan denials from their neighborhoods, but bankers often dismissed these stories as anecdotal rather than systemic. But by the late 1970s, NPA affiliates had become increasingly sophisticated in their strat­ egies to challenge this line of thinking. Activists regularly researched deed transfers in redlined neighborhoods to learn the number of homes that changed owners in a given year and compare that to the number of loans banks made during the same period. Organizers from Cleveland’s Union Miles Coalition, for example, used HMDA data from Society National Bank to learn that Society granted only six mortgages in their neighbor­ hood in 1977. They used municipal deed transfer records to reveal that

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405 new owners took title to as many deeds during that same period. Even if some of those title transfers did not require financing for purchase, they reasoned, it seemed entirely implausible that only six did.62 Deed transfer records provided crucial evidence to support activists’ claims that there was indeed demand for mortgages in neighborhoods and that banks re­ fused to meet it. While many NPA affiliates won significant lending victories through CRA, others found in their neighborhoods the same resistance that bank­ ers had displayed during the HMDA and CRA hearings. Ona Jones, the CRA chairperson of an NPA affiliate in Denver, approached “all the banks” in northeast Denver to collect CRA statements and found the ex­ perience “humiliating.” Despite the regulations that said the public should have access to CRA statements, bankers answered Jones’s request with a barrage of questions: “Who are you? Where are you from? Why do you want it?”63 Other activists also found interactions with bankers demor­ alizing. Some reported being “harassed” for their names, addresses, or proof of identity when they requested HMDA data and CRA statements from local lenders. The sense from many activists was that most bankers assumed there would be no repercussions for ignoring activists’ requests. “We’ve had a local banker here implying that they are not worrying be­ cause the law [CRA] won’t work,” reported Doris Jeffrey of Brooklyn.64 Some bankers struck a middle ground, not enthused to make new lend­ ing agreements but not so opposed as to defy the new federal law and its regulations. These bankers responded like FHLBB chairman Mc­ Kinney did—­they tried to preempt activists by creating their own urban rein­vestment initiatives before the CRA gave activists the power to de­ fine what reinvestment looked like in their communities. For example, a vice president from United California Bank in Los Angeles pointed to the Greater New York ruling as evidence that bankers needed to get out in front of CRA. In several speeches to fellow bankers, he pitched a nine-­ point program that included affirmative marketing, hiring more minority branch managers, and hiring a consumer compliance officer. Admitting that these changes would come at a cost, he reminded audiences, “If we don’t make these investments, our costs will be much greater,” should regu­ lators deny institutions their requests to merge or branch because of CRA noncompliance.65 The local partnerships that enabled reinvestment for current residents proved too small and too few to buck a larger trend of urban reinvestment that served more affluent urbanites and for-­profit developers. Indeed, de­ spite the law’s limited reach, as the 1970s came to a close, the financial

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trade associations organized politically to end their codified obligations to low-­ and moderate-­income communities entirely. They did so by attack­ ing activists’ most important tool for making the CRA effective: the data from the Home Mortgage Disclosure Act. Since HMDA was passed in 1975, it proved crucial in substantiating activists’ charges that banks had disinvested from their communities. Scores of community-­bank agree­ ments had resulted from activists using data in protests with local banks, even at times when no merger or acquisition triggered a CRA challenge. But HMDA passed with a five-­year sunset provision. With the 1980 sun­ set still two years away, financial trade associations began speaking out against the law that they called useless and costly. The US League’s new president, Joseph T. Benedict, called HMDA “a waste of money, an unfair burden on lending institutions, and a failure in accomplishing any docu­ mentable results.” In response, NPA asked its member organizations to “actively seek out” HMDA data from their local institutions in order to show that community groups indeed used the law. Cincotta and Trapp sent surveys out to member organizations to record their experiences in acquiring data from local banks in order to build the case that commu­ nity groups relied on HMDA data, especially now that CRA challenges hinged on showing that banks had ignored their responsibilities to lend.66 The stakes were especially high for the low-­and moderate-­income peo­­ ple who comprised NPA because affiliate groups had recently started to report new threat to urban reinvestment: displacement. During the late 1970s, member organizations from Chicago, Boston, New York, and more reported warning signs that some lenders had become eager to lend in transitional urban neighborhoods, but to more affluent white buyers rather than those who reflected the existing racial and class demographics of their communities. “Without HMDA, neighborhoods would get shut out of the reinvestment process just when lots of lenders are finally ‘dis­ covering’ the city as a good place to lend,” one activist said. NPA members worried that without access to mortgage data that helped them hold banks accountable and file CRA challenges, “reinvestment” would happen “only for the rich” with revitalization through “massive redevelopment” instead the “conservation” of neighborhoods for the people who lived there. Unless community groups kept tools like HMDA to help them target reinvestment for low-­and moderate-­income people specifically, “reinvest­ ment can be just as big a problem as disinvestment,” a Disclosure editor wrote.67 In the end, Congress agreed to make the Home Mortgage Disclo­ sure Act a permanent law. But the renewed conflict over HMDA revealed another limitation of bank-­based reinvestment: activists would have to

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periodically defend even its weak infrastructure from bankers who wanted to end it.

Commercial Banks and Thrift CRA Enforcement The CRA expanded urban activism beyond savings and loan associations and drew new attention to the neighborhood lending practices of larger commercial banks. The law applied to all commercial banks on the prem­ ise that they, too, accepted people’s savings deposits and benefited from government charters. But during the late 1970s, at the time the CRA was passed, it was commercial banks, not savings and loans, that were most likely to acquire or merge with other banks and thus trigger the CRA. Commercial bank consolidation brought many local reinvestment orga­ nizations into battles with these larger banks whose institutional culture did not share savings and loans’ emphasis on service and community. Nor did commercial bankers consider themselves first and foremost mortgage granters, as thrift executives did. Commercial banks gained their share of the mortgage market over the late ’60s and ’70s, much to the chagrin of struggling savings and loans. But even so, mortgage lending remained only a moderate segment of commercial bank business. Reinvestment activists took advantage of the new leverage they had to pressure commercial banks, rather than only thrifts, into partnerships. “Commercial banks have never been required to make mortgages at all,” NPA leaders explained to readers of Disclosure, but the CRA changed that. Included with thrifts as “depositories,” first under HMDA and now under the CRA, these “huge banks” also had a “continuing and affirma­ tive obligation to help meet the credit needs of local communities,” as the legislation stated. By the spring of 1978, commercial banks held $218 bil­ lion in collective assets, over $80 billion more than savings and loans. As the former grew, activists charged that “commercial banks must be held accountable for more home mortgages.” Reinvestment activists started targeting these banks for increased access to financing.68 “I don’t see why the large commercial banks should be left off the hook so easily, consider­ ing their large savings deposits,” said one Bronx activist.69 Commercial bankers did not immediately feel threatened by the po­ tential of reinvestment activists to become grassroots financial regulators through the CRA. Indeed, the flexibility of the CRA regulations at first pleased commercial bankers. The American Banker ran a series of encour­

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aging stories. “Regulator’s CRA Guidelines Provide for Flexibility,” ran one headline. The law would pose “no high-­risk obligation,” the magazine suggested; the regulation procedure might be so painless as to only take a half day visit from the Fed.70 Other articles cited regulators who pledged that if a bank could just show good-­faith effort, that performance would likely suffice in a CRA examination. Bankers breathed a collective sigh of relief that the regulations made no reference to credit allocation or quotas. The flexible regulations, the Boston Globe explained, “allay[ed] their fears of mandated allocation of credit.” A spokesman for a Massa­ chusetts state association said, “We expect the banks to support the regu­ lations,” implying that they did not represent a revolution in urban home financing.71 But over the course of the CRA’s first year, commercial bankers grew frustrated that the law proved to have more teeth than they originally ex­ pected, as many found themselves the target of local CRA protests. The new leverage the CRA gave activists with commercial banks soon led to conflict with the American Bankers Association. In 1979, a year after the law went into effect, the ABA began a political campaign called “Opera­ tion Unravel” with the goal of repealing the CRA. The incoming presi­ dent of the ABA, C. C. Hope, reported that his association had begun working with other financial trade associations on questionnaires to be sent to their members to “document problems created by the Community Reinvestment Act.” He said “emotional appeals” would not be enough to convince legislators to repeal the legislation. “We need horror stories.”72 To protect the tool they had only recently won, activists initiated a months-­long campaign to pressure the ABA to end Operation Unravel and instead encourage its members to comply with the CRA. In the spring of 1979, they demanded that John Perkins, the outgoing president of the ABA, give NPA time to address his constituents at the ABA’s annual convention so Cincotta and other leaders could demand that the ABA support “strong” CRA enforcement. NPA leaders also requested that the ABA support a permanent HMDA and adopt a code of ethics that in­ cluded an antiredlining pledge. When Perkins refused, explaining that the conference agenda had already been set, NPA promised that hundreds of urbanites would come to New Orleans during the bankers’ convention to disrupt the meeting until NPA leaders were allowed to speak. In August, NPA member organizations around the country staged hits at the offices of local commercial banks to demand that bank executives pressure Per­ kins to put NPA on the agenda. Several executives placed the calls, but

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the ABA did not concede.73 Perkins sent a letter to ABA members to “comment in advance about our experience with a national activist group that may be demonstrating, seeking entrance to our meetings, or talk­ ing to you individually to convince you of their views and their demands for action.” The ABA president assured members that “the ABA has focused on ways to help in the social and financial health of the larger ur­ ban areas” and that the organization was dedicated to the goals that “we bankers share with the residents of the city neighborhoods.”74 In October of 1979, NPA showed the network’s capacity to organize an impressive protest. Over three hundred reinvestment activists arrived in New Orleans by train, plane, and car to disrupt the ABA’s annual meet­ ing. Calling the protest the Battle of New Orleans, NPA members turned the entire city into an arena of protest. Activists chased down bankers in their hotel lobbies. They caught them off guard when out to dinner. They followed them down Bourbon Street. In keeping with their movement culture, reinvestment activists parodied folk songs and used humor to make their protests fun for participants. Some turned “I’ve Been Work­ ing on the Railroad” into “I’ve Been Working for Our Neighborhoods,” singing their demands for access to credit as they confronted bankers. As one participant recalled, “NPA had more fun than the bankers.”75 They may have had fun in New Orleans, but they did not accomplish their goals. Instead, the Battle of New Orleans revealed the limited clout that reinvestment activists had with large commercial bankers in the early years of the CRA. Savings and loans had a ­decades-­long history of neighborhood lending and had been the target of reinvestment activ­ ism for nearly a decade by 1979, whereas most commercial bankers had little experience with, or interest in, prioritizing social obligations to spe­ cific communities. Indeed, several activists reported that the commercial bankers they confronted in New Orleans not only had no affirmative plan for meeting local credit needs, they also had no idea what the Community Reinvestment Act was. While the FDIC, one commercial bank regulator, had validated activists’ complaints in the Brooklyn case in late 1978, that decision turned out to be the exception rather than the rule. Commercial banks’ other CRA regulator, the Federal Reserve Board, had proved even more lax on CRA enforcement. As one policy analyst put it, the Fed had displayed “an insular, arrogant, almost hostile attitude toward the goals of community-­based protestors,” despite the evidence that “CRA is in­ tended to open the [examination] process to a lay audience of interested community groups and public interest organizations.”76

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Activists also discovered that the FHLBB, the savings and loan regu­ lator, would not be much better when it came to CRA enforcement. De­ spite FHLBB chairman Robert McKinney’s pledges that the savings and loan industry would do its part to revitalize older neighborhoods, those promises did not seem to extend to reinvestment demands that came from neighborhoods rather than bankers. In the thrift industry, activists gained new opportunities to use the CRA for reinvestment on their own terms due to an increase in mergers. Thrift mergers began to increase to about a hundred a year during the 1970s. Whereas in 1955 there was one branch for every ten savings and loan offices, by 1979, there were, on average, three branches for each thrift.77 As activists began filing CRA challenges against many of these merging institutions, a common FHLBB response emerged: the “conditional” or “contingent” approval. Under conditional approvals, the FHLBB conceded activists’ point that the savings and loan in question had indeed failed to meet the credit needs of low-­ and moderate-­income communities. However, the FHLBB nonetheless granted the institution permission to branch or merge, with an added stipulation that it address discriminatory accusations from the CRA protest. In practice, most often the strings that the FHLBB attached included changes that set a very low bar, such as improving “communication” with local community groups. In 1979, NPA lobbied the FHLBB to instead deny thrifts permissions out­ right when they violated the CRA, in hopes of strengthening the law, but FHLBB officials denied this request, arguing that conditional approvals could be effective tools to win new reinvestment agreements. Over the first two years of CRA organizing, then, activists won significant victories by us­ ing CRA threats and challenges to bring local banks into partnerships on neighborhood revitalization efforts, but evidence was mounting that the impetus to enforce the CRA fell entirely on community groups to deploy the law as grassroots financial regulators. “Federal regulators don’t take their responsibilities very seriously,” one activist from Atlanta said. “Any application is approved unless it is specifically protested.”78 This piecemeal approach hardly constituted a national neighborhood reinvestment policy.

New Threats: Displacement and Financial Deregulation As member organizations reported victories and frustrations to NPA’s Chicago headquarters, they also began describing signs that their neigh­ borhoods faced new challenges with which the CRA could not help. By

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the late 1970s, reinvestment activists around the country worried that the future of urban lending was not in the low-­ and moderate-­income bor­ rowers that NPA represented but, rather, in housing for upwardly mo­ bile professionals. Newspapers reported an increase in “urban pioneers” seeking authenticity and affordability.79 The very word “pioneer” re­ vealed the assumption that these new migrants were staking out new ter­ ritory as the first to settle an urban wilderness, despite the fact that the neighborhoods they moved into were often home to longtime residents.80 Shifts in the economics of suburban home buying helped drive a growing number of middle-­class baby boomers into cites during the second half of the 1970s. The cost of living in the suburbs had skyrocketed over the course of the 1970s, and housing costs accounted for much of this jump. Developers were squeezed by high interest rates, which they passed on to homebuyers. Tax policy in many new suburbs also affected development costs. In order to avoid high taxes, some suburbs charged developers fees as a way to collect new revenue, and those fees made construction more expensive with “no relationship to the actual work being done,” as one developer put it. Whereas in 1950, two-­thirds of homebuyers could afford the single-­family homes that dominated the suburbs, that share dropped below 10 percent by the end of the 1970s.81 By 1979, NPA and its allies raised “displacement” as a pressing neighborhood problem that resulted from “too much reinvestment” as middle-­class people bought property in cities instead. NPA worked with the National Urban League, an allied group, to research the emerging concern that the arrival of more affluent newcomers would price low-­and moderate-­income urbanites out of many neighborhoods that had been redlined just a few years prior.82 For thrifts struggling to survive inflation within regulations that still tied the bulk of their assets to home financing, the arrival of more afflu­ ent urban homebuyers, who so worried members of National People’s Action, offered a promising new market. Indeed, during the late 1970s, lending experts echoed reinvestment activists’ rhetoric that there were good loans to be made in cities, but they had different ideas about who might obtain those loans. One observer writing for the business publi­ cation Wharton Magazine noted that opportunity could be in found in “transitional real estate markets”—­a term that activists had used to de­ scribe white-­to-­minority racial change a decade earlier but that lenders now used to indicate the arrival of more white, affluent buyers. If bankers were alert to “unconventional opportunities” that existed in areas they had once ignored, the writer said, they might “choose innovation instead

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of withdrawal” from urban neighborhoods.83 A national housing survey pointed to the growth of one such unconventional opportunity: condo conversion, as urban rental apartments became the private property of middle-­class newcomers. Condo conversions doubled in just one year, ris­ ing from about fifty thousand nationwide in 1977 to one hundred thou­ sand in 1978.84 As activists feared, thrifts provided financing that enabled displace­ ment. Reports from the first two years of the FHLBB’s Community In­ vestment Fund confirmed as much. Only between 7 and 12 percent of sav­ ings and loans applied for the discounted advances with the community investment strings attached, compared to the 60–­70 percent of S&Ls that received ordinary FHLBB advances. That meant that much of the capac­ ity of the $500 billion industry was untapped to reverse redlining in ur­ ban neighborhoods. Furthermore, while the district FHLBs did monitor participating S&Ls to ensure that they served low-­and moderate-­income borrowers, there was no restriction on participating S&Ls to simulta­ neously serve more affluent customers in ways that might erase reinvest­ ment gains for low-­and moderate-­income people. Savings and Loan News reported that “revitalization dollars at cut-­rate costs are beginning to pay off in first-­rate results,” but as profits for savings associations, not as new funds for declining neighborhoods. The list of CIF-­financed projects by 1980 included condominium conversions, shopping center renovations, and the rehabilitation of Long Beach resort hotels.85 Community activ­ ists, together with reinvestment ally Senator William Proxmire, floated a proposal for the FHLBB to make its records about the distribution of CIF funds open for public comment, but the FHLBB rejected this idea. Since participation in the CIF was voluntary, an FHLBB official explained, in­ creased public pressure might scare away the few S&Ls that proved will­ ing to participate.86 At the same time, in the context of persistence of inflation and high interest rates, policymakers began to consider thrift deregulation in a way they had not just a few years prior, and in so doing, they seriously undermined the potential for thrifts to serve as partners in resident-­led urban redevelopment. The deregulation of the savings and a loan industry was a response to the problems that high interest rates caused for thrifts’ business model—­a response that showed policymakers’ increasing will­ ingness to end thrifts’ special status as agents of homeownership and embrace competitive banking. Recall that the interest rates on savings ac­ counts were capped by Regulation Q and that Regulation Q allowed thrifts

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to pay slightly more interest on savings accounts than commercial banks. When the market interest rate surpassed the Regulation Q limit, many middle-­class Americans with money to save recognized that they could earn more interest by closing their thrift passbook accounts and moving their savings to higher-­return investments such as money market mu­tual funds and minimum-­amount certificates of deposit (CDs). Aggressive marketing campaigns by bank holding companies like Citicorp helped spur enthusiasm for these alternatives to the passbook.87 But at the time, such investment opportunities were an option only for the relatively afflu­ ent, with the minimum denomination for CDs at $10,000. The high cost of entry frustrated many middle-­class Americans who did not have that much to invest. The Gray Panthers, a political advocacy group for senior citizens, filed a lawsuit against the federal financial regulators, charg­ing that setting the minimum so high discriminated against small savers. The im­ age of elderly Americans protesting class-­based discrimination haunted elected officials, who knew that seniors vote. In the wake of the Gray Panthers lawsuit, Congress held six hearings on the “small saver problem” in the spring and summer of 1979 alone, with a central question being whether the era of high interest rates required the end of Regulation Q and, by implication, the end of the provision that gave thrifts an advan­ tage to protect their special status. Notably, National People’s Action was not present to testify about the implications of high interest rates for ur­ ban borrowers.88 In fact, as the 1970s came to a close, NPA became less important in setting the agenda of the Senate Banking Committee, where HMDA and CRA had originated during the 1970s, and advocates of deregulation gained traction. NPA’s disappearance was not for lack of interest. During the late 1970s and early 1980s, the organization proposed several solu­ tions to protect low-­ and moderate-­income urbanites from the effects of high interest rates that threatened reinvestment efforts just as activists won new access to conventional mortgages through the Community Re­ investment Act. Cincotta had accompanied colleagues to dozens of hear­ ings between 1972 and 1979. But reinvestment activists’ role as serial wit­ nesses declined at decade’s end. In large part, their absence resulted from the reality that congressional friends and foes of NPA had associated the organization with urban borrowers, whereas many understood the victims of the late-­1970s and early-­1980s high-­interest-­rate regime to be small sav­ ers.89 Once the CRA was passed, the needs of borrowers had hypotheti­ cally been met. As Proxmire put in during the HMDA hearing, Congress

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passed reinvestment legislation to provide the tools to citizens and they would “expect communities to do the rest.” During the high-­interest-­rate regime, members of Congress became convinced that savers were suffer­ ing most.90 At the same time that NPA affiliates tried to make do with the CRA, thrifts lobbied for new permissions to help them navigate the increasingly competitive market for consumer savings in the era of high interest rates. They in essence asked for new lending privileges that would not jeopar­ dize their role as mortgage specialists. The US League asked Congress to let thrifts enter new lending markets that still served “families”—­markets including car loans and consumer loans, which charged higher interest than mortgages. The league also resurrected the request that the FHLBB give thrifts new authority to issue variable-­rate mortgages so they could raise the interest on mortgages. Higher interest on mortgages would allow them pay the competitive rates that consumers expected on savings de­ posits. But instead of those permissions, policymakers and regulators only gave thrifts permission to compete for savings, with no changes to the lending side of their business. Starting in June of 1978, thrifts could issue a new “money market certificate” (MMC), a six-­month time deposit that paid interest rates that were competitive with other investments. MMCs allowed thrifts to compete on the savings side of their business, but the lending side was still highly regulated.91 Savings and Loan News ran a headline that put the decision in blunt terms that would have resonated with NPA leaders who advocated for borrowers: “Political Support for Home Buyers Shifts in Face of Outcry from Small Savers.”92 But tinkering with one side of the thrift business and not the other came at a cost, which NPA’s urban borrowers soon felt. Thrifts needed to charge higher interest rates on loans to survive. Within eight months, the new MMCs drew $100 billion into the coffers of thrift institutions. Paying a market rate on these certificates while only charging borrowers a low fixed rate on their mortgages could not compensate for the high cost of the MMCs. Here is where the consequences for NPA’s urban borrowers hoping to make good use of the CRA became apparent. By changing the assets side of the thrift business to meet the interests of consumer-­savers, these financial innovations threw the thrift business model out of whack and gave regulators a stark choice: allow thrifts to change the lending side of their business too, or put thrifts in the dangerous position of hemor­ rhaging interest rate payments to their customers until they became in­ solvent.93 Either way, the industry’s long-­standing “3–­6–­3” rule—­pay

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3 percent on deposits, collect 6 percent on loans, and be at the golf course by three o’clock—­was dead. As small savers became Washington’s “new cause célèbre,” as one thrift executive put it, the high cost of competitive savings accounts essentially required that thrifts start charging more for mortgages. As one savings and loan president wrote to Proxmire, if Congress demanded “that we have a totally free market on the savings side of our ledger, then [they] must include legislation that would permit the other side of the ledger, the mortgage side, to be an equally free market.”94 If one side of the bal­ ance sheet moved with market rates, the other side should do the same. In this context, the savings and loan industry finally won permission to grant variable-­rate mortgages (VRMs), the regulatory power they had fought for since the mid-­1970s, when reinvestment activists had first lobbied for the Home Mortgage Disclosure Act. In a surprising move that activists called a “bomb shell,” Chairman McKinney allowed VRMs as his final policy action before resigning his position in the summer of 1979. For a half decade, congressional worries about the unpopularity of a new pol­ icy that would make homeownership more expensive had served to keep VRMs from becoming a reality. But McKinney made what activists called an “end run” around legislative authority, authorizing VRMs before Con­ gress held a new round of hearings on the topic, which was scheduled for later that summer. The rationale McKinney gave was one the FHLBB and the S&L trade organizations had given throughout the decade: infla­tion had made unsustainable the thirty-­year fixed-­rate mortgages that were normalized by the New Deal, as lenders could not afford to pay high in­ terest rates on savings without collecting higher interest on mortgages. And now that MMCs undermined thrifts’ stable business model, VRMs had become all the more urgent. Reinvestment activists worried that VRMs marked the death of the fixed-­rate mortgages they had come to expect as part of their financial common sense and would thus put affordable and predictable borrowing out of reach. “Once the industry starts writing [VRMs],” one Disclosure article said, it “will no longer write the standard mortgages, which would bring them less profit than VRMs.”95 Even as the Community Reinvest­ ment Act gave activists new traction to preserve the codependent relation­ ship between specific communities and their local financial institutions, this new permission pulled in the other direction, putting affordable ur­ ban credit further out of reach. While McKinney and the US League strategized to help thrifts survive high inflation, Congress convened to discuss changes in federal banking

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laws in response to what financial institutions said they needed to make do. The future of Regulation Q was on the line. President Carter asked Congress to consider the Depository Institutions Deregulation and Mon­ etary Control Act (DIDMCA) in 1979, his proposal for “comprehensive financial reform legislation” through an “orderly transition to a system where the average depositor can receive market-­level interest rates on his or her savings.” At the same time, the administration pledged to “protect the long-­term viability” of thrifts so they could “continue their traditional role in meeting our nation’s housing needs.”96 Despite the president’s op­ timism that deregulation would be orderly, the New York Times predicted it would “touch off a legislative free-­for-­all” and would “meet fierce op­ position from savings and loan associations” that had supported Regula­ tion Q.97 During the hearings over the legislation, even NPA ally Sena­ tor William Proxmire, a longtime advocate for the urban borrowers, now embraced the consumer-­saver rationale for financial deregulation. “Con­ sumers are the big losers in the financial institutions regulation game,” he said. “They receive no interest at all in their checking accounts, and the small savers, they are paid a low rate of return on their savings,” and it was time to consider changing that.98 On that logic, the law called for the end of Regulation Q and, by extension, thrifts’ special role as mortgage specialists. When Carter signed DIDMCA in March of 1980, he celebrated the “far-­reaching, beneficial effects” expected from it. But the act showed no consideration of the needs of urban borrowers. Indeed, after a decade in which the Senate Banking Committee had held hearings on FHA abuse, the allocation of community development funds, the Home Mortgage Dis­ closure Act, and the Community Reinvestment Act, concerns for banks’ role in resolving the urban crisis had completely disappeared from the policy conversation about bank regulations. Instead, Carter highlighted that the DIDMCA would “help small savers.”99 The law created the De­ pository Institutions Deregulation Committee to oversee the process of eliminating the Regulation Q ceiling and gave the committee a six-­year timeline for doing so. It also gave thrifts broader asset powers by allowing them to issue NOW accounts, interest-­bearing savings accounts that were expected to help thrifts draw in more savers.100 DIDMCA endorsed the prescription to deregulate the New Deal fi­ nancial regime as the way to reform it. The argument that financial in­ stitutions should operate on free-­market principles, first put forth by the Hunt Commission in 1972, failed to convince members of Congress who expressed “ambivalence and outright resistance” to comprehensive

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deregulation throughout the 1970s.101 But in 1980, the persistence of high interest rates, the potential disintermediation crisis for thrifts, and the cause of the small saver pushed policymakers to endorse deregulation.102 The New Deal financial regime, characterized by specialized institutions with distinct lending roles, caps on interest rates to avoid bidding wars for consumer savings, and a charter process that encouraged limited mo­ nopolies for depository institutions, was giving way to a system built on the premise that greater competition would improve efficiency.103 For the reinvestment movement, DIDMCA marked the beginning of the end of the financial regime as they knew it.

Conclusion By the time the Depository Institutions Deregulation and Monetary Con­ trol Act passed, activists had learned what they could expect to achieve through the Community Reinvestment Act. Despite their efforts to win strong regulations with specific affirmative-­action policies for their local banks, the CRA rules were weak. They required that financial institutions demonstrate their efforts to serve and low-­and moderate-­income commu­ nities, but the banks did not have to show that efforts turned into results. Even so, the weak regulations could become useful tools in the hands of informed community organizations who understood how to file a CRA challenge and had a sense of what regulators would view as reasonable credit demands. In effect, the CRA hinged on the specialized knowledge of reinvestment activists acting as grassroots financial regulators. And while this meant that community groups could make tailored lending de­ mands that reflected their neighborhoods’ particular credit needs, it also guaranteed uneven results for low-­and moderate-­income neighborhoods. Only those communities with organized reinvestment groups that knew how to use the Home Mortgage Disclosure Act and make a CRA chal­ lenge could expect community-­bank partnerships to make a difference. At the same time, broader policy changes suggested that the financial system was changing around activists just as they gained traction with the CRA. The Federal Home Loan Bank Board began to promote urban re­­ investment, but they did so in a way that served more affluent buyers and promoted displacement. And Congress embraced financial deregu­ lation that promoted competitive banking to serve small savers, putting thrifts—­the institutions activists hoped would have a stake in the future

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of their neighborhoods—­in danger of losing their special status as agents of homeownership. As NPA leaders stressed the limits of bank-­based re­­ investment, they again adjusted their demands. They began to call for the policy proposal that bankers and free-­market enthusiasts had wrongly ac­ cused them of plotting for a half decade before: credit allocation, and greater democratic control over the financial system for all those suffering from “economic discrimination” during the Great Inflation.

chapter six

Let’s Make the Market Work for Us The Lost Fight for Credit Allocation and the Rise of Community-­Bank Partnerships

O

n October 6, 1981, National People’s Action affiliates around the country staged mock funerals for the American dream. The date was significant. Their protests marked the two-­year anniversary of the day that the Federal Reserve, under Chairman Paul Volcker, changed its operations. Since then, to combat out-­of-­control inflation, the central bank had pursued a new policy based on monetarism: it targeted the nation’s money supply rather than setting interest rates directly as it had previously done. By 1981, from what activists could see, the Fed’s experiment with monetarism had been a disaster. Interest rates fluctuated wildly but trended up. At their peak, rates surpassed 20 percent, making it impossible for borrowers to afford the cost of mortgages or home improvement loans. Their communities suffered, but monetarism seemed to serve the nation’s elite quite well. Many of the nation’s financiers appreciated that the Fed stayed the course, signaling that the central bank was serious about stomping out inflation and stabilizing the dollar. At the same time, wealthy investors and big banks raked in windfall profits from the high interest rates they received on investments and loans. And while the nation’s largest corporations didn’t like the high cost of borrowing, at least they could afford it. Two years into the monetarist experiment, reinvestment activists thus took to the streets. Activists in Boston, New York, Philadelphia, Chicago, and a dozen more cities staged their funerals for good jobs and decent housing—­victims of what they called “Volcker’s disease.” They carried caskets through downtowns, sang funeral laments, and signed petitions to

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demand that the Fed provide interest rate relief for low-­ and moderate-­ income communities. “We can no longer sit by and watch our country and our way of life die around us,” said Gale Cincotta. “Credit must be made more affordable for all, not just Corporate America.”1 The funeral protests reflected the shifting agenda of the urban reinvestment movement at a time when the central bank’s strategy to combat inflation revealed just how limited bank-­based reinvestment proved for low-­and moderate-­income urbanites. Their demands in the 1980s included jobs, affordable energy, support for seniors and, for the first time, credit allocation. The policy proposal that one Senate staffer called the “bogeyman” that bankers had seen behind the Home Mortgage Disclosure Act and the Community Reinvestment Act just a few years earlier, credit allocation became a reinvestment movement campaign. As the economic downtown hurt NPA’s low-­and moderate-­income constituents hard, they raised new questions about the relationship between credit and national priorities. They demanded the federal government use its powers to direct affordable credit to people who relied on it to buy homes, run businesses, operate small family farms, and more. But their calls received no attention, as the Federal Reserve Board, with support from Democratic pres­ident Jimmy Carter and then Republican president Ronald Reagan, refused to protect low-­ and moderate-­income people from the recession-­inducing effects of its fight against inflation. At the same time, the US financial system was in the midst of the largest banking crisis since the Great Depression. Thrift after thrift collapsed between 1980 and 1989, bringing the total number of failed savings and loans to 890, with $347.8 billion in assets lost by decade’s end.2 Reports of thrift executives investing in speculative stocks and junk bonds showed that the industry had changed.3 Financial deregulation through the Depository Institution Deregulation and Monetary Control Act of 1980 and the Garn–­St. Germain Act of 1982 gave thrifts unprecedented powers to enter new arenas of business in which they lacked expertise. Many thrifts responded to these changes with caution. But headlines that some savings and loans were “running wild,” with greedy executives and widespread charges of fraud, presented an image of an industry that had lost its way, lured by greed into speculative and shady dealings.4 It seemed the end of the social institutions that resembled the thrifts memorialized by It’s a Wonderful Life.5 As the effects of financial deregulation became clear, using the Community Reinvestment Act to win new lending agreements seemed the only strategy left on the table for reinvestment activists who sought new

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resources for their struggling communities. Activists made impressive use of the law, given the obstacles posed by financial deregulation. The social mission of the New Deal– ­era thrifts shifted to a new and separate banking infrastructure some have called “community development banking.”6 The rise of community development banking bucked the broader trend toward financial deregulation, based on 1970s reinvestment legislation that created new lending mandates at the same time financial institutions generally found greater freedoms to lend and invest as they wished. Yet, as activists understood, the neighborhood lending units, community reinvestment officers, CRA compliance programs, and affordable-­housing developments that emerged over the 1980s were small-­scale solutions to large-­scale problems facing low-­ and moderate-­income urban communities. As unemployment rose in the 1970s and wages shrunk over the last third of the twentieth century, community-­bank partnerships proved an inadequate solution to the era’s growing economic inequality.

We’ve Been Volckerized As the previous chapter showed, reinvestment activists around the country won impressive victories with the newly passed Community Reinvestment Act during the two years after its passage. NPA member groups in Cleveland, Chicago, and other cities negotiated lending commitments that brought new affordable-­housing opportunities to previously redlined ur­ ban neighborhoods.7 But at the same time that displacement and financial deregulation began to threaten the usefulness of the CRA, so did another challenge: high interest rates. The era’s persistent inflation led the Fed to increase interest rates, threatening to price out urbanites looking for mortgages or home improvement loans. Paul Volcker became chairman of the Federal Reserve Board in the summer of 1979 with expectations that he might have the resolve and experience to finally attack inflation and put the economy back on track. After Jimmy Carter’s famous “malaise” speech, the president shuffled his cabinet in an effort to demonstrate his capacity for bold action. But the shuffling created uncertainty among financiers who read Carter’s shake­up as further indication that the president could not manage the economy. Carter’s choice to appoint Volcker as Fed chair signaled that the administration was serious about fighting inflation.8 Volcker had a reputation as an “inflation hawk” who prioritized price stability. He believed the

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Federal Reserve was in part to blame for inflation because under his predecessors, it had allowed too much money to circulate in the economy.9 Volcker was “highly respected” among economic policymakers for his “integrity, ability, and public-­service ethos.”10 His physical appearance reinforced his reputation as a level-­headed financial engineer. At six-­foot-­ seven, Volcker had a big presence that signaled strength and resolve. He often smoked cigars during meetings, which gave him the impression of being relaxed, even aloof, during tense moments. Activists first paid little attention to his appointment. Volcker had not yet become their “public enemy number one.”11 Volcker’s Fed embarked on its monetarist experiment in the fall of 1979, which would have enormous consequences for reinvestment activists. Most known for its support from economist Milton Friedman, monetarist theory prescribed approaching the money supply with the principles of supply and demand that economic doctrine applied to other commodities. Monetarists believed that inflation was a symptom of too much money in circulation. So their solution was to take some out—­tighten the money supply. With less in circulation, monetarists believed, the economy would slow down, eventually bringing inflation along with it. But this long-­term gain would come with short-­term pain. The principles of supply and demand suggested that interest rates—­the price of money—­would go up with the initial contraction and thus price some borrowers out of credit markets. Using monetarism to manage the economy marked a departure from the Keynesian approach of relying on tax-­and-­spend fiscal policy to promote growth and reduce unemployment.12 Indeed, throughout the 1970s, monetarism was so out of step with mainstream economics that one economist referred to monetarists as “the chiropractors of modern economics.” However, the stubborn persistence of inflation gave monetarism new credence by 1979. Policymakers became more willing to experiment with the unconventional approach given that no strategies to combat inflation were working.13 Using the momentum of his recent appointment, the new chairman Volcker spent the fall of 1979 lobbying the other Fed governors to vote in support of embracing a new money-­targeting approach he called “practical monetarism.”14 He announced the change in Fed operations on October 6, 1979, in an atypical Saturday-­night press conference that signaled the gravity of the decision. When Volcker announced the change, NPA leaders were cautiously optimistic that Volcker’s new policies would bring inflation down, which they assumed couldn’t be bad. Informed by the press and bank trade

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publications, NPA leaders concluded that “most economists” agreed that the Fed’s decision might reduce loans available for currency and commodity speculation, which had the potential to stop inflationary spirals in those markets. But the “bad side” of the monetarist experiment, reinvestment leaders added, was “much higher costs” for borrowing in general. And that could mean expensive credit for housing. To ensure that urbanites maintained access to housing credit that had only recently been made possible by the CRA, NPA leaders warned, the Fed would have to find a way to encourage “vital uses of credit” at the same time it cracked down on inflationary borrowing.15 And so it became reinvestment activists’ new mission to monitor lending trends to ensure that as monetarism stopped the flow of credit to speculative lending, “vital uses” and “productive loans” did not take a hit at the same time. The financial knowledge they’d gained over the past decade made these urbanites vanguards in the struggle to combat the effects of Volcker’s decision on low-­ and moderate-­income Americans. As the Fed’s money targeting began to have effects in their commu­ nities, activists’ cautious optimism turned to pessimism. For one, high inter­ est rates jeopardized the new access to credit that activists had only re­­ cently won through the CRA. Activists had just begun negotiating new loan commitments from local banks when the spike in interest rates hit, pricing many potential low-­and moderate-­income borrowers out of credit markets. The CRA might become useless, just like other urban initiatives coming out of Washington, such as the FHLBB’s Community Investment Fund and Urban Development Action Grant programs, that put “profits over people,” in activists’ words. “The most serious threat to neighborhood reinvestment in the ’80s is high interest rates,” Cincotta concluded. And as activists saw it, the high rates gave banks new cover to turn down loans in urban neighborhoods. “Banks can now say, ‘Sure we’ll write mort­ gages in your neighborhood. All you have to do is pay 15 percent!” one activist quipped. “High-­income people” might be able to survive high-­ interest mortgages that came along with monetarism, activists noted, but their constituents were not so well positioned.16 Activists also worried that the high-­interest-­rate regime would worsen the unemployment rate among their low-­ and middle-­class constituents, knowing that high rates meant “decreased buying [that] will cause more unemployment.”17 By February of 1980, when the interest rate on home mortgages reached an incredible 15 percent, activists charged that Volcker was “redlining our neighborhoods more than the banks [were].”18

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As Volcker’s money targeting kept interest rates high, activists offered an alternative to the monetarist approach that treated the economy as one coherent entity: credit allocation, or credit control. As chapters 3 and 4 explained, bankers often protested HMDA and the CRA as forms of credit allocation that violated free-­market principles. In response, NPA’s legislative allies, especially Senator William Proxmire, were adamant that reinvestment was not the same as state-­mandated lending. But by the early 1980s, NPA activists had begun to talk more openly about credit allocation as a solution to the high-­interest-­rate regime that priced low-­and moderate-­income homeowners out of credit markets. As early as 1978, NPA’s staff discussed whether member organizations could eventually make credit allocation an issue in the 1984 presidential election.19 Leaders began promoting credit allocation in their national newsletter when Volcker took over the Fed. The central bank already allocated credit when it embraced a policy that let borrowing became increasingly expensive, they maintained. The question was not whether to control credit; it was “credit control in whose interest?”20 NPA leaders in Chicago began drafting a campaign for credit allocation that could offer special treatment for lending toward “vital” purposes like affordable housing. NPA leaders criticized the Fed for taking what they saw as too broad an approach toward tightening the money supply, akin to using a sledgehammer when a scalpel was in order. Targeting the money supply without attention to the disparate effects on low-­income borrowers meant no protection for “those hardest hit” by the policy.21 As activists saw it, tightening credit also forced “our neighborhoods” to compete with big players like Standard Oil for a finite supply of credit—­a competition that urbanites would surely lose given their small market share and their inability to afford high rates. It reeked of unfairness. Credit allocation, through both government regulations and voluntary incentives to encourage banks to make loans for affordable urban housing, could level the playing field. Activists called for credit allocation through federal policies that would “fine tune the details” of the Fed’s monetarist approach and “insulate” their neighborhoods from the high cost of borrowing.22 Activists thus had high hopes when, on March 14, 1980, President Jimmy Carter made a statement suggesting the Fed would indeed begin to allocate credit to soften the blow of the monetarist experiment. Invoking the Credit Control Act of 1969, Carter declared that “regulation and control of credit is necessary and appropriate” as a strategy for “controlling inflation” created by “an excessive volume” of credit.23 The act, on

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the books for a decade but not yet used, gave the Federal Reserve Board power to set terms of credit among all entities, from savings and loans and commercial banks to the financial branches within companies like Sears and to credit card companies. NPA leaders explained to their constituents that with Carter’s invocation of the act, Volcker had been authorized—­ even encouraged—­to use incredible power to manipulate credit markets. Theoretically, he could mandate that savings and loans offer mortgages at low interest, or demand that banks allocate a certain portion of their lending to affordable housing.24 In activists’ vision, Volcker’s power under the Credit Control Act could be deployed to help urban neighborhoods navigate the high interest rates. But what happened instead was a deba­ cle in which the Fed only set targets for credit card borrowing, and Carter asked consumers to exercise restraint in their borrowing. In response, many Americans went beyond policymakers’ expectations. They cut up their credit cards and stopped buying all together. Consumer spending came to a halt, further inducing a recession.25 As the monetarist experiment continued with no relief in sight, activists began to mobilize. They coordinated a campaign that combined direct protest and moral suasion in an effort to convince Paul Volcker to allocate credit to “the neighborhoods.” In April 1980, activists gathered in the rain outside the Federal Reserve building in Washington, DC, to confront Paul Volcker in person for the first time. Cincotta estimated the crowd to be 2,000, but local police reported a much smaller 350.26 Protestors carried signs that read “Volcker’s Loan Shark Headquarters,” likening the Fed to usurious lenders who exploited the desperation of vulnerable borrowers. To drive the point home, Richie Gallagher from the Bronx dressed up in a borrowed “Land Shark” costume from a friend who worked at Saturday Night Live. A Cleveland activist stood up and read a fabricated memo from Volcker, adding theater to the protest. Stressing the class-­based argument that monetarism discriminated against the nonaffluent, she told protestors that because “rich people, suburbanites, investors, and government bureaucrats have but little experience with financial difficulties,” the Fed concluded that “city neighborhood people are best suited” to bear the brunt of monetarism because they had “years of practice sacrificing.”27 The protest ended when Volcker agreed to meet with fifteen NPA leaders in his office.28 There, Volcker listened to Cincotta explain that “high interest rates are just killing us.” Without promising any policy changes, Volcker agreed to meet with NPA leaders again in May to discuss NPA’s proposals for “neighborhood credit.” He then came out to briefly address

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figure 10.  Paul Volcker agrees to address NPA leaders outside his office. Courtesy of People’s Action

the waiting crowd and gave NPA leader Juanita Gear one of his famous cigars as a souvenir. “We’re always glad to look at constructive suggestions,” Volcker told the crowd. “I’m not sure all the suggestions will be within our area of responsibility,” he continued, but “we’re glad to look at them.” Noting the growing sense of class-­based solidarity around the interest rate protests, one activist claimed that the police guarding the Fed were actually “on our side” because “they’re poor too.”29 At their follow-­up meeting in May of 1980, activists did more than create a spectacle. Cincotta and the six other leaders in attendance also demanded policy changes. They offered two plans to allocate affordable

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credit toward small borrowers and provide interest rate relief. First, activists proposed that the Fed allow banks to set aside a smaller reserve requirement if they demonstrated that they provided affordable credit to low-­ and moderate-­income people. Reinvestment leaders knew that banks were required by regulation to hold a percentage of their funds in reserve, and that banks disliked reserves because each dollar held there was a dollar not earning interest. They hoped a smaller reserve requirement was an incentive that would matter to bankers. Second, reinvestment leaders pressured Volcker for what they called a “secondary discount window.” The existing discount window gave Fed member banks access to affordable, short-­term loans to help them navigate liquidity shortages. It was one mechanism through which the Fed controlled the money supply. Activists wanted similar cheap access to funds for small borrowers. They requested that the Fed create a special line of credit for banks to borrow at a lower interest rate so long as those banks agreed to pass along to borrowers the savings that resulted.30 The Federal Home Loan Bank Board, the regulator of savings and loan institutions, already had its Community Investment Fund that made below-­market loans to banks who then passed that interest savings along to low-­income borrowers. The secondary window was modeled on an existing plan and so was doable, they argued.31 The Fed rejected these proposals on the basis that NPA’s suggestions would bring the Fed into “political” decision-­making that was best left to Congress. The notion that the Fed was an “apolitical” institution, outside the influence of self-­interested politicians, was central to its institutional identity reaching back to its founding. Volcker drew on this tradition as he spoke to the group. According to activists, Volcker told them that “throughout the years, and by law,” the Fed had not “wanted to get into the business of making those [credit allocation] decisions” because that was the business of Congress. The Fed should continue its “ordinary business” of combating inflation, and NPA’s constituents would find relief when the rest of the country did—­without special treatment. Volcker’s framing of the Fed as apolitical belied the reality that the Fed was a deeply political institution. It had a historic mandate to combat unemployment as well as inflation, but it had all but ignored the former as it relentlessly focused on lowering inflation under Volcker’s watch.32 Similar arguments about the Fed’s apolitical nature came from meetings that local NPA affiliates had with regional Fed offices. In New York City, a Fed official told an NPA member organization from the Bronx that the Fed “does not as

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a matter of policy engage in specific credit allocation programs,” implying that such a move would entail playing politics.33 By late 1980, NPA leaders’ inability to win credit allocation from the Fed prompted them to look beyond their traditionally urban constituents, building new coalitions in hopes that strength in numbers could sway the Fed. Cincotta began using the terms “redlining by class” and “economic redlining” to describe the effects of high interest rates on a growing segment of the population who were not confined to cities. These formulations marked a departure from their earlier use of “redlining,” in which a lack of access to credit was understood to be a specifically urban problem. The harsh realities of the monetarist moment recast activists’ very definition of the term—­now they saw the problem of redlining as one that reached beyond cities to affect any and all Americans who could not afford the high cost of interest.34 Activists also called high interest rates “discriminatory,” language that connoted not only unfairness but unfairness that was specific to some groups of people (low-­ and moderate-­income borrowers).35 The election of Ronald Reagan compounded this new sense of urgency in late 1980, as the incoming president’s pledge to cut spending on social programs threatened to reduce support for low-­ and moderate-­ income peo­ple at the same time borrowing was slipping out of their reach. A newly capacious view of who suffered from the monetarist experiment thus led reinvestment activists to imagine new coalitions. “We must question the divisions, real or perceived, that have kept various movements apart in the past ten years,” Cincotta said.36 Now there would be a “new movement in this country,” expanding “beyond our neighborhood movement of the ’70s.” Its goal would be to “to reclaim the resources of this country” in order to “retool, rebuild, reshape the future for us all.”37 To that end, NPA reached out to organized labor, “small farmers,” and “small business owners” who also relied on credit for economic stability. Cincotta and other NPA leaders made some headway in 1981 when, after a meeting between Volcker and twenty community organizers, the Fed agreed to hold public hearings on interest rates in twelve cities around the country. Organizing these regional meetings created an important opportunity for NPA leaders to build new alliances of other Americans of modest means who testified about the tangible effects that the monetarist experiment had on their lives. One Fed economist explained why the central bankers agreed to such meetings. “We’re seriously concerned about the impact of our policy on people and neighborhoods,” he said. The meetings would “give us a better feel for how interest rates are affecting

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figure 11.  Chicago organizer Otto McMath addresses the crowd at a Reclaim America meeting. Courtesy of People’s Action

people around the country.”38 A Fed governor echoed these sentiments.39 Looking back thirty-­five years later, Fed communications director Joseph Coyne remembered the agreement as more pragmatic than Fed officials originally suggested. By his account, the regional meetings were a “great idea” because they “would show [the Fed’s] willingness to at least listen” and, perhaps more importantly, “discourage [NPA] from picketing our buildings” and get them to leave Fed governors alone.40 In recruiting participants in the interest rate hearings, NPA leaders created materials to educate affiliate organizations about the relationship between the Fed and the economic hardship many had been feeling in their daily lives. NPA leaders produced flyers titled “Who Is the Federal Reserve Board Anyway” and “How Does the Fed Raise Interest Rates.” These flyers included easy-­to-­read graphs that showed increases in mortgage costs (58 percent) and consumer prices (43 percent) compared to the lagging increase in real wages (28 percent), arguing that these trends could be corrected if the Fed agreed to allocate credit away from inflationary purposes. Materials also explained how the Fed used different levers, such as buying and selling government securities, to influence

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the rate that banks charged ordinary customers for borrowing.41 NPA lead­­ ers turned potentially abstract interest rate hikes into concrete numbers that ordinary Americans would understand—­monthly mortgage payments. They compared a 9 percent mortgage, more common two years prior, to the going 17 percent mortgage. On a $30,000 house, they told readers, the former would cost $250 a month while the latter could cost $425 a month, a significant jump for buyers on static incomes.42 Leaders in Chicago sent letters to local clergy, asking them to post flyers and make announcements to inform their congregations about meetings on high interest rates. The meetings were an “opportunity to educate people about the various aspects of this [interest rate] issue, and to provide a direction for alternatives to the problem,” they said.43 The Chicago leaders encouraged NPA affiliates not to let the confusing business of central banking keep them from joining the protests. For example, in planning the funeral protest, NPA leader Ted Wysocki told the “funeral directors” in other cities “it would be good to familiarize yourself” with how the Fed worked. But, at the same time, he told them, “you want to avoid getting too complicated with some of the technical proposals” that NPA leaders proposed as ways achieve credit allocation. Instead, “keep it simple—­lower interest rates.” Local protestors should “at least have an idea” about NPA’s policy proposals in case they were asked questions by “some smart ass reporter,” but they need not become experts in central banking.44 Nonetheless, some reinvestment activists took it upon themselves to learn more about the Fed in preparation for confrontations with Fed officials. “I did a lot of research on my own at the library because this is an important issue,” said Pauline Wessel, an activist from Indianapolis. “I have a book club and I hope to let a lot of them know what’s going on.”45 Susan Foran, on the South Side of Chicago, said, “I think more communities should start educating themselves. It’s a pretty complicated issue and you can’t learn everything in one or two weeks,” but learning about the central bank was worth the effort.46 When it came time for Fed officials to hold the regional hearings, activists in all twelve cities personalized the monetarist experiment for the Fed governors and forced what seemed to be an unaccountable central bank to see real people who had been hurt by the monetarist experiment. Participants demanded that the Fed officials take seriously their financial common sense—­the economic knowledge they gathered from their everyday lives. In so doing, they challenged the validity of the professional economic theory that undergirded monetary policy. During the

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Chicago meeting, activists forced Fed officials to admit that they personally had not felt the pain of monetarism to the same extent that low-­and moderate-­income people had. One audience member pushed Fed officials to disclose their annual salaries, the costs of homes they lived in, and what interest rate they paid on their current mortgages. When some Fed offi­ cials admitted that they held mortgages with rates as low as 5.4 percent, the audience “groaned and catcalled,” their anger driven by a sense of unfairness.47 The Fed’s Joseph Coyne remembered the meetings ranging from “tense to extremely tense to sometimes threatening.” Fed officials who attended the regional meetings even received makeshift “purple hearts,” little purple pincushions that Volcker presented to officials who “faced the verbal darts and spears,” as Coyne put it.48 From activists’ perspective, the meetings were significant for the sense of empowerment they felt in getting Fed governors to “come down” to the people in moments like these. NPA’s urban leadership also cultivated new relationships with “small farmers,” or “family farmers,” during the campaign for interest rate relief. Farmers felt the monetarist experiment more acutely than most, given the mid-­1970s prosperity they had enjoyed by contrast. Foreign demand created high prices for many farmers during that time, and in this moment of prosperity, many farmers took out large loans to expand production, update equipment, and acquire new land. But prices came down in 1977, creating a “farm crisis” on the eve of the monetarist experiment.49 As the historian Michael Steward Foley has shown, by the late 1970s, many farmers in dire straits felt “fooled as forces beyond their control undermined the very comfort and security they prized.”50 Some of them found common cause with NPA leaders, who rallied rank and file around the similar sentiment that economic forces had unfairly put the good life out of reach. At the Des Moines, Iowa, interest rate hearing, for example, Curt Sorteberg of the Farmers Union expressed his frustration that farmers had begun borrowing simply to meet their interest payments during the monetarist experiment, which meant “paying interest on interest” with little hope of earning enough to make a decent living.51 To make the case to their traditionally urban constituents that “neighborhood people” had common cause with farmers, NPA leaders drew connections between urban homeownership and rural landownership. “Americans have always believed in the importance in owning land to live on, to farm, and to build communities on,” one NPA leader wrote. “Land is part of the American dream.” But “land ownership is slipping away from the

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individual” because of the high interest rates caused by monetarism. High rates posed a threat not only to “small farmers” who were “forced to sell their property” but also to residents in “urban areas” where “homeownership [had] become the impossible dream” due to the “lack of affordable mortgages.”52 NPA leaders also encouraged support for farmers by profiling them in “From the Roots,” a monthly column in which activists from around the country gave personal testimony to highlight issues on NPA’s agenda. In their own words, farmers explained to Disclosure’s urban readership the specific obstacles that high rates created for a farm. “I would like to tell the people in the neighborhoods that when the price of groceries gets high, they shouldn’t blame the farmer,” said Minnesota farmer Alice Tripp. Instead, high interest rates were the problem. “Farmers live on credit. Interest rates mean more to them than to almost anybody,” she said. Tripp reported that, like their urban counterparts, many farmers couldn’t get loans, and, worse, that many of their suppliers stopped accepting credit entirely, demanding cash. “Right now [farmers] need help,” she said in a plea for solidarity.53 Despite NPA’s success in building new alliances, recruiting new participants to protest high rates, and sharpening their critique of the Fed’s monetarist experiment, the campaign for credit allocation never did deliver any policy change. It ran up against the limits of effecting change through the central bank. Despite having enormous power to shape economic outcomes that had implications for low-­ and moderate-­income people, the Fed was unaccountable to voters and had pledged to fight inflation, whatever the cost.54 Indeed, by the winter of 1981–­1982, Cincotta sent plead­ing letters to Fed officials to meet again with activists and to help them fa­ cilitate meetings with large commercial banks in hopes that banks would voluntarily provide the “affordable line of credit” that the Fed would not.55 Nothing came of these requests. What’s more, as a recession deepened, meetings among NPA leaders revealed that the number of issues coming from local communities had grown, and some of them appeared to be quite pressing. Energy costs, for example, had skyrocketed. Unemployment had worsened in low-­income communities. As Ronald Reagan assumed the presidency in 1981, NPA began to feel the effects of federal cuts to social services, too. Senior citizens, who comprised a significant portion of NPA’s rank and file, worried about losing their Social Security. Meanwhile, activists watched in frustration as the military budget grew. NPA began coordinating protests on “Big Oil” and added reducing national defense spending to its list of priorities.56

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By the summer of 1982, with NPA’s constituency and issues broadened, the Chicago leaders began a new campaign called “Reclaim America,” a task much fuzzier than their goal of credit allocation. The very name of the campaign suggested the extent to which leaders felt they had lost control of their government, even their country. The list of demands included the low interest rates they had sought from the Fed, as well as affordable fuel prices, jobs, senior rights, and “control of our government.”57 To NPA’s leadership, the Reclaim America campaign was an effort to unite “millions of people who [had] been economically discriminated against.” But this broad goal also showed how crowded their agenda had become as more Americans suffered from the persistent economic downturn and as their constituency expanded accordingly. NPA’s member organizations now included groups whose members demanded jobs, affordable rent, heating fuel, small business credit, farm credit, “manageable” health care costs, and the means to “bring improvements to their communities.” NPA told readers of its newsletter, “The crisis has been brought by anti-­people policies coming out of Washington, including artificially high interest rates, artificially high energy costs, and federal cutbacks in all social service and community development monies.”58 The mounting evidence, said reinvestment leaders, suggested there had been an overall shift in national “priorities” as the Reagan administration showed little interest helping non-­elite Americans survive the economic downturn.59 The reinvestment movement’s efforts to “reclaim America” did not go far. Meetings and protests affiliated with the campaign surely energized activists and strengthened the new coalitions, but activists didn’t hope for much in terms of national policy impact. Their 1970s efforts for legislation to combat urban redlining had won the support of many congressional allies, including William Proxmire, the chair of the Senate Banking Committee; in contrast, throughout the early 1980s, members of Congress were seldom heard to echo the movement’s slogans about affordable lines of credit or reclaiming America. But the high-­interest-­rate regime revealed an emerging sense of shared interests among diverse Americans who relied on borrowing for survival in their businesses or their communities. Cincotta’s comment about waning economic stability hinted at the problem of macroeconomic policies that approached the national economy as one unified entity without attention to the disparities within it. The emerging alliance of people suffering from those disparities was reminiscent of the urban-­rural producer cooperation that characterized the Populist movement of the 1890s, yet

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figure 12.  NPA activists at a Reclaim America rally. Courtesy of People’s Action.

expanded to the organized constituencies of the postwar rights revolution.60 One steelworker from East Chicago, Indiana, asserted that “most of the ills in the country, today, can be traced to the banking policies that are the number one promoter of inflation and unemployment.” Not only did these policies “raise prices without producing anything,” but “their failure to provide capital” to places where “they think their return might not be fabulous” worsened unemployment. “Inflation and unemployment are being created by bank policies,” he said. “Union members and neighborhood people have a lot in common on this issue.”61 The president of the American Federation of State, County and Municipal Employees echoed the call for solidarity between labor and community organizations like NPA. “The effects of Ronald Reagan’s economic program have been devastating for the vast majority of American people,” he wrote to Cincotta in 1982. “It is imperative for us to raise our voices in protest,” he added, telling Cincotta he therefore was “encouraging our affiliates to participate in your rallies.”62

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“The Great Inflation produced its own generation,” historian Bruce Schulman later wrote, “altering Americans’ relationship to money, government, and each other.”63 Though Schulman located the significant change in that so many ordinary Americans “crossed the Rubicon from savers to investors,”64 the reinvestment movement suggests a different narrative of the inflationary crisis. It was not what inflation did to their savings so much as Washington’s response to it that mattered most to the movement’s members. For a politically mobilized and historically Democratic constituency of working-­ and middle-­class urbanites, Volcker’s action, which started during the Carter administration, showed a Democratic president allowing a purposely induced recession to unfold under his watch. Reinvestment activists pointed out alternatives—­a national urban policy rooted in neighborhoods, and credit controls—­that would have eased the effects of inflation for those who could least afford them. But these alternatives went nowhere. In the meantime, the competitive regulatory landscape that followed the Depository Institutions Deregulation and Monetary Control Act (DIDMCA) created new challenges for financial institutions, especially thrifts. NPA’s demand for fair access to credit would become increasingly difficult to win from depository institutions that were now expected to pay high rates to savers if they wanted to compete. NPA’s low-­and moderate-­ income constituents asked for an affordable line of credit. What they got instead was a “mortgage revolution”: a multiplication of new mortgage products that departed from the long-­term, fixed-­rate mortgage they had come to expect under the New Deal financial regime. They also got a new kind of bank, the “megafinancial” that served national and international customers and marked the end of thrifts’ heyday.

Deregulation and the Rise of Megafinancials DIDMCA marked the first meaningful step toward dismantling the regulations in place since the 1930s, and it threatened thrifts’ unique role as housing specialists. The Depository Institutions Deregulation Committee (DIDC), the agency in charge of implementing DIDMCA, proposed regulatory changes that essentially forced thrifts to act more like commercial banks in order to compete. Rather than take the six years Congress gave DIDC to phase out the Regulation Q interest rate ceilings, it had moved quickly, giving thrifts little time to plan for the newly competitive financial

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system.65 Smaller savings and loans predicted that their associations would have to preemptively merge with others in order to have the resources necessary to compete if their state laws allowed it. Others would likely fail. The year after DIDMCA was passed, headlines in the savings and loan trade publication revealed the industry’s struggles.66 “The Deregulators Threaten America’s Housing Dream,” read one. “Takeover Controversy Continues, Hearings Offer No Solutions,” warned another.67 By the spring of 1981, a financial service provider called Saddlebrook began placing an ad in the Savings and Loan News that featured a businessman rowing a tiny inflatable raft through rough waters. “Do you have the right financial tools to survive deregulation?” it asked. It promised “the precise tools you need to stay afloat in today’s complicated marketplace.”68 Indeed, the savings and loan executives themselves used the word “survival” repeatedly in the wake of DIDMCA to describe their immediate priority in the wake of the changes.69 Several members of Congress spoke up for thrifts, defending their historic role as housing specialists and community institutions. Frank Annunzio (D-­IL), a reinvestment ally since the mid-­ 1970s, complained that the DIDC was “dominated by card-­carrying commercial bank sympathizers” who had little concern for the way deregulation would undermine thrifts.70 For reinvestment activists, the on-­the-­ground manifestation of the thrifts’ need to compete with bigger banks and financial service providers was a “mortgage revolution” that threatened their survival, too. DIDC’s regulatory changes led to a host of mortgage products that deviated from the long-­term, fixed-­rate, self-­amortizing mortgage that had become standard under the New Deal financial regime. New mortgage products allowed thrifts to collect enough in interest or, increasingly, in equity so they could pay the high interest rates on deposits. To NPA, these new mortgage instruments allowed banks to adjust to the high-­interest-­rate regime but made no effort to bring rates down to relieve borrowers who could not afford higher rates. Some of the mortgages were new versions of old proposals. The rollover mortgage, for example, was the latest rebranding of the variable-­rate mortgage. It allowed lenders to adjust the interest on a mortgage over its lifetime. Other proposals were new. Shared appreciation mortgages, or SAMs, for example, gave the bank partial ownership of the equity in the house.71 To activists, a graduated-­payment rollover mortgage was just paying more to get further into debt.72 The renegotiated-­rate mortgage proposed in the fall of 1980 allowed the interest rate to change every six months with no limit on the total increase allowed. To activists,

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this mortgage was “much worse” than the ordinary rollover, as it allowed banks to raise rates at a whim.73 Activists were particularly offended by the proposal from a company called Electronic Realty Associates to connect prospective homebuyers with investors who agreed to copurchase the home.74 The new policies looked like a “war against mortgage borrow­ ers.”75 Looking back to the New Deal era, activists reminded their representatives in Congress that the reason for the creation of the long-­term fixed-­rate mortgage had been to ensure economic stability. They warned that such “creative financing” might lead to another Great Depression.76 Protests against the new products started immediately, in part because reinvestment activists followed financial news closely and had worried about variable-­rate mortgages since the mid-­1970s. Reinvestment activists also took issue with the small-­saver rationale for the changes. They rejected the premise that mortgages should change to allow thrifts to meet savers’ expectations of higher interest, a change that served middle-­class and affluent people who had ample money to save. They rejected the premise that all savers cared more about a high return on their savings than they did about affordable borrowing or the stability of thrifts. They said they had no problem earning a lower return on their money if it would protect the stability of their local banks and guarantee lower borrowing rates. They argued the priority should be to preserve thrifts for housing.77 Here, the reinvestment movement’s social democratic populism revealed its class implications. Americans of modest means were unlikely to have a great deal of savings on which to collect interest— ­certainly not enough to make interest payments a significant source of their income. The small-­saver rationale prioritized middle-­class and wealthy people over their less affluent counterparts. But it was more than the lack of financial incentive that led reinvestment activists to oppose changes in savings rates. It was that earning high interest on savings also violated their financial common sense by undermining the stability of the financial system and, specifically, thrifts’ role within it. Activists stressed the larger consequences of focusing on thrifts’ ability to pay high rates on savings at the expense of all other financial services. When the House Banking Committee held a “grassroots hearing on the economy” in 1981, a diverse group of American borrowers echoed the sentiment that policymakers ought not take at face value the deregulationist argument that all consumers were obsessed with earning more on their savings, especially if it was going to simulta­ neously price nonelite Americans out of credit markets and undermine

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the stability of the thrifts they had come to think of as community institutions. As one Illinois carpenter put it, “I think we are creating a world of greed” with “people running from one savings institution to another.” He was “satisfied with the passbook” and planned to keep his savings there.78 The Gray Panthers joined NPA and other borrowers of modest means in protesting the effects of deregulation once they understood its long-­term consequences, although contemporaries and historians alike have identified retirees as the consumer group that drove the small-­saver rationale for interest rate deregulation.79 As thrifts struggled to adapt to deregulation in the early 1980s, NPA affiliates began to feel the consequences as thrifts became less willing to participate in community-­bank partnerships. It became difficult to count on even the most cooperative of their local savings and loans. The Neighborhood Housing Services of Cleveland, for example, reported that while local savings and loans contributed about $80,000 a year to their community lending program in the late 1970s, that amount fell to $25,000 in 1981 and 1982 as interest rates stayed high and the changes from DIDMCA made it harder to compete for savings. “Savings and Loan executives have said they cannot afford to make the financial contributions requested,” a representative reported, “while they are losing money due to high interest rates.”80 In response to the new challenges savings and loans faced, the Rea­­ gan administration sent a bill to the Senate Banking Committee in 1982 to help thrifts balance out the lending side of their portfolios. The proposal that became the Garn–­St. Germain Act of 1982 pledged to “revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans.”81 The act gave thrifts new powers to invest well outside of the res­ idential mortgage market. Thrifts now had permission to invest a larger portion of their funds in commercial, consumer, and nonhousing real estate lending.82 As the law went into effect, the notion that these institutions had a stake in the stability of a local community no longer mapped onto reality. And as thrifts turned away from the residential mortgage market, unregulated mortgage houses—­the institutions that originated the FHA loans that had so infuriated activists a decade earlier—­increasingly took their place.83 In the meantime, NPA became increasingly dependent on commercial banks to partner with members on community-­bank partnerships. The high interest rates under Volcker’s monetarist experiment had so strained

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local thrifts that activists in some cities had stopped bothering to ask them to make new lending agreements. Due to high interest rates, one New York reinvestment activist told Congress that his organization had “begun to look more and more at the commercial banks for the necessary reinvestment into our neighborhoods.”84 In the fall of 1981, NPA leaders in Chicago lobbied commercial bankers to join representatives of NPA, the Fed, and “leading commercial banks” to create a “consortium of major banks” that would “spearhead a national effort to provide lower-­interest loans to targeted groups of borrowers.” They sketched out a plan for a $12 billion pool that would create “jobs and housing.” Cincotta asked some of the nation’s largest commercial banks to work “bank by bank, city by city, state by state,” to help low-­ and moderate-­income communities survive the disappearance of their local thrifts and the high interest rates of the era.85 “We will not be able to afford— ­either financially or socially—­to replace any further losses among these economic groups,” she said.86 But these were the same institutions who had only recently collected horror stories to undermine the CRA. It was no surprise that “these banks [had] not come anywhere near fulfilling the spirit of the CRA,” as the New York activist put it.87 By 1983, as the harms from deregulation became unavoidable, the Community Reinvestment Act remained the only resource NPA had to defend their financial common sense from the larger thrust of financial deregulation. In September of 1983, NPA took its banking demands to “key congressional members and staff” in Washington. Twenty leaders from fifteen cities held two days of meetings in which they asked that legislators expand the activities and institutions covered by the CRA. NPA raised alarm about the effects of “megafinancials”—­the national and international bank holding companies that resulted from recent mergers and acquisitions. They demanded that Congress make any new powers to any depository institution—­not just permission to consolidate— ­contingent on whether the institution met its CRA requirements. Activists also demanded that CRA be extended to the growing number of “nonbank banks,” especially the financial arms established by nonfinancial companies such as department stores. If Sears and JCPenney wanted to act like banks when they issued loans, activists argued, then they should be subject to the same regulations as traditional banks, including those of the CRA.88 Activists quipped that megafinancials had their own regulatory system: “regulation by loophole.” No institution frustrated activists as much as Citicorp. As they saw it, the company seemed to operate outside of

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regulations entirely. Branching was still illegal in Illinois in 1983, for example, but Citicorp had sixty-­one branches in the state by then.89 Reports of Citicorp’s loans to developing nations outraged activists who believed that the bank should prioritize meeting Americans’ credit needs before looking abroad for new customers. In the fall of 1983, news that Citicorp might lose several billion dollars on a bad loan to Brazil infuriated the editors of Disclosure, who charged that while bankers refused to lend to low-­ and moderate-­income Americans on the basis of concerns about safety and soundness, the holding company lent billions to a country whose outstanding loans to all banks totaled the equivalent of 83 percent of Citicorp’s capital.90 Citicorp also had a reputation for closing branches in low-­ and moderate-­income neighborhoods. Because the CRA only kicked in when banks applied for new branches, not when it closed old ones, activists had no recourse to challenge the closings that, in the era before ATMs proliferated, forced neighborhood people to travel to take care of their personal banking. “Without community people, there would be no banks,” one activist said, so banks should “keep all their branches open.”91 In 1984, reinvestment activists returned to Congress to debate the merits of further deregulation in the financial services industry. Because the Senate Banking Committee had recently spent much of its time in session debating the particularities of thrift deregulation, Senator Jake Garn joked with Cincotta that she had not been before the committee in a while (it had been eight months). “Well, you haven’t invited me for a long time,” she responded.92 But activists had now been invited to weigh in on the impact that deregulation was having on low-­ and moderate-­income borrowers so far. Specifically, the Senate debated a proposal that would take another step toward competitive banking by giving bank holding companies new securities powers—­to underwrite and trade in municipal revenue bonds, commercial paper, and mortgage-­backed securities. These investment powers had been denied to depository institutions since the New Deal’s Glass-­Steagall Act separated commercial from investment banking. Senator John Heinz (R-­PA) spoke for the bill’s few opponents when he argued that bill “would constitute a major, dangerous and unwarranted erosion” of Glass-­Steagall.93 Cincotta asked the senators to consider the dire consequences of turning access to banking services into a privilege that hinged on one’s ability to pay, rather than a basic right of citizenship. “If the industry decides whom they will and will not serve, we will see discrimination in this

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country much broader than racial or geographic discrimination,” she charged. “If credit is not affordable and available to every economic and geographic segment of our society, then a major percentage of American society will not be able to participate in their own economy.” Most Americans depended on bank services to ensure their economic security, and losing access to these entitlements would hurt the already vulnerable. “We simply cannot succeed in this country as individual family homeowners, farmers, small business people or even parents who want to borrow to improve the quality of their children’s lives unless we have access to convenient banking deposit services and affordable and available credit,” she said, referencing NPA’s expanded coalition.94 Cincotta outlined what she saw as the three options in front of policymakers as they considered further financial reform. One was the “continued piece meal deregulation” where the “industry is making the decisions with every loophole they find.” A second path, offered by the pending legislation, was “full deregulation” that might “run the risk of bank monopoly of this country’s capital.” But reinvestment activists hoped for a third option: to “call time out and re-­regulate the industry, taking into consideration the already changed nature of financial services in 1984.” It wasn’t too late, she suggested, to keep banks accountable to the communities outside their offices, and indeed, to the national public good.95 At the very least, any new powers should hinge on CRA compliance. Cincotta said it was “time that . . . any corporation which offers financial services” become subject to CRA so citizens should have at least some leverage to secure fair access to credit as the financial system changed around them.96 Legislators responded with a sense that Cincotta’s call for reregulation was unrealistic. Financial deregulation could not be undone, they suggested, because the changes had already gone too far. Senator Jake Garn, a longtime proponent of reorganizing the financial sector along free-­market principles, agreed that the community service ethos had been lost in the turn to the competitive banking. “Well, I understand what you’re saying, Gale, but again, I don’t know how to get there from here, even if I choose to go that route again,” Garn said. “I understand your concerns,” he said. “but that isn’t possible, to put the genie back in the box, any more than we could require grocery stores to be small.”97 There was no “go[ing] back to the rolltop desk” thrift days, he said. The Senate passed the bill 89–­5, endorsing the principle of “competitive equity” in the financial sector.98 What must have irked activists was that, during ongoing legislative debates over financial deregulation, bankers often testified that there was

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no need to worry about the effects that new banking permissions would have on economically vulnerable people because the Community Reinvestment Act was now in place. The CRA as a safeguard against solely profit-­driven banking had been a recurring theme in legislative debates over financial deregulation since the CRA’s passage. When commercial banks asked for new permission to start selling insurance, for example, spokespeople stressed that commercial banks “ha[d] a legal requirement to serve their communities” under the CRA, while insurance companies did not. By that logic, commercial banks were more likely to offer insurance at fair terms and end “the problem of insurance redlining” that also plagued low-­and moderate-­income communities.99 In another instance, in 1981, when the House met to discuss the impact that condo conversions were having on displacing low-­ and moderate-­income urbanites from their communities, Chase Bank brought evidence of its “Corporate Responsibility Program,” its CRA activities, to show that it met its obligation to low-­and moderate-­income New Yorkers even as it invested $85 million in condo conversions in Bethesda, Maryland. “Does it offend you like it offends me that you loaned more money for mortgages in Bethesda than you did in Brooklyn?” asked New York representative Benjamin Rosenthal of a Chase executive, invoking the New Deal financial common sense codified by the CRA. “Well,” the banker responded, “I do not think the two are comparable, sir.”100 In a way, he was right. The CRA did not require that financial institutions take a holistic view of the way their lending decisions might deepen inequities—­it only required that they meet the credit needs of low-­ and moderate-­income communities, which they could do alongside financing high-­end condominiums. Commercial bankers found that they could comply with CRA through community outreach and neighborhood lending programs while simultaneously requesting new ways to increase profits. In the wake of this smashing defeat as Congress committed to financial deregulation, NPA called a conference on megafinancials. Its members needed to make sense of the rapidly changing financial services industry, lest they forgo any chance to leverage lending deals from these increasingly important financial players. They invited speakers from the private and public sectors, organizers and regulators, bankers and politicians, to ask what the rise of the financial services industry—­in which nontraditional lenders provided mortgages and investing replaced saving—­ portended for their neighborhoods. The strategy to call a conference in an effort to learn about, rather than seek to overthrow, the new system

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of megafinancials is telling. Reinvestment activists, pragmatists that they were, did not discuss the possibility of dismantling these nonbank banks. Instead, following legislators, they assumed deregulation was the new reality and the transformation was now inevitable. All that could be done was identify a coping strategy.

The CRA and the Rise of Community Development Banking The expansion of community development banking was exactly such a coping strategy. Activists did not convince policymakers either to extend the CRA to megafinancials or to tie new depository powers to CRA compliance, but they nonetheless made creative use of the legislation as it stood. As chapter 5 explained, a central irony was built into the legislation: mergers and acquisitions by neighborhood thrifts and banks triggered the CRA so activists could use industry consolidation to their advantage. The legislation gave community groups standing to challenge any bank that sought these deals or tried to open a new branch. Congress passed incremental geographic deregulation between 1980 and 1994, resulting in a “record number” of bank mergers— ­over 6,300— ­during that period.101 The resulting merger wave created new opportunities for community groups to bring local banks to the table and led to innovative new community-­bank partnerships. That is not to say that reinvestment activists celebrated mergers. They worried that the trend toward mergers and acquisitions would bode poorly for their neighborhoods, as financial institutions looked increasingly like “monopolies” serving ever more affluent customers in the now national market. However, in the process of winning community-­bank agreements, reinvestment activists built an infrastructure for community development banking that included institutions and experts that preserved the flexibility and local commitment that activists associated with an older model of neighborhood banking in the style of New Deal thrifts.102 When activists won CRA victories, it was seldom the result of any initiative by the financial regulators whose responsibility it was to enforce the law. Even Paul Volcker agreed the laws were lax. At a 1982 meeting with NPA representatives, he agreed to direct the Fed’s Consumer Advi­ sory Council to investigate the CRA compliance of the Fed’s member banks and issue recommendations about improved enforcement.103 Activists were alarmed by what the mid-­1980s expansion of Citicorp suggested

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about federal regulators granting permission for acquisitions without requiring CRA compliance. Citicorp’s acquisition binge—­taking over large banks in Chicago, Miami, and Oakland; moving into industrial banking in Kentucky and Tennessee; and opening person-­to-­person consumer lending offices in twenty-­eight states—­raised red flags for reinvestment activists. They protested the “megafinancial” by filing complaints with the Federal Reserve and the comptroller of the currency. Citicorp was a “prime example of the lack of regulation” even when the CRA was law.104 Activists charged that federal financial regulators did nothing to force financial institutions to inform local communities of their plans to merge, despite the fact that such notification was required by the CRA. Even the most engaged community groups sometimes lacked such information and therefore missed the opportunity to file a CRA challenge that might have directed new loans to their communities. “We didn’t even know that our bank was being sold until Gale called us,” said one St. Louis organizer.105 When regulators did enforce the CRA, they often granted conditional approval of bank mergers, rather than rejecting requests outright, so long as the banks negotiated with community groups. A community organizing paper reported that none of the 142 CRA protests it analyzed between 1978 and 1989 resulted in the denial of a bank merger or acquisition. It wasn’t until Continental Bank, of “too big to fail” fame, tried to open a branch in Scottsdale, Arizona, in February of 1989 that the Federal Reserve Board finally denied a commercial bank permission.106 One Iowa banker, whose bank agreed to a $13 million reinvestment project in that state, confirmed that his institution complied with CRA because the banks saw the particular project as good business, not because he feared repercussions from federal regulators. “Federal banking regulatory authorities have not enforced the maxims of the [CRA] law,” he said.107 Still, the few community-­bank partnerships that resulted from the early use of the CRA reveal that the flexibility built into the law allowed activists and bankers to create unique agreements tailored to local credit needs. In the wake of the CRA’s passage, activists wanted regulations that specified that the CRA was intended to meet the credit needs of “historically underserved” communities, not neighborhoods in general. Regulators left the regulations vague, but through CRA challenges, activists could negotiate with banks to ensure that specificity was written into individual CRA agreements. The vagueness of the regulations, which activists at first interpreted as a concession to bankers, soon became an asset that allowed activists to win tailored lending agreements for specific

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neighborhoods. Much as Proxmire and his staffers had envisioned, CRA agreements allowed the lending programs to come from the neighborhood people themselves.108 One example from a Cleveland NPA affiliate is illustrative. The Buckeye-­ Woodland Community Congress (BWCC) examined the disclosure statements that local banks had given them in compliance with the Home Mortgage Disclosure Act. It decided which banks to target and made a list of needs. The possibilities included mortgages for specific purposes—­ “rehab vacant houses, construct new houses on vacant lots, write more mortgages, start mortgage counseling program”—­as well as business lending needs—­“offer low interest loans to small and minority business, start counseling program for small business.” The BWCC also wanted financial counseling for borrowers and an “advertising campaign to let community know what type of loans [participating banks] will make.” Drawing on the belief that banks were special institutions that were part of the community’s social fabric, the organization also envisioned banks offering more than loans. They wanted banks to donate funds for a park and for street and sidewalk improvements, suggesting banks should do more than comply with CRA’s lending requirements. BWCC leaders then brought their ideas to a community meeting to let residents decide which demands leaders should bring to the bankers. They issued ballots with the list of credit needs and let their members vote.109 This strategy was typical for reinvestment organizations who understood that the law’s flexibility gave them great range for making demands of their financial institutions, and whose roots in Alinsky organizing led them to insist on community participation in deciding which demands were most important.110 Other community groups won agreements that were tailored to local financial needs that went beyond urban mortgages. The Community Congress of Northeast Denver, for example, convinced one bank that having three loan officers assigned to their neighborhood would increase residents’ access to home mortgage loans. From a second bank, they won a new “business and marketing representative” who would work with the community group to promote small businesses in the area.111 In Philadelphia, a local group demanded that a bank holding company target some funds toward single-­family buying and rehabbing and direct other funds toward reduced closing costs and below-­market interest rates to help nonprofit organizations that pursued larger, more expensive development projects.112 Within the first years of the law’s passage, a set of common practices emerged as a kind of CRA tool kit for reinvestment

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organizations, which built on and expanded the local strategies activists had used before the law’s passage. One of the most important tactics remained the use of HMDA to present to bankers and regulators a comprehensive snapshot of credit flows throughout their metropolitan area and to identify “high priority” credit needs within them.113 In negotiating these CRA agreements, activists didn’t expect banks to make commitments out of altruism. While they maintained that banks had an obligation to local communities, activists did not see anything wrong with the banks making a profit as well. The idea that the banks were motivated by profits made sense to activists who were trained in the Alinsky tradition of self-­interest organizing. “The flip side of a CRA challenge is the new markets banks can open up when partnerships are created with the coalition. There are good loans that can be made with potential homeowners and with non-­profit developers. Such new markets can measurably benefit the banks, as well as the communities,” said reinvestment activist Rev. Mark Heaney. The profit would likely be lower than if the bank were lending to upper-­income people or using its assets for loans in corporate mergers, but neighborhood lending could be profitable nonetheless. “Opportunities exist for both the coalition and the banks,” Heaney said. “What is unacceptable is unilateral decision making by the banks. We demand a real say in creating our future.”114 NPA’s Chicago headquarters served as a hub for educating activists to use the CRA. Its leaders ran a training institution for CRA activists nationally, as well as a clearinghouse for the reinvestment movement to share strategies and report victories. Starting in 1978, NPA collected simple data sheets on CRA agreements from other organizations in which the staff recorded the bank challenged, the demands made, the outcomes, and more. These reports helped dozens of NPA affiliates to aggregate quantitative data about CRA challenges, which activists deployed to refute bankers’ charges that the CRA should be repealed because no one actually used it.115 The bankers’ dishonest argument made it imperative that reinvestment leaders have a sense of how many community groups around the country were using the CRA and what dollar commitments came out of these agreements. NPA also created elaborate CRA guidebooks that provided examples of good and bad CRA statements, texts of the agency regulations, and a glossary of lending terms to assist activists with banker jargon. NPA also periodically held trainings and workshops for community organizers whose neighborhoods had been redlined and who might benefit from filing their own CRA challenges. One Pittsburgh

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organizer, for example, credited NPA for teaching his organization to leverage new loans for “low-­moderate income neighborhoods” through a CRA challenge.116 While leaders of National People’s Action had been training community groups in how to use the CRA since its passage in 1978117 and had been collecting CRA statements and HMDA data from their own local banks,118 it was not until 1983 that the Chicagoans had an opportunity to use the legislation on their home turf. Mergers and acquisitions came late to Illinois. It had been one of few “unit banking states” until then: branches were illegal, with only one drive-­up facility allowed within 1,500 feet of the original bank. With Illinois banks barred from mergers and acquisitions that would have created new branches, activists thus had no opportunities to use the CRA to stall such transactions. When the state law was repealed in 1983, however, and Illinois banks seized the opportunity to expand their operations, reinvestment activists were ready to strike. That summer, news reached activists that the bank holding company First Chicago Corporation planned to acquire American National Corporation and three other suburban banks.119 When First National first announced its acquisition plans, an NPA ally organization, the Woodstock Institute, initiated the CRA protest. Recog­ nizing the acquisition as “one of the most significant Chicago banking events in recent years,” Woodstock immediately set to work researching First Nation’s lending record. Woodstock invited “neighborhood-­based and city-­wide organizations to come together to discuss use of the Community Reinvestment Act to open dialogue with First Chicago Corporation about Chicago neighborhood credit needs.”120 Activists formed a coalition called the Chicago Reinvestment Alliance to pursue a local CRA challenge. Alliance activists used HMDA lending data and neighborhood maps to make the case that First National failed to lend in low-­and moderate-­income neighborhoods and thus was not in compliance with the CRA. The group’s threat to issue a formal CRA challenge with a financial regulator caught the attention of First National executives, who agreed to sit down and negotiate. Barry Sullivan, the chairman and CEO of the holding company and the bank, met with community groups in mid-­December.121 The bank and the community groups met at least weekly for the next two months, for a total of ten negotiating sessions. The community people took the bankers on two tours of credit-­starved neighborhoods and showcased the groups’ achievements in the neighborhoods. They stopped

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at “successful not-­for-­profit multi-­family rehab projects” and “successful commercial/industrial redevelopment projects.” The “high level of professional skills of not-­for-­profit developers” and “the high quality of their workmanship and management” at these sites created a “positive impression” that made the tours “a pivotal point in the discussions.”122 The agreement drew front-­page headlines in Chicago’s Tribune, Sun-­Times, and Defender, and a mention in the Wall Street Journal.123 First National agreed to lend $100 million in loans targeting “underserved markets” in the Chicago area, defined as areas within the metropolitan area at or below 75 percent of the median household income. This allowed First National, resistant to the idea of limiting its lending to the city, to loan in three nearby suburbs that had met the low-­income requirement. Within the city, the loans targeted census tracts at or below 80 percent of median income. The stated purpose of the targeting was “to insure that communities which have suffered the greatest disinvestment are the beneficiaries of the Special Loan Program.” But most important was the nature of the loans. First National agreed to create new opportunities for mortgages that residents identified as the most difficult to obtain from the banks. For example, using HMDA data, activists discovered that single-­ family home mortgages dominated many local banks’ assets. This trend posed a problem for urban neighborhoods with many mixed-­use build­ ings and multiunit apartment buildings. When loans for such buildings were available, they were often in the form of short-­term high-­interest loans that “moderate-­ to middle-­income borrowers” were unable to afford. “Right now you can’t get long-­term financing for rehab,” said Bill Forster of the Chicago Rehab Network. “Now you have to take out a short-­term loan with high rates.”124 First National’s commitment included thirty-­year long-­term mortgage commitments at “favorable interest rates” for these types of buildings. Thus the agreement did more than just pledge a dollar amount. It changed the way that the bank would treat loans on these kinds of buildings in Chicago, meeting a credit need that activists identified as chronically unmet.125 The negotiation also allowed activists to leverage business loans for low-­ and moderate-­income communities, although these were not actu­ ally covered by CRA. An “underserved rather than unserved credit need,” small business loans of less than $5 million were “often charged an interest penalty for their smallness” in the city. And furthermore, “neighborhood banks” often had a hard time meeting the credit needs of small business because of, in the case of savings and loans, “regulatory limits on the total

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loans extended to a given borrower.” Furthermore, a small neighborhood bank tying up so much of its assets in one business loan would put that institution in danger should the business default. “The willingness of a major metropolitan lender to make favorably priced loans to small businesses will greatly expand the credit market for neighborhood businesses in Chicago,” one banker said. As a reinvestment organization put it, the First National deal showed a “hand-­crafted” rather than “cookie-­cutter” approach to community reinvestment.126 First National also created a new unit within the bank, the Neighborhood Banking Division, and put a senior vice president in charge.127 The bankers explained what was in it for them. “We’re willing to swallow a lot of administrative expenses to make this program work,” said Marina Carrott, the executive in charge of the neighborhood banking division. She stressed the value of activists’ local knowledge. “The neighborhood organizations are in a better position anyway than we are,” she said, “to identify those lending opportunities that will benefit a large number of residents.” Carrott also suggested that if the program was successful, it might even expand. “Yes, we’ve said $100 million is available in the next five years,” she said, “but we’re not going to close up shop when we reach $99,999. If it works, we’ll continue.”128 While Carrott struck an amiable tone, the Wall Street Journal later pointed out that her boss acted with a “gun being held to his head” in the form of the CRA.129 In any case, the partnership served as a model for two other banks to enter similar partnerships in the city. These new agreements directed an additional $53 million to neighborhoods.130 Within two months of the program’s announcement, the Chicago Association of Neighborhood Development Organizations and the Rehab Network, the two Community Reinvestment Alliance organizations in charge of screening loan applicants, reported nearly four thousand inquiries. As First National prepared to make the first batch of loans, they estimated $10 to $20 million of the funds would be authorized by the end of 1984.131 In the case of First National, as with the other two partnerships that followed, the partnerships were “not contracts per se” but “living documents agreed to,” with bankers and activists meeting frequently to tweak the program as needed.132 Northern Trust, one of the banks in the subsequent partnerships, reported that by 1987, not a single loan of the $11 million in commercial and residential loans had gone into default. In fact, no borrower had even missed a single payment. NPA reported that money available for the multiunit apartment buildings that many low-­and

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moderate-­income urbanites called home had increased nearly 200 percent, from $17.3 million in those census tracts in 1982 to $33.8 million by 1985.133 Four years into the partnership, one study celebrated its effectiveness in establishing resident power over the flow of local credit. Community groups “[sat] at the bargaining table with real estate lenders to negotiate a plan” to redevelop “inner-­city neighborhoods,” the report said.134 Twelve other cities copied the Chicago agreements within two years.135 Central to the First National partnership was the role of the community development banker, a new occupational niche. Take Kristin Faust, for example. Faust went into community development banking “very intentionally” because she wanted “to address racism and disinvestment.” Growing up in an “economically and racially diverse” area of Sacramento, Faust was struck by the contrast with her college experience at Brown University in Providence, situated in an area where she found racism pervasive. When she learned about disinvestment—­the “whole scale and mass and targeted” form of discrimination that seemed like the next target in the fight against racism in the United States—­she found a career trajectory. Faust deliberately chose to work for First National bank because it had an outstanding credit training program. She pursued corporate banking because she “wanted to learn how credit decisions were made.” She recalled, “I’ve always cared about housing. . . . I wanted to learn so I could go and become part of making better credit decisions.” She hoped that her plan to work in corporate banking for five years and then transition into “neighborhood lending” would give her a “badge of legitimacy.” She observed that “neighborhood lending was always used a stepchild,” so she had to do corporate work first. But after six months, she moved into neighborhood lending.136 The success of the Chicago partnerships drew attention from other bankers. Faust was soon asked to write articles for the American Bankers Association’s trade publication and to serve on professional committees within the organization. “Usually you have to be a banker for ten or fifteen years before they think you know anything,” she recalled. “I was a leader in community development area and had only been a banker for five years.  .  .  . We were in this movement together, even the bankers, because the bankers they tended to hire were people who did this because they wanted to. We loved this. We wanted to be a community development lender. There was a collegiality uncommon in the business world among competitors because we were all competitors in a brand new product. When you are on the forefront of something, sometimes it’s so

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exciting that it’s not all about keeping it all to yourself. You’re trying to learn from whoever to make it better.”137 Faust and other community development bankers served as what historian Nancy MacLean has called “brokers of inclusion” in another context. They acted as “intermediaries who maneuvered between those seeking change and those resisting it” in the banking industry.138 Yet bankers were not always so cooperative. Especially in the first years of CRA, before there was evidence of successful community-­bank partnerships in urban neighborhoods, banks were reluctant to make CRA agreements in which the community organizations set the terms. When activists filed CRA protests with financial regulators, banks often sent the regulators counterproposals that would offer concessions to the community groups without acceding to demands that they change their lending standards.139 That bankers had to respond to these demands, however, reinforced and legitimized the role of reinvestment groups in defining what constituted CRA compliance. As exciting as the new collaborations were, their reach was limited. The federal financial regulators did little to ensure that low-­and moderate-­ income neighborhoods without reinvestment organizations would also benefit from the CRA. Indeed, the uneven enforcement of the CRA was a primary concern of reinvestment activists during the time the regulators spent deciding the new rules. NPA and its allies feared that regulators might rely exclusively on community groups to draw their attention to problem banks, thus ensuring that the law would only be effective in neighborhoods with noisy activists, mainly in big cities, leaving whole regions of the country untouched. A reinvestment activist from New York explained that waiting for a community challenge was “profoundly anti-­ democratic” because only applications that affected “an organized community capable of the sophisticated effort required in researching, writing and producing a challenge” would catch the regulators’ attention. “Too often,” he said, “the communities most in need of consideration would not be heard from.”140 Chicago’s West Side, where Cincotta and Trapp got their start in the late 1960s, offered a street-­level view of the limits of community-­bank partnerships in the wake of 1980s financial deregulation, even in commu­ nities that were as hyperorganized as the CRA’s architects expected. As the federal government reduced spending for public housing over the 1980s, community-­bank partnerships emerged as a small-­scale replacement to provide affordable housing to low-­income people on the West Side.

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Bethel New Life, a member of the Community Reinvestment Alliance that struck a CRA deal with First National Bank, offered what one reporter called “one of the few bright spots on the otherwise gloomy low-­ income housing horizon.” Chicagoan Janice Hearns moved her family to a recently renovated apartment in Bethel’s twenty-­four-­unit building in 1986 after nine years in public housing. The decline in federal funding for low-­income housing had led to years of delayed maintenance at the high-­rise development she’d just left, and concentrated poverty and crime made her eager to move. In contrast, the new place she rented from Bethel New Life had been recently renovated. She called it “heaven.”141 Hearns was lucky. Many other Chicagoans of modest means were not. At the time she moved into her apartment, Chicago was hemorrhaging low-­income housing units. The Tribune estimated that the city lost about 3,500 low-­income units each year since 1981, while nonprofits like Bethel, relying on “creative” financing with “little to no direct government” funding, produced only about 960. About 750,000 Chicagoans lived below the poverty line, but there were only 75,000 subsidized units in the city. The waiting list for the Chicago Housing Authority, the city’s public housing agency, hovered around 20,000. What’s more, private nonprofits like Bethel had no enforceable mandate to house the West Side’s most vulnerable people; rather, they had to earn enough on the rentals to repay their loans and so rented to what one reporter called “safe low-­income people.” As a result, the rental application process was rigid. One of Hearns’s neighbors was evicted when property managers discovered that her husband sold drugs. Bill Foster, who ran the Chicago Rehab Network and worked with low-­income borrowers to put the First National CRA agreement into practice, didn’t mince words. “It’s a Band-­Aid approach to saving neighborhood housing,” he said of the affordable-­housing developments that came from the city’s community-­bank partnerships.142 Furthermore, the CRA did little to nothing for reinvestment activists who aimed to keep banks local. The federal agencies built a central tension into the regulations from the outset: only the kind of activity that loosened banks’ ties to local communities—­mergers, branches, and acqui­ sitions—­triggered the CRA review process. If no mergers or acquisitions occurred in a given low-­income community, its residents lacked the leverage to attract their bank’s attention. When CRA opportunities did arise, as the First National example highlights, the result was often that a local financial institution became bigger and also less local—­hardly a victory for proponents of preserving local banking. In the end, the agreements

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that reinvestment activists won in CRA negotiations often created neighborhood lending departments or programs that fulfilled obligations to low-­ and moderate-­income communities, but within banks whose broad geographic reach and whose involvement in national or international lending did not much resemble the local thrifts of the New Deal era. The fate of the thrifts in Chicago’s Austin neighborhood reveals the local implications of the end of thrifts’ heyday. The trajectory of Austin’s two largest savings and loans reveals a dizzying list of mergers and acquisitions that created decidedly different financial service providers for local residents than were available in 1966. Austin Federal Savings and Loan, a neighborhood mortgage lender since 1930, merged to become part of Chicago Federal Savings and Loan in 1981. The next year, that thrift merged to become part of Pathway Financial. Nine years later, Pathway was absorbed into the First Nationwide Bank network, which merged with California Federal Bank six years after that. Two more mergers came next, the first with West National Association, and the next (and, to date, final) with Citibank in 2006. St. Paul Federal’s history was a bit different. It remained a local institution for longer and merged less often, with its first merger into Charter One coming in 1999. Eight years later, it merged with RBS Citizens, a subsidiary of the London-­based holding company UK Financial Investments Limited. Today, a drive through Austin reveals that neither brick-­and-­mortar office remains. On the lot where Austin Fed­ eral stood at the time of NPA’s founding now sits a franchise of a national tire store. Several check cashing operations occupy storefronts nearby. These outcomes—­both banks gone from the neighborhood, replaced by an unregulated lender on one hand and an international holding company on the other—­illustrate the loss of the localism in the financial regime that shaped reinvestment activists’ expectations about how banks ought to work.143 The growing importance of commercial banks in CRA agreements proved no better for Austin. In 1987, a bank sought permission to purchase Austin Bank of Chicago. The Northeast Austin Organization (NAO) issued a CRA challenge, charging that Austin Bank didn’t meet its CRA obligations. Mary Volpe, the Organization for a Better Austin woman whose floors one could eat off in the late 1960s, ran NAO at the time. As part of the CRA challenge, her group asked that Austin Bank make a $100,000 deposit into a new credit union so residents could have a local bank once again. Over the course of 1980s financial deregulation, commercial banks like Austin Bank adopted new policies like mandatory

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minimum deposits, reflecting that they were indeed competing for more affluent customers and pricing out many Austin residents who couldn’t afford to open accounts. “We have children who have never been inside a bank,” Volpe lamented. “When we were little, our parents put one dollar in an account for us and we could look at the passbook,” she said, invoking the financial common sense that had ceased to map onto banking in her low-­income community, but those days were over. Volpe’s remarks reflected not just nostalgia but also concern for her neighbors’ economic and physical security. Austinites complained that when they cashed paychecks or government assistance checks, with no bank willing to accept their small deposits, they walked home through their neighborhood with their entire earnings in their purses or pockets. With local crime rates on the rise—­NAO tracked burglaries, battery, rape, and, murder on a map in their church office basement—­they worried that they would lose it all in a street burglary. With no support from existing financial institutions in Austin, Volpe planned to house the new credit union in NAO’s office. A Chicago Tribune reporter, who seemed not to know the longer history of how communities like Austin had been demanding banks reinvest in their neighborhoods for two decades by this time, called it a “new strategy.” His tone was optimistic as he said the new credit union just might give some Austinites “the first chance to get a loan.”144

Conclusion Over the course of the 1980s, reinvestment activists made the most of the imperfect tool they had gained through the Community Reinvestment Act. Deregulating the thrift industry created a new regulatory regime that prioritized competition and efficiency rather than service and localism. Yet activists took advantage of mergers and acquisitions to build mechanisms that, on a smaller scale, preserved their financial common sense as financial deregulation changed the nature of banking. Community development banking grew as a niche within the financial sector where the New Deal notion of service still applied. Commercial banks created neighborhood lending units and put bankers like Kristin Faust in charge.145 The community-­bank partnerships that emerged from this new infrastructure helped deliver affordable housing to urban neighborhoods that needed it. But these victories were partial and incomplete, especially in the context of the reinvestment movement’s hopes to win state-­mandated credit

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allocation during the early 1980s. Urban activists applied the financial knowledge and expertise that they had acquired in their battles against redlining to contexts in which they hoped to hold the Federal Reserve Board accountable to low-­and moderate-­income people. They raised fundamental questions about the relationship between monetary policy and popular democracy and argued that the former was too important to be decided without public input. But their efforts to win credit allocation and to “reclaim America” ultimately failed. Their proposals revealed the limited power that low-­and moderate-­income people had to shape monetary policy and national spending priorities during the 1980s.

Conclusion

I

n 1995, Elnora Thompson could proudly say that she lived in a home that she owned. But it took a struggle for that to happen. A black woman and an employee at a Boston telephone company for nearly twenty years, Thompson had applied several times for a mortgage that would allow her to buy a house in the city. The first two times, she approached a mortgage company affiliated with her employer. She was denied. Next, she tried conventional banks and mortgage companies. She was denied there, too. Each time, mortgage granters said that her debt-­to-­income ratio would be too high with a job that only paid $30,000 a year. They questioned her credit history and her modest savings. According to Thompson, they also raised eyebrows at the Boston neighborhood in which she hoped to live. But Elnora Thompson did eventually obtain a mortgage, with help from the Community Reinvestment Act. When Citizens Bank acquired another bank, a community organization deployed the CRA to leverage a new lending program for Boston’s low-­and middle-­income neighborhoods. The bank’s community lenders looked at Thompson’s application with knowledge of the long history of urban redlining, placing a premium on helping people of modest means get loans that they could pay back. Thompson’ two decades of steady employment and her history of paying her rent on time suggested that while she was not rich, she could likely handle the long-­ term debt. Citizens Bank approved her loan. She moved into her city home, where she lived with her daughter and her grandson, and managed her payments such that she became an example of community lending success in congressional hearings.1 As she built equity in her home, she acquired a modest asset she could pass down to the next generation of her family members, a benefit historically denied to African Americans, the absence of which deepened the racial wealth gap during the twentieth century.

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The Community Reinvestment Act helped Elnora Thompson and many low-­ and moderate-­income nonwhite families secure credit to become urban homeowners, a status that had been difficult for them to obtain during the preceding three decades. The movement’s community organizations, urban scholars, and community bankers used the tools created by the Home Mortgage Disclosure Act and the Community Reinvestment Act to document patterns of lending discrimination. They leveraged new credit to neighborhoods that had been denied, as activists sometimes put it, the “lifeblood” of their local housing markets. Success stories abounded throughout the 1990s and 2000s in which local organizations deployed the CRA to increase fair access to credit. In Milwaukee, for example, HMDA data showed that banks rejected black people for mortgages four times more often than similarly qualified white people. That city’s Fair Lending Coalition convinced ten nearby banks to take “affirmative action” to correct this pattern. They won $100 million in new loans for underserved communities, three new bank branches in areas that had none, and a commitment to hire more black employees and black contractors. A study by the National Community Reinvestment Coalition suggested that Milwaukee’s story was not uncommon. Nationwide, over one hundred community groups and over two hundred banks made over three hundred agreements for over $60 billion between the law’s 1977 passage and the mid-­1990s.2 A decade later, another 146 agreements put the amount in the $4.5 trillion range.3 The community-­bank partnerships forged through activists’ use of the CRA also reshaped cities. Since the law’s passage, alliances of banks, nonprofits, and investors have used the CRA, as well as other federal initiatives that use market incentives—­the Low Income Tax Credit and the New Markets Tax Credit, among others—­to expand affordable rental housing through public-­private partnerships. This new rental housing proved crucial for low-­income urbanites who found their options in public housing disappearing. The urban reinvestment movement deserves credit for the policy changes behind these community-­bank partnerships and for recodifying the notion— ­central to the financial common sense forged by the New Deal state—­that banks owed something to the communities outside their offices, even as policymakers reregulated the financial system in the 1970s and 1980s to prioritize competition, not service. The impact that these activists effected through the CRA as both an urban policy and a banking policy was no small feat. As they organized and educated urbanites

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around the country, won allies in Congress, and pressured banks to comply with the law’s loose regulations, they helped direct fair credit to people and places that a pure profit motive likely would have skipped. To this day, many reinvestment activists view the Community Reinvestment Act as a monumental victory for the movement and celebrate what they accomplished through its use. Community banker Kristin Faust, for one, maintains that the CRA was “one of the most important laws of the twentieth century” because it brought regulated credit to previously redlined communities.4 The flexibility and local commitment that activists expected from their banks persisted within a community banking sector into the new century, even as the larger financial system became one in which a mortgage was another commodity to be bought and sold on the market.5 Within the emerging neoliberal financial order, the gains that activists won through the CRA proved all the more important because they created a safe haven for vulnerable borrowers whom bankers had long deemed too “risky.” Even so, the CRA is an artifact of the 1970s as an era of limits and of growing inequality. Indeed, HMDA and CRA proved limited tools for activists’ larger goal of coordinating financial capital with federal spending to combat the urban crisis. Throughout the 1970s and 1980s, NPA and its allies maintained that the needs of low-­and moderate-­income city dwellers could not be met though the financial sector alone. Calling on the state to intervene with targeted, robust federal programs that worked in coordination with financial capital, Gale Cincotta and other urbanites articulated a variant of social democratic populism that ran contrary to the faith-­in-­free-­markets meritocracy gaining credence in the suburbs and in Washington during this same period. They demanded a role for the federal government as a distributor of resources to level the playing field for urbanites who had difficulty navigating a changing economy without support. But at a crucial moment in the 1970s, as Washington policymakers debated the needs of “neighborhoods,” economic conditions worsened around them and economic theory prescribed austerity to set things right. Bank-­based reinvestment, however, would cost the federal budget nothing. And for that reason, it became an attractive solution for national po­ licymakers who tried to solve an intractable, expensive problem. And so the story told here is one of roads only partially taken. Activists found a receptive audience in policymakers, especially 1970s liberals, who saw empowering community groups to police local banks as a way to address the lingering urban crisis and respond to the concerns of a

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traditionally Democratic constituency of nonelite, multiracial urbanites, without the requisite federal spending associated with urban renewal or the War on Poverty. This bank-­based version of reinvestment was a much narrower concept than the one that the activists who inspired the Community Reinvestment Act articulated at the time and since. Through the CRA, urban reinvestment became enshrined in federal policy as something banks alone would do. The CRA’s roots lay in a broader neoliberal turn in federal urban policy, wherein federal policymakers put stock in bank-­based reinvestment to solve resource disparities within the metropolis. This was a bipartisan approach, but it started in the Democratic Party and revealed the diminishing expectations for postwar liberalism. As the Carter administration put financial institutions at the center of New Partnerships, it failed to devote significant new resources to combat metropolitan inequities. Subsequent administrations doubled down on bank-­based reinvestment as a policy solution to inequality, not only in American cities but in the country more generally. In no instance was this as true as during the Clinton administra­ tion. Clinton resurrected the Carter-­era emphasis on community-­bank partnerships, stressing the role that community organizations would play in harnessing financial capital to serve the nation’s distressed areas. He called for stronger CRA sanctions against banks who had not done their part in lending to low-­ and moderate-­income communities. But at the same time, he furthered financial deregulation, authorizing a new wave of mergers and acquisitions that led to the consolidation of enormous bank holding companies that served national and international markets. The wave of mergers set off more use of the CRA, which Clinton pointed to as an accomplishment, and reflected a larger trend wherein the Democratic Party of the 1990s embraced market-­based solutions to inequality.6 In the long run, the CRA also fell short because it was written for a financial regime that disappeared soon after its passage, as regulators embraced the neoliberal logic that financial institutions worked best when they competed for customers’ business, just like any other private firm. The 1980 Depository Institutions Deregulation and Monetary Control Act and then the Garn–­St. Germain Act of 1982 dismantled the New Deal financial regime. The Community Reinvestment Act applied to depository institutions—­the regulated banks that held consumer savings accounts, operated according to government charters, and enjoyed federal deposit insurance. The law did not apply, however, to the storefront mortgage lenders that multiplied during the 1980s and 1990s. To be sure, a

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“parallel banking system” that exploited vulnerable borrowers was nothing new in US history, as unequal access to credit has been a regular feature of African American life from Reconstruction to the present.7 But at the moment of NPA’s formation, savings and loans served as the largest source of mortgage credit, and those institutions represented a potential alternative to financial exploitation, if only the benefits that white people enjoyed during thrifts’ post–­World War II heyday would be extended to integrated and majority-­minority neighborhoods.8 With diminishing federal financial regulations and the concurrent growth of an unregulated financial service industry, that never happened. By the close of the twentieth century, some low-­income homeowners paid as much as 20 percent interest on their mortgages from predatory lenders at a time when the market rate was as low as 6 percent.9 Just as the Federal Housing Administration programs of the 1970s revealed, there was money to be made by exploiting the vulnerability of people who desperately sought access to credit to achieve some semblance of economic stability. Assuming that financial institutions will serve low-­ and moderate-­income people as the regulations governing them have changed has deepened inequality. By the turn of the century, financial institutions shifted strategies for managing risk, moving toward a system that relied on market-­based strategies and away from one that relied on state intervention to protect investors from risk, namely, the FHA urban insurance programs described in chap­ ter 2. The FHA’s 1970s urban initiatives had been deeply flawed, with perverse incentives that reinforced the patterns they aimed to break. But the late twentieth-­century shift to market strategies for risk management stripped borrowers and their advocates of their ability to use politics as an arena in which they could challenge financiers’ monopoly on defining risk. In a financial system governed by state regulations, activists found avenues to demand accountability from elected officials who had the power to change the laws and regulations that governed urban home financing. In the reregulated financial system, financial “innovations” in “structured finance” diffused risk but didn’t eliminate it. One result of securitization, credit default swaps, and related strategies was that financiers grew confident that they had conquered their own risk by selling it to other institutions in the marketplace. As the 2008 financial meltdown revealed, that confidence was unfounded. But more than that, the crisis revealed how turning mortgages into market abstractions that can be split, swapped, and traded has weakened opportunities for democratic accountability by making it difficult to pinpoint who is to blame or who has the power to make change.

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Yet the shortcomings of the CRA obscure a different legacy of the reinvestment movement: the persistence of the activists who built a network of self-­made experts and nonprofit institutions that continued to pursue not only fair access to credit for low-­income borrowers but also broader democratic accountability from the country’s financiers. National People’s Action and its allies in a broader reinvestment movement did not stop their work once the mortgage revolution and megafinancials changed the urban lending landscape. Instead, they continue to pressure legislators and bureaucrats to improve the Community Reinvestment Act and update it for the challenges that the 2008 financial crisis made visible. Yet, just as they did in the story told here, activists have maintained that bank-­based reinvestment alone cannot solve the problems of low-­income urbanites or poor people in general. In 2014, People’s Action (it has dropped the word “National,” signaling solidarities that transcend national borders) launched a campaign called “Long-­Term Agenda for a New Economy” that echoes the reinvestment movement’s politics of social democratic populism. In characteristic organizing fashion, People’s Action staff conducted interviews with five thousand people to discover their “values, be­ liefs, and big ideas” regarding what would make the economy better. The “new economy” would require more “local control” and should be “democratic,” its literature explains. It should be “owned by workers, the community, local owners and stakeholders,” the group says, reminiscent of its early campaigns for local control. The current People’s Action is run by a new generation of organizers, as its founders have passed away or moved on to other organizations. Gale Cincotta worked as an advocate for reinvestment until she died in 2001. Shel Trapp continued to train organizers until his death ten years later. Other NPA activists took positions within the growing network of reinvestment organizations around the country, such as the National Community Reinvestment Coalition, the Woodstock Institute, Partners for the Common Good, and the local Neighborhood Housing Services organizations created in the mid-­1970s, the number of which has grown to nearly 250 nationwide. Robert Kuttner,—­Senator Proxmire’s staffer who was a crucial ally during the movement’s legislative campaigns and who directed the National Commission on Neighborhoods—­founded and now edits the American Prospect. Through that magazine, and several books on political economy (with telling titles—­The Economic Illusion, The Squandering of America, and Everything for Sale, to name a few), Kuttner has become a leading voice calling for a new political agenda to

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check the power of free-­market advocates. For many activists, the issues of the reinvestment movement thus informed their life’s work. Most chose not to seek power as elected officials but instead to become advocates and tend to the less visible work of policy implementation. Reinvestment activists never believed that bank-­based reinvestment was a silver bullet. The limited successes they won did not provide the resources that low-­income urbanites needed, and that activists called for, during the 1970s and 1980s. But the persistence of the People’s Action network to the present day suggests that one legacy of the reinvestment movement is hope. The premium placed on concrete victories like cooperatives, housing rehabilitation, and an updated CRA enables people to imagine a better future—­and to plot steps toward it.

Acknowledgments

T

his book began when I heard a lie on the radio in 2008. I was listening to an interview with a financial trade lobbyist who claimed that the Community Reinvestment Act had caused the recent market collapse. I knew that wasn’t true, but I had a lot to learn to construct an alternative narrative. I am grateful for the many people who helped me put this story together during the past decade. Several institutions provided research support, including the Northwestern University Graduate School, the Gerald R. Ford Presidential Foundation, and the Arch Dalrymple III Department of History at the University of Mississippi. I am thankful for the staff at several archives and special collections departments, including the National Archives at College Park, the Harold Washington Library Center, the Illinois State Archives, and the Archives and Records Management at the University of Wisconsin. I particularly want to thank Emilie Codega at Harvard Business School, William McNitt at the Gerald Ford Presidential Library, Ann Sindelar at Western Reserve Historical Society, Kevin Cawley at Notre Dame, and Clay Stalls and Jamie Hazlitt at Loyola Marymount. I am beyond appreciative of Morgen MacIntosh Hodgetts of the Special Collections at DePaul University. Morgen helped me navigate the NPA papers when they were moved to DePaul and made it possible for me to finish this project from Mississippi. Her knowledge of the collection was indispensable, particularly when it became time to find photos that captured NPA’s unique story. I also thank the staff at People’s Action, especially George Goehl, for giving me access to the rich collection of archival material in “the basement.” I am deeply grateful to the activists who generously agreed to sit down and talk with me, namely, Edwina Cloherty, Anne Marie Douglas, Kristin Faust, Joe Mariano, Helen Murray, Ed Shurna, Richard Wise, and Ted Wysocki. Their stories, and the stories of hundreds of other activists, allowed me to write this book.

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acknowledgments

I am deeply appreciative of Amanda Seligman, who saw potential in this project in its earliest iteration. Her insights at several stages of the book’s development have made this project better. I’m grateful for the patience and support of Timothy Mennel, Rachel Kelly Unger, and Susannah Engstrom of the University of Chicago Press, as well as the two anonymous reviewers, whose feedback proved invaluable. Thanks also to Tamara Ghattas for her careful editing of the manuscript and her thoughtful feedback. I’m also grateful to Bob Lockhart at the University of Pennsylvania Press for his insights and encouragement during the early stages of this project. I was lucky to work with an amazing group of historians at Northwestern University, including Alvita Akiboh, Andy Baer, Laila Ballout, Ashley Johnson Bavery, Kyle Burke, Bonnie Ernst, D’Weston Haywood, Matthew June, Terri Keeley, Michael Martoccio, Austin Parks, Ian Saxine, and Abby Trollinger. I thank Michael Sherry for creating an infrastructure for intellectual community. I also thank Daniel Immerwahr for his perspectives on all matters from monetarism to pedagogy. And I am grateful to have received my training from a department with matchless role models, including Lane Fenrich, Kate Masur, Alex Owen, Susan Pearson, and Dylan Penningroth. Henry Binford provided a safe space for the half-­baked thoughts that led me to see my material in new ways. Michael Allen provided crucial guidance when this project was only a proposal, and since then he has reminded me to keep my eyes on the stakes. My deepest thanks I reserve for Nancy MacLean, who served as the best mentor anyone could ask for. She read countless drafts. She challenged me to think deeper and strengthen my analysis. She knew when to push and when to support. I am truly grateful for the experience of working with her. In my transition from graduate student to professor, I had two delightful detours. First, the history department at Franklin and Marshall graciously welcomed me as a visitor. I’m grateful to Matt Hoffman, Laura Shelton, and Amy Mulnix for being friends and mentors. F&M also introduced me to my kindred spirit, Leanne Roncolato, whom I can’t imagine life without. Second, my year at the Harvard Warren Center gave me the time and the intellectual community to push the book in new directions. I’m grateful to Sven Beckert, Michael Zakim, Kenneth Mack, and Christine Desan for inviting me to participate, and to Arthur Patton-­Hock for making the year a successful one. I’m grateful for the camaraderie and brilliance of Nicolas Barreyre, Megan Black, Gabrielle Clark, Martin

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Giraudeau, Paul Kershaw, John Larson, Justin Leroy, Noam Maggor, Lukas Rieppel, Stuart Schrader, and Abby Spinak. I’m indebted to the Warren Center for introducing me to Lily Geismer, who quickly became a friend and a mentor whose wisdom, humor, and compassionate I value deeply. The University of Mississippi has proved a terrific place to develop this book. My colleagues in the Arch Dalrymple III Department of History—­ Mikaela Adams, Suneetha Chittiboyina, Jesse Cromwell, Oliver Dinius, Chiarella Esposito, Garrett Felber, Les Field, Josh First, Shennette Garrett-­Scott, Sue Grayzel, Darren Grem, April Holm, Kelly Brown Houston, Joshua Howard, Vivian Ibrahim, Zack Kagan-­Guthrie, Frances Kneupper, Marc Lerner, Theresa Levitt, Alex Lindren-­Gibson, John Neff, Ted Ownby, Joe Peterson, Paul Polgar, Jarod Roll, Chuck Ross, Bashir Salau, Susan Stearns, Isaac Stephens, Nicolas Trepanier, Annie Twitty, Jeff Watt, and Jessica Wilkerson—­have provided support both professionally and personally, and I am lucky to have landed Noell Wilson as a chair. I’m also grateful to Dean Lee Cohen for research support and one particular accommodation that made it possible for my family to put down roots here. Several historians gave me invaluable feedback on this project, both as chapters in progress and as conference papers. I offer a sincere thank you to Davarian Baldwin, Simon Balto, Eduardo Canedo, David Freund, David Goldberg, Dylan Gottlieb, Alex Gourse, Robert Henderson, Elizabeth Hinton, Louis Hyman, Matthew Lasner, Matthew Lassiter, Katherine Marino, Josh Mound, Christopher Phelps, Kim Philips-­Fein, Harold Platt, Emily Remus, Anthony Ross, Carlo Rotello, Bruce Schulman, Katy Schumaker, John Shelton, Ellie Shermer, David Stein, Chloe Taft, Jon Teaford, Sean Vanetta, and Benjamin Waterhouse for their generous feedback while the book was still a work in progress. I thank the Modern Monetary Theory scholars who patiently taught me humanist approaches for studying economic life, especially Scott Ferguson, Mitch Green, and Jakob Feinig. Ben Holtzman read the whole manuscript and provided invaluable feedback during the final stretch. I’m grateful for his suggestions and for his friendship. This book would have been impossible to write without the many conversations I have had with Keeanga-­Yamahtta Taylor about the history of American housing policy. I’ve learned so much from her and am proud to call her my most famous friend. While writing this book, I drew much of my energy from sources outside the academy. I thank the Chicago Game Night Coalition—­Melissa Buenger, Chris Gansen, Brian Bonenberger, Danielle Lukowski, Monica

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acknowledgments

Bartz-­Gallagher, Jenn Rhein, Jimmy Rhein, Lindsay Crammond, Scott Weicksel, Andrew Crago, Mollie Edgar, Steven Rajewski, Evelyn Pollins, Jackson Cavanaugh, Amy Carson, Dan Carson—­for a decade of big laughs. I am deeply grateful that my in-­laws—­Mary, Roy, Owen, Beth, Walter, and Helen—­welcomed me into their family with open arms. My extended family— ­Gary, Penny, Lisa, Julie, Doug, Sandy, Matt, Christina, Dylan, and Dreas—­has given unflagging love and support. My late grandparents, Mary, Margaret, and Stan, gave me a living connection to the past and told their stories whenever I asked. My parents, Herb and Marcia, built a childhood home that gave me the stability and the curiosity that helped me take the risk in pursuing a career I was passionate about. My brother, Brian, counseled me through all my grown-­up decisions with a light-­heartedness that made it all seem less scary. My husband, Peter Thilly, is my best friend and my coparent. I once wondered aloud whether our relationship might ruin each other’s careers, and he coolly responded that we should “just let it play out.” I’m so glad we did. His love has been a constant during an era of big changes. Meeting our children, Bruce and Maggie, and watching them grow has made my heart expand a million times. I dedicate this book to my family with all my love and gratitude.

Abbreviations for Archival Collections

T

he following abbreviations are used throughout the notes to indicate the locations of archival sources.

ACC Austin Community Collection, Special Collections and Preservation Division, Harold Washington Library Center, Chicago, IL ANC Austin Newspaper Collection, Special Collections and Preservation Division, Harold Washington Library Center, Chicago, IL BWCC Buckeye-­Woodland Community Congress Records, Western Reserve Historical Society, Cleveland, OH COP Charles Orlebeke Papers, Gerald Ford Presidential Library, Ann Arbor, MI FHLBB Records of the Federal Home Loan Bank Board, RG 195, National Archives College Park, College Park, MD GCC Gale Cincotta Collection, Special Collections and Archives Department, DePaul University, Chicago, IL JCL Jimmy Carter Presidential Library, Atlanta, GA NCN Records of the National Commission on Neighborhoods, RG 220, Jimmy Carter Presidential Library, Atlanta, GA NPA

National People’s Action Papers, Chicago, IL

NTIC

National Training and Information Center, Chicago, IL

NUE National Center for Urban Ethnic Affairs, University of Notre Dame Archives, Notre Dame, IN

242

abbreviations for archival collections

PHF Presidential Handwriting File, Gerald Ford Presidential Library, Ann Arbor, MI SWO Records of the Speechwriters Office, Jimmy Carter Presidential Library, Atlanta, GA TAG Thomas A. Gaudette Collection, William H. Hannon Library, Loyola Marymount University, Los Angeles, CA WPC Senator William Proxmire Collection, Wisconsin Historical Society, Madison, WI

Notes Introduction 1. “Chicago’s City Ordinance Proves Total Disinvestment,” Disclosure, March 1975, 5–­6. 2. Center for Neighborhood Technology, “Bank Unveils Community Loans Plan,” The Neighborhood Works 7, no. 4 (April 1984); Marc A. Weiss and John T. Metzger, “Neighborhood Lending Agreements: Negotiating and Financing Community Development,” Lincoln Institute of Land Policy Occasional Paper Series no. 88-­06 (March 1988): 1–­3. 3. For more on the discourse of postwar urban decline, and Americans’ ambiguity about urban revitalization as a national priority, see Robert A. Beauregard, Voices of Decline: The Postwar Fate of  U.S. Cities (New York: Oxford University Press, 1993). 4. NPA recently donated these papers to the Special Collections Library at DePaul University, where they are currently being processed. 5. “Neighborhood Organizations,” undated, no author, 9, in author’s possession, courtesy of John Gaudette. 6. Michael Westgate and Ann Vick-­Westgate, Gale Force: Gale Cincotta: The Battles for Disclosure and Community Reinvestment (Cambridge, MA: Harvard Book Store, 2011), 33–­34. 7. Gale Cincotta, “The Next Move,” Disclosure, January 1976, 12. 8. Edward Stefaniak, Gail Cincotta, Father Richard Dodero, Alvaro Rodriguez to Senator Birch Bayh, January 27, 1972, folder “First Conference,” drawer 5, cabinet 10, NPA. 9. See, for example, Julia Rabig, The Fixers: Devolution, Development, and Civil Society in Newark, 1960–­1990 (Chicago: University of Chicago Press, 2016); Brian D. Goldstein, Gentrification and the Struggle over Harlem (Cambridge, MA: Harvard University Press, 2017). 10. Suleiman Osman, “The Decade of the Neighborhood,” in Rightward Bound: Making American Conservative in the 1970s, ed. Bruce J. Schulman and Julian E. Zelizer (Cambridge, MA: Harvard University Press, 2008), 106–­27.

244

notes to pages 5–9

11. Samantha Friedman and Gregory D. Squires, “Did the Community Reinvestment Act Help Minorities Access Traditionally Inaccessible Neighborhoods?” Social Problems 52, no. 2 (May 2005): 209. 12. A. Andrew Boemi to Gale Cincotta, April 5, 1976, unlabeled folder, drawer 5, cabinet 10, National Training and Information Center, Chicago. 13. For a longer history of the impact of grassroots investments on American banking, see Christopher W. Shaw, Money, Power, and the People: The American Struggle to Make Banking Democratic (Chicago: University of Chicago Press, 2019). 14. Greta Krippner, Capitalizing on Crisis: The Political Origins of  the Rise of Finance (Cambridge, MA: Harvard University Press, 2012), 60–­61. For the “cooperative spirit” that permeated thrifts before the New Deal era, see David L. Mason, “The Rise and Fall of the Cooperative Spirit: The Evolution of Organizational Structures in American Thrifts,” Business History 54, no. 3 (June 2012): 381–­98. For the influence of progressivism on the thrift industry, see Heather A. Haveman, Hayagreeva Rao, and Srikanth Paruchuri, “The Winds of Change: The Progressive Movement and the Bureaucratization of Thrift,” American Sociological Review 72, no. 1 (February 2007): 114–­42. For a long history of the relationship between “thrift” and American capitalism, see Joshua J. Yates and James Davison Hunter, eds., Thrift and Thriving in America: Capitalism and Moral Order from Puritans to the Present (New York: Oxford University Press, 2011). 15. David M. P. Freund, “State Building for a Free Market: The Great Depression and the Rise of Monetary Orthodoxy,” in Shaped by the State: Toward a New Political History of  the Twentieth Century, ed. Brent Cebul, Lily Geismer, and Mason B. Williams (Chicago: University of Chicago Press, 2019). 16. Jennifer Klein, For All These Rights: Business, Labor, and the Shaping of America’s Public-­Private Welfare State (Princeton: Princeton University Press, 2003), 3. The scholarship on the New Deal is vast, but work on the ideas and political institutions that constituted the New Deal order include Gary Gerstle and Steve Fraser, eds., The Rise and Fall of  the New Deal Order (Princeton: Princeton University Press, 1990); Meg Jacobs, Pocketbook Politics: Economic Citizenship in Twentieth-­Century America (Princeton: Princeton University Press, 2005); Ira Katznelson, Fear Itself: The New Deal and the Origins of Our Time (New York: W. W. Norton, 2013). For the role of collective bargaining in the New Deal order, see Nelson Lichtenstein, State of  the Union: A Century of  American Labor (Princeton: Princeton University Press, 2002). 17. Samuel Zipp, Manhattan Projects: The Rise and Fall of  Urban Renewal in Cold War New York (New York: Oxford University Press, 2010); Christopher Klemek, The Transatlantic Collapse of Urban Renewal (Chicago: University of Chi­ cago Press, 2011). 18. For Carter’s federal urban policy, see Tracy Neumann, “Privatization, Devolution, and Jimmy Carter’s National Urban Policy,” Journal of  Urban History 40, no. 2 (March 2014) 283–­300; Thomas J. Sugrue, “Carter’s Urban Policy Crisis,”

notes to pages 9–11

245

in The Carter Presidency: Policy Choices in the Post-­New Deal Era, ed. Gary M. Fink and Hugh Davis Graham (Lawrence: University Press of Kansas, 1998). 19. For the role of monetary policy and the Federal Reserve Board in limiting the economic gains of the black freedom struggle, see David Stein, “Fearing Inflation, Inflating Fears: The End of Full Employment and the Rise of the Carceral State” (PhD diss., University of Southern California, 2014). 20. Krippner, Capitalizing on Crisis; J. Bradford De Long, “The Triumph of Monetarism?” Journal of  Economic Perspectives 14, no. 1 (2000): 83–­94; Gerard Dumenil and Dominique Levy, Capital Resurgent: Roots of  the Neoliberal Revo­ lution (Cambridge, MA: Harvard University Press, 2004), 1–­10; David Harvey, A Brief History of  Neoliberalism (Oxford: Oxford University Press, 2007), 19–­23. For more on financialization, see Costas Lapavistas, “Financialised Capitalism: Crisis and Financial Expropriation,” Historical Materialism 17 (2009): 114–­48; Thomas I. Palley, “Financialization: What It Is and Why It Matters,” Levy Economics Institute Working Paper no. 525 (December 2007). For more on the effects of shifts in the financial system on ordinary consumers, see Ismail Erturk, Julie Froud, Sukhdev Johal, Adam Leaver, and Karel Williams, “The Democratization of Finance? Promises, Outcomes and Conditions,” Review of  International Political Economy 14, no. 4 (October 2007): 553–­75; Andrew Leyshon and Nigel Thrift, “Geographies of Financial Exclusion: Financial Abandonment in Britain and the United States,” Transactions of the Institute of British Geographers 20, no. 3 (1995): 312–­41. For scholarship that positions the rise of finance in a broader story of “postindustrialism,” see Tracy Neumann, Remaking the Rust Belt: The Postindustrial Transfor­ mation of North America (Philadelphia: University of Pennsylvania Press, 2016). 21. Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America (New York: Metropolitan Books, 2009), 6. 22. For more on the logic that linked blackness with declining property values, especially the role of the federal government in perpetuating this logic, see David M. P. Freund, Colored Property: State Policy and White Racial Politics in Suburban America (Chicago: University of Chicago Press, 2010). 23. Amanda Seligman, Block by Block: Neighborhoods and Public Policy on Chicago’s West Side (Chicago: University of Chicago Press, 2005), 151–­62; Kevin Kruse, White Flight: Atlanta and the Making of  Modern Conservatism (Princeton: Princeton University Press, 2005). For an account of similar processes in Baltimore, which began a decade earlier, see Antero Pietila, Not in My Neighborhood: How Bigotry Shaped a Great American City (Chicago: Ivan R. Dee, 2010), 144–­88. 24. Historians have located a similar set of beliefs among the labor unionists and civil rights activists of the late 1930s and 1940s. Robert Korstad, Civil Rights Unionism: Tobacco Workers and the Struggle for Democracy in the Mid-­Twentieth-­ Century South (Chapel Hill: University of North Carolina Press, 2003); Martha Biondi, To Stand and Fight: The Struggle for Civil Rights in Postwar New York City

246

notes to pages 11–13

(Cambridge, MA: Harvard University Press, 2003); Nelson Lichtenstein, State of the Union: A Century of  American Labor (Princeton: Princeton University Press, 2002). 25. Daniel T. Rodgers, Age of Fracture (Cambridge, MA: Harvard University Press, 2011), 10, 42–­43. For more on the ascent of private and market-­based solutions to urban problems, see Kim Philips-­Fein, Fear City: New York’s Fiscal Crisis and the Rise of  Austerity Politics (New York: Metropolitan Books, 2017); Benjamin Holtzman, The Long Crisis: New York City and the Path to Neoliberalism (New York: Oxford University Press, forthcoming). 26. Becky Nicolaides, My Blue Heaven: Life and Politics in the Working-­Class Suburbs of  Los Angeles, 1920–­1965 (Chicago: University of Chicago Press, 2002); Kevin M. Kruse and Thomas J. Sugrue, eds., The New Suburban History (Chicago: University of Chicago Press, 2006); Thomas J. Sugrue, “All Politics is Local: The Persistence of Localism in Twentieth-­Century America,” in The Democratic Experiment: New Directions in American Political History, ed. Meg Jacobs, William J. Novak, and Julian E. Zelizer (Princeton: Princeton University Press, 2003); Matthew D. Lassiter, The Silent Majority: Suburban Politics in the Sunbelt South (Princeton: Princeton University Press, 2007), 1–­2; Robert O. Self, American Babylon: Race and the Struggle for Postwar Oakland (Princeton: Princeton University Press, 2003), 16–­17. For how these ideas reshaped the Democratic Party, see Lily Geismer, Don’t Blame Us: Suburban Liberals and the Transformation of  the Democratic Party (Princeton: Princeton University Press, 2015). 27. For the relationship between white urban politics and the rise of conservatism, see Timothy J. Lombardo, Blue-­Collar Conservatism: Frank Rizzo’s Philadelphia and Populist Politics (Philadelphia: University of Pennsylvania Press, 2018). Suleiman Osman’s work on “neighborhoodism” spotlights a version of urban politics that overlapped with, but was not the same as, reinvestment activism. The “neighborhood movement” he describes was an “eclectic collection of seemingly unrelated urban revolts” that included “returning suburbanites, African American activists, white ethnic revivalists, historic preservationists, and new urban white-­collar professions.” Reinvestment activists did not see their interests as shared with more affluent “back to the city” brownstoners who they feared would displace low-­and moderate-­ income urbanites. Osman, “The Decade of the Neighborhood,” 110–­11, 115–­17. 28. Robert O. Self, All in the Family: The Realignment of  American Democracy since the 1960s (New York: Hill and Wang, 2013), 3. 29. For affirmative action in employment, see Nancy MacLean, Freedom Is Not Enough: The Opening of  the American Workplace (Cambridge, MA: Harvard University Press, 2006); Dennis Deslippe, Protesting Affirmative Action: The Struggle over Equality after the Civil Rights Revolution (Baltimore: Johns Hopkins University Press, 2012); Biondi, To Stand and Fight. 30. Lizabeth Cohen, Making a New Deal: Industrial Workers in Chicago: 1919–­ 1939 (New York: Cambridge University Press, 1990).

notes to pages 13–20

247

31. For an argument that the “unified notion of a ‘working class’ crumbled,” see Jefferson Cowie, Stayin’ Alive: The 1970s and the Last Days of the Working Class (New York: New Press, 2010); for an argument that explores postwar political realignment through debates over the family, see Self, All in the Family, 3. 32. Keeanga-­Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Chapel Hill: University of North Carolina Press, 2019). 33. I thank my colleague Darren Grem for the conversations about deregulation that helped clarify this point.

Chapter One 1. “Panic Peddler: Panic Peddling,” Chicago Tribune, November 28, 1971, G37. 2. “Panic Peddler”; Amanda I. Seligman, “ ‘Apologies to Dracula, Werewolf, Frankenstein’: White Homeowners and Blockbusters in Postwar Chicago,” Journal of  the Illinois State Historical Society 94, no. 1 (March 2001): 70–­95. 3. Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton: Princeton University Press, 1998). 4. Mark Santow, “Saul Alinsky and the Dilemmas of Race in the Post-­war City” (PhD diss., University of Pennsylvania, 2000), 5. 5. Judith A. Martin, “The Influence of Values on an Urban Community: The Austin Area of Chicago, 1890–­1920” (master’s thesis, University of Minnesota, 1973). 6. “Austin to Train Self to Produce Leaders,” Chicago Tribune, October 24, 1965, 94; Jesuit Community Organizers Newsletter, folder 1, box 2, series 1, TAG. “Two populations” quotation from interview of Roger Coughlin by Michael Westgate and Anne-­Vick-­Westgate, 2005, 475, folder “Roger Coughlin,” box 4, GCC. Data from Evelyn M. Kitagawa and Karl E. Tauber, eds., Local Community Fact Book: Chicago Metropolitan Area, 1960 (Chicago: Chicago Community Inventory, University of Chicago, 1963). 7. For the history of racial transformation on Chicago’s west side, see Amanda Seligman, Block by Block: Neighborhoods and Public Policy on Chicago’s West Side (Chicago: University of Chicago Press, 2005). 8. Michael Westgate and Ann Vick-­Westgate, Gale Force: Gale Cincotta: The Battles for Disclosure and Community Reinvestment (Cambridge, MA: Harvard Book Store: 2011), 25. Gale Force is a collection of oral histories compiled in memory of Gale Cincotta. 9. Westgate and Vick-­Westgate, Gale Force, 34–­35; Antero Pietila, Not in My Neighborhood: How Bigotry Shaped a Great American City (Chicago: Ivan R. Dee, 2010), 89–­104. Pietila notes that Fulton Avenue carried similar significance in Baltimore.

248

notes to pages 20–23

10. Seligman, Block by Block. 11. Kitagawa and Tauber, Local Community Fact Book. Similar shifts occurred in other West Side neighborhoods. Less than 5 percent of East Garfield Park’s population was black in 1940, but the neighborhood was 61 percent black by 1960 and 98 percent black by 1970. In West Garfield Park, the 0.05 percent black population in 1940 became 15 percent by 1960 and 96 percent by 1970. 12. “What’s Your Choice,” Austinite, December 14, 1966, 6, folder 8, box 7, ANC. See also “Realtors Battle for Unfair Housing,” Chicago Defender, September 7, 1966. 13. The trademarked term “Realtor,” although it has often been used generically, indicated that a broker was a member of the National Association of Real Estate Boards or the Chicago Real Estate Board. The brokers described here, in contrast, were not members of those organizations and thus “were not bound by [their] codes of ethics.” For more on the process of blockbusting, see Seligman, Block by Block, 153–­62. 14. For more on the logic that linked blackness with declining property val­ ues, especially the role of the federal government in perpetuating this logic, see David M. P. Freund, Colored Property: State Policy and White Racial Politics in Suburban America (Chicago: University of Chicago Press, 2010). 15. Seligman, Block by Block, 151–­62; Kevin Kruse, White Flight: Atlanta and the Making of Modern Conservatism (Princeton: Princeton University Press, 2005). For an account of similar processes in Baltimore, which began a decade earlier, see Pietila, Not in My Neighborhood, 144–­88. 16. “Buckeye-­Woodland,” Encyclopedia of  Cleveland History, https://case.edu /ech/articles/b/buckeye-­woodland/. 17. On the visible national victories of the black freedom struggle, see Hugh D. Graham, The Civil Rights Era: Origins and Development of  National Policy, 1960–­ 1972 (New York: Oxford University Press, 1990). 18. Statistic on white flight to the suburbs from Thomas J. Sugrue, Sweet Land of Liberty: The Forgotten Struggle for Civil Rights in the North (New York: Random House, 2008), 205. For more on the United Property Group, see Seligman, Block by Block, 169–­75. This group resembled the homeowner association that Sugrue describes in The Origins of the Urban Crisis; quotation from interview of Gayle and Paul Brinkman by Michael Westgate and Ann Vick-­Westgate, August 17, 2005, 445, folder “Gayle and Paul Brinkman Interview Transcript,” box 4, GCC. 19. Harvey Luskin Molotoch, Managed Integration: Dilemmas of Doing Good in the City (Berkeley: University of California Press, 1972). Egan also worked extensively with nearby Lawndale. See Seligman, Block by Block, 86. 20. For a celebratory biography of Egan, see Margery Frisbie, An Alley in Chicago: The Ministry of a City Priest (Kansas City, MO: Sheed &Ward, 1991). 21. P. David Finks, The Radical Vision of Saul Alinsky (New York: Paulist Press, 1984), 259.

notes to pages 23–25

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22. Jerome Don Harris, “Grass-­Roots Organizing in the City of Chicago” (PhD diss., University of Illinois at Chicago, 1980), 77. 23. Santow, “Saul Alinsky and the Dilemmas of Race,” 5. 24. Saul Alinsky, Reveille for Radicals (Chicago: University of Chicago Press, 1945); Saul Alinsky, Rules for Radicals (New York: Random House, 1971); Sanford D. Horwitt, Let them Call Me a Rebel: Saul Alinsky: His Life and Legacy (New York: Knopf, 1989); Seligman, Block by Block, 194–­201; Santow, “Saul Alinsky and the Dilemmas of Race”; Amanda Seligman, Chicago’s Block Clubs: How Neighbors Shape the City (Chicago: University of Chicago Press, 2016), 110–­11. 25. For an example of how Vatican II similarly influenced Catholic activism in a Canadian city, see Peter E. Baltutis, “Rooted in the Vision of Vatican II: Youth Corps and the Formation of Christ-­Centered Social Activists in Toronto, 1966–­ 1984,” Historical Studies 76 (2010), 7–­26. 26. “The Church and Social Change,” Church in Metropolis (Fall 1965), folder 5, box 2, series 1, TAG; “The Power of Community Action, Franciscan Message (March 1966), folder 4, box 2, series 1, TAG. For the relationships between Catholicism, race, and community, see John McGreevy, Parish Boundaries: The Catholic Encounter with Race in the Twentieth-­Century Urban North (Chicago: University of Chicago Press, 1996). 27. Harris, “Grass-­Roots Organizing,” 77. 28. Seligman, Block by Block, 194–­95. 29. “Neighborhood Organizations,” undated, no author, 2, in author’s possession, courtesy of John Gaudette; Hillel Black, “This Is War,” Saturday Evening Post, January 25, 1964, 60–­63. 30. Westgate and Vick-­Westgate, Gale Force, 82. 31. Robert Bailey Jr., Radicals in Urban Politics: The Alinsky Approach (Chicago: University of Chicago Press, 1972), 71. Gaudette often talked about people “banding together” or “getting together” as the definition of “power.” See also “Getting Together Aim of Departing Director,” Community Publications, May 3, 1972, folder 7, box 1, ANC. 32. “Empowering People, Not Elites,” Playboy, March 1972. For more on the FIGHT campaign against Eastman Kodak, see Alinsky, Rules for Radicals, 170–­ 83; Finks, The Radical Vision of  Saul Alinsky, 191–­228. 33. On block clubs, see Seligman, Chicago’s Block Clubs; Trapp and Gaudette’s skepticism about these groups is described on 112. 34. While I found no data on block clubs during the first year of organizing, block clubs made up 65 of the group’s 171 member organizations by the spring of 1968, surpassing the 26 churches, 30 church affiliates, and 30 civic groups. See Tom Gaudette to Staff, “2nd OBA Congress Members,” May 9, 1968, folder 3, box 3, series 1, TAG. For a brief discussion of OBA’s dual strategies, see Harris, “Grass-­ Roots Organizing,” 88. Quotations from Bailey, Radicals in Urban Politics, 30–­31. 35. Bailey, Radicals in Urban Politics, 30–­31.

250

notes to pages 26–29

36. Shel Trapp, Dynamics of  Organizing (Chicago: Shel Trapp, undated), 15–­ 18, 48. 37. Bailey, Radicals in Urban Politics, 46–­47, 113. 38. Seligman discusses this motivation in her chapter on “keeping whites in.” See Seligman, Block by Block, 183–­207, especially 184. 39. Ed Shurna, interview with author, Chicago, August 17, 2010. 40. Westgate and Vick-­Westgate, Gale Force, 82. 41. Santow, “Saul Alinsky and the Dilemmas of Race.” 42. Santow, “Saul Alinsky and the Dilemmas of Race,” 29; Interview of Gayle and Paul Brinkman by Michael Westgate and Ann Vick-­Westgate, August 17, 2005, 444–­46, folder “Gayle and Paul Brinkman Interview Transcript,” box 4, GCC. 43. Westgate and Vick-­Westgate, Gale Force, 37. Sugrue characterizes the whites who moved into integrated neighborhoods as “back-­to-­the-­city whites” and posits that these “countercultural” whites “embraced the ideal of diversity, seeking out ‘authentic’ communities that stood as a counterpart to bland, conformist suburbia.” By Sugrue’s account, such whites believed “interracial contact would change their consciousness and thus change the world.” Such a depiction is less suitable for OBA activists, who put a premium on building a community of common interest and would not have articulated their goals in such “hearts and minds” terms. See Sugrue, Sweet Land of Liberty, 421. 44. Mary Shimandle, interview with author, Chicago, August 17, 2011. 45. Westgate and Vick-­Westgate, Gale Force, 29. 46. Bailey, Radicals in Urban Politics, 112. 47. Bailey, Radicals in Urban Politics, 5–­7. 48. Shurna, interview with author. 49. Resolutions Passed by the Second Annual Congress of the Organization for a Better Austin, April 28, 1968, folder 23, box 3, ACC; Resolutions Adopted at 3rd All Austin Congress, April 27, 1969, folder 4, box 3, series 1, TAG. 50. Resurrection-­Saint Thomas Community Service Center News Bulletin, ca. 1968, folder 3, box 3, series 1, TAG. 51. “Clergy, Unity Group Clash on Method, Not Target,” publication unknown, April 26, 1967, folder 26, box 3, ACC. 52. “Clubs and Organizations” fact sheet, folder 23, box 3, ACC. 53. Ronald P. Formisano, Boston against Busing: Race, Class, and Ethnicity in the 1960s and 1970s (Chapel Hill: University of North Carolina Press, 1991); Sugrue, The Origins of the Urban Crisis; Pietila, Not in My Neighborhood. 54. Interview of Justin McCarthy by Michael Westgate and Ann Vick-­Westgate, 2003, 809, folder “Justin McCarthy,” box 4, GCC. 55. Interview of Ed Bailey by Michael Westgate and Ann Vick-­Westgate, June 6, 2003, 5, folder “Ed Bailey Interview Transcript,” box 4, GCC. 56. “Far Reaching Proposals Set Main Objectives of Congress,” Austin News, folder 23, box 3, ACC; “Austin Unity Committee Expects 800 at Meeting,” Chi-

notes to pages 29–33

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cago Tribune, June 11, 1967, sec. 10, p. 6; Westgate and Vick-­Westgate, Gale Force, 82–­83. 57. Westgate and Vick-­Westgate, Gale Force, 25. 58. Interview of Gayle and Paul Brinkman. 59. Laura Green, “Whirlwind: What Makes Austin Leader Tick,” publication unknown, 1972, folder 8, box 1, ACC. 60. Interview of Gale Cincotta by Studs Terkel, July 15, 1982, folder “Gale Cincotta, Interview Transcript from Studs Terkel Show,” box 4, GCC. 61. Westgate and Vick-­Westgate, Gale Force, 25. 62. Westgate and Vick-­Westgate, Gale Force, 22. 63. Westgate and Vick-­Westgate, Gale Force, 33–­34. 64. Brian Boyer, Cities Destroyed for Cash: The FHA Scandal at HUD (Chicago: Foller, 1973), 178. For more on the media’s early-­1970s discovery of white working-­class women, see Nancy Seifer, Nobody Speaks for Me!: Self-­Portraits of American Working-­Class Women (New York: Simon & Schuster, 1976). 65. Bailey, Radicals in Urban Politics, 72. 66. Westgate and Vick-­Westgate, Gale Force, 33–­34. 67. Westgate and Vick-­Westgate, Gale Force, 27. 68. Westgate and Vick-­Westgate, Gale Force, 29. 69. Bailey, Radicals in Urban Politics, 72. 70. Westgate and Vick-­Westgate, Gale Force, 24, 38. For more on the particu­ lar power of mothers as activists for social justice, see Tamar Carroll, Mobilizing New York: AIDS, Antipoverty, and Feminist Activism (Chapel Hill: University of North Carolina Press, 2015). 71. Minutes, OBA Senate Meeting, May 21, 1969, folder 3, box 3, series 1, TAG. 72. Bailey, Radicals in Urban Politics, 79. 73. Resolutions Passed by the Second Annual Congress of the Organization for a Better Austin, April 28, 1968. 74. “OBA Starts Its Second Year,” Community Publications, May 1, 1968, folder 23, box 3, ACC. 75. For more on how local real estate markets shaped the racial identities and political worldviews of postwar urban whites, see Sugrue, The Origins of the Urban Crisis. 76. Boyer, Cities Destroyed for Cash, 179–­80. 77. Emphasis mine. Resolutions Passed by the Second Annual Congress of the Organization for a Better Austin, April 28, 1968. 78. Resolutions, OBA Third Congress, April 27, 1969, folder 23, box 3, ACC; Resolutions, OBA Fifth Congress, May 1, 1971, folder 23, box 3, ACC. 79. Resolutions, OBA Third Congress, April 27, 1969. 80. Resolutions, OBA Fifth Congress, May 1, 1971. 81. Resolutions, OBA Fifth Congress, May 1, 1971. 82. Minutes, First Real Estate Practices Compliance Hearing, March 8, 1969, folder 4, box 3, series 1, TAG. For more on Gaynor’s commitment to civil rights and white west siders’ anger toward him, see Seligman, Block by Block, 170–­71.

252

notes to pages 33–38

83. Minutes, First Real Estate Practices Compliance Hearing, March 8, 1969, folder 4, box 3, series 1, TAG. 84. Quotation from Resolutions, April 13, 1971, folder 27, box 3, ACC; Keeanga Yamahtta Taylor, “Race for Profit: The Political Economy of Black Urban Housing in the 1970s” (PhD diss., Northwestern University, 2013), 10, 33–­42. 85. Minutes, OBA Senate Meeting, May 21, 1969, folder 3, box 3, series 1, TAG. 86. “Austin Group Curbs ‘Panic Peddler,’ ” Chicago Tribune, July 30, 1967, sec. 10, p. 1. 87. “Groups Dissatisfied with Investigations on Panic Peddling,” Chicago Tribune, August 23, 1970, sec. 10, p. 6. 88. “Hi, I’m Your Outraged Citizen on the March,” Chicago Tribune, December 5, 1971, folder 2, box 4, series 1, TAG. 89. Westgate and Vick-­Westgate, Gale Force, 83. 90. “Realtors Agree Not to Sell in Austin Area,” Chicago Defender, Novem­ ber 11, 1968. 91. “Realtors Agree Not to Sell in Austin Area.” 92. “Drive Against ‘For Sale’ Signs,” Austin News, July 8, 1970, 1. 93. “Realtors Tell Their Problems in Austin Market,” Austinite, December 7, 1966, folder 7, box 7, ANC. 94. “Opportunists Find Fringe Happy Hunting Ground,” Austinite, Decem­ ber 7, 1966, folder 7, box 7, ANC. 95. “FHA Policy Aids Minority Buyers—­and Panic Sellers,” Chicago Tribune, August 12, 1971, 1. 96. “Austin Group Curbs ‘Panic Peddler.’ ” 97. “Austin Center to Help Families Find Housing,” Chicago Tribune, November 19, 1967, sec. 10, p. 11. 98. “Welcome Neighbor,” housing referral service pamphlet, undated, box 3, folder 4, series 1, TAG. 99. “OBA Starts Its Second Year.” 100. Resolutions Adopted at Second OBA Congress, April 28, 1968, folder 3, box 3, series 1, TAG; Fundraising letter to local businesses, May 1968, folder 23, box 3, ACC. 101. For more on open housing, see Sugrue, Sweet Land of Liberty, 220–­48. 102. For more on the role of Oak Park, see Carole Goodwin, The Oak Park Strategy: Community Control of Racial Change (Chicago: University of Chicago Press, 1979). 103. “Hi, I’m Your Outraged Citizen on the March.” 104. Trapp, Dynamics of  Organizing, 17. 105. “Hi, I’m your Outraged Citizen on the March”; “Housing Service: Austin Group Lends Hand,” Chicago Tribune, March 20, 1969, sec. 2A, p. 9. 106. “Leadership Council to Continue Black Housing Efforts in Austin,” Chicago Tribune, April 3, 1969, sec. 1C, p. 3.

notes to pages 38–42

253

107. Resolutions, OBA Third Congress, April 27, 1969. 108. “OBA Convention Elects McCarthy, Adopts Resolutions,” Austinite, June 14, 1967, folder 6, box 1, ANC. For more on open-­housing campaigns, see Sugrue, Sweet Land of Liberty, 220–­48. 109. Shurna, interview with author. 110. Resolutions, OBA Third Congress, April 27, 1969. 111. Resolutions, OBA Third Congress, April 27, 1969. This quotation is handwritten under Foran’s name on the back of a copy of the “rules of the day” from the conference. 112. “OBA Seeks Speed-­Up of Renewal Project,” Austin News, July 1, 1970, 1, box 2, ANC. 113. “DUR Opens Office in Austin,” Austin News, August 5, 1970, 1, box 2, ANC. 114. Executive Board Minutes, February 19, 1968, folder 3, box 3, series 1, TAG; “Our Town: Panic Peddlers Are Still Evading Human Relations Commission,” Chicago Tribune, January 21, 1971, sec. 3C, p. 3. Other Chicago communities experienced panic peddling before Austin did, beginning during the 1950s and 1960s. See Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America (New York: Metropolitan Books, 2009); Seligman, Block by Block. 115. “Irate Austin Residents Blast Fly-­by-­Night Realty Operators,” Chicago Tribune, August 12, 1971, 2. 116. Jesuit Community Organizer newsletter, March 1970. 117. Jesuit Community Organizer newsletter, March 1970. 118. “Opportunists Find Fringe Happy Hunting Ground,” Austinite, Decem­ ber 7, 1966, folder 7, box 7, ACC; Resolutions, undated, folder 23, box 3, ACC. Because this document repeatedly references the “Greater Austin Convention,” the original name for the founding conference during the planning stages and the only set of resolutions to do so, it is most likely that this document came from the first conference. OBA Resolutions, April 13, 1971, folder 27, box 3, ACC. 119. Thomas J. Jablonsky and Paul-­Thomas Ferguson, “Northwest Community Organization,” in The Encyclopedia of  Chicago, ed. James Grossman, Ann Durkin Keating, and Jan Reiff (Chicago: University of Chicago Press, 2004). 120. Trapp, Dynamics of  Organizing, 50. 121. “Panic Peddling Charge Filed against Realtor,” Chicago Tribune, September 7, 1969, sec. 10, p. 10. 122. “Panic Sellers Play Fear against Fear—­Skirt Law,” Chicago Tribune, August 10, 1971, 1. 123. Trapp, Dynamics of  Organizing, 51; Jesuit Community Organizer news­ letter, March 1970; “OBA Trainees ‘Graduating,’ ” Austin News, October 28, 1970, folder 26, box 3, ACC. Two years later, two Sky salesmen were placed on four years’ probation by a federal judge after pleading guilty to providing the FHA

254

notes to pages 42–45

false information on an Austin home. “Two Realty Salesmen Sentenced,” Chicago Tribune, April 6, 1972, sec. 1A, p. 2. 124. Alyssa Katz, Our Lot: How Real Estate Came to Own Us (New York: Blooms­ bury, 2009), 11. 125. OBA Resolutions, 1968, folder 2, box 3, series 1, TAG. 126. Minutes, OBA Second Congress, April 26, 1968, folder 27, box 3, ACC. 127. US Census Bureau, 1970, prepared by Social Explorer, accessed June 4, 2018, http://www.socialexplorer.com/tables/C1970. 128. “Thrift Artists Awarded Prizes,” Austin News, March 4, 1970, 4, box 2, ANC. 129. Frank Capra, dir., It’s a Wonderful Life (Los Angeles: Republic Entertainment, [1946] 1998). 130. Lawrence Conway, Savings and Loan Principles (Chicago: American Savings and Loan Institute Press, 1960), 25. 131. Henry Morton Bodfish and A. D. Theobald, Savings and Loan Principles (New York: Prentice-­Hall, 1938), 4. 132. Dimitry Wanda, Teller Operations (Chicago: American Savings and Loan Institute Press, 1954), 1; Conway, Savings and Loan Principles, 25. 133. For example, see savings and loan advertisements in Austin News, box 1, ANC. 134. Susan Hoffman, Politics and Banking: Ideas, Public Policy, and the Crea­ tion of Financial Institutions (Baltimore: Johns Hopkins University Press, 2001), 155, 173. For the “cooperative spirit” that permeated thrifts before the New Deal era, see David L. Mason, “The Rise and Fall of the Cooperative Spirit: The Evolution of Organizational Structures in American Thrifts,” Business History 54, no. 3 (June 2012): 381–­98. For the influence of progressivism on the thrift industry, see Heather A. Haveman, Hayagreeva Rao, and Srikanth Paruchuri, “The Winds of Change: The Progressive Movement and the Bureaucratization of Thrift,” American Sociological Review 72, no. 1 (February 2007): 114–­42. For a long history of the relationship between “thrift” and American capitalism, see Joshua J. Yates and James Davison Hunter, eds., Thrift and Thriving in America: Capitalism and Moral Order from Puritans to the Present (New York: Oxford University Press, 2011). 135. Hoffman, Politics and Banking, 4, 141–­42, 151, 161–­64; quotation at 177. 136. Leon T. Kendall, The Savings and Loan Business: Its Purposes, Functions, and Justifications (Englewood Cliffs, NJ: Prentice-­Hall, 1962), 57. 137. Clifton B. Luttrell, “The Hunt Commission Report—­An Economic View,” Federal Reserve Bank of  St. Louis Review (June 1972), 9; Albert H. Cox Jr., Regulation of  Interest Rates on Bank Deposits (Ann Arbor: University of Michigan Press, 1966). 138. Hoffman, Politics and Banking, 141–­42, 160–­61; quotation at 177. 139. Hoffman, Politics and Banking, 169–­72. 140. Conway, Savings and Loan Principles, 25.

notes to pages 45–48

255

141. Richard K. Green and Susan M. Wachter, “The American Mortgage in Historical and International Context,” Journal of Economic Perspectives 19, no. 4 (Fall 2005): 93–­94. 142. Robert Mason, From Buildings and Loans to Bailouts: A History of the American Savings and Loan Industry, 1831–­1995 (New York: Cambridge University Press, 2004),116–­17. 143. For more on the role of the FHA in making homeownership a white right, see Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of America (New York: Oxford University Press, 1985); Lizabeth Cohen, A Consumer’s Republic: The Politics of  Mass Consumption in Postwar America (New York: Knopf, 2003), 199–­205. For more on the role of financial institutions and their regulators in bolstering homeownership as a white right, see L. L. Woods, “The Federal Home Loan Bank Board, Redlining, and the National Proliferation of Racial Lending Discrimination, 1921–­1950,” Journal of  Urban History 38, no. 6 (April 2012). For a broader analysis of Neal Deal rights as white rights, see Ira Katznelson, When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-­ Century America (New York: W. W. Norton, 2005); Matthew D. Lassiter, The Silent Majority: Suburban Politics in the Sunbelt South (Princeton: Princeton University Press, 2007), 10. 144. Satter, Family Properties. For more on the long history of assumptions that black people drove down property values, see Sugrue, The Origins of  the Urban Crisis, 43–­47, 209–­29; Freund, Colored Property; Katznelson, When Affirmative Action Was White, 163; Natalie Moore, “Contract Buying Robbed Black Families in Chicago of Billions,” WBEZ News, May 30, 2019, accessed July 8, 2019, https:// www.wbez.org /shows /wbez-­news /contract-­buying-­robbed-­black-­families-­in-­chi cago-­of-­billions/d643ea19-­2977-­43d7-­81c7-­1d7a568c5c81. 145. Resolutions, OBA Third Congress, April 27, 1969. For more on the Contract Buyers League, see Satter, Family Properties. 146. Resolutions, OBA Third Congress, April 27, 1969. 147. “Business Council Aims to Stabilize Community,” Austin News, July 8, 1970, 2A, box 2, ANC. 148. Bailey, Radicals in Urban Politics, 4–­5, 8. 149. “Mike” [Mike Thompson] to Tom Gaudette, October 7, 1970, folder 1, box 4, series 1, TAG. 150. Interview of Ed Bailey by Michael Westgate and Ann Vick-­Westgate, June 6, 2003, 8, folder “Ed Bailey Interview Transcript,” box 4, GCC. 151. Interview of Gayle and Paul Brinkman. 152. Jeffery Helgeson, Crucibles of Black Empowerment: Chicago’s Neighborhood Politics from the New Deal to Harold Washington (Chicago: University of Chicago Press, 2014), chap. 6, especially 231. 153. “OBA Starts Its Second Year”; Harris, “Grass-­Roots Organizing,” 92–­93, 99. OBA member Gayle Brinkman remembers Mark Salone doing a better job

256

notes to pages 48–54

than primary sources from the moment suggest. See Interview of Gayle and Paul Brinkman. For more on the Red Squad, see Lynn Emmerman, “Confessions of a Red Squad Spy,” Chicago Reader, August 25, 1978. As a result of two lawsuits, the Red Squad files are now available to the public at the Chicago History Museum. 154. “Austin: A Community Struggling with Social Evolution,” Chicago Tribune, September 9, 1971, sec. 2B, p. 9. 155. “Austin: A Community Struggling with Social Evolution.” 156. “Austin: A Community Struggling with Social Evolution.” 157. Arlene Stein, “Between Organization and Movement: ACORN and the Alinsky Model of Community Organizing,” Berkeley Journal of Sociology 31 (1986): 96. 158. Bailey, Radicals in Urban Politics, 114. 159. Bailey, Radicals in Urban Politics, 120. 160. Bailey, Radicals in Urban Politics, 130–­31.

Chapter Two 1. Shel Trapp, Dynamics of Organizing: Building Power by Developing the Human Spirit (Chicago: Shel Trapp, undated), 53–­55. 2. For more on the FHA’s role in suburbanization, see Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the United States (New York: Oxford University Press, 1985), 190–­219; David Freund, Colored Property: State Policy and White Racial Politics in Suburban America (Chicago: University of Chicago Press, 2007). For more on the FHA urban programs that began in the 1960s, see Kevin Fox Gotham, “Separate and Unequal: The Housing Act of 1968 and the Section 235 Program,” Sociological Forum 15, no. 1 (2000): 13–­37; Louis Hyman, Debtor Nation: The History of America in Red Ink (Princeton: Princeton University Press, 2011), 227; Andrew R. Highsmith, “Prelude to the Subprime Crash: Beecher, Michigan, and the Origins of the Suburban Crisis,” Journal of Policy History 24, no. 4 (2012); Keeanga-­Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Chapel Hill: University of North Carolina Press, 2019). 3. On the predatory nature of Chicago’s tax sales, see Andrew Kahrl, “Capitalizing on the Urban Fiscal Crisis: Predatory Tax Buyers in 1970s Chicago,” Journal of Urban History 44 (May 2018), 382–­401. 4. Brian Boyer, Cities Destroyed for Cash: The FHA Scandal at HUD (Chicago: Follett, 1973), 7, 179–­87; “FHA Policy Aids Minority Buyers—­and Panic Sellers,” Chicago Tribune, August 12, 1972, 1. 5. Boyer, Cities Destroyed for Cash, 180. 6. Louis Hyman, “American Debt, Global Capital,” in The Shock of the Global: The 1970s in Perspective, ed. Niall Ferguson, Charles S. Maier, Erez Manela, and

notes to pages 54–56

257

Daniel J. Sargent (Cambridge, MA: Harvard University Press, 2010), 131. For more on the role of the collapse of the Bretton Woods system in the credit crunch, see Barry Eichengreen, Globalizing Capital: A History of the International Monetary System (Princeton: Princeton University Press, 1996); Albert Burger, “A Historical Analysis of the Credit Crunch of 1966,” Federal Reserve Bank of St. Louis Review 51, no. 9 (September 1969): 13–­30. 7. Hyman, “American Debt, Global Capital,” 129–­31; Greta Krippner, Capitalizing on Crisis: The Political Origins of the Rise of Finance (Cambridge, MA: Harvard University Press, 2011), 63–­73. For more on the role of Regulation Q as a housing policy, see Robert Henderson, “Dream Deregulated: The Politics of U.S. Housing Finance, 1968–­1985” (PhD diss., University of Maryland, 2013), 32–­42. 8. As historian Wendell Pritchett has shown, what constituted the urban crisis and how to solve it was up for debate and changed over time. During the first half of this period, policymakers who spoke of the “urban crisis” often described concerns about metropolitan growth, not decline. Historians have since used the term to describe the transformations in the political economy of the postwar metropolis, namely, the white flight and deindustrialization that shifted power and resources to mostly white suburbs. Wendell Pritchett, “Which Urban Crisis? Regionalism, Race, and Urban Policy, 1960–­1974,” Journal of Urban History 34, no. 2 (January 2008): 266–­86. For more on the role of race and the urban crisis, see Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit (Princeton: Princeton University Press, 1998); Arnold Hirsch, Making the Second Ghetto: Race and Housing in Chicago, 1940–­1960 (Chicago: University of Chicago Press, 1999). 9. Senate Subcommittee on Housing and Urban Affairs, Housing and Urban Development Legislation of 1968: Hearings before the Subcommittee on Housing and Urban Affairs: Committee on Banking and Currency of the United States Senate, 90th Cong., 2nd sess. (March 5–­7, 1968), 207. 10. Hyman, “American Debt, Global Capital,” 131–­33. 11. Howard K. Smith, “A Strong Thread of Moral Purpose,” To Heal and to Build: The Programs of President Lyndon B. Johnson (New York: McGraw-­Hill, 1968), 3. 12. Bruce Schulman, Lyndon B. Johnson and American Liberalism (Boston: Bedford Books, 1995), 1–­3, 81–­94. For more on the War on Poverty, see James T. Patterson, America’s Struggle against Poverty in the Twentieth Century, rev. ed. (Cambridge, MA: Harvard University Press, 2000), 131–­49; For the HUD Act, see Taylor, Race for Profit. 13. Thomas R. Wolanin, Presidential Advisory Commissions: Truman to Nixon (Madison: University of Wisconsin Press, 1975). 14. For more on Johnson’s Great Society as it related to cities, see Roger Biles, The Fate of Cities: Urban America and the Federal Government, 1945–­2000 (Lawrence: University of Kansas Press, 2011), 112–­59.

258

notes to pages 57–59

15. This was not the first time that mortgage-­backed securities had been used to finance mortgages. For their nineteenth-­century counterpart, see Jonathan Levy, Freaks for Fortune: The Emerging World of Capitalism and Risk in America (Cambridge, MA: Harvard University Press, 2012). For a brief discussion of the role of mortgage-­backed securities in the 1920s real estate boom before the Great Depression, see Alyssa Katz, Our Lot: How Real Estate Came to Own Us (New York: Bloomsbury, 2009), 4. 16. Hyman, “American Debt, Global Capital,” 132–­35. 17. House Committee on Banking and Currency, Real Estate Settlement Costs, FHA Mortgage Foreclosures, Housing Abandonment, and Site Selection Policies: Hearing before the Subcommittee on Housing of the Committee on Banking and Currency, 92nd Cong., 2nd sess. (February 22 and 24, 1972), 265. President Kennedy signed an executive order in 1962 that prohibited racial discrimination in the sale or rental of housing made with FHA insurance. 18. Boyer, Cities Destroyed for Cash, 20–­23. The Section 235 and Section 236 programs provided subsidies on mortgages in the form of government payment of all but one percent of mortgages interest for low-­and moderate-­income homebuyers. Another FHA program, 223-­e, granted FHA mortgage insurance to older urban areas given they were “viable” and the loan’s risk was deemed reasonable. 19. Boyer, Cities Destroyed for Cash, 23. 20. Senate Subcommittee on Housing and Urban Affairs, Housing and Urban Development Legislation of 1968, 172. 21. Louis Hyman, Debtor Nation: A History of America in Red Ink (Princeton: Princeton University Press, 2011), 135. 22. Leon T. Kendall, The Savings and Loan Business: Its Purposes, Functions, and Economic Justifications (Englewood Cliffs, NJ: Prentice-­Hall, 1962), 90–­91; Norman Strunk and Fred Case, Where Deregulation Went Wrong: A Look at the Causes behind Savings and Loan Failures in the 1980s (Chicago: United States League of Savings Institutions, 1988), 21. 23. Lawrence Conway, Savings and Loan Principles (Chicago: American Savings and Loan Institute Press, 1960), 55. 24. The differential between the capped FHA interest rate and the market rate was already a problem well understood by the housing and mortgage industries before Congress debated the HUD Act. Many in the housing industry suggested that the interest rate cap was one of the prime factors keeping the housing market in a slump. One builder went so far as to predict that if Congress simply lifted the FHA rate, the housing industry would rebound immediately. “High Interest Rates Seen as Housing Boost: Loan Problems Hurting Housing Industry,” Washington Post, January 27, 1968, E1. 25. See statement of Dwight D. Townsend of the Cooperative League of the USA in Senate Subcommittee on Housing and Urban Affairs, Housing and Urban Development Legislation of 1968, 114–­15; also statement of Andrew J. Biemiller of the AFL-­CIO at 170.

notes to pages 59–64

259

26. Senate Subcommittee on Housing and Urban Affairs, Housing and Urban Development Legislation of 1968, 185. 27. “Impact of ’68 Housing Act Termed ‘Dramatic,’ ” Chicago Tribune, October 5, 1968, sec. 1b, p. 16; William C. Prather, “Savings and Loan Legislative Developments—­1968,” Business Lawyer 24, no. 3 (April 1969), 975–­1019. 28. “Tenants Become Home Owners,” Washington Post, November 10, 1968, C1. 29. “Photo Stand Alone 14,” Chicago Daily Defender, February 15, 1969. 30. “U.S. Lifts Ceiling on Mortgages FHA, VA Back: Lid Rises One Point to 8 ½%,” Wall Street Journal, December 31, 1969, 2. 31. “Examine Impact of Increase in VA, FHA Interest Rates,” Chicago Tribune, January 1, 1970, sec. 3, p. 7. 32. “Talman To Increase FHA Loan Activity,” Chicago Tribune, January 17, 1970, sec. 2, p. 7. The Tribune reported, “Savings and loan associations are gearing up to move more heavily into the FHA lending market to take advantage of the higher rate available”; “Bankers to Seek Usury Rate Hike,” Chicago Tribune, January 27, 1970, sec. 3, p. 7. 33. “Savings and Loans Begin FHA Lending,” Chicago Tribune, February 15, 1970, D1. 34. “Black Lender in Search of Home Buyers,” Chicago Tribune, February 15, 1970, D1. 35. “Mortgage Money Available,” Chicago Tribune, June 14, 1970, sec. 3A, p. 1. 36. Austin News, March 4, 1970, p. A; Austin News, March 11, 1970, p. A. 37. “Mortgage Money Available.” 38. “Mortgage Money Available.” 39. “Puerto Rican Family Obtains Home thru Revised Housing Act,” Chicago Tribune, February 5, 1970, sec. 1B, p. 2. 40. “Group Buys 8 Buildings in Renewal Area,” Chicago Tribune, August 19, 1970, sec. 2, p. 10. 41. “Poor Get Housing Aid,” Chicago Tribune, August 9, 1970, sec. 10, p. 12. 42. “FHA Policy Aids Minority Buyers—­and Panic Sellers,” Chicago Tribune, August 12, 1971, 1. 43. Chris Bonastia, “Why Did Affirmative Action in Housing Fail during the Nixon Era? Exploring the ‘Institutional Homes’ of Social Policies,” Social Problems 47, no. 4 (November 2000): 535. 44. House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­ and Moderate-­Income Housing Programs: Hearing before the Committee on Banking and Currency United States House of Representatives, 92nd Cong., 1st sess. (March 31, 1971), 241. 45. “Coalition Urges Congress to Probe FHA Practices,” Chicago Tribune, Jan­ uary 27, 1972, sec. 1A, p. 9. 46. House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­and Moderate-­Income Housing Programs, 107.

260

notes to pages 65–68

47. “Latins Hit FHA Policy,” Chicago Tribune, February 24, 1972, 6. 48. House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­and Moderate-­Income Housing Programs, 114. 49. Interim Report on HUD Investigation of Low-­and Moderate-­Income Housing Programs, 114. 50. HUD Circular, July 31, 1970. 51. Calvin Bradford, “Financing Home Ownership: The Federal Role in Neighborhood Decline,” Urban Affairs Quarterly 14, no. 3 (1979): 329. 52. For example, House Committee on Government Operations, Defaults on FHA-­Insured Mortgages (Detroit): Hearings before a Subcommittee of the Committee on Government Operations of the House of Representatives, 92nd Cong., 1st sess. (December 2–­4, 1971); data on inventory and razing at 6. See also “Charge Buyer Aid Builds Slums,” Chicago Tribune, January 6, 1971, sec. 1, p. 7; “Who Is the Leading Slum Landlord?” Chicago Tribune, December 11, 1971, sec. 1, p. 10. The West Side activists compiled a list of “national headlines.” See “National Head­ lines Tell the Story,” West Side Coalition press sheet, undated, unlabeled fold­­er, drawer 5, cabinet 10, NPA. 53. House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­and Moderate-­Income Housing Programs, 234. 54. Interim Report on HUD Investigation of Low-­and Moderate-­Income Housing Programs, 235–­36. In 1975, sociologist Mark Gelfand observed that “the real-­estate trade, the building industry, and financial institutions supplied FHA with most of its personnel and guidelines, and each of these groups accepted, as an iron law of economics, the concept that racial homogeneity was essential of residential districts were to retain their stability and desirability.” Gelfand in Chris Bonastia, “Why Did Affirmative Action in Housing Fail during the Nixon Era? Exploring the ‘Institutional Homes’ of Social Policies,” Social Problems 47, no. 4 (November 2000): 532. 55. Activists frequently framed urban lending risk as bankers’ “perceptions of risk” to stress that bankers’ assessments of risk were subjective and inseparable from their assumptions about cities as dangerous, declining places. See, for exam­ ple, Michael Przybylski, Perceptions of Risk—­the Bankers’ Myth: An Eight City Survey of Mortgage Disclosure Data (Chicago: National Training and Information Center, 1978). 56. “FHA Policy Aids Minority Buyers—­and Panic Sellers.” 57. Trapp, Dynamics of Organizing, 53–­55. 58. Boyer, Cities Destroyed for Cash, 187. 59. Boyer, Cities Destroyed for Cash, 188. 60. “Gale Cincotta: It’s More Than Just Street Savvy,” Chicago Sun-­Times, Jan­ uary 20, 1976, folder 5, series I, box 4, TAG. Thank you to Amanda Seligman for this citation. 61. Society of Real Estate Appraisers, Guide to Appraising for Federal Agencies, (Chicago: Society of Real Estate Appraisers, 1971): 46.

notes to pages 68–74

261

62. “City Action Group Expected to Assail FHA, Charging Its Policies Help to Promote Slums,” Wall Street Journal, March 10, 1972; Boyer, Cities Destroyed, 188. 63. “City Action Group Expected to Assail FHA.” 64. Shel Trapp in Michael Westgate and Anne Vick-­Westgate, Gale Force: Gale Cincotta: The Battles for Disclosure and Community Reinvestment (Cambridge, MA: Harvard Bookstore, 2011), 116. 65. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 116. 66. Trapp, Dynamics of Organizing, 50–­55. 67. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 116. 68. Westgate and Vick-­Westgate, Gale Force, 117. 69. Anne Marie Douglas, interview with author, Chicago, October 21, 2010; Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 117. 70. Speech by Geno Baroni, folder 18, box 30, NUE; “Blue-­Collar ‘Ethnics’ Mobilizing,” Insight Magazine, March 1972, unlabeled folder, drawer 5, cabinet 10, NPA; Lawrence M. O’Rourke, The Life and Mission of Geno Baroni (New York: Paulist Press, 1981). 71. Newshouse News Service, “Presidential Advisor to Aid FHA Convention Planning,” The Journal, January 12, 1972. For more on Baroni and the National Center on Urban Ethnic Affairs, see Denis Deslippe, “ ‘We Must Bring Together a New Coalition’: The Challenge of Working-­Class White Ethnics to Color-­Blind Conservatism in the 1970s,” International Labor and Working-­Class History Journal 74, no. 1 (Fall 2008): 148–­70; Douglas, interview with author. 72. Jim Wright to John Esposito, “Understandings Coming out of the Conference Planning Session, Chicago, January 3–­4, 1972,” January 10, 1972, unlabeled folder, drawer 5, box 10, NPA; Jim Wright to Sheldon Trapp, December 23, 1971, unlabeled folder, drawer 5, cabinet 10, NPA; Bill Frej to Mark Trovovitch, National Conference on FHA, Real Estate, Insurance and Mortgage Abuses, March 18, 19 Chicago, St. Sylvester Schwinn Auditorium, February 3, 1972, unlabeled folder, drawer 5, box 10, NPA. 73. “West Side Coalition, National Conference March 18–­19” fact sheet, unlabeled folder, drawer 5, cabinet 10, NPA. 74. “West Side Coalition, National Conference March 18–­19.” 75. “West Side Coalition, National Conference March 18–­19.” 76. “West Side Coalition, National Conference March 18–­19.” 77. “West Side Coalition, National Conference March 18–­19.” 78. “City Action Group Expected to Assail FHA, Charging Its Policies Help to Promote Slums,” Wall Street Journal, March 10, 1972. 79. “West Side Coalition, National Conference March 18–­19”; Gale Cincotta general letter to conference invitees, January 12, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 80. Pete White to Bill Frej, March 1, 1972, unlabeled folder, drawer 5, cabi­ net 10, NPA.

262

notes to pages 74–77

81. Sr. Anna Koop to Gale Cincotta, February 23, 72, unlabeled folder, drawer 5, cabinet 10, NPA. 82. Dennis Martin to Bil Frej, social worker in East St. Louis, February 19, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 83. Pastor Charles Davidson to Northwest Community Organization, Febru­ ary 8, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 84. Jean Gregg Milgram to West Side Coalition, February 3, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 85. For example, Jennifer Frost, An Interracial Movement of the Poor: Community Organizing and the New Left in the 1960s (New York: New York University Press, 2001); Gordon Mantler, Power to the Poor: Black-­Brown Coalition and the Fight for Economic Justice, 1960–­1974 (Chapel Hill: University of North Carolina Press, 2013). 86. “Interfaith Coalition Raps FHA, Realtors,” National Catholic Reporter, March 10, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 87. “Background on National Housing Conference to Be Held in Chicago,” West Side Coalition press release, unlabeled folder, drawer 5, cabinet 10, NPA. 88. “ Background on National Housing Conference”; “Plan Inner City Housing Parley,” Chicago Tribune, March 2, 1972, sec. 2, p. 16; “Real Estate Parley for 50 Cities Here,” Chicago Sun-­Times, March 2, 1972, 18; “Interfaith Coalition Raps FHA, Realtors,” National Catholic Reporter, March10, 1972; “Invite Senators to Meet Groups Opposed to FHA Mortgages,” Economist Newspapers, March 12, 1972, unlabeled folder, drawer 5, cabinet 10, NPA. 89. Hispano Pamphlet for Housing Conference, undated, ca. March 1972, un­ labeled folder, drawer 5, cabinet 10, NPA. 90. Suggested Resolutions—­Revised 2/18, unlabeled folder, drawer 5, cabi­ net 10, NPA; List of Invitees, unlabeled folder, drawer 5, cabinet 10, NPA. 91. Helen Murray, interview with author, Chicago, October 20, 2010; Dan Rostenkowski, 118 Cong. Rec. 6673 (March 2, 1972). 92. “Coalition Urges Congress to Probe FHA Practices,” Chicago Tribune, Jan­ uary 27, 1972, sec. 1A, p. 9. 93. Press release, undated but with reference to January 21, 1972, unlabeled folder, drawer 5, cabinet 10, NPA; “West Siders Seek Democrats’ Help in Saving Communities,” Chicago Tribune, February 6, 1972, sec. 10, p. 8. 94. “List of Invited Guests and Politicians and Why They Can’t Come to the National Conference,” West Side Coalition press release, undated, unlabeled folder, drawer 5, cabinet 10, NPA. 95. Mortgage Resolutions, March 3, 1972, unlabeled folder, drawer 5, cabi­ net 10, NPA. 96. West Side Coalition press release, March 1, 1972, unlabeled folder, drawer 5, cabinet 10, NPA; “W. Side Coalition Hails Results of Housing Meeting,” Chicago Tribune, March 23, 1972, sec. 4A, p. 4; “Group Asks Real Estate Profit Limit,”

notes to pages 78–80

263

Chicago Tribune, March 19, 1972; “1,600 from Ethnic Groups Protest against the Institutions They Say Are Destroying Central Cities,” New York Times, March 20, 1972, 29; “Neighborhoods Form US Coalition,” Washington Post, March 20, 1972. 97. “St. Louis Whites Ready to Fight to the Last against Open Housing,” Chicago Tribune, September 20, 1966, sec. 1A, p. 4; “Whites in Chicago Throw Rocks at Negroes in Housing Protest,” New York Times, August 17, 1966, 23. 98. “Whites Blame Blacks,” Boston Globe, July 28, 1968; “Industrialists Told Why Blacks Distrust Whites,” Chicago Daily Defender, January 18, 1969. 99. See, for example, “Pupil Busing Plans Offered in Detroit,” New York Times, February 6, 1972, 34; “6 School Desegregation Plans Tossed to Court,” Washington Post, February 3, 1972, A2; “Nixon, Muskie Lead Latest N.H. Poll,” Washington Post, February 18, 1972, A2; “Humphrey Overtakes Muskie, Wallace Third,” Washington Post, March 19, 1972, A3; “School Busing: Divisive Issue,” New York Times, February 28, 1972, 30; “Segregation and Busing Both Opposed in Poll,” New York Times, March 6, 1972, 65; “Busing Plans Set Off White Boycott in Augusta, GA,” New York Times, February 15, 1972, 12; “Busing in New York: Ambivalence, Not Outrage,” New York Times, March 20, 1972, 39. 100. “Chicago to Host Meeting on Real-­Estate Abuses,” Baltimore Sun, March 2, 1972. 101. “Housing Loan Changes to Be Housing Topic,” Chicago Tribune, January 9, 1972, sec. 10, p. 7. 102. “Here Come the Ethnics,” Newsweek, April 3, 1972; Suggested Resolu­ tions—­Revised 2/18, unlabeled folder, drawer 5, cabinet 10, NPA; “FHA Called Segregation Aid,” Chicago Tribune, March 20, 1972, sec. 1, p. 16. 103. “Here Come the Ethnics”; Suggested Resolutions—­Revised 2/18; “FHA Called Segregation Aid.” 104. Laura Green, “Whirlwind: What Makes Austin Leader Tick,” publication unknown, 1972, folder 8, box 1, ACC. 105. “Housing Group Wants Romney Out,” Boston Globe, March 18, 1972. 106. For example, Geno Baroni to Sargent Shriver (“Sarge”), August 7, 1972, folder 30/02 “Platform Materials, 1972 Election,” box 30, NUE. 107. “Group Asks Real Estate Profit Limit,” Chicago Tribune, March 19, 1972. 108. “Daley, McGovern Attack Federal Housing Policies,” Chicago Sun-­Times, March 19, 1972; “Study Shows Much Federal Housing Subsidy Money Goes to Middlemen Instead of Poor Families,” New York Times, March 13, 1972, 25. 109. “Kansas” McGovern for President staff person to John Holum, Ila Pennington, Sarah Ehrman, Lester Speilman, “The Issue of Ethnicity in the 1972 Campaign,” May 13, 1972, folder 30/02 “Platform Materials, 1972 Election,” box 30, NUE; Memo for Robert F. Wagner on “middle-­class Catholics” and the Democratic Party, no date, folder 30/02 “Platform Materials, 1972 Election,” box 30, NUE. Baroni also encouraged Sargent Shriver to consider the “Catholic-­ethnic vote” in his “overall [campaign] strategy.” Geno Baroni to Sargent Shriver (“Sarge”), August 7, 1972.

264

notes to pages 80–88

110. “Daley, Percy, McGovern to Address Conference,” Community Publications Journal, March 15, 1972; “Two Senators Rap Shoddy Housing,” Chicago Daily News, March 18–­19, 1972.

Chapter Three 1. “West Side Coalition Demands Conventional Loans in District,” unlabeled folder, drawer 5, cabinet 10, NPA. 2. Or the lengthier “discrimination . . . on account of geographical location.” “Housing and Community Development Act Passed,” Disclosure, September 1974, 3; “FHLBB Memo Reveals Need for Disclosure,” Disclosure, November 1974, 6. 3. David A. Hollinger, “Amalgamation and Hypodescent: The Question of Ethnoracial Mixture in the History of the United States,” American Historical Review 108, no. 5 (December 2003): 1363–­90. 4. The group’s most comprehensive definition of redlining and understanding of the step-­by-­step process by which it occurred can be found in Housing Training and Information Center, “Redlining: Problems and Tactics,” June 1974, folder 26, box 29, NUE. 5. Gale Cincotta appeared alongside other activists as a witness in forty separate congressional hearings between 1971 and 1990. 6. Shel Trapp in Michael Westgate and Anne Vick-­Westgate, Gale Force: Gale Cincotta: The Battles for Disclosure and Community Reinvestment (Cambridge, MA: Harvard Bookstore, 2011), 127, 113. 7. Joe Mariano in Westgate and Vick-­Westgate, Gale Force, 127–­28. 8. Helen Murray in Westgate and Vick-­Westgate, Gale Force, 127–­28. 9. “Wilmington, Delaware,” Disclosure, September 1974, 5; “Detroit, Michigan,” Disclosure, September 1974, 5. 10. “New York City, New York,” Disclosure, September 1974, 7. 11. Untitled front-­page story, Disclosure, September 1974, 1. 12. “Regional Housing Conference in Boston on September 28,” Disclosure, September 1974, 2. 13. For example, Housing Training and Information Center, “Redlining: Problems and Tactics.” 14. Ted Wysocki in Westgate and Vick-­Westgate, Gale Force, 101. 15. Calvin Bradford in Westgate and Vick-­Westgate, Gale Force, 102. 16. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 93; Joe Mariano in Westgate and Vick-­Westgate, Gale Force, 99. 17. Bud Kanitz in Westgate and Vick-­Westgate, Gale Force, 96. 18. Helen Murray, interview with author, Chicago, October 20, 2010; Robert Kolodny, The National Training and Information Center: A Monitoring Report, Prepared at the Request of the National Affairs Division of the Ford Foundation,

notes to pages 88–90

265

June 1977, folder “Ford 1977,” box 1, GCC. Organizer Tom Fox played a similar role researching and organizing around FHA reform. 19. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 95. 20. Folder “Cleveland,” drawer 1, cabinet 4, NPA. 21. See, for example, folder “Cleveland,” Drawer 1, Cabinet 4, NPA; folder “Buffalo,” drawer 1, cabinet 4, NPA; folder “Detroit,” drawer 1, cabinet 4, NPA; folders “Iowa,” drawer 2, cabinet 4, NPA. 22. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 103. 23. Seymour J. Mansfield, Supervisory Attorney of the Legal Assistance Foundation of Chicago to Gale Cincotta, February 10, 1975, folder “Letters of Support,” drawer 4, cabinet 10, NPA. 24. Howard W. Hallman of Center for Governmental Studies to Gale Cincotta, October 16, 1974, folder “Letters of Support,” drawer 4, cabinet 10, NPA. 25. Sister Demienne Gerchmen to Gale Cincotta, May 20, 1975, folder “Letters of Support,” drawer 4, cabinet 10, NPA. 26. National Committee Against Discrimination in Housing to editors of Disclosure, September 4, 1975, unlabeled folder, drawer 5, cabinet 10, NPA. 27. George Snowden to Carl Holman and David Browne, December 1, 1975, unlabeled folder, drawer 5, cabinet 10, NPA. 28. For more on contract buying, see Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America (New York: Metropolitan Books, 2009); Suggested Resolutions—­Revised 2/18, folder “First Conference,” drawer 5, cabinet 10, NPA; “FHA Called Segregation Aid,” Chicago Tribune, March 20, 1972, sec. 1, p. 16. 29. Senate Committee on Banking, Housing and Urban Affairs, Oversight on Housing and Urban Development Programs, Chicago, Illinois: Hearings before the Subcommittee on Housing and Urban Affairs of the Committee on Banking, Housing and Urban Affairs, 93rd Cong., 1st sess. (March 30, 1973), 26. 30. “Reluctant Landlord: Now Owner of Thousands of Slum Dwellings FHA Cuts Back on Loans, Tries to Rebuild,” Wall Street Journal, September 12, 1972, 48. 31. Chris Bonastia, “Why Did Affirmative Action in Housing Fail during the Nixon Era? Exploring the ‘Institutional Homes’ of Social Policies,” Social Problems 47, no. 4 (November 2000): 535. 32. Bonastia, “Why Did Affirmative Action in Housing Fail,” 524. In addition to the urban scandals, the FHA 235 program— ­created by the 1968 HUD Act to finance new construction for low-­income buyers—­had become a political liability, not only because the homes were poorly constructed but also because those homes were built in white working-­class suburbs where residents resisted new black homeowners. 33. “Reluctant Landlord: Now Owner of Thousands of Slum Dwellings.” 34. House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­ and Moderate-­Income Housing Programs: Hearing before the

266

notes to pages 90–92

Committee on Banking and Currency, 92nd Cong., 1st sess. (March 31, 1971), 34, 48, 165–­67. 35. For example, “Harvey Group Says FHA is Creating ‘Black Ghetto,’ ” Chi­ cago Tribune, August 29, 1971, sec. 10, p. 8; “Two Realty Men Salesmen Sentenced,” Chicago Tribune, April 6, 1972; “40 Charged in $200 Million FHA Bribery Scandal in NY: Dun, Bradstreet Accused of False Credit Claims,” Los Angeles Times, March 30, 1972; “A Critical Look at the FHA,” Baltimore Sun, August 26, 1973; “FHA Works against the City,” Baltimore Sun, November 13, 1973; House Committee on Banking and Currency, Interim Report on HUD Investigation of Low-­ and Moderate-­Income Housing Programs; Competition in Real Estate and Mortgage Lending: Hearings before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, 92nd Cong., 2nd sess. (May 1, 1972); Senate Committee on Banking, Housing, and Urban Affairs, Oversight on Housing and Urban Development Programs, Chicago, Illinois. 36. “Home Defect Payback Program” fact sheet, undated, folder “Editorials,” drawer 3, cabinet 5, NPA. 37. “FHA Fast Foreclosures Plague the Nation,” Disclosure, January–­February 1975, 2; Tom Fox and Lenore Rodgers, editorial reply re: “Fast Foreclosure,” March 7, 1975, folder “Editorials,” drawer 3, cabinet 5, NPA. 38. Senate Committee on Banking, Housing, and Urban Affairs, Nomination of Carla A. Hills: Hearings before the Committee on Banking, Housing, and Urban Affairs, 94th Cong., 1st sess. (February 24, 1975). Stevenson pledged to question Hills about fast foreclosures in a meeting with NPA representatives in the winter of 1975. “Stevenson to Act on Fast Foreclosure,” Disclosure, January–­February 1975, 5. 39. Senate Committee on Banking, Housing and Urban Affairs, Housing Management, Foreclosures, and Abandonments: Hearings before the Senate Committee on Banking, Housing and Urban Affairs, 94th Cong., 1st sess. (July 14, 1975), 28. 40. “Hurry up Senator,” remarks to WHXM radio station, undated, folder “Editorials,” drawer 3, cabinet 5, NPA. Other allies in the FHA campaigns included Rep. Ralph Metcalfe (D-­IL), Sen. John Sparkman (D-­AL), and Sen. Edward Brooke (R-­MA). 41. “Adlai Charges HUD Breaks Payback Law,” Chicago Tribune, May 29, 1975, sec. 2, p. 1. The Chicago Defender also credited NPAH with the payback win. “Urban Network Builds Platform,” Chicago Defender, April 17, 1975. 42. “The Next Move,” Disclosure, January–­February 1975, 12; Velma Rimmer, Channel 7 editorial, August 11, 1974, folder “Editorials,” drawer 3, cabinet 5, NPA. 43. “HUD Pays for Home Defects,” Chicago Defender, March 31, 1975; “MAHA Seeks ‘Payback,’ HUD Sued over Home Deals,” Chicago Defender, March 4, 1975. 44. “HUD Guidelines Unenforced,” Disclosure, January–­February 1975, 3. 45. “Victory on Fast Foreclosure in the Making,” Disclosure, March 1975, 7. 46. “HUD Guidelines Unenforced.” 47. The demand to stop payment to “unscrupulous” mortgage houses origi-

notes to pages 92–94

267

nated during the March 1972 conference, and activists continued to make this demand throughout the early 1970s. See FHA Resolutions, March 18, 1972, folder “First Conference,” drawer 5, cabinet 10, NPA; “Move to Stop Fast Foreclosures,” MAHA Roots, December 4, 1974, 4. 48. Gale Cincotta, “The Next Move,” Disclosure, January–­February 1975, 12. 49. “FHA Wastes $4 Billion and Creates City Slums,” Chicago Tribune, June 22, 1975, 1, 10. 50. “FHA Scandal Spreads across Nation,” Washington Post, March 10, 1974. 51. “Ailing Agency: The Once-­Proud FHA Is Beset by Scandals and Lots of Red Tape,” Wall Street Journal, March 19, 1974. 52. “Abuses Mar Home Loan Plan,” Boston Globe, September 1, 1974. 53. A ProQuest newspaper search for “FHA scandal” shows 113 articles from the digitized national and big-­city dailies between 1973 and 1975 alone. 54. “HUD Guidelines Unenforced.” 55. “FHA Wastes $4 Billion and Creates City Slums.” The series later won the Pulitzer Prize and was also a finalist for the Public Service Award from the Asso­ ciated Press Managing Editors Association. “Tribune FHA Series among Award Finalists,” Chicago Tribune, August 27, 1975, sec. 1, p. 5. 56. “FHA Wastes $4 Billion and Creates City Slums.” 57. “FHA Wastes $4 Billion and Creates City Slums.” 58. “FHA Reforms Promised,” Boston Globe, July 20, 1975. 59. “Adlai Vows Criminal Probe in FHA Scandal,” Chicago Tribune, June 28, 1975, 1. 60. “FHA Reforms Promised.” 61. “FHA Probe Team Ordered,” Chicago Tribune, July 20, 1975, 1, 16. 62. “FHA Reforms Promised.” 63. “FHA Probe Team Ordered.” 64. “FHA Office Here Occupied in Protest,” Chicago Tribune, October 9, 1975, sec. 1, p. 3; “Nationwide Action on HUD,” Disclosure, September 1975, 5. 65. “U.S. Copies FHA Reforms Here,” Chicago Tribune, November 16, 1975, 36. 66. “U.S. Copies FHA Reforms Here.” 67. “The FHA Scandal—­New Safeguards for Borrowers,” Chicago Tribune, December 31, 1975, 38. 68. For more on the relationship between political trust and federal policy, see Marc Hetherington, Why Trust Matters: Declining Political Trust and the Demise of American Liberalism (Princeton: Princeton University Press, 2005). Hetherington argues that there is a link between political trust and support for redistributive public policies. 69. Romney admitted that the FHA was wrought with speculation and fraud by late 1972, but he maintained the assumption that the “inner-­city” had an inherently different mortgage market. See “Restoring Cities after the Scandals,” Wall Street Journal, July 5, 1972.

268

notes to pages 94–99

70. “Hartford Redlined,” Disclosure, June–­July 1975, 8. 71. Richard Wise, phone interview with author, Chicago, January 5, 2011. 72. “Baltimore’s ‘Dedicated Dollars,’ ” Disclosure, August 1975, 7. 73. “Jamaica Plain Clergy Join Fight against Savings Banks,” Boston Globe, November 26, 1974; “Denver Banks Pledge Funds,” Disclosure, September 1975, 8; “California S&L to Reinvest Redlined Area,” Disclosure, September 1975, 11. 74. For example, Dan Rudy to Shel Trapp, June 6, 1975, unlabeled folder, drawer 5, cabinet 10, NPA; Al Wroblewski to Shel Trap, May 7, 1973, unlabeled folder, drawer 5, cabinet 10, NPA. 75. “State Acts to Curb ‘Redlining,’ ” Chicago Tribune, February 23, 1974, sec. 1, p. 8; “Larceny in Philadelphia,” Disclosure, June–­July 1975, 11; “Boston: Politicians Move but Bankers Balk,” Disclosure, August 1975, 11. The money came from $100 million tax-­exempt notes that the housing authority sold to banks and savings and loans. 76. “San Antonio: Community Groups Work to Reverse the Effect of Disinvestment,” Disclosure, January–­February 1975, 9. 77. For an argument that the Ford Foundation’s community development ini­ tiatives created “developmental separatism” during the 1970s, see Karen Ferguson, Top Down: The Ford Foundation, Black Power, and the Reinvention of Racial Liberalism (Philadelphia: University of Pennsylvania Press, 2013). 78. “Neighborhood Housing Services: New Reinvestment Strategy,” Disclosure, November 1974, 1–­3. 79. Urban Systems Research and Engineering, “Creating Local Partnerships: The Role of the Urban Reinvestment Task Force in Developing Neighborhood Housing Services Organizations” (Washington, DC: Office of Policy Development and Research, 1980), 3–­5; Richard Platt, “Office of Housing and Urban Affairs,” FHLBB Journal (April 1974): 48–­50. See also Westgate and Vick-­Westgate, Gale Force, 166–­92. 80. Westgate and Vick-­Westgate, Gale Force, 210–­12. 81. “Neighborhood Housing Service: New Reinvestment Strategy,” Disclosure, November 1974, 1–­2. 82. “Larceny in Philadelphia”; “Salt Lake City Battles CD Plans,” Disclosure, January 1975, 9; “Atlanta: Coalition Groups Organize to Fight Redling [sic] Practices,” Disclosure, September 1974, 6. 83. “Cheap House Repair Combats Deterioration,” New Pittsburgh Courier, April 26, 1975, 6. 84. “Livable Cities: Historical Preservation or Urban Conservation,” HUD Chal­­ lenge, August 1978, 9. 85. “Livable Cities: Historical Preservation or Urban Conservation.” 86. Senate Committee on Banking, Housing and Urban Affairs, Neighborhood Reinvestment Corporation: Hearing before the Committee on Banking, Housing and Urban Affairs, 95th Cong., 1st sess. (July 25, 1977), 135.

notes to pages 99–104

269

87. “Larceny in Philadelphia.” 88. David M. P. Freund, “State Building for a Free Market: The Great Depression and the Rise of Monetary Orthodoxy,” in Shaped by the State: Toward a New Political History of the Twentieth Century, ed. Brent Cebul, Lily Geismer, and Mason B. Williams (Chicago: University of Chicago Press, 2019). For the longer history of moral claims on monetary policy, see Jakob Feinig, “The Moral Economy of Money between the Gold Standard and the New Deal,” Journal of Historical Sociology 30, no. 2 (June 2017): 315–­41. 89. David Mason, From Buildings and Loans to Bail-­Outs (Cambridge, UK: Cambridge University Press, 2004), 160–­63. 90. “MAHA Charge: 2 Loop Banks Deny Redlining,” Chicago Tribune, May 6, 1975, sec. 1, p. 3. 91. Housing Training and Information Center, “Methods of Redlining,” reprinted in Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975: Hearings before the Committee on Banking, Housing and Urban Affairs, 94th Cong., 1st sess. (May 5, 1975), 58. 92. Edwina Cloherty, phone interview with author, Chicago, January 31, 2011; Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975, 291. 93. Senate Committee on the Judiciary, Competition in Real Estate and Mortgage Lending: Hearings Before the Subcommittee on Antitrust and Monopoly of the Committee on the Judiciary, 92nd Cong., 2nd sess. (May 1, 1972), 41. 94. Housing Training and Information Center, “Redlining: Problems and Tactics,” June 1974, folder 26, box 29, NUE. 95. “Boston: Regional Housing Conference Deals with FHA and Anti-­redlining,” Disclosure, October 1974, 7. 96. “US Bank Officials Walk Out on Parley,” Chicago Tribune, July 19, 1973, sec. 4A, p. 10. It’s possible that NPA leaders might have tried to negotiate with the FHLBB before making public demands, but I found no evidence of such an attempt in the archive. 97. Westgate and Vick-­Westgate, Gale Force, 148. 98. Ford Foundation report, quoted in Westgate and Vick-­Westgate, Gale Force, 149. 99. National People’s Action on Housing/MAHA Fact Sheet—­Federal Home Loan Bank Board Study on Redlining, March 21, 1974, unlabeled folder, drawer 4, cabinet 5, NPA; Westgate and Vick-­Westgate, Gale Force, 148–­49; “Washington & Business: Redlining Fight,” New York Times, October 21, 1976; “State Acts to Curb ‘Redlining,’ ” Chicago Tribune, February 23, 1974, sec. 1, p. 8. 100. “Redlining Condemned by Daley,” Chicago Tribune, April 28, 1974, sec 1, p. 46. 101. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 153. 102. For example, House Committee on Banking, Currency, and Housing, Man­­agement and Operations of Federal Housing Administration Activities in the

270

notes to pages 104–106

Chicago Metropolitan Area, 94th Cong., 2nd sess. (September 13, 1976); Senate Committee on Banking, Housing and Urban Affairs, Housing Management, Foreclosures, and Abandonments. 103. “Redlining Condemned by Daley.” 104. Shel Trapp in Westgate and Vick-­Westgate, Gale Force, 153–­54. 105. Arthur J. Naparstek and Gale Cincotta, Urban Disinvestment: New Implications for Community Organization, Research and Public Policy (Chicago: National Center for Urban Ethnic Affairs and National Training and Information Center, 1976), 25–­26; “Chicago’s City Ordinance Proves Total Disinvestment,” Disclosure, January–­February 1975, 5. 106. Homeownership in Illinois: The Elusive Dream: Report of the Governor’s Commission on Mortgage Practices, 1974, 15–­16. 107. Kirk Hallahan attributed the ease of the state-­level campaign to a politi­ cal rivalry between Walker and Daley. Hallahan, “The Mortgage Redlining Con­ troversy, 1972–­1975: A Case Study in Social Problems and Agenda Building: The Role of Reformers, Lawmakers and Media in Public Policy Making,” presented to the Association for Education in Journalism and Mass Communication Qualitative Studies Division, Montreal, August 1992, 7–­8. 108. Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975, 523. 109. “Boston: Regional Housing Conference Deals with FHA and Anti-­ Redlining,” Disclosure, October 1974, 7. 110. “Cleveland Tables Disclosure Ordinance,” Disclosure, June–­July 1975, 10; “Disclosure: Next Step—­Ford,” Disclosure, December 1975, 3; “From the Nation’s Roots,” Disclosure, January 1976, 8–­9. 111. “Providence: Increased Pressure on Mortgage Program Produces Victory” Disclosure, September 1974, 5. For examples of other local studies, see “St. Louis: Study Shows Drain of City Funds to Newer Suburbs,” Disclosure, October 1974, 8; “Rochester Redlined,” Disclosure, January–­February 1975, 7; “Redline Seen in Buf­ falo,” Disclosure, August 1975, 8; “Banks Destroying Seattle,” Disclosure, Septem­ ber 1975, 10; “Kansas City Redlined,” Disclosure, October 1975, 10. 112. “The Urban-­Suburban Investment-­Disinvestment Process: Consequences for Older Neighborhoods,” Annals of the American Academy of Political and Social Science 422 (November 1975): 77–­79. 113. “Providence, Rhode Island,” Disclosure, September 1974, 3; Westgate and Vick-­Westgate, Gale Force, 147, 149. 114. “St. Louis: Study Shows Drain of City Funds to Newer Suburbs”; “St. Louis Data Documents Redlining,” Disclosure, November 1974, 7. 115. “Lenders Stuff Suburbs, City Starves,” Chicago Tribune, March 25, 1976, sec. 2, p. 1. 116. “Firms’ Refusal to Insure under Attack,” Boston Globe, July 10, 1968. For other examples of redlining attributed to insurance companies, see “City Store

notes to pages 106–110

271

Owners Get Insurance Break,” Boston Globe, December 9, 1968; “Assembly Votes Mandatory Slum Insurance Pool,” New York Times, March 27, 1968, 34. 117. “Banks Linked to Problems in Inner Cities,” Los Angeles Times, July 17, 1972. 118. “Roseland, Gage Park Not Redlined,” Chicago Tribune, July 26, 1974, B13. 119. “Adlai Hears Harvey Redline Grips, Chicago Tribune, June 20, 1974, sec. 4A, p. 5. 120. “State Acts to Curb ‘Redlining.’ ” 121. “Roseland, Gage Park Not Redlined”; “N. Side Lenders to Join Redline Fight,” Chicago Tribune, October 25, 1974, sec. 2, p. 1. 122. “New Study of ‘Redlining’ Fails to Answer Major Questions,” Chicago Tribune, March 28, 1974, sec. 4A, p. 4. 123. For more on the role of the media in the disclosure campaign, see Hallahan, “The Mortgage Redlining Controversy, 1972–­1975.” 124. Leon T. Kendall, quoted in Robert Henderson, “Dream Deregulated: The Politics of U.S. Housing Finance, 1968–­1985” (PhD diss., University of Maryland, 2013), 133. 125. Henderson, “Dream Deregulated,” 133–­34. 126. Henderson, “Dream Deregulated,” 133–­34. 127. President’s Commission on Financial Structure and Regulation, Report of the President’s Commission on Financial Structure and Regulation (Washington, DC: Government Printing Office, 1971), 1. 128. Report of the President’s Commission on Financial Structure and Regulation, 9. See also Henderson, “Dream Deregulated,” 140–­46. 129. Clifton B. Lutterell, “The Hunt Commission Report—­An Economic View,” Federal Reserve Bank of St. Louis Review 54, no. 6 (June 1972): 8. 130. Donald P. Jacobs and Almarin Phillips, “Adoption of Hunt Proposals Would Smooth Entry into Banking’s ‘New World,’ ” American Banker, February 20, 1975, 19. 131. Henderson, “Dream Deregulated,” 134–­40. The Hunt Commission report would serve as a blueprint for future deregulation policies in the late 1970s and 1980s. 132. House Committee on Banking, Currency, and Housing, An Act to Lower Interest Rates and Allocate Credit: Hearings before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Currency and Housing, United States House of Representatives, 94th Cong., 1st sess. (February 4, 1975). 133. “Disturbing Trends in Commercial Banking,” Savings and Loan News, January 1975, 32. 134. “Subsidies, Yes; Variable Rates, No,” Savings and Loan News, May 1975, 27. 135. Joseph Sims, “Variable Rate Loan Hope Rises,” Savings and Loan News, February 1975, 33. 136. For scholarship that considers risk as a historical construct, see Barbara Young Welke, “The Cowboy Suit Tragedy: Spreading Risk, Owning Hazard in the

272

notes to pages 111–113

Modern American Consumer Economy,” Journal of American History 101, no. 1 (June 2014): 97–­121; Ian Baucom, Specters of the Atlantic: Finance Capital, Slavery, and the Philosophy of History (Durham, NC: Duke University Press, 2005); Jonathan Levy, Freaks of Fortune: The Emerging World of Capitalism and Risk in America (Cambridge, MA: Harvard University Press, 2012). 137. “Appraiser Report,” Savings and Loan News, April 1975, 106–­7. 138. That subsidy was a provision of the Brooke-­Cranston Act of 1974. See Grace Milgram et al., The Effect of the Brooke-­Cranston Program: A Comparison of Assisted and Unassisted Home Mortgages in 1975 (Washington, DC: Congressional Research Service, 1976). 139. House Committee on Banking, Currency and Housing, Variable Rate Mortgage Proposal and Regulation Q: Hearings before the Subcommittee on Financial In­ stitutions Supervision, Regulation and Insurance, 94th Cong., 1st sess. (April 8–­10, 1975); Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975, 409. For activists’ criticisms of relocation, see “FHLBB Branching and Relocation Regulations Make It Easier for Financial Institutions to Redline Their Local Service Areas,” Disclosure, October 1974, 5–­6. 140. Richard S. Simmons, “Developments in Banking Law—­1969,” Business Lawyer 25, no. 4 (July 1970): 1707. 141. Congressional Research Service, Supplemental Selective Reserve Requirements on Commercial Bank Assets: An Option for Credit Allocations Based on Social Goals, April 1, 1974. 142. Greta Krippner, Capitalizing on Crisis: The Political Origins of the Rise of Finance (Cambridge: Harvard University Press, 2012), 73; Henderson, “Dream Deregulated,” 139. 143. House Committee on Banking, Currency, and Housing, An Act to Lower Interest Rates and Allocate Credit: Hearings before the Subcommittee on Domestic Monetary Policy of the Committee on Banking, Currency and Housing, United States House of Representatives, 94th Cong., 1st sess. (February 4, 1975), 2. 144. “Democrats Vote to Unseat Patman, Hays as Chairmen,” Los Angeles Times, January 16, 1975. Reuss assumed the chairmanship after his colleagues ousted five-­year chairman Wright Patman. Despite his populist politics, Democrats deemed Patman ineffective in exerting control over bankers. 145. “New Congress to Stress Public Interest,” American Banker, January 14, 1975. 146. House Committee on Banking, Currency, and Housing, An Act to Lower Interest Rates and Allocate Credit, 1. 147. House Committee on Banking, Currency, and Housing, To Maximize the Availability of Credit for National Priority Uses: Hearing before the Committee on Banking, Currency, and Housing of the House of Representatives, 94th Cong., 1st sess. (May 12, 1975), 1–­3; Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975, iii.

notes to pages 114–121

273

148. Cincotta, quoted in Hallahan, “The Mortgage Redlining Controversy, 1972–­1975,” 10. 149. Marilyn Rice Christiano, “The Community Reinvestment Act: A Case Study in the Role of Community Groups in the Formation and Implementation of a Public Policy (PhD diss., University of Maryland, 1995), 36, 58–­59; Robert Kuttner interview transcript, July 9, 2011, WPC, 6, 12. Kuttner later cofounded the liberal magazine American Prospect. 150. Westgate and Vick-­Westgate, Gale Force, 236. 151. Senate Committee on Banking, Housing and Urban Affairs, Home Mortgage Disclosure Act of 1975, 1–­2. 152. Home Mortgage Disclosure Act of 1975, 292. 153. Home Mortgage Disclosure Act of 1975, 171. 154. Home Mortgage Disclosure Act of 1975, 414. 155. Home Mortgage Disclosure Act of 1975, 171. 156. Home Mortgage Disclosure Act of 1975, 374. 157. Home Mortgage Disclosure Act of 1975, 169. 158. Home Mortgage Disclosure Act of 1975, 397. 159. Home Mortgage Disclosure Act of 1975, 301. 160. Home Mortgage Disclosure Act of 1975, 332. 161. Home Mortgage Disclosure Act of 1975, 291. 162. Home Mortgage Disclosure Act of 1975, 333. 163. Home Mortgage Disclosure Act of 1975, 171–­72, 306–­28, 398–­99. 164. Home Mortgage Disclosure Act of 1975, 298. 165. Home Mortgage Disclosure Act of 1975, 247. Emphasis in original transcript. 166. Home Mortgage Disclosure Act of 1975, 168–­70. 167. Home Mortgage Disclosure Act of 1975, 366. 168. Home Mortgage Disclosure Act of 1975, 333. 169. Home Mortgage Disclosure Act of 1975, 354. 170. Home Mortgage Disclosure Act of 1975, 292. 171. Home Mortgage Disclosure Act of 1975, 164. 172. Home Mortgage Disclosure Act of 1975, 4. 173. Home Mortgage Disclosure Act of 1975, 166–­67. 174. “Activist Group Calls on US League with Urban Lending Demands,” Savings and Loan News, June 1975, 15. 175. Lizabeth Cohen, A Consumer’s Republic: The Politics of Mass Consumption in Postwar America (New York: Knopf, 2003), 345–­57. 176. “Landmark Victory on National Disclosure!” Disclosure, May 1975, 3–­5. 177. “Activist Hails Law on Loan Disclosure,” Chicago Tribune, January 3, 1976. 178. Michael Stewart Foley, Front Porch Politics: The Forgotten Heyday of American Activism in the 1970s and 1980s (New York: Hill and Wang, 2013), 25; Judith Stein, Pivotal Decade: How the United States Traded Factories for Finance in the Seventies (New Haven: Yale University Press, 2010), 129.

notes to pages 121–126

274

179. Gale Cincotta, “The Next Move,” Disclosure, November 1974, 12. 180. Ted Wysocki, “NTIC Is . . . ,” Disclosure, November 1975, 7. 181. Gale Cincotta, “The Next Move,” Disclosure, May 1975, 12.

Chapter Four 1. “Platform Hearings,” Disclosure, May 1976, 3. 2. Jimmy Carter, “Housing and Community Development Act of 1977 Remarks on Signing H.R. 6655 into Law,” online in Gerhard Peters and John T. Woolley, The American Presidency Project, https://www.presidency.ucsb.edu /node/24282. 3. “Perceptions of Risk,” Disclosure, July 1978; “$1,397,264,810,000,” Disclosure, June 1976, 5; Roger Biles, The Fate of Cities: Urban America and the Federal Government, 1945–­2000 (Lawrence: University of Kansas Press, 2011), 203. 4. Kim Phillips-­Fein, Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics (New York: Metropolitan Books, 2017). 5. National People’s Action Fifth National Conference Program, “People’s Platform: Neighborhoods First,” June 13–­14, 1976, folder “1976 Conference,” drawer 3, cabinet 10, NPA; “2,000 Expected at Neighborhood First Conference in DC,” NPA press release, June 11, 1976, folder “1976 Conference,” drawer 3, cabinet 10, NPA; People’s Platform Fact Sheet, undated, folder “1976 Conference,” drawer 3, cabinet 10, NPA. For more on state support for suburban development, see Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the United States (New York: Oxford University Press, 1985). On the Sun Belt, see Bruce Schulman, From Cotton Belt to Sunbelt: Federal Policy, Economic Development, and the Transformation of the South, 1938–­1980 (New York: Oxford University Press, 1991); Carl Abbott, “Through Flight to Tokyo: Sunbelt Cities and the New World Economy, 1960–­1990, in Urban Policy in Twentieth-­Century America, ed. Arnold R. Hirsch and Raymond A. Mohl (New Brunswick, NJ: Rutgers University Press, 1993). 6. Gale Cincotta, “The Next Move,” Disclosure, April 1976, 12. 7. Senate Committee on Banking, Housing, and Urban Affairs, Neighborhood Preservation, 94th Cong., 2nd sess. (June 14, 1976), 36. 8. National People’s Action, “Neighborhoods First Agenda,” folder “1976 Conference,” drawer 3, cabinet 10, NPA. 9. Gale Cincotta, “The Next Move,” Disclosure, January 1976, 12. National po­­ litical leaders including Senator Ted Kennedy and Senator Hubert Humphrey often made the Marshall Plan comparison as well. 10. Gale Cincotta to Gerald Ford, August 22, 1976, folder “National People’s Action,” box 21, COP. 11. Memorandum, Shel Trapp to National Groups, “D.C. Conference,” May 3, 1976, folder “1976 Conference,” drawer 3, cabinet 10, NPA.

notes to pages 126–131

275

12. “Neighborhoods Aim to Be Heard in Elections,” Cleveland Plain Dealer, January 18, 1976. 13. National People’s Action, “People’s Platform: Neighborhoods First Six-­ Month Agenda,” folder “1976 Conference,” drawer 3, cabinet 10, NPA. 14. “Neighborhoods First,” Disclosure, March 1976, 2–­3. 15. “5 Major Goals Outlined by People’s Platform,” Providence Journal, Feb­ ruary 21, 1976. 16. “Building the Planks,” Disclosure, April 1976, 2. 17. “Neighborhoods First,” Disclosure, May 1976, 2. 18. Gale Cincotta remarks to Alliance for Neighborhood Government, October 16, 1976, folder “Speaking Engagements,” drawer 3, cabinet 10, NPA; Gale Cincotta remarks to National NHS Conference, November 3, 1976, folder “Speaking Engagements,” drawer 3, cabinet 10, NPA; Gale Cincotta remarks to Hartford Community Organization, October 17, 1976, folder “Speaking Engagements,” drawer 3, cabinet 10, NPA. 19. “ ‘Redlining’ Policy Targeted,” Denver Post, April 30, 1976; “Democratic Leaders Hear Housing Activists’ Appeal,” Chicago Tribune, April 26, 1976, sec. 2, p. 1. 20. “The Next Move: Gale Cincotta,” Disclosure, May 1976, 12. 21. For more on Community Development Block Grants, see Brent Cebul, Illusions of Progress: Business, Poverty, and Liberalism in the American Century (Philadelphia: University of Pennsylvania Press, forthcoming), chap. 5. 22. “The Next Move: Gale Cincotta”; Henry J. Schmandt, George D. Wendel, and George Ott, “CDBG: Continuity or Change?,” Publius 13, no. 3 (Summer 1983): 7–­22. The block grant legislation included a specific provision that cities must solicit input from their residents “to participate in the development of the application prior to submission” of any funding proposal, thus permitting “citizens likely to be affected by community development and housing activities” to “assist in the selection of priorities.” 23. Senate Committee on Banking, Housing, and Urban Affairs, Neighborhood Preservation, 100. 24. Neighborhood Preservation, 98. 25. “Neighborhoods First,” 3. 26. “Neighborhoods First,” 3. 27. “When You Pick upon a Star,” Disclosure, August 1976, 2. 28. “Neighborhoods First,” 3. 29. For example, “When in the Course of Human Events . . . ,” Disclosure, July 1976, 3. 30. Memorandum, William J. Baroody Jr. to Gerald Ford, May 28, 1976, folder “President’s Committee on Urban Development and Urban Revitalization (1),” box 15, PHF. 31. Senate Committee on Banking, Housing, and Urban Affairs, Neighborhood Preservation, 1.

276

notes to pages 131–135

32. Gale Cincotta and Shel Trapp, “Proposal Submitted to Ford Foundation,” August 1977, folder “Ford 1977,” GCC. 33. Benjamin Looker, A Nation of Neighborhoods: Imagining Cities, Communities, and Democracy in Postwar America (Chicago: University of Chicago Press, 2015), chap. 11. 34. Baroody to Ford, May 28, 1976. 35. Baroody to Ford, May 28, 1976. 36. Joe Fagan to Urban Reinvestment Task Force, folder “National People’s Action,” box 21, Orlebeke Papers, Gerald R. Ford Presidential Library, Ann Arbor, MI. 37. “Building the Planks,” Disclosure, April 1976, 2; “Udall Proposes Programs to Reduce City’s Burdens,” New York Times, March 29, 1976, 1. 38. “Conference, continued,” Disclosure, July 1976, 4. 39. For more on politics of white backlash, see Ronald P. Formisano, Boston against Busing: Race, Class, and Ethnicity in the 1960s and 1970s (Chapel Hill: University of North Carolina Press, 2003); Kenneth D. Durr, Behind the Backlash: White Working-­Class Politics in Baltimore, 1940–­1980 (Chapel Hill: University of North Carolina Press, 2003); Jonathan Rieder, “The Rise of the Silent Majority,” in The Rise and Fall of the New Deal Order, 1930–­1980, ed. Steve Fraser and Gary Gerstle (Princeton: Princeton University Press, 1989). 40. David Stein, “Fearing Inflation, Inflating Fears: The End of Full Employment and the Rise of the Carceral State” (PhD diss., University of Southern California, 2014), 204–­44. 41. “Carter Defends All-­White Areas,” New York Times, April 7, 1976, 1; “Carter Issues Apology on ‘Ethnic Purity’ Phrase,” New York Times, April 9, 1976, 1; “Carter Makes ‘Ethnic’ Apology,” Los Angeles Times, April 8, 1976; “What Jimmy Carter Said about ‘Ethnic Purity,’ ” Boston Globe, April 8, 1976. 42. “The Campaign and the Neighborhood Vote,” Disclosure, September 1976, 2. 43. “On the Streets with Jimmy Carter,” Disclosure, September 1976, 3. Activists remained skeptical that Carter offered more than rhetoric and urged Carter and Ford to “debate content and substance” to assess whether either was sincere in their urban campaign promises. See “The Campaign and the Neighborhood Vote.” 44. “Cities Promised Peanuts,” Disclosure, May 1976, 5. See also “Carter Is Stressing New York City’s Plight,” New York Times, October 19, 1976; “Carter Team Brings Urban Commitments,” Washington Post, November 20, 1976. 45. Michael Westgate and Ann Vick-­Westgate, Gale Force: Gale Cincotta: The Battles for Disclosure and Community Reinvestment (Cambridge, MA: Harvard Book Store, 2011): 271. 46. Gale Cincotta, “The Next Move,” Disclosure, August 1976, 14; Center for Urban Pedagogy, Who$e Money Is It Anyway?, video, accessed December 17, 2019, http://www.vimeo.com/37432918. 47. Calvin Bradford and Paul Schersten, A Tool for Community Capital: Home Mortgage Disclosure Act 1985 National Survey (Minneapolis: Hubert H. Humphrey Institute of Public Affairs, 1985), 11.

notes to pages 136–142

277

48. Staffer Ken McLean described the importance of giving “community groups a seat at the table” through CRA. Oral history interview with Ken McLean, September 11, 2009, WPC, 68. 49. Westgate and Vick-­Westgate, Gale Force, 275. 50. Westgate and Vick-­Westgate, Gale Force, 271. 51. Senator William Proxmire to Gale Cincotta, December 17, 1976, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 52. First Draft of Community Reinvestment Act, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 53. Senate Committee on Banking, Housing, and Urban Affairs, Neighborhood Preservation, 38–­39. 54. “CRA— ­Center of Redlining Fight,” Disclosure, April 1978, 6. 55. Helen Murray to Bob Kuttner, January 6, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. Emphasis in original. 56. Helen Murray to Stan Hallett, February 9, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 57. Frances E. Werner of Berkeley National Housing Law Project to Helen Murray, March 31, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA; Andy [Mott] to Helen Murray, March 7, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 58. “Housing Activists Want Ban on ‘Arbitrary’ Loan Denials,” Chicago Tribune, March 23, 1977, sec. 3, p. 11. 59. Senate Committee on Banking, Housing, and Urban Affairs, Community Credit Needs, 95th Cong., 1st sess. (March 23–­25, 1977), 1. 60. Senate Committee on Banking, Housing, and Urban Affairs, Community Credit Needs, 1. 61. Robert Henderson, “Dream Deregulated: The Politics of U.S. Housing Finance, 1968–­1985” (PhD diss., University of Maryland, 2013). 62. Henderson, “Dream Deregulated,” 153 63. “How to Live with Loan Disclosures,” Savings and Loan News, August 1976, 50–­56. 64. “How to Live with Loan Disclosures.” 65. “How to Live with Loan Disclosures.” 66. “How to Live with Loan Disclosures.” 67. Senate Committee on Banking, Housing, and Urban Affairs, Community Credit Needs, 283. 68. Community Credit Needs, 244–­45. 69. Community Credit Needs, 333. 70. Community Credit Needs, 326. 71. Community Credit Needs, 18–­19, 132–­35. 72. The Community Reinvestment Act of 1977: Amended Version Pro­posed by National People’s Action, folder “CRA Introduced,” drawer 1, cabinet 10, NPA.

278

notes to pages 143–148

73. Gale Cincotta to Senator William Proxmire, March 31, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 74. Senator William Proxmire to Gale Cincotta, April 6, 1977, folder “CRA Introduced,” drawer 1, cabinet 10, NPA. 75. “The Next Move,” Disclosure, October 1976, 2. 76. “Early Disclosure Indicts Lenders,” Disclosure, October 1976, 3. 77. Senate Committee on Banking, Housing, and Urban Affairs, Community Credit Needs, 163–­64. 78. “REITs,” Disclosure, June 1976, 6; “$1,397,264,810,000,” Disclosure, June 1976, 5. 79. “The Next Move,” Disclosure, December 1976, 2. 80. Senate Committee on Banking, Housing, and Urban Affairs, Community Credit Needs, 160. 81. “Reinvestment: Signs of the Times?,” Disclosure, October 1977, 7. 82. Westgate and Vick-­Westgate, Gale Force, 274–­85. 83. Citizens’ CRA, “Summary Statement of Citizens’ CRA Guidelines,” 1, folder “CRA Introduced (2),” drawer 1, cabinet 10, NPA. 84. “Reinvestment: Signs of the Times?” 85. Biles, The Fate of Cities, 226–­28. For an inside account of the activities of the URPG, see Yvonne Scruggs-­Leftwich, Consensus and Compromise: Creating the First National Urban Policy under President Carter (New York: University Press of America, 2006). 86. US Department of Housing and Urban Development, “A National and Regional Urban Policy,” draft paper, April 18, 1977, folder “Urban Policy” (CF, O/A 49), box 302, Domestic Policy Staff–­Eizenstat Files, JCL; URPG Redlining Staff to URPG Working Group, “Work Plan for Single-­Family Redlining,” Septem­ ber 27, 1977, folder “HUD Urban Policy—­Housing,” box 7, NCN. 87. Gale Cincotta and Shel Trapp, “Proposal Submitted to Ford Foundation,” August 1977, Folder “Ford 1977,” Collection on Gale Cincotta, DePaul University Library, Chicago, IL. 88. Edwin A. Murray Jr., “Redlining, Greenlining, Silverlining,” Wharton Magazine, September 1977. 89. Memorandum for URPG Redlining Task Force from URPG Redlining Staff, September 27, 1977, folder “HUD Urban Policy—­Housing,” box 7, NCN. 90. “Neighborhood Commission Appointed,” Disclosure, January 1978, 2. 91. Options for Commission Goals, February 10, 1978, folder “Commission Goals,” box 1, NCN. 92. National Commission on Neighborhoods background fact sheet, folder “Administrative Responsibilities,” box 1, NCN. 93. Gale Cincotta to “All Neighborhood Reinvestment Issue Forum Participants,” April 28, 1978, folder “Issue Conferences (1),” box 7, NCN. NPA organizer Joe Mariano recalled the commission was an important symbolic victory for the movement. Joe Marino, interview with author, Chicago, April 26, 2011. Tracy

notes to pages 148–153

279

Neumann argues that the National Commission on Neighborhoods offers “a seminal example of how the neighborhood movement’s demands for local empowerment helped legitimate devolution and privatization.” Tracy Neumann, “Privatization, Devolution, and Jimmy Carter’s National Urban Policy,” Journal of Urban History 40, no. 2 (March 2014): 290. 94. Profiles of commissioners and staff, folder “Administrative Responsibilities,” box 1, NCN. 95. “McKinney Surprises His Critics,” New York Times, June 11, 1978, F7. 96. Neumann, “Privatization, Devolution, and Jimmy Carter’s National Urban Policy,” 283–­85. 97. Neumann, “Privatization, Devolution, and Jimmy Carter’s National Urban Policy,” 288. 98. Patricia J. Dusenbury and Thad L. Beyle, Southern Cities and the National Urban Policy (Research Triangle Park, NC: Southern Growth Policies Board, 1979). 99. Biles, The Fate of Cities, 228–­29. 100. “From the Roots: Lenora Rodgers,” Disclosure, March 1977, 2. 101. “Some Powers Hostile,” Disclosure, April 1977, 3. 102. For more on the Law Enforcement Assistance Administration, see Elizabeth Hinton, From the War on Poverty to the War on Welfare: The Making of Mass Incarceration (Cambridge, MA: Harvard University Press, 2016). 103. “Waiting for Carter Once Again,” Disclosure, July 1977, 7. 104. “New Partnership to Conserve America’s Communities,” March 27, 1978, folder “Kuttner, Bob and O’Brian, Robert B.— ­Task Force, St. Louis,” box 7, NCN. 105. President’s Urban and Regional Policy Group, A New Partnership to Conserve America’s Communities: A National Urban Policy (Washington, DC: Department of Housing and Community Development, 1978), II-­5–­II-­8, III-­1, III-­25. 106. Rochelle L. Stanfield, “Toward an Urban Policy with a Small-­Town Accent,” Publius 19, no. 1 (Winter 1979): 31. 107. “The Double Cross,” Disclosure, April 1978, 1–­2. 108. Biles, The Fate of Cities, 222. 109. “Carter Ducks Rehab Needs,” Disclosure, November–­December 1978, 7. 110. President’s Interagency Coordinating Council, A New Partnership to Conserve America’s Communities: A Report After One Year from the President’s Interagency Coordinating Council (Washington, DC: U.S. Government Printing Office, 1979), 16. 111. Amy Shriver Dreussi and Peter Leahy, “Urban Development Action Grants Revisited,” Review of Policy Research 17, no. 2–­3 (June 2000): 120–­37; Ingrid W. Reed, “The Life and Death of UDAG: An Assessment Based on Eight Projects in Five New Jersey Cities,” Publius 19, no. 3 (Summer 1989): 93–­109. 112. Joseph Timilty to Patricia Harris, February 16, 1978, folder “F 1/25–­78–­ 11/20/78,” box 2, NCN; Joseph Timilty to Robert Embry, April 7, 1978, folder “C 1/4/78–­10/3/78,” box 1, NCN; Joseph Timilty to Dick Gephardt, April 27, 1978, folder “F 1/25/78–­11/20/78,” box 2, NCN; “Group Protests Downtown Grants

280

notes to pages 154–163

Being Used to Build Luxury Hotels,” St. Louis Post-­Dispatch, April 10, 1978; “Federal Neighborhood Commission Assailed by Missouri Legislator,” St. Louis Post-­Dispatch, April 11, 1978. 113. “Let ’Em Wash Dishes,” Disclosure, April 1978, 3. 114. “S. Austin Group Still Dissatisfied,” Chicago Tribune, April 8, 1978. 115. Quoted in Reed, “The Life and Death of UDAG,” 108. 116. Michael J. Rich, “Targeting Federal Grants: The Community Development Experience, 1950–­1986,” Publius 21, no. 1 (Winter 1994): 164. 117. Thomas J. Sugrue, “Carter’s Urban Policy Crisis,” in The Carter Presidency: Policy Choices in the Post–­New Deal Era, ed. Gary M. Fink and Hugh Davis Graham (Lawrence: University Press of Kansas, 1998); Biles, The Fate of Cities, 222–­23.

Chapter Five 1. For more on gentrification, see Suleiman Osman, The Invention of Brownstone Brooklyn: Gentrification and the Search for Authenticity in Postwar New York (Oxford: Oxford University Press, 2011); Loretta Lees, Tom Slater, and Elvin Wyly, Gentrification (New York: Routledge, 2008). 2. “The President’s News Conference of September 21, 1977: Resignation of Bert Lance,” Weekly Complication of Presidential Documents, 13, no. 39 (September 26, 1977): 1390; “Lance Resigns,” Washington Post, September 22, 1977. 3. William Safire, “Carter’s Broken Lance,” New York Times, July 21, 1977; “Bert Lance, Carter Confidant and Former U.S. Budget Chief, Dies at 82,” Reu­ ters online, August 6, 2012, http://reut.rs/1bEd2rK. 4. Citizens’ CRA, “Summary Statement of Citizens’ CRA Guidelines,” 1, folder “CRA Introduced (2),” drawer 1, cabinet 10, NPA. 5. “CRA— ­Center of Redlining Fight,” Disclosure, April 1978, 6; “FHLBB Rules on CRA Allow Denial of Expansion on Lending Record,” American Banker, October 4, 1978, 1. 6. “Summary Statement of Citizens’ CRA Guidelines.” 7. “Summary Statement of Citizens’ CRA Guidelines.” 8. “Summary Statement of Citizens’ CRA Guidelines.” 9. “Colorado Executives Go to Capitol,” Savings and Loan News, May 1978, 88. 10. “Hot Issue Pack Busy ’78 Agenda for Congress,” Savings and Loan News, January 1978, 33. 11. “Political Action: The Need to be Involved,” Savings and Loan News, September 1978, 48; see also Savings and Loan News, September 1978, 49–­87. 12. Jimmy Carter to Senator Edward Brooke, July 26, 1977, name file “McKinney, Robert H.,” JCL. 13. Senate Committee on Banking, Housing, and Urban Affairs, Nomination of Garth Marston, 93rd Cong., 2nd. sess. (March 22, 1974); Senate Committee on

notes to pages 163–169

281

Banking, Housing, and Urban Affairs, Nomination of Robert McKinney, 95th Cong., 1st. sess. (July 15, 1977). 14. Vernon Jordan, Robert Corletta, et al. to Jimmy Carter, May 11, 1977, name file “McKinney, Robert H.,” JCL. 15. J. Thomas Meadows to Jimmy Carter, undated, name file “McKinney, Robert H.,” JCL. 16. William Proxmire, “Redlining (Outline for St. Louis Speech),” undated, folder “Redlining,” box 10, NCN. 17. Proxmire, “Redlining (Outline for St. Louis Speech).” 18. “Redline Rule Reaction Mixed,” Washington Post, September 14, 1977. 19. “Redline Rule Reaction Mixed”; clipping, Federal Home Loan Bank Board Daily News Clips, July 18, 1978, reprint of “Activist FHLBB Creates New Office to Combat Urban Decay,” Savings and Loan News, July 1978, 29, folder “Commu­ nity Credit Needs Act,” box 3, FHLBB. 20. “Redline Rule Reaction Mixed”; “Activist FHLBB Creates New Office to Combat Urban Decay.” 21. “Redline Rule Reaction Mixed.” 22. “Activist FHLBB Creates New Office to Combat Urban Decay.” 23. “Robert McKinney: A Washington View,” Washington Post, August 10, 1979. 24. David Mason, From Buildings and Loans to Bail-­Outs (Cambridge, UK: Cambridge University Press, 2004), 209. 25. “FHLBB’s McKinney: Santa for Thrifts,” Disclosure, February 1979, 3. 26. Office of Congressional Liaison and Legislative Counsel to Chairman Mc­ Kinney, Urban Lending Legislative Proposal, December 16, 1977, folder “Urban Lending Proposal,” box 4, FHLBB. 27. General Counsel to Robert McKinney, Urban Lending Legislative Proposal, January 6, 1978, folder “Urban Lending Proposal,” box 4, FHLBB. 28. “Board Wields Big ‘Stick’ in New Anti-­bias Lending Rules,” Savings and Loan News, June 1978, 37. 29. “Savings and Loan Service Corporations: Regulations in Ohio,” Akron Law Review 13, no. 3 (1980): 404–­61. 30. “FHLBB’s McKinney: Santa for Thrifts.” 31. “US Messes with Inflation,” Disclosure, November 1978, 6. 32. “New Law—­Banker’s Bonanza,” Disclosure, November 1978, 7. 33. “New Law—­Banker’s Bonanza.” 34. Mason, From Buildings and Loans to Bail-­outs, 211. 35. “FHLBB’s McKinney: Santa for Thrifts”; “The Big Fix,” Disclosure, October 1978, 6. 36. Press briefing by Robert H. McKinney, Chairman, Federal Home Loan Bank Board, June 8, 1978, folder “6/8/78—­Robert McKinney, Chairman, FHLB (Federal Home Loan Bank Board),” box 27, NCN. 37. Press briefing by Robert H. McKinney, Chairman, Federal Home Loan

282

notes to pages 169–176

Bank Board, June 8, 1978; Remarks of Robert H. McKinney, Chairman, Federal Home Loan Bank Board, June 8, 1978, folder “Community Investment Fund,” box 13, NCN; Briefing remarks by Robert H. McKinney, Chairman, Federal Home Loan Bank Board, folder “Community Investment Fund,” box 13, NCN; “Remarks of the President at Meeting on Community Investment Fund Program,” folder “6/7/78—­Remarks— ­Community Investment Fund Program,” box 27, SWO. 38. Jimmy Carter to Robert McKinney, June 7, 1978, name file “McKinney, Robert H.,” JCL. 39. “New Help for Neighborhoods,” clipping from Times Picayune, folder “Community Investment Fund,” box 13, NCN. 40. Remarks of Robert H. McKinney; Briefing Remarks by Robert H. McKinney. 41. “The Big Fix.” 42. “The Big Fix.” 43. “Innercity Loan Rules Too Vague— ­Critics,” Boston Globe, July 7, 1978. 44. “CRA—­Seldom an ‘Encouraging’ Word,” Disclosure, August–­September 1978, 8. 45. “CRA—­Seldom an ‘Encouraging’ Word.” 46. Daniel Immergluck, Foreclosed: High-­Risk Lending, Deregulation and the Undermining of America’s Mortgage Market (Ithaca, NY: Cornell University Press, 2009), x-­xiii, 41–­43; Andrew Skalaban, “State Governance and Financial Market Integration: The Politics and Consequences of Interstate Banking Deregulation,” Publius 26, no. 1 (1996), 11–­25. For the impact of deregulation on thrift institutions, see Mason, From Buildings and Loans to Bail-­Outs, 213–­40. For work that celebrates the lifting of geographic restrictions on banking, see Ann B. Matasar and Joseph N. Heiney, The Impact of Geographic Regulation on the American Banking Industry (Westport, CT: Quorum Books, 2002). 47. “1979— ­The Year of the CRA,” Disclosure, November–­December 1978, 1. 48. Mark Schneider of the Northside Conference to National Training and Information Center, June 29 1982, unlabeled folder, drawer 3, cabinet 10, NPA. 49. Russell Potter, “From the Roots,” Disclosure, May 1980, 3. 50. Tom Hagey of South Shore Bank, “Deposits Translated into Loans,” folder “How to Use HMDA,” drawer 3, cabinet 10, NPA. 51. “First CRA Victory Brewing in Brooklyn,” Disclosure, November–­December 1978, 1. 52. “What to Expect from a CRA Protest,” Savings and Loan News, April 1979, 62. 53. “Who’s Protesting,” Savings and Loan News, April 1979, 67. 54. “CRA Statements Ready and Waiting for Neighborhood People’s Scrutiny,” Disclosure, January 1979, 4–­5; “February 5: Round #1 of CRA Fight,” Disclosure, February 1979, 1, 5. 55. “Bankers Reassured on CRA Regulation,” American Banker, January 26, 1979; “February 5: Round #1 of CRA Fight,” 1, 5. 56. “CRA Statements Ready and Waiting.”

notes to pages 176–182

283

57. “February 5: Round #1 of CRA Fight,” 1, 5. 58. “CRA Statements Ready and Waiting .” 59. “Los Angeles CRA Victory Stops Rip-­Off Sales,” Disclosure, August–­ September 1979, 5. 60. “CRA National Victory Update–­Neighborhoods Winning Big!,” Disclosure, November 1979, 4–­5. 61. See “CRA National Victory Update,” Disclosure, November 1979, 4–­5; “Los Angeles CRA Victory Stops Rip-­off Sales,” Disclosure, August 1979, 6; “Cedar Rapids CCI Wins Development Corporation,” Disclosure, August 1979, 10; National Training and Information Center, CRA: Ten Fights for Reinvestment (Chicago: National Training and Information Center, 1980), drawer 2, cabinet 5, NPA. 62. “Union Miles Challenging SNB Branch,” Disclosure, November 1979, 4. 63. “From the Roots: Ona Jones, Community Congress of Northeast Denver, Colorado,” Disclosure, March 1979, 4. 64. “From the Roots: Doris Jeffrey, Bank on Brooklyn,” Disclosure, July 1979, 3. 65. “LA Banker Says ‘Act Now on CRA,’ ” Disclosure, November 1979, 4. 66. “Disclosure Law in Jeopardy: HMDA under Attack by Lenders,” Disclosure, February 1979, 1. 67. “HMDA: The Battle Lines Are Drawn,” Disclosure, October 1979, 4–­5. 68. “Commercial Banks Remain Hostile,” Disclosure, May–­June 1978, 4. 69. “From the Roots: Richard Gallagher,” Disclosure, May–­June 1978, 3. 70. “Regulator’s CRA Guidelines Provide for Flexibility, No High-­Risk Obligation,” American Banker, November 27, 1978, 1. For more coverage that suggested CRA enforcement might be weak, see “Federal Checks on CRA May Be Brief,” American Banker, November 10, 1978, 1, 15; “Good-­Faith Effort by Banks to Comply with Community Reinvestment Act Urged,” American Banker, Novem­ ber 20, 1978, 3, 8. 71. “Innercity Loan Rules Too Vague— ­Critics.” 72. “ABA Chief Perkins Meets NPA,” Disclosure, May–­June 1979, 11; “Bank Groups Mobilize on CRA,” American Banker, April 5, 1979; “Operation Unravel,” Banking, November 1978. 73. “August 7: Perkins Is ‘Out’ When Bankers Call In,” Disclosure, August–­ September 1979, 6–­7. 74. John Perkins to Convention Delegates, September 24, 1979, folder 76, container 4, BWCC. 75. “Operation Unravel,” Disclosure, October 1979, 4–­5; “Attendee Testimonies,” Disclosure, October 1979, 2–­3; “The Chase,” Disclosure, October 1979, 1. 76. Warren L. Dennis, “The Community Re-­Investment Act of 1977: The Legislative History and Its Impact on Applications for Changes in Structure Made by Depository Institutions to the Four Federal Financial Supervisory Agencies,” for the Redlining Task Force of the President’s Urban and Regional Policy Group, Purdue University Credit Research Center Working Paper no. 24 (1978), 85–­96, accessed December 17, 2019, http://faculty.msb.edu /prog/CRC /pdf/wp24.pdf.

284

notes to pages 183–186

77. Mason, From Buildings and Loans to Bail-­outs, 202–­3. 78. “Who’s Protesting.” 79. Richard Wise, phone interview with author, Chicago, January 5, 2011; “Urban Wilderness Attracts Pioneers: Artists Turn Lofts into Dwellings,” Los Angeles Times, February 12, 1978; “Toward Ho! Is the Cry of the New Urban Pioneer,” Baltimore Sun, August 7, 1977; “A New Breed of Businessman Who’s Revitalizing Our Cities and His Company  .  .  . the Urban Pioneer” (advertisement), Boston Globe, September 17, 1978. 80. Neil Smith, The New Urban Frontier: Gentrification and the Revanchist City (London: Routledge, 1996). For more on the back-­to-­the-­city movement in New York City, see Osman, The Invention of Brownstone Brooklyn; Michael Stewart Foley, Front Porch Politics: The Forgotten Heyday of American Activism in the 1970s and 1980s (New York: Hill and Wang, 2013), 247–­48. 81. “Factors in Higher Housing Costs,” Chicago Tribune, April 3, 1977, sec. 12, p. 2B; Foley, Front Porch Politics, 245–­46. 82. National People’s Action, “Displacement Proposal Draft,” undated, folder “Displacement,” drawer 2, cabinet 10, NPA. HUD began circulating memos about displacement in early 1978. See Bill Whitte to Robert Maffin, “NAHRO Expression of Concern for Relocation Policy in President’s Urban Policy Report,” Feb­ ruary 8, 1978, folder “Displacement,” box 6, NCN; see also the contents of this folder more generally. 83. Edwin A. Murray Jr., “Redlining, Greenlining, Silverlining,” Wharton Magazine, September 1977. 84. “The Condo Boom,” Washington Post, August 16 1978; “No Surprise: Condo Conversion Hottest Thing in the Market,” Chicago Tribune, April 22, 1979, sec. 14, p. 1A. The Senate held hearings on the rise in condo conversions in the summer of 1979. Senate Subcommittee on Housing and Urban Affairs, Condominium Housing Issues, 96th Cong., 1st sess. (June 28, 1979). 85. “FHLB Credit Backs Community Betterment,” Savings and Loan News, March 1979, 82. 86. Copy of Jay Janis responses to Senator Proxmire’s questions in preparation for confirmation hearing, November 15, 1979, folder “Fair Housing Opinion and Memoranda,” box 7, FHLBB. 87. For more on money market funds, see Bruce Schulman, The Seventies: The Great Shift in American Culture, Society, and Politics (New York: Free Press, 2001), 136–­39. 88. Greta Krippner, Capitalizing on Crisis: The Political Origins of the Rise of Finance (Cambridge, MA: Harvard University Press, 2012), 74–­82. 89. I am deeply indebted to Robert Henderson for his excellent scholarship on financial deregulation during this period, especially the policy proposals to help small savers. Robert Henderson, “Dream Deregulated: The Politics of U.S. Housing Finance, 1968–­1985” (PhD diss., University of Maryland, 2013).

notes to pages 187–193

285

90. Henderson, “Dream Deregulated,” 151–­67; Krippner, Capitalizing on Crisis, 74–­85. 91. Krippner, Capitalizing on Crisis, 79–­80. The MMC’s interest rate was tied to the yield on treasury bills; Henderson, “Dream Deregulated,” 151. 92. “Political Support for Home Buyers Shifts in Face of Outcry from Small Savers,” Savings and Loan News, May 1979, 35. 93. Henderson, “Dream Deregulated,” 211–­12, 263. 94. Thomas. J. Sheehan to William Proxmire, February 15, 1979, folder 29, “Small Savers,” box 93A, WPC. 95. “McKinney Resigns FHLBB,” Disclosure, May–­June 1979, 6. 96. Senate Subcommittee on Financial Institutions, Depository Institutions Deregulation Act of 1979, 96th Cong., 2nd sess. (June 21, 1979), 5–­7. 97. “Carter Bids to Lift Bank-­Interest Curb,” New York Times, May 23, 1979, A1. 98. Senate Subcommittee on Financial Institutions, Depository Institutions Deregulation Act of 1979, 4. 99. Jimmy Carter, “Depository Institutions Deregulation and Monetary Control Act of 1980 Remarks on Signing H.R. 4986 Into Law,” March 31, 1980, online by John Woolley and Gerhard Peters, The American Presidency Project, http:// www.presidency.ucsb.edu /node/250395. 100. R. Dan Brumbaugh Jr. and Andrew S. Carron, “Thrift Industry Crisis: Causes and Solutions,” Brookings Papers on Economic Activity 2 (1987): 355–­56. Eliminating Regulation Q through a phaseout was first recommended by the Hunt Commission in 1972. See Henderson, “Dream Deregulated,” 184. 101. Henderson, “Dream Deregulated,” 191. 102. Henderson, “Dream Deregulated,” passim. 103. For the argument that competition made banks better by reducing costs and prices of banking services, see Kevin J. Stiroh and Philip E. Strahan, “Com­ petitive Dynamics of Deregulation: Evidence from U.S. Banking,” Journal of Money and Credit 35, no. 5 (October 2003): 801–­28.

Chapter Six 1. “NPA Mourns for the American Dream,” Disclosure, November 1981, 1, 4. 2. Robert Mason, From Buildings and Loans to Bailouts: A History of the American Savings and Loan Industry, 1831–­1995 (New York: Cambridge University Press, 2004): 239. 3. Mason, From Buildings and Loans to Bailouts, 238. 4. Mason, From Buildings and Loans to Bailouts, 224–­39; see, for example, “Racketeering Charged in Failure of Savings & Loan,” Los Angeles Times, April 12, 1989; “ ‘Running Wild’ at First Maryland Savings and Loan,” New York Times, April 17, 1988, F6; “Savings Industry’s Costly Fraud,” New York Times, January 10,

286

notes to pages 193–195

1989, D1; “FDIC Found Fraud at Half of Savings Units It Studied,” New York Times, May 18, 1989, D1. 5. See Martin Mayer, The Greatest-­Ever Bank Robbery (New York: Random House, 1993); L. William Seidman, Full Faith and Credit: The Great S & L Deba­ cle and Other Washington Sagas (New York: Times Books, 1993); Stephen Pizzo, Mary Fricker, and Paul Muolo, Inside Job: The Looting of America’s Savings and Loans (New York: McGraw-­Hill, 1989); Kathleen Day, S & L Hell: The People and Politics Behind the $1 Trillion Savings and Loan Scandal (New York: W.W. Norton, 2013). 6. Julia Ann Parzen and Michael Hall Kieschnick, Credit Where It’s Due: Development Banking for Communities (Philadelphia: Temple University Press, 1993); Jeffrey S. Lesk and Richard M. Price, “An Introduction to the Community Development Bank Network,” Journal of Affordable Housing and Community Development Law 4, no. 4 (Summer 1995): 267–­74; Greg C. Gilbert, “Convincing a Private Bank to Become a Community Development Bank: One Group’s Experience,” Journal of Affordable Housing and Community Development Law 6, no. 4 (Summer 1997): 275–­82. 7. See Richard Marsico, Democratizing Capital: The History, Law, and Reform of the Community Reinvestment Act (Durham, NC: Carolina Academic Press, 2005); Gregory D. Squires, ed., From Redlining to Reinvestment: Community Responses to Urban Disinvestment (Philadelphia: Temple University Press, 1992). 8. William Greider, Secrets of the Temple: How the Federal Reserve Runs the Country (New York: Simon & Schuster, 1989), 19. 9. Iwan Morgan, “Reaganomics and Its Legacy,” in Ronald Reagan and the 1980s: Perceptions, Policies, Legacies, ed. Cheryl Hudson and Gareth Davies (London: Palgrave Macmillan, 2008), 101–­3; W. Carl Biven, Jimmy Carter’s Economy: Policy in an Age of Limits (Chapel Hill: University of North Carolina Press, 2002), 239. 10. Iwan Morgan, “Monetary Metamorphosis: The Volcker Fed and Inflation,” Journal of Policy History 24, no. 4 (October 2012), 547; Biven, Jimmy Carter’s Economy, 237. 11. “Paul Volcker—­Public Enemy #1,” Disclosure, March–­April 1980, 2. 12. Greider, Secrets of the Temple, 89; quotation from Morgan, “Reaganomics and Its Legacy,” 103. 13. See Krippner, Capitalizing on Crisis, chap. 5; Greider, Secrets of the Temple, 95–­96; Judith Stein, Pivotal Decade: How the United States Traded Factories for Finance in the Seventies (New Haven: Yale University Press, 2010), chap. 10. Chiropractor quotation from Stein, Pivotal Decade, 228, and Greider, Secrets of the Temple, 93. 14. Paul Volcker, “A Broader Role for Monetary Targets,” FRBNY Quarterly Review 2, no. 2 (Spring 1977): 23–­28; Paul A. Volcker, “The Role of Monetary Targets in an Age of Inflation,” Journal of Monetary Economics 4, no. 4 (1978):

notes to pages 196–201

287

329–­39. Morgan calls Volcker’s strategy “money-­supply control” in “Monetary Metamorphosis,” 546. 15. “Volcker Drops Bombshell: Fed Moves to Credit Allocation,” Disclosure, October 1979, 6. 16. “The Next Move,” Disclosure, February 1980, 2; “Volcker’s Rates Put Squeeze on Neighborhoods,” Disclosure, February 1980, 9; “Paul Volcker—­Public Enemy #1.” 17. “Carter, the Fed, and High Interest Rates: Bad News for Neighborhood Reinvestment,” Disclosure, August–­September 1979, 6–­7. 18. “Volcker’s Rates Put Squeeze on Neighborhoods.” 19. Ted Wysocki to NTIC Staff, “Credit Allocation,” 1978, unlabeled folder, drawer 5, cabinet 10, NPA. 20. “More Volcker News, None of It Good,” Disclosure, August–­September 1980, 6; “Affordable Credit: Long Overdue,” Disclosure, September 1982, 10. 21. Gale Cincotta, “The Next Move,” Disclosure, May 1980, 2. 22. Gale Cincotta, “The Next Move,” Disclosure, June–­July 1980, 2; Gale Cincotta, “The Next Move,” Disclosure, May 1980, 2. 23. Jimmy Carter, “Executive Order 12201— ­Credit Control,” March 14, 1980, online by John Woolley and Gerhard Peters, The American Presidency Project, http://www.presidency.ucsb.edu /node/250046. 24. “Carter Gives Volcker Credit Allocation Power,” Disclosure, March–­April 1980, 2, 12. 25. Stacey L. Schreft, “Credit Controls: 1980,” Economic Review 76, no. 6 (November–­December 1990): 25–­57; Biven, Jimmy Carter’s Economy, 246–­48; Joe Nocera, A Piece of the Action: How the Middle Class Joined the Money Class, rev. ed. (New York: Simon & Schuster, 2013), 185. 26. Jay Rosenstein, “Volcker Talks to His Critics,” American Banker, April 15, 1980. 27. “From the Roots: Richie Gallagher, Northwest Bronx Community Coalition, Bronx, New York,” Disclosure, May 1980, 1, 4. 28. Gale Cincotta, “The Next Move,” Disclosure, May 1980, 2. 29. “The Day the Fed Stood Still,” Disclosure, May 1980, 1; “From the Roots: Betty Du Charme, Citizens for Community Improvement, Cedar Rapids, Iowa,” Disclosure, May 1980, 2; “From the Roots: Barb McClintock, Citizens for Community Improvement, Des Moines, Iowa,” Disclosure, May 1980, 2. 30. “From the Roots: Richie Gallagher”; Gale Cincotta, “The Next Move,” Disclosure, June–­July 1980, 2. 31. Rosenstein, “Volcker Talks to His Critics.” 32. “Volcker Refuses to Act . . . ,” Disclosure, May 1980, 4. 33. Peter Bakstansky of New York Federal Reserve to William Frey of Northwest Bronx Community and Clergy Coalition, June 27, 1980, in author’s possession, courtesy of Brian Sargent.

288

notes to pages 201–204

34. “Determination Renewed on CRA,” Disclosure, November–­December 1980, 1. See also “Examples of Adjustable Rate Mortgages,” Chicago Tribune, May 11, 1981. 35. “Volcker’s Rates Put Squeeze on Neighborhoods.” 36. Gale Cincotta, “The Next Move,” Disclosure, November–­December 1980, 2. For a similar framing at a later date, see “Ohioans Hit Reaganomics,” Disclosure, May 1983, 9. For more on the importance of organizing outside electoral politics in the era of union decline and when disenfranchisement remained a reality for many African Americans and poor Americans, see Eileen Boris’s discussion of Frances Fox Piven in “On Grassroots Organizing, Poor Women’s Movements, and the Intellectual as Activist,” Journal of Women’s History 14, no. 2 (Summer 2002): 140–­42. 37. Gale Cincotta, “The Next Move,” Disclosure, August–­September 1980, 2. 38. “Fed Officials Booed in Chicago on Rates,” New York Times, June 22, 1981, D3. 39. “Fed Luncheon: Loan Sharks Share Bite with NPA,” Disclosure, April 1981, 4. 40. Joseph Coyne, “Reflecting on the FOMC Meeting of October 6, 1979,” Federal Reserve Bank of St. Louis Review 87, no. 2, part 2 (March–­April 2005): 314. 41. “Federal Reserve Board” flyer, undated, folder “National Fight against Interest Rates Meetings, 1981–­1982,” NPA. 42. “Join the Fight to Lower Interest Rates” flyer, folder “National Fight against Interest Rates Meetings, 1981–­1982,” NPA. 43. National People’s Action to Pastor, June 2, 1981, folder “National Fight against Interest Rates Meetings, 1981–­1982,” NPA. 44. Ted Wysocki to My Fellow Funeral Directors, “Re: Oct. 6th Memorial Services,” September 29, 1981, folder “National Fight against Interest Rates Meetings, 1981–­1982,” NPA. 45. “Roots: Pauline Wessel, United Southside Community Organization, Indianapolis,” Disclosure, July–­August 1981, 2. 46. “From the Roots: Susan Foran, Homeowners Federation Chicago,” Disclosure, April 1981, 3. 47. James Rubinstein, “Fed Offices Meet with Chicago Citizen Groups,” American Banker, June 25, 1981. 48. Coyne, “Reflecting on the FOMC Meeting of October 6, 1979,” 314. 49. Claudia Dodge, “The American Agricultural Movement: Economic Prairie Fire or Smoldering Ember,” Plan B Paper, Department of Agricultural and Applied Economics, University of Minnesota (September 1980); Barry J. Barnett, “The U.S. Farm Financial Crisis of the 1980s,” Agricultural History 74, no. 2 (Spring 2000): 366–­80. 50. Michael Stewart Foley, “Everyone Is Pounding on Us: Front Porch Politics and the American Farm Crisis of the 1970s and 1980s,” Journal of Historical Sociology 28, no. 1 (March 2015): 105.

notes to pages 204–209

289

51. “Humor, Anger, Demands at NPA /Fed Hearings,” Disclosure, November 1981, 4. 52. “Who Owns the Land,” Disclosure, September 1981, cover; Gale Cincotta, “The Next Move,” Disclosure, September 1981, 2; “Brooklyn/Bronx: Controlling Urban Land,” Disclosure, September 1981, 5. 53. “From the Roots: Alice Tripp, General Assembly to Stop the Powerline (GASP), Belgrade, MN,” Disclosure, March–­April 1980, 11. 54. David Stein, “Fearing Inflation, Inflating Fears: The End of Full Employment and the Rise of the Carceral State,” (PhD diss., University of Southern California, 2014). 55. Gale Cincotta to Charlotte H. Scott, Chairperson, Consumer Advisory Board, Federal Reserve, January 5, 1982, folder “National Fight against Interest Rates Meetings, 1981–­1982,” NPA. 56. “Texaco Jumps the Gun,” Disclosure, Summer 1982, 4; “Seniors Winning in Lorain,” Disclosure, Summer 1982, 4; “Military Madness,” Disclosure, Summer 1982, 3. The growth of the agenda is most visible at the beginning of 1983, when NPA issued its “action calendar” for the year. NPA Action Calendar for 1983, April 18, 1983, unlabeled folder, drawer 3, cabinet 7, NPA. 57. “Reclaim America” advertisement, Disclosure, February 1982, 11. 58. Gale Cincotta, “The Next Move,” Disclosure, April 1982, 2. 59. Activists expressed frustration that the intersection of economic and social policies under Reagan helped “the corporations” and prioritized “profits” over “the people.” See “From the Roots: Dave Leighton of Citizens to Bring Broadway Back,” Disclosure, April 1983, 7; “FERC’s Richard Listens to Iowa CCI,” Disclosure, March 1983, 3; “Defense Profiteering vs. Budget Priorities,” Disclosure, March 1983, 10. 60. Some activists were conscious of their position within a longer political tradition of American populism. See, for example, “Populism under Reagan,” Neighborhood Action newsletter, March–­April 1981, 29, folder “Third Party,” drawer 3, cabinet 10, NPA. 61. “From the Roots: Cliff Mezzo,” Disclosure, October 1980, 2. 62. Gerald W. McEntee to Gale Cincotta, August 12, 1982, unlabeled folder, drawer 2, cabinet 8, NPA. See also William H. Wynn of the United Food and Commercial Workers (UFCW) to Gale Cincotta, June 30, 1982, unlabeled folder, drawer 2, cabinet 8, NPA. 63. Bruce Schulman, The Seventies: The Great Shift in American Culture, Society, and Politics (New York: Free Press, 2001), 135. 64. Schulman, The Seventies, 137. 65. “Trade Groups Use St. Germain Hearings to Blast DIDC,” Savings and Loan News, August 1980, 6. 66. “Organizing for the 1980s: Associations Face Spectrum of Change,” Savings and Loan News, February 1981, 46.

290

notes to pages 209–212

67. Dennis Jacobe, “The Deregulators Threaten America’s Housing Dream,” Savings and Loan News, August 1980, 38; “Takeover Controversy Continues, Hearings Offer No Solution,” Savings and Loan News, January 1981, 9; “Size Isn’t Everything,” Savings and Loan News, January 1981, 37. 68. Saddlebrook Corporation, “Survival,” Savings and Loan News, April 1981. 69. For example, see “Savings Associations Must Adapt to High, Volatile Interest Rates,” Savings and Loan News, February 1981, 54. 70. “Trade Groups Use St. Germain Hearings to Blast DIDC.” 71. Mayer, The Greatest-­Ever Bank Robbery, 42. 72. “Re-­Rolled Rollovers,” Disclosure, October 1980, 5. 73. “Putting the ARM on Borrowers,” Disclosure, October 1980, 5. 74. “Dark Era in Home Financing,” Disclosure, June 1981, 1. 75. “Putting the ARM on Borrowers,” Disclosure, October 1980, 5. 76. Senate Subcommittee on Housing and Urban Affairs, FHA Revitalization Act of 1981, 97th Cong., 1st sess. (November 19, 1981), 76. 77. “Years of Delusion,” Disclosure, Summer 1982, 5. 78. House Committee on Banking, Finance and Urban Affairs, Grassroots Hearings on the Economy Part 2, 97th Cong., 1st sess. (November 7–­8, 1981), 315–­16. 79. House Committee on Banking, Finance and Urban Affairs, Grassroots Hearings on the Economy Part 3, 97th Cong., 1st sess. (December 4 and 7, 1981), 150. Rep­ resentative St. Germain attributed the origins of concerns for small savers to “the Gray Panthers from California” who “came in and started a movement” demanding “more money for their money.” See also Krippner, Capitalizing on Crisis, 80–­ 81; Henderson, “Dream Deregulated,” 171–­73. For more on the Gray Panthers, see Roger Sanjek, Gray Panthers (Philadelphia: University of Pennsylvania Press, 2009). 80. Arthur Wooton to Kay Oliver, March 31, 1982, folder 75, container 4, BWCC. 81. US Senate, Garn–­St. Germain Depository Institutions Act of 1982, s. rpt. 97-­ 641, 97th Cong., 2nd sess. (Washington, DC: Government Printing Office, 1982), 1. 82. Henderson, “Dream Deregulated,” 312 and chap. 6. 83. Henderson, “Dream Deregulated,” 372 and chap. 7. 84. House Committee on Government Operations, Community Reinvestment Act Compliance: New York City Banks: Hearing before a Subcommittee of the Committee on Government Operations, 97th Cong., 2nd sess. (March 29, 1982), 3. 85. Gale Cincotta to Arthur D. Herrman, Chairman of BancOhio National Bank, November 1981, folder 75, container 4, BWCC. 86. Gale Cincotta to Arthur D. Herrman, November 1981. 87. House Committee on Government Operations, Community Reinvestment Act Compliance: New York City Banks, 3. 88. Senate Committee on Banking, Housing, and Urban Affairs, Competitive Equity in the Financial Services Industry, Part II, 98th cong., 2nd sess. (February 28–­ 29, 1984), 1023–­24.

notes to pages 213–218

291

89. Senate Subcommittee on Telecommunications, Consumer Protection and Finance, Financial Restructuring: The Road Ahead, 98th cong., 2nd sess. (May 17, 1984), 418–­19. 90. “CAR Files Challenge against Citibank,” Disclosure, September–­October 1983, 10. A New York Times article would later reveal that Citicorp earned $168 million in Brazil—­20 percent of its worldwide net income—­in 1982 alone. See “Citibank Flourishes in Brazil,” New York Times, December 3, 1984, D10. 91. “CAR Files Challenges against Citibank.” Activists also talked about “loophole exploitation.” 92. Senate Committee on Banking, Housing, and Urban Affairs, Competitive Equity in the Financial Services Industry, Part II, 1016. 93. “Bank Bill Approved by Senate,” Washington Post, September 14, 1984, E1. 94. Senate Committee on Banking, Housing, and Urban Affairs, Competitive Equity in the Financial Services Industry, Part II, 1027. 95. Competitive Equity in the Financial Services Industry, Part II, 1023. 96. Competitive Equity in the Financial Services Industry, Part II, 1019–­20. 97. Competitive Equity in the Financial Services Industry, Part II, 1101. 98. “Bank Bill Approved by Senate.” 99. House Committee on Banking, Finance, and Urban Affairs, Bank Holding Company Legislation and Related Issues, 96th Cong., 1st sess. (June 20, 1979), 280. 100. House Committee on Government Operations, Condominium and Cooperate Conversion: The Federal Response, Part 3— ­Overview Hearings Continued: Hearings before a Subcommittee of the Committee on Government Operations, 97th Cong., 1st sess. (June 25, 1981), 41. 101. Daniel Immergluck, Foreclosed: High-­Risk Lending, Deregulation and the Undermining of America’s Mortgage Market (Ithaca, NY: Cornell University Press: 2009), x-­xiii, 41–­43; Stephen A. Rhoades, “Bank Mergers and Industrywide Structure, 1980–­1994,” Federal Reserve Bulletin, January 1996, 196. 102. Sandra B. McCray, “Interstate Banking: Current Status and Unfinished Agendas,” Publius 17, no. 3 (Summer 1987): 179–­94. 103. “Disclosure Rejected, HMDA Data Delayed,” Disclosure, May 1983, 11. 104. Senate Committee on Banking, Housing, and Urban Affairs, Competitive Equity in the Financial Services Industry, Part II, 1021–­23. 105. Patrick Barry, “Heather Booth and Gale Cincotta: From Grass-­Roots Troublemakers to National Leaders,” Illinois Issues, January 1989, 25. 106. John Vanover, “Using the Community Reinvestment Act,” in Regional Council of Neighborhood Organizations, Organizing, no. 1 (Spring–­Summer 1989): 11. 107. Vanover, “Using the Community Reinvestment Act,” 11. 108. Oral history interview with Ken McLean, September 11, 2009, WPC, 68. 109. CRA Committee Meeting, January 4, 1979, folder 75, container 4, BWCC. 110. NPA’s study of ten local CRA struggles in the late 1970s highlighted the specificity of each local agreement. See National Training and Information Center,

292

notes to pages 218–222

CRA: Ten Fights for Reinvestment (Chicago: National Training and Information Center, 1980). 111. “From the Roots: Ona Joes of Community Congress of Northeast Denver,” Disclosure, March 1979, 4. 112. Vanover, “Using the Community Reinvestment Act,” 11. 113. “HMDA & CRA: Tools for Changing the Flow of Dollars,” Disclosure, January–­March 1984, 10; Mike Clark and Barbe Fogarty, “Mortgage Lending in Delaware County: Widening the Economic Divide,” in Regional Council of Neighborhood Organizations, Organizing, no. 1 (Spring–­Summer 1989): 14–­15. 114. Vanover, “Using the Community Reinvestment Act,” 11. 115. NPA’s archive includes these reports filed by state. Many appear to be handwritten reports mailed to NPA headquarters, but several are written in the same handwriting. I imagine that an NPA staff member filled out many of these forms after phone calls about local CRA campaigns with activists from allied organizations. 116. Mark Schneider of the Northside Conference to NTIC, June 29 1982, unlabeled folder, drawer 5, cabinet 10, NPA. 117. For example, CRA Workshop Agenda, December 2, 1978, folder “CRA Misc,” drawer 1, cabinet 10, NPA. 118. For example, Gale Cincotta to Savings and Loan Presidents, June 5, 1979, unlabeled folder, drawer 1, cabinet 5, NPA. 119. Tara Rice and Erin Davis, “The Branch Banking Boom in Illinois: A Byproduct of Restrictive Branching Laws,” Chicago Fed Letter, no. 238 (May 2007): 1. 120. Larry D. Swift and Jean Pogge, Neighborhood Reinvestment Partnership: Neighborhood Groups Lead the Way for First Chicago Corporation (Chicago: Woodstock Institute, 1984), 1–­3. 121. Swift and Pogge, Neighborhood Reinvestment Partnership, 1–­3. 122. Swift and Pogge, Neighborhood Reinvestment Partnership, 1–­3. 123. “$100 Million Rehab Plan Unveiled,” Chicago Sun-­Times, March 6, 1984; “$100 Million Loan Plan,” Chicago Tribune, March 6, 1984; “Pledge $100-­Mil for Low Income Housing,” Chicago Defender, March 7, 1984; “First Chicago Forms Program for Lending in City Neighborhoods,” Wall Street Journal, March 7, 1984. 124. “$100 Million Rehab Plan Unveiled.” 125. Swift and Pogge, Neighborhood Reinvestment Partnership, 4–­5. 126. Swift and Pogge, Neighborhood Reinvestment Partnership, 4–­5, 7. 127. “$100 Million Loan Plan.” 128. “Neighborhood Groups Expect Revitalization, Thanks to Loan Plan,” Chicago Tribune, April 28, 1984, sec. 16, p. 2H. 129. “Lending a Hand: Unlikely Activist Gets Chicago Banks to Give Loans in Poor Sections,” Wall Street Journal, August 21, 1985. 130. Marc A. Weiss and John T. Metzger, “Neighborhood Lending Agreements: Negotiating and Financing Community Development,” Lincoln Institute of Land

notes to pages 222–231

293

Policy Occasional Paper Series no. 88-­06 (March 1988); Community Reinvestment Alliance HMDA User Survey, 1984, unnamed folder, drawer 2, cabinet 7, NPA. 131. “Neighborhood Groups Expect Revitalization, Thanks to Loan Plan.” 132. “From Protests to Partnerships,” ABA Banking Journal, September 29, 1987, folder 4, box 11, series 1, TAG. 133. “From Protests to Partnerships.” 134. Weiss and Metzger, “Neighborhood Lending Agreements.” 135. “Redlining Fight Bearing Fruit in Money-­Strapped Inner Cities,” Chicago Tribune, May 25, 1986, sec. 3, p. 4. 136. Kristin Faust, interview with author, Chicago, March 14, 2012. 137. Faust, interview with author. 138. Nancy MacLean, Freedom Is Not Enough: The Opening of the American Workplace (Cambridge, MA: Harvard University Press, 2006), 77. 139. Jerry V. Jarrett to M. Brock Weird, “Effective Communication with Cleveland Neighborhood Organizations,” March 23, 1979, folder 75, container 4, BWCC. 140. Jeff Zinsmeyer to Members of Working Group on the Community Reinvestment Act, “Upcoming Meeting and CRA Materials,” March 10, 1978, folder “CRA Title VIII #1,” box 84, NUE. 141. “Housing Groups’ Aid Can’t Dent the Need,” Chicago Tribune, Decem­ ber 8, 1986, 1. 142. “Housing Groups’ Aid Can’t Dent the Need.” 143. The Federal Deposit Insurance Corporation maintains a searchable website on bank charters that includes information on bank mergers and acquisitions. See http://www.fdic.gov. 144. “A Credit Union for Those Who’ve Paid Dues,” Chicago Tribune, Octo­ ber 5, 1987, sec. 2, p. 1. 145. Faust, interview with author.

Conclusion 1. House Subcommittee on Financial Institution and Consumer Credit, Community Reinvestment Act, 104th Cong., 1st sess. (March 8–­9, 1995), 747. 2. Gregory Squires, “Friend or Foe? The Federal Government and Community Reinvestment,” in Revitalizing Urban Neighborhoods, ed. Dennis Keating, Normal Krumholz, and Philip Star (Lawrence: University of Kansas Press, 1996), 227. 3. National Community Reinvestment Coalition, CRA Commitments (Washington, DC: National Community Reinvestment Coalition, 2007), 4. 4. Joe Mariano, interview with author, Chicago, April 26, 2012; Kristin Faust, interview the author, Chicago, March 14, 2012. 5. Hyman likens the 1980s’ shift to securitization to “the shift in farming from subsistence crop to cash crop. Producing for oneself and producing for the market,

294

notes to pages 232–233

even if it is still the same corn, results in a very different mentality.” Louis Hyman, Borrow: The American Way of Debt: How Personal Credit Created the American Middle Class and Almost Bankrupted the Nation (New York: Vintage, 2012), 216. For more on the relationship between the commodification of mortgages and the rise of subprime, see Daniel Immergluck, “The Foreclosure Crisis, Foreclosed Properties, and Federal Policy: Some Implications for Housing and Community Development Planning,” Journal of the American Planning Association 75, no. 4 (Autumn 2009): 406–­23; Patricia McCoy and Elizabeth Renaurt, “The Legal Infrastructure of Subprime and Nontraditional Home Mortgages,” in Borrowing to Live: Consumer and Mortgage Credit Revisited, ed. Nicolas P. Retsinas and Eric S. Belsky (Washington, DC: Brookings Institution Press, 2008). 6. See Lily Geismer, “Doing Good: Liberal Uses of the Market to Help the Poor from the War on Poverty through the Clinton Era,” in author’s possession. 7. Dalton Conley, Being Black, Living in the Red: Race, Wealth, and Social Policy in America (Berkley: University of California Press, 1999); Allan H. Spear, Black Chicago: The Making of a Negro Ghetto, 1890–­1920 (Chicago: University of Chicago Press, 1967); Keeanga-­Yamahtta Taylor, “Race for Profit: The Political Economy of Black Urban Housing in the 1970s” (PhD diss., Northwestern University, 2013); Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black America (New York: Metropolitan Books, 2009), 5; Mehrsa Baradaran, The Color of Money: Black Banks and the Racial Wealth Gap (Cambridge: Belknap Press, 2017); Keeanga-­Yamahtta Taylor, Race for Profit: How Banks and the Real Estate Industry Undermined Black Homeownership (Chapel Hill: University of North Carolina Press, 2019). 8. Robert Mason, From Buildings and Loans to Bail-­Outs: A History of the American Savings and Loan Industry, 1831–­1995 (New York: Cambridge University Press, 2004), 139, 173. 9. Gary Rivlin, Broke USA: From Pawnshops to Poverty, Inc.—­How the Working Poor Became Big Business (New York: Harper Collins, 2010), 13.

Index Page numbers followed by “f ” refer to figures. affirmative action (in lending), 12–­13, 137, 161, 230; CRA and, 5, 137, 142, 160, 161, 190; NPA and, 125; reinvestment activists and, 12–­13, 137, 142, 161, 190 affirmative marketing, 177, 178 affordable-­housing crisis, 15. See also housing crisis Alinsky, Saul, 3, 18, 22–­24, 26, 28, 70; leader-­organizer model, 87; power and, 23, 24 (see also under Alinsky-­style community organizing); organizations of, 23 Alinsky-­style community organizing, 12, 24, 26, 29, 70, 86–­87, 218; Alinsky-­inspired organizations, 39, 49; confrontational tactics of, 3, 23; origins/roots of, 23; overview and nature of, 70, 84; power and, 18, 73; racism in, 27; Tom Gaudette and, 24, 26–­29, 70; training in, 3, 12, 28, 39, 52, 70, 73, 219 American Banker magazine, 109, 112, 175, 180–­81 American Bankers Association (ABA), 181–­82; annual convention, 181, 182; CRA and, 181; Federal Reserve and, 174, 175; HMDA and, 181; NPA and, 181–­82; Operation Unravel (political campaign), 181; publications of, 223 (see also American Banker magazine); reinvestment activists and, 181, 182 Annunzio, Frank, 209 Ashton, Lud, 145 Assumption Greek Orthodox Church, 39

Austin (Chicago neighborhood), 24; integration and, 18–­20, 22, 26, 27, 31–­32, 36, 38, 46–­49; racial change in, 20–­23, 25, 31–­32, 34. See also Organization for a Better Austin Bailey, Ed, 20, 21, 29, 47 Baltimore, 21, 77, 78, 85–­86, 143, 153–­54; “Dedicated Dollars” program/campaign, 95, 99 Baltimore Savings and Loan, 95 bank mergers, 216; Bill Clinton and, 232; CRA and, 135–­37, 156, 160–­61, 171–­72, 175, 179, 183, 212, 216, 217, 219, 220, 225–­27, 232; HMDA and, 179; in Illinois, 220, 226; megafinancials and, 212; reinvestment activists and, 172, 216, 227; wave of, 171–­72, 216 banks: American expectations for how they ought to behave, 5; defined, 16 Baroni, Geno, 71–­72, 80 Battle of New Orleans (protest), 182 Bell Federal, 50, 52–­54, 57; FHA and, 52, 53, 65; Gale Cincotta and, 50, 54, 65; Shel Trapp and, 50, 52–­54, 65 Benedict, Joseph T., 179 Bernstein, Carl, 60 Bethel New Life, 225 Bills, George, 92–­93 black freedom struggle, 11–­13, 22, 24–­27, 133. See also integration “black invasion,” 133

296 black nationalism, 47–­48 “black tax,” 33–­34 “blockbusters,” 20, 22, 65, 114. See also panic peddlers block-­by-­block racial change, 20, 21, 25 Bradford, Calvin, 105–­6, 138 branching, 156, 213 Buckeye-­Woodland, 21 Buckeye-­Woodland Community Congress (BWCC), 218 bundling loans/mortgages into securities, 57, 61 busing for school integration, 78 “busted” markets, 21, 33 Capra, Frank, 43 Carrott, Marina, 222 Carter, Jimmy, 124, 148f, 162, 189; Bert Lance and, 157, 158; Community Investment Fund (CIF) and, 152, 168, 169; CRA and, 146, 151; credit, the Credit Control Act, and, 197–­98; DIDMCA and, 189; Federal Reserve and, 193, 194, 197, 198; FHLBB and, 152, 162–­64, 168, 169; Humphrey-­Hawkins Full Employment Act and, 133; inflation and, 193, 194; “malaise” speech, 194; mayors and, 148; National Commission on Neighborhoods (NCN) and, 148; New Partnerships and, 150–­52, 154; NPA and, 134, 148, 149, 151; Paul Volcker and, 194, 198; and preserving neighborhoods, 133, 134, 148, 149; redlining and, 134, 147; reinvestment activists and, 133, 134, 150, 276n43; Robert McKinney and, 162–­64, 168, 169; Urban and Regional Policy Group (URPG) and, 146–­47 Catholic Church, priests, and community organizing, 22–­24 certificates of deposit (CDs), 186 Chase, Alice, 116, 122 Chase Bank, 215 Chesney, Jim, 36 Chicago Commission on Human Relations (CCHR), 34 Chicago Freedom Movement /Chicago open-­housing movement, 36, 77–­78 Chicago Police Red Squad, 48 Chicago Tribune, 18, 92, 93, 106, 107 churches and community organizing, 22–­24

index Cicero Avenue, 20 Cincotta, Gale, 4f, 10–­11, 67–­72, 89, 102, 121, 125, 127f, 137, 142, 145, 148f, 193, 206, 207, 234; Alinsky training, 70; American Bankers Association (ABA) and, 181; Anita Miller and, 96–­97; Austin and, 29–­32, 34; background and overview, 3, 4, 29–­30; banks and, 114–­15, 145, 212; Bell Federal and, 50, 54, 65; Community Investment Fund (CIF) and, 169; CRA and, 137, 139, 142–­45, 172, 175, 179, 214; descriptions and characterizations of, 30, 89; Disclosure and, 95, 121; Federal Reserve and, 201, 205; FHA and, 52, 66, 67; FHA abuse and, 65–­67, 73, 90; FHA mortgages and, 104; finances, 96, 97; financial common sense and, 6; First National Partnership and, 2, 2f; Geno Baroni and, 71, 72; HMDA and, 119, 140, 144, 173, 179; on the housing crisis, 121; HUD Act and, 57, 60; on interest rates, 196, 198–­201; John Waner and, 68; Ken McLean and, 113–­ 14; March 1972 organizers’ conference and, 68–­69, 72, 73, 78; Mary Volpe on, 30; National Commission on Neighborhoods (NCN) and, 147–­48, 148f; Neighborhood Housing Services (NHS) and, 96; NPA /NPAH and, 3, 4, 96–­97, 127f, 147, 159, 172, 175, 179, 181, 186, 199–­ 201, 205, 212, 214, 231; on older neighborhoods, 122, 126, 145; on options for financial reform, 214; Organization for a Better Austin (OBA) and, 17, 29–­32, 34, 47; panic peddlers and, 53, 54, 108; Paul Volcker and, 198, 201; “perceptions of risk” and, 66; personality, 3, 29–­30; power relations and, 67; race and, 12, 17, 31, 32, 49, 133, 137; real estate abuse and, 49, 52; real estate agents and, 10, 34; real estate investment trusts (REITs) and, 144; redlining and, 1, 89, 114, 118, 127, 201; Robert Kuttner and, 113, 143, 148; savings and loans and, 54, 55, 73, 90, 95, 111, 142; Senate Banking Committee and, 113, 213–­14; Shel Trapp and, 3, 4f, 29, 41, 54, 55, 57, 60, 65–­70, 127f, 133, 147, 172, 175, 179; testimony at Democratic Party platform hearing, 122, 123; testimony before House Banking

index Committee, 114–­17, 115f; Tom Gaudette and, 29; US League and, 118, 142; West Side, Chicago, and, 60, 73; West Side Coalition against Panic Peddling (WSC) and, 41, 47, 49, 53, 68; William Proxmire and, 114, 137, 139, 143, 147 Citicorp, 186, 212–­13, 216–­17 Citizens Bank, 229 “Citizens Guidelines” for CRA regulations, 159–­61, 171 city survivors, 80, 82; a meeting of, 70–­80 Civil Rights Act of 1968, 117, 137 civil rights laws and panic peddling, 41 civil rights movement, 25–­27. See also black freedom struggle; integration civil rights organizations, 26; NPA /NPAH and, 89, 127, 134 Clinton, Bill, 132 Cohen, Lizabeth, 13 Collier, Robert, 35 Collins, George, 76 commercial banks, 157; community-­bank partnerships and, 211; competition with savings and loans, 99–­100, 107, 108, 161, 167; definition and terminology, 16; deregulation and, 108–­10, 226–­27; DIDC and, 208, 209; FDIC and, 182; Federal Reserve Board and, 100, 140, 182, 198, 205, 217; HMDA and, 119, 140–­41, 144; insurance and, 215; neighborhood lending and, 180, 215, 227; New Deal financial common sense and, 100; Neighborhood Housing Services (NHS) projects and, 96; NPA leaders and, 144, 167, 180, 212; NPA /NPAH and, 100, 181, 211–­12; policies, 226–­27; real estate investment trusts (REITs) and, 144; Regulation Q and, 44, 100, 107, 108, 185–­86, 208; reinvestment activists and, 99, 144, 180, 182, 205; and thrift CRA enforcement, 139, 180–­83; William Proxmire and, 119, 139. See also American Bankers Association; specific topics Commission on Financial Structure and Regulation. See Hunt Commission Committee for a Better Austin, 24 Committee on Urban Development and Neighborhood Preservation, 132 community banking, 173, 231. See also community-­bank partnerships

297 community-­bank partnerships, 2–­3; affordable housing and, 225, 227; bank mergers and, 216; Bill Clinton and, 232; in Chicago, 222–­25; CRA and, 123, 141, 190, 216, 217, 219, 222, 224, 227, 230 (see also CRA); HMDA and, 190; Jimmy Carter and, 232; legislation that laid groundwork for, 5; NPA and, 141, 211; and politics, 123; redlining and, 2, 6, 123; reinvestment activists and, 2, 5, 6, 100, 216, 230; savings and loans and, 211; savings and loans joining, 1 67; as solution to economic inequality, 194; urban affordable housing and, 10; urban housing crisis and, 123. See also Neighborhood Housing Services community development banking, 194, 227; CRA and the rise of, 216–­27 Community Development Block Grant (CDBG) program, 128, 129, 149–­50, 153, 166 Community Investment, Institute for, 151 Community Investment Fund (CIF), 168–­ 69; FHLBB and, 9, 124, 152, 168–­70, 185, 196, 200; NPA members and, 168, 170 community organizations, 71, 73–­74, 86, 89, 95, 127, 143; Bill Clinton on, 232; black nationalism and, 48; CRA and, 137, 175, 176, 190, 224, 230; FHA and, 63; HMDA and, 135; interracial, 21, 22; negotiations between banks and, 176; policing redlining at the street level, 5; solidarity between labor and, 207. See also specific organizations Community Organizations Acting Together, 134 community organizers, 39, 41, 70; FHA programs and, 53; NPA and, 172, 201, 219; Organization for a Better Austin (OBA) and, 39; Shel Trapp and, 70, 88; trainings and workshops for, 128–­29, 172, 219–­20. See also specific organizers community organizing, 6, 41, 124; Catholic priests and, 22–­24; to manage integration, 19–­31; for national FHA reform, 89–­94; for national neighborhood reinvestment policy, 124–­34; Organization for a Better Austin (OBA) and,

index

298 community organizing (cont.) 32; reinvestment activists and, 12; reinvestment movement and, 12. See also Alinsky-­style community organizing; specific topics Community Reinvestment Act. See CRA competition: between commercial banks and S&Ls, 99–­100, 107, 108, 161, 167; deregulation and, 108, 110, 185, 190 Congress, US: credit allocation and, 112, 113, 157; FHLBB and, 165, 166; HMDA and, 119, 156, 165, 167, 179, 186–­87; NPA and, 186, 212, 215; savings and loans and, 166, 170. See also deregulation: legislators/policymakers and conservatism, white urban politics and the rise of, 246n27 consumer rights, language of, 6, 119 Contract Buyers League of Lawndale, 46 Cotto, Julio, 62–­63 Coyne, Joseph, 202, 204 CRA (Community Reinvestment Act), 15; affirmative action and, 5, 137, 142, 160, 161, 190; bank mergers and, 135–­37, 156, 160–­61, 171–­72, 175, 179, 183, 212, 216, 217, 219, 220, 225–­27, 232; community-­ bank partnerships and, 123, 141, 190, 216, 217, 219, 222, 224, 227, 230; community development banking and, 216–­27; credit allocation and, 138–­41, 144, 145, 160, 181, 193, 197; depository institutions and, 145–­46, 171; deregulation and, 157, 186, 193, 194, 212; DIDMCA and, 157, 189, 190; disinvestment and, 135, 138, 139, 142, 160, 173; enactment of, 5, 161; enforcement of (see CRA enforcement); Federal Reserve and, 146, 174, 175, 181, 182, 216; FHLBB and, 141, 146, 151, 165, 176, 183; financial common sense and, 139, 142, 156, 165, 212, 215; Gale Cincotta and, 137, 139, 142–­45, 172, 175, 179, 214; Helen Murray and, 138, 174–­75; HMDA and, 123, 135, 136, 140, 176, 179; insurance and, 215, 232; New Deal financial regime and, 139, 142, 156, 165, 215, 226; NPA /NPAH and, 139, 144–­46, 151, 155, 159–­61, 170, 171–­77, 179, 183, 186, 187, 212, 219–­20, 224, 234; NPA /NPAH leaders and, 136–­38, 146, 159, 172, 180, 196, 219, 220; regulation of (see CRA

regulations); reinvestment activists and, 5; Robert McKinney and, 178, 183; Shel Trapp and, 172, 175, 179; statements and notices on, 171, 174–­76, 178, 219, 220; William Proxmire and, 123, 135–­45, 164, 174–­75, 218 CRA enforcement, 175, 216; American Bankers Association (ABA) and, 181; challenges in, 138; commercial banks and thrift CRA enforcement, 180–­83; Federal Reserve Board and, 182; FHLBB and, 183; lax, 175, 176, 217; NPA and, 171, 175, 176, 181, 216, 224; reinvestment activists and, 183, 224; uneven, 174, 217, 224 CRA regulations, 155, 165, 180–­81; organizing for strong, 157–­61; released, 170–­80. See also CRA: deregulation and; Federal Reserve Board “creative” financing, 210, 225 credit allocation, 108, 109, 144, 199–­200, 205; affordable housing and, 198; bankers and, 139, 140, 145, 181; Chicago and, 197, 206; CRA and, 138–­41, 144, 145, 160, 181, 193, 197; Congress and, 112, 113, 157; criticism of and opposition to, 139, 197; Federal Reserve and, 140, 197, 200–­202; HMDA and, 113, 119, 140, 193, 197; Jimmy Carter and, 197; legislation and, 112, 113; mandated, 140, 141, 181, 198, 227–­28; monetarism and, 197, 198; NPA and, 15, 193, 197, 200–­203; Paul Volcker and, 197, 198, 200; proposals, 109–­10, 112, 113, 119, 191, 203; reinvestment and, 111; reinvestment activists and, 84, 111, 197, 199–­200, 227–­28; savings and loans and, 111, 112; for social needs, 112 Credit Control Act of 1969, 112, 197–­98 credit control(s), 197, 208; selective, 109. See also specific topics credit crunch of 1966: aftermath, 59; causes, 108; credit allocation and, 112; interest rates and, 54, 59, 107–­8, 110; mortgages and, 54, 107, 110; New Deal financial regime and, 54, 107, 108; thrift industry and, 54, 110, 112 credit unions, 226, 227 Daley, Richard J., 48, 103–­4 “Dedicated Dollars” program, 95, 99

index defaulted mortgages, purchasing, 45 defaults, 65, 222; FHA insurance and, 45, 51, 57–­58; on FHA loans, 92, 93, 117. See also foreclosures Democratic Party: Platform Committee of, 80, 127, 132; platform hearing of, 122; and the postwar period, 13, 131, 232 Department of Housing and Urban Development. See HUD Department of Urban Renewal (DUR), 40 depository institutions, 141–­42, 190; CRA and, 145–­46, 171; credit needs and, 146, 171; HMDA and, 113, 119; NPA and, 208; powers of, 113, 171, 212, 213. See also commercial banks; savings and loans (S&Ls)/thrifts Depository Institutions Deregulation and Monetary Control Act of 1980. See DIDMCA Depository Institutions Deregulation Committee (DIDC), 189, 208, 209 depression. See Great Depression deregulation, 224; advocates of, 6, 108–­9, 126, 186, 189; Bill Clinton and, 232; commercial banks and, 108–­10, 226–­27; community development banking and, 194; and competition, 108, 110, 185, 190; CRA and, 157, 186, 193, 194, 212; defined, 16; financialization and, 10; Gale Cincotta on, 214; HMDA and, 119, 126, 186; Hunt Commission and, 108, 109, 189; interest rates and, 185, 190, 194, 211; Jimmy Carter and, 189; legislators/policymakers and, 6, 10, 112, 157, 185, 189–­90, 210, 213–­16; in the media, 189, 209; of New Deal financial regime, 189; NPA and, 186, 211, 212, 215; ramifications of, 6, 110, 157, 190–­91, 193, 194, 209–­11, 214, 216, 226–­27; reinvestment activists and, 6, 126, 193–­94, 213, 216; and the rise of “megafinancials,” 208–­16; savings and loans and, 157, 185, 190–­91, 193, 209–­11, 213, 227. See also DIDMCA; reregulation “deroloc” (colored spelled backward) code on mortgage applications, 110, 111 DIDMCA (Depository Institutions Deregulation and Monetary Control Act of 1980), 189, 208–­9; CRA and, 157, 189, 190; credit needs and, 189; Jimmy Carter

299 and, 189; New Deal financial regime and, 189–­90, 232; overview, 189; rami­ fications, 157, 189–­90, 193; Regulation Q and, 189, 208; savings and loans and, 157, 189, 193, 208–­9, 211 differential (higher interest rates paid to savers), 108 differential between capped FHA interest rate and market rate, 258n24 disclosure (activism): of NPAH, 100–­106, 110, 114; NPA /NPAH affiliate organizations and, 103, 105, 114, 118, 218. See also HMDA Disclosure (newsletter), 87, 91, 95, 121, 129, 149 discount window, secondary, 200 disintermediation, 54, 190 disinvestment, 105–­6, 145, 221; CRA and, 135, 138, 139, 142, 160, 173; discrimination and, 223; Gale Cincotta and, 139, 145; HMDA and, 135, 143, 179; nature of, 223; NPA /NPAH and, 87, 89, 124–­ 25, 138, 173; racism and, 223; reinvestment activists and, 8, 123, 134, 142, 179; transitional neighborhoods and, 89, 139; William Proxmire and, 135, 138, 139 displacement, 9, 157, 179, 185, 190, 194 Dodaro, Richard, 79 “double dollars,” 128 Douglas, Anne Marie, 71 dual housing market, 10, 49, 78; data regarding, 82; panic peddlers and, 19, 21, 33; racial boundaries prescribed by, 39–­40 Dukakis, Michael, 105 “economic discrimination,” 9, 191 “economic redlining,” 201 Egan, John E., 22–­24 Eizenstat, Stuart, 149 elderly, 5, 75, 98, 122, 126, 186, 205; legislation to help, 122; NPA and, 125, 205, 206; support for, 125, 139. See also Gray Panthers empowerment: of community groups, 135–­37, 171, 231–­32; of reinvestment activists, 204 ethnic whites, 13, 71, 133 family farms. See farmers: small Fannie Mae, 57, 61, 62, 66

300 “farm crisis” on the eve of the monetarist experiment, 204 farmers: Alice Tripp on, 205; interest rates and, 204, 205; NPA and, 193, 201, 204–­6; small, 193, 201, 204, 205 farming, 293n5 Faust, Kristin, 223–­24, 227, 231 federal deposit insurance, 7, 43, 139, 142, 232 Federal Deposit Insurance Corporation (FDIC), 144, 146, 156, 173, 182, 293n143 Federal Home Loan Bank (FHLB) Act of 1932, 44 Federal Home Loan Bank Board. See FHLBB Federal Housing Administration. See FHA Federal Reserve (“the Fed”), 54; American Bankers Association (ABA) and, 174, 175; apolitical nature, 200–­201; banks and, 100, 156, 174, 175, 182, 205, 212, 216; Community Reinvestment Act (CRA) and, 146, 174, 175, 181, 182, 216; complaints filed with, 217; Consumer Advisory Council, 216; credit allocation and, 110; Credit Control Act and, 197–­98; HMDA and, 140; and inflation, 192–­95, 205; interest rates and, 109, 193, 194, 206; Jimmy Carter and, 193, 194, 197, 198; Joseph Coyne and, 204; monetarism and, 192, 195–­97, 205; money targeting and, 196; NPA and, 9, 175, 196, 197, 200–­202, 205, 206, 212; Paul Volcker and, 192, 194–­98, 200, 201, 204, 216; reinvestment activists and, 9, 102, 192, 196–­200, 203–­4; reinvestment legislation and, 156. See also Regulation Q Federal Reserve Board, 193, 194, 217; commercial banks and, 100, 140, 182, 198, 205, 217; interest rates and, 54, 109; NPA and, 9, 198, 202; power of, 109–­10, 198, 205; redlining and, 228; Regulation Q and, 100 FHA (Federal Housing Administration): abuse of programs of (see FHA abuse); “approved” homes, 61, 64; expansion into urban neighborhoods, 55; foreclosures and, 58, 64, 65–­68, 81, 89–­94, 117; Gale Cincotta and, 65–­67, 172, 175, 179; homeownership, homeowners, and, 46, 50–­53, 57–­59, 64–­67, 75, 90–­93,

index 95; insurance programs of (see FHA insurance [programs]); Jimmy Carter and, 146, 151; mortgage-­backed securities and, 57, 61, 62; New Deal financial regime and, 45, 51, 90, 94; “payback” to homebuyers, 91; “point system” of, 72–­ 73; and real estate abuse, 52, 64, 75; real estate agents and, 51, 53, 64, 67–­68, 73; reform of (see FHA reform); Shel Trapp and, 51, 52, 65–­68; speculators and, 52, 64, 67, 129; transitional neighborhoods and, 52, 53, 63, 68, 73, 75, 83–­84, 89, 92–­ 94; in urban neighborhoods, 60–­66; and West Side, Chicago, 58, 62, 67, 82; West Side organizers and, 64–­66. See also FHAed, being FHA abuse, 125; Gale Cincotta and, 65–­67, 73, 90; George Romney and, 79, 267n69; NPAH and, 89–­94; Shel Trapp and, 65, 67 FHA insurance (programs), 51, 57–­59, 61, 62, 64, 76, 82, 90–­92, 95, 125, 233; defaults and, 45, 51, 57–­58; foreclosure and, 58, 65–­67, 89, 90, 93; goals, 45, 129; HUD and, 64, 89, 92; HUD Act and, 51, 53, 59–­61, 64; and inspection of insured homes, 68; Nixon’s moratorium on, 89; NPA /NPAH and, 89–­92, 125; and panic sales, 65; problems with, 53, 66–­67, 69f, 70, 78, 80, 88, 94, 125, 129, 144; racialized assumptions and, 45–­46; reinvestment activists and, 61, 80, 110, 125; savings and loans and, 52, 61, 62, 110 FHA reform, 75, 86, 94, 129; Adlai Stevenson and, 90; changes in national policy required for, 14; financial common sense and, 66–­69, 81, 83, 94, 120; HUD and, 93; NPAH lobbying for, 83, 84, 89–­93, 120; organizing for national, 89–­94; panic peddling and, 67; resolution calling for, 79; and the urban housing crisis, 81, 84 FHAed, being, 51, 53–­60, 82; HUD Act and, 51, 57–­60; neighborhoods that experienced, 73, 75, 89, 115 FHLBB (Federal Home Loan Bank Board), 96, 97, 102, 103, 113, 146, 190; Center for Executive Development, 96; chairman of, 113, 157, 162 (see also McKinney, Robert); changes within, 162; Community Investment Fund (CIF), 9, 124,

index 152, 168–­70, 185, 196, 200; Congress and, 165, 166; CRA and, 141, 146, 151, 165, 176, 183; funds distribution, 169–­70; Gale Cincotta and, 102; HMDA and, 140, 163; inflation and, 165, 168, 188; Institute for Community Investment, 151; interest rates and, 187, 188; Jimmy Carter and, 152, 162–­64, 168, 169; mortgages and, 187, 188; Neighborhood Housing Services (NHS) and, 141; New Partnerships and, 151; NPA /NPAH and, 97, 102, 163, 170, 183; promoting urban investment, 190; redlining and, 102, 163, 167; reinvestment activists and, 102, 163; savings and loans and, 102, 103, 140, 163, 164, 166, 167, 169, 170, 183, 185, 187, 200; service corporations and, 166–­ 67; Urban Reinvestment Task Force, 96; urban reinvestment through, 156, 157, 161–­70; US League and, 162, 167, 187. See also McKinney, Robert financial common sense, 5, 6, 99, 120, 142, 167, 210; banks and, 5, 84, 101, 132, 230; CRA and, 139, 142, 156, 165, 212, 215; and the Fed, 203; FHA reform and, 66–­ 69, 81, 83, 94, 120; Mary Volpe and, 227; Neighborhood Housing Services (NHS) and, 96; neighborhood roots of, 42–­48; New Deal and, 7, 57, 94, 100, 132, 139, 142, 156, 165, 215, 230; NPAH defending their, 81, 83, 99, 120, 212; reinvestment activists and, 11; urban savings and loan associations and, 143; variable-­rate mortgages (VRMs) and, 188 financial crisis of 2008, 233, 234 financial institutions: defined, 16. See also banks Financial Institutions Act of 1973, 112 Financial Institutions and Interest Rate Control Act of 1978, 165 financialization and “financial channels,” 9–­10 Financial Structure and Regulation, Commission on. See Hunt Commission First Chicago Corporation, 220 First National Bank of Chicago, 1–­3, 2f, 220–­23; CRA agreement, 225; Neighborhood Banking Division, 222; partnership in urban neighborhoods, 2f, 222, 223

301 First Nationwide Bank, 226 fixed-­rate mortgages, 50, 52, 66; high interest rates and, 110, 188; Home Owner’s Loan Corporation (HOLC) and, 45; inflation and, 188; money market certificates (MMCs) and, 187; “mortgage revolution” and, 208, 209; New Deal financial regime and, 45, 52, 188, 208–­10; NPA /NPAH and, 111, 208; savings and loans and, 110, 111, 165, 187, 209; vs. variable-­rate mortgages (VRMs), 110, 111, 188 Foley, Michael Steward, 204 Foran, Susan, 203 Foran, Thomas, 39 Ford, Gerald, 97, 119, 128, 130–­32. See also New Federalism Ford Foundation, 95, 96, 102 foreclosures, 90; “fast,” 66–­68, 81, 90–­94; FHA and, 58, 64, 65–­68, 81, 89–­94, 117; FHA insurance and, 58, 65–­67, 89, 90, 93; HUD and, 65, 89, 91–­93; NPAH and, 81, 89–­93; reinvestment activists and, 93–­94, 117; transitional neighborhoods and, 68, 92, 93 Foster, Bill, 221, 225 free market, 188, 235; challenges to, 18; faith in and support for, 11, 214, 231; principles of, 60, 197, 214; social democratic populism and, 18, 231 Friedman, Milton, 195 “From the Roots” (NPA monthly column), 205 Gallagher, Richard, 198 Garn, Jake, 118, 130, 214 Garn–­St. Germain Act of 1982, 193, 211, 232 Gaudette, Thomas A. (“Tom”), 24–­29; Alinsky training, Alinsky-­style organizing, and, 24, 26–­29, 70; background and overview, 24; clergy, religious institutions, and, 24, 28, 29, 47; institutions founded by, 70; organizers and, 24–­26, 29, 47, 70–­ 71; positions held by, 24; Shel Trapp and, 25, 27; South Austin and, 24–­25, 28 Gaynor Realty, 33 Gear, Juanita, 199 Gelfand, Mark, 260n54 gentrification, 9, 157. See also displacement

302 geographic discrimination, 83, 122, 147; CRA and, 142, 160; defined, 83; FHLBB and, 163; race-­based geographic discrimination in lending, 5; redlining and, 50, 103, 138; reinvestment activists and, 5, 83, 100, 103, 107; struggle against, 5, 12, 137, 138, 142, 160, 163 ghettos, 106; “ghetto” conditions, 27; moving people between, 53 “ghost towns,” 65, 81, 92 Glass-­Steagall Act of 1932, 213 Gray Panthers, 186, 211, 290n79 Great Depression: aftermath of, 7–­8, 43, 44, 57, 108–­9; mortgages and, 43–­45, 51, 57, 210 Greater New York Savings Bank, 173 Great Inflation, 191, 208 “greenline,” Jimmy Carter’s, 152 “greenlining drive,” 94–­95 Grothaus, Darel, 105–­6 Grzywinski, Ron, 138, 173 Hanlon, Ann, 115 Harris, Fred, 76, 80, 132 Harris, Patricia, 148f, 149 Heaney, Mark, 219 Hearns, Janice, 225 Heinz, John, 213 Helgeson, Jeffery, 48 Hetherington, Marc, 267n68 Hills, Carla, 90, 93–­94 HMDA (Home Mortgage Disclosure Act of 1975), 5, 10, 113, 114, 119, 150, 218, 219; American Bankers Association (ABA) and, 181; bankers and, 140, 141, 178, 197, 219; banks and, 119, 135, 140–­41, 144, 145, 173, 179, 180, 230; Chicago and, 220; Congress and, 119, 156, 165, 167, 179, 186–­87; CRA and, 123, 135, 136, 140, 176, 179; credit allocation and, 113, 119, 140, 193, 197; data and reports on, 135, 136, 140, 143, 147, 173, 176–­79, 220, 221, 230; deregulation and, 119, 126, 186; and disclosure, 119, 120; disinvestment and, 135, 143, 179; Federal Reserve and, 140; FHLBB and, 140, 163; Gale Cincotta and, 119, 140, 144, 173, 179; hearings for, 113–­20, 130, 141, 163, 178, 186; Joseph Benedict’s criticism of, 179; lending discrimination and, 230;

index limitations, 119, 179, 231; NPA and, 118, 121, 123, 124, 135, 178, 179, 181, 186, 220; NPA /NPAH affiliate organizations and, 123, 177, 178, 218; overview, 113; passage of, 5, 119, 122, 156, 165, 167, 173, 179; reinvestment and, 179; reinvestment activists and, 5, 10, 113, 118–­19, 125–­26, 137, 140, 144, 147, 177–­80, 188, 220, 221, 231; reinvestment groups’ use of, 190; savings and loans and, 135, 140–­41, 176, 177, 180; Senate Banking Committee and, 135, 186; sunset provision, 179; support for, 177, 188; urban neighborhoods and, 119, 121; US League and, 118–­19; William Proxmire and, 114, 119, 123, 135, 136, 140, 186 home loans, 92, 143; suburban, 177. See also FHLBB Home Mortgage Disclosure Act of 1975. See HMDA homeownership (and homeowners), 27, 28, 45, 46; the dream of, 114, 205; FHA and, 46, 50–­53, 57–­59, 64–­67, 75, 90–­93, 95; FHLB Act and, 44; HUD and, 91, 92; HUD Act and, 51–­52, 56–­59; landownership, farmers, and, 204–­5; Neighborhood Housing Services (NHS) and, 96–­98; NPAH and, 90–­92, 100; policymakers prescribed a new policy framework for, 56; savings and loans and, 7, 42–­45, 100, 185. See also integration; specific topics Home Owners Loan Act, 166 Home Owner’s Loan Corporation (HOLC), 45 Hope, C. C., 181 House Banking Committee, 115f; Gale Cincotta’s testimony before, 114–­17, 115f Housing Act of 1949, 8, 166 Housing Act of 1954, 8 Housing and Community Development Act of 1974, 91 Housing and Community Development Act of 1977, 145, 153, 158. See also CRA housing credit, 196 housing crisis, urban, 75, 149, 170, 173; bank-­based solutions to the, 105; building a national movement against the, 84–­89; FHA reform and, 81, 84; legislative solutions to the, 91; NPAH and, 87, 88, 91; NPAH conference on the, 75, 76,

index 80; “redlining part” and “tenant half” of the, 87; role of banks in solving the, 84. See also affordable-­housing crisis; urban crisis Housing Training and Information Center (HTIC), 86, 121 HUD (Department of Housing and Urban Development), 68, 130; Community Development Block Grant (CDBG) program and, 128; Community Investment Fund (CIF) and, 168; distrust of, 94; FHA and, 64, 65, 68, 89–­94; FHA insurance and, 64, 89, 92; FHLBB and, 164; foreclosures and, 65, 89, 91–­93; NPA /NPAH and, 91–­94, 128, 129, 168; programs of (see HUD programs); reinvestment activists and, 91–­94, 153; Robert McKinney and, 164, 168; UDAG and, 153, 154; Urbank and, 151; URPG and, 149. See also Romney, George HUD Act (Housing and Urban Development Act of 1968), 51, 53, 56–­61; and being FHAed, 51, 57–­60; FHA and, 51, 52, 57–­61, 64, 258n24; FHA insurance and, 51, 53, 59–­61, 64; homeownership, homeowners, and, 51–­52, 56–­59; interest rates and, 59–­61, 258n24; mortgage-­backed securities and, 52, 57, 60; programs created by, 58, 265n32; Shel Trapp and, 57, 60; and West Side, Chicago, 58, 60 HUD programs, 112, 168; William Proxmire and, 112, 145 Humphrey-­Hawkins Full Employment Act, 133 Hunt Commission, 108, 189; deregulation and, 108, 109, 189 Hyman, Louis, 54, 293n5 Illinois, 95, 220; FHA rates and, 61; legislation, 45, 61, 104, 105, 213; mergers and acquisitions in, 220; NPAH and, 104; politicians, 80, 90, 104, 118, 127; redlining in, 107; savings and loans in, 45. See also Chicago inflation: Federal Reserve and, 192–­95, 205; FHLBB and, 165, 168, 188; Great Inflation, 191, 208; Jimmy Carter and, 193, 194; New Deal financial regime and, 107–­9; Paul Volcker and, 194–­95; Robert

303 McKinney and, 165, 166, 188; William Proxmire on, 141 Institute for Community Investment (FHLBB), 151 institutional investors, 55, 57, 59, 61, 63, 106 insurance, 92, 95, 144; companies, 57, 74–­77, 215; CRA and, 215; FDIC, 144; redlining and, 106, 215; savings and loans and, 144. See also federal deposit insurance; FHA insurance (programs); mortgage insurance integrated neighborhoods, 50, 104, 116; NPA and, 8; redlining and, 129; reinvestment activists and, 111; savings and loans and, 55, 163, 233; transitional neighborhoods and, 129; whites moving into, 250n43 integrating neighborhoods, 82, 98, 156, 157; redlining and, 1, 140, 163; reinvestment activists and, 19; as “risky” neighborhoods, 7; savings and loans and, 19, 55, 110–­11; transitional neighborhoods and, 18 integration, 26, 39, 111; Austin and, 18–­20, 22, 26, 27, 31–­32, 36, 38, 46–­49; banks, bankers, and, 116; Catholic and Protestant churches and, 23, 24; community organizing to manage, 19–­31; CRA and, 136, 139–­40, 156–­57; democratic experiments in, 21; neighborhoods that never integrated, 20; and property values, 22, 111; reinvestment activists and, 32, 111, 116; school, 78. See also resegregation interest rate ceilings. See Regulation Q interest rates, 113, 165; credit crunch of 1966 and, 54, 59, 107–­8, 110; deregulation and, 185, 190, 194, 211; Federal Reserve and, 109, 193, 194, 206; Federal Reserve Board and, 54, 109; FHLBB and, 187–­88; Gale Cincotta and, 196, 198–­201; George Romney and, 60–­61; HUD Act and, 59–­61, 258n24; New Deal financial regime and, 45, 107–­8, 188, 190; Paul Volcker and, 196–­99, 211 Jackson, Jesse, 26 Jamaica Plains Investment Plan, 94–­95 Jefferson Park, 117 Jeffrey, Doris, 178 Johnson, Lyndon Baines, 56

304 Jones, Ona, 178 Jones, Thomas, 98–­99 Kaiser, Edgar, 56 Kaiser Commission (President’s Commission on Urban Housing), 56, 59 Kennedy, Robert F., 56 King, Martin Luther, Jr., 77–­78. See also Chicago Freedom Movement /Chicago open housing movement; Leadership Council for Metropolitan Open Communities Kuttner, Robert (“Bob”), 113, 114, 135, 143, 148, 234–­35; Gale Cincotta and, 113, 143, 148; Ken McLean and, 113, 114; William Proxmire and, 113, 114, 135, 143, 234 labor unions, 23, 111, 127, 207 Lake Street (Chicago), 19 Lance, Bert, 157–­59 landownership, 204–­5 Latinx, 3, 64, 78–­79, 95 Law Enforcement Assistance Administration, 122, 149 Lawndale, 20, 32, 36, 46, 63 Leadership Council for Metropolitan Open Communities, 36, 38 lending: lack of demand for, 139, 177; mandated, 84, 123, 158–­59, 194, 197, 198. See also specific topics lobbying, 195; by nonprofits, 86, 159–­60; by NPA /NPAH, 86, 87, 120, 131f, 160; by reinvestment activists, 146 Lower Interest Rate Act of 1975, 113 MacLean, Nancy, 224 managed integration, 22. See also integration Marshall Plan, 6; reinvestment activists and the goal of, 4, 6, 8, 126 Mason, David, 168 McCarthy, Eugene, 80 McCarthy, Justin, 29 McGovern, George, 76, 80 McKinney, Robert, 162–­65, 170; background and overview, 162; on Community Investment Fund (CIF), 168–­69; CRA and, 178, 183; criticisms of, 163, 164; Financial Institutions and Interest

index Rate Control Act and, 165; inflation and, 165, 166, 188; Jimmy Carter and, 162–­64, 168, 169; NPA and, 163, 167; older neighborhoods and, 163, 164, 183; redlining and, 163, 164, 167; reinvestment and, 162–­64, 168; reinvestment activists and, 163, 178, 183, 188; savings and loan industry and, 162–­68, 170, 183; variable-­rate mortgages (VRMs) and, 188; Walter Mondale’s praise of, 164 McLean, Ken, 113–­14, 135–­37, 145; Robert Kuttner and, 113, 114; William Proxmire and, 113–­14, 136 McMath, Otto, 202f McNeil, James, 48 “megafinancials,” 212, 217, 234; deregulation and the rise of, 208–­16; NPA conference on, 215–­16 mergers. See bank mergers Metropolitan Area Housing Alliance, 86 Mexican-­American Unity Council, 95 Mid-­America Institute for Community Development, 70 Miller, Anita, 96–­97 Milwaukee, 230 Mondale, Walter, 164 monetarism: credit allocation and, 197, 198; Federal Reserve and, 192, 195–­97, 205; Paul Volcker and, 195, 211; practical, 195 money market certificates (MMCs), 187, 188 money-­targeting approach of Paul Volcker, 195–­97 mortgage-­backed securities, 57, 61, 62, 213; bundling and, 57, 61; FHA and, 57, 61, 62; history of, 258n15; HUD Act and, 52, 57, 60; New Deal and, 57, 60, 213; savings and loans and, 52, 57, 62 Mortgage Bankers Association, 61 mortgage brokers, 72, 93 mortgage insurance, 7, 45, 51, 57. See also FHA insurance mortgages: and the credit crunch of 1966, 54, 107, 110; George Romney and, 60, 61, 66; Great Depression and, 43–­45, 51, 57, 210; New Deal financial regime and, 45, 53, 55, 60, 83, 116, 188, 208–­10. See also HMDA; variable-­rate mortgages; specific topics

index Mott, Andy, 138 Murray, Helen, 71, 85, 86; CRA and, 138, 174–­75; NPA /NPAH and, 86, 88, 137–­ 38; William Proxmire and, 174–­75 Nader, Ralph, 142, 163 Naparstek, Art, 106 National Center for Urban Ethnic Affairs (NUE /NCUEA), 71, 72, 106 National Commission on Neighborhoods (NCN), 130–­32, 134, 147, 148, 279n93; Gale Cincotta and, 147–­48, 148f; William Proxmire and, 130–­32, 147 National Development Bank (Urbank), 151 National Neighbors, 74 National People’s Action. See NPA (National People’s Action)/NPAH (National People’s Action on Housing) National People’s Action on Housing. See NPA (National People’s Action)/NPAH (National People’s Action on Housing) National Savings and Loan League, 113. See also US Savings and Loan League National Training and Information Center (NTIC), 121. See also Housing Training and Information Center National Urban League, 184 national urban policy, 124; CRA and, 156, 161; the financial turn in, 146–­54; Jimmy Carter, the Carter administration, and, 146–­48, 150–­52, 154–­56 (see also New Partnerships); need and demand for a, 125, 146, 208; NPA and, 124–­26, 146, 156, 161; political pledges to develop a, 131, 132; reinvestment activists and, 6, 125, 146, 150, 156, 208; rooted in neighborhoods, 6, 124–­26, 132, 146, 148, 161, 208 Neighborhood Commercial Reinvestment Centers, 151 neighborhood credit, NPA’s proposals for, 198 neighborhood credit needs, 150, 220 Neighborhood Housing Services (NHS), 96–­100, 141, 151; CRA and, 141; NPA / NPAH and, 96–­99, 128, 141; overview, 96; reinvestment activists and, 96, 99–­ 101; savings and loans and, 167, 211; Thomas Jones on, 98 neighborhoodism, 246n27

305 neighborhood lending, 219; commercial banks and, 180, 215, 227; CRA and, 180; Kristin Faust and, 223, 227; programs, 215, 226; reinvestment activists and, 180, 182, 194, 226; by savings and loans, 182; units, 194, 227 “neighborhood people,” 13, 204 “neighborhood strategy,” 130, 131. See also national urban policy: rooted in neighborhoods Neighborhoods First campaign, 126, 127, 130, 155; Jimmy Carter on, 134, 149; “Neighborhoods First Week,” 149. See also People’s Platform Neighborhoods Uniting Project, 176–­77 Neubauer, Chuck, 92–­93 Neumann, Tracy, 278n93 New Deal banking regulations, 81 New Deal financial regime, 7, 52, 132, 190, 230, 232; banks and, 100, 107, 230; CRA and, 139, 142, 156, 165, 215, 226; credit crunch of 1966 and, 54, 107, 108; DIDMCA and, 189–­90; FHA and, 45, 51, 90, 94; HMDA and, 119; inflation and, 107–­9; interest rates and, 45, 107–­8, 188, 190; legislation that dismantled the, 232; mortgage-­backed securities and, 57, 60, 213; mortgage credit and, 53, 55; mortgages and, 45, 60, 83, 116, 188, 208–­10; neighborhoods and, 52, 107, 142; postwar period and, 7, 44–­45; race and, 13, 45, 82–­83; reforming, 107–­9, 119, 189; reinvestment activists and, 83, 90, 107, 133, 139, 142, 210; savings and loans and, 44, 45, 51, 53, 83, 108, 116, 118, 132, 165, 194; thrift industry and, 45, 81; working-­ class whites and, 13. See also financial common sense: New Deal New Deal savings and loan system, 55–­57, 60 New Deal–­style thrift lending, 83, 88 New Federalism, 8, 128, 132, 134 New Orleans, 182 New Partnerships, 123, 150–­52, 154–­55, 168; financial institutions and, 232; Jimmy Carter and, 150–­52, 154 Nixon, Richard M., 60–­61, 80, 89, 112, 133 “no demand” argument. See lending: lack of demand for North Austin, 19, 25, 33, 42, 46, 47 Northern Trust, 222

306 North Lawndale, 20 North Side Savings Bank, 175–­76 Northwest Community Organization, 41, 63 NPA (National People’s Action)/NPAH (National People’s Action on Housing), 87, 88, 104, 112, 120–­21, 129, 206, 231; activists, 89–­91, 114, 132–­34, 174, 197, 207f, 234; affiliates (see NPA /NPAH affiliate organizations); agenda, 8–­10, 121, 125, 154, 205; American Bankers Association (ABA) and, 181–­82; Anita Miller and, 96–­97; Battle of New Orleans (protest), 182; Citizens Guidelines and, 160, 161, 171; civil rights organizations and, 89, 127, 134; commercial banks and, 100, 181, 211–­12; community-­bank partnerships and, 141, 211; conferences (see NPA /NPAH conferences); Congress and, 186, 212, 215; congressional hearings and, 186; CRA and, 139, 144–­46, 151, 155, 159–­61, 170, 171–­77, 179, 183, 186, 187, 212, 219–­20, 224, 234; CRA enforcement and, 171, 175, 176, 181, 216, 224; credit allocation and, 15, 193, 197, 200–­202; defending their financial common sense, 81, 83, 99, 120, 212; deregulation and, 186, 211, 212, 215; disclosure activism, 100–­106, 110, 114; disinvestment and, 87, 89, 124–­25, 138, 173; farmers and, 193, 201, 206; federal cuts to social services and, 205; Federal Reserve and, 9, 175, 200, 205, 206, 212; FHA and, 82, 89–­91; FHA abuses and, 89–­94, 125; FHA insurance and, 89–­92, 125; FHA reform and, 84, 91, 93; FHLBB and, 97, 102, 103, 163, 170, 183; financial common sense and, 212; foreclosures and, 81, 89–­93; founding/formation of, 3, 4, 125, 226, 233; Gale Cincotta and, 3, 4, 96–­97, 127f, 147, 159, 172, 175, 179, 181, 186, 199–­201, 205, 212, 214, 231; Helen Murray and, 86, 88, 137–­38; HMDA and, 118, 121, 124, 135, 178, 179, 181, 186, 220; Housing Training and Information Center (HTIC) and, 86; HUD and, 91–­94, 128, 129, 168; interest rates and, 186, 187, 202, 205, 206, 209; Jimmy Carter and, 134, 148, 149, 151; John Perkins and, 181; labor unions/organized labor and,

index 127, 201, 207; leaders (see NPA /NPAH leaders); lobbying for FHA reform, 83, 84, 89–­93, 120; in the media, 92–­93, 133, 161; megafinancials and, 212, 215–­16; members (see NPA /NPAH members); mission of, 76–­77, 82, 83, 89, 97; naming of, 77; national reinvestment movement and, 89; National Urban League and, 184; national urban policy and, 124–­26, 146, 156, 161; National Commission on Neighborhoods (NCN) and, 148; Neighborhood Housing Services (NHS) and, 96–­99, 128, 141; Neighborhoods First campaign, 126, 127, 130, 155; NPAH renamed, 3, 122; older neighborhoods and, 8, 125, 148–­49; overview, 3; Paul Volcker and, 198–­201, 199f, 216; People’s Platform and, 128, 135; protests, 161; publications, 85f, 87, 172, 205, 206 (see also Disclosure); real estate abuse and, 77, 120; on real estate investment trusts (REITs), 144; redlining and, 87, 88, 104, 148, 159–­60, 173, 181, 194; regional meetings, 201; reinvestment activists and, 91, 133, 143, 184, 186, 224; renamed National People’s Action, 3, 122; Republicans and, 131–­32; Robert McKinney and, 163, 167; savings and loans and, 82, 99, 100, 102, 111, 135, 161, 167, 187, 208, 209, 211, 234; Senate Banking Committee and, 130, 135, 186; Shel Trapp and, 3–­4, 88, 96–­97, 126, 127f, 147, 172, 179; Shore Bank and, 173; staff of, 91, 101–­2, 173, 197; strategies to combat urban housing crisis, 81; trainings and workshops for community organizers, 219–­20; transitional neighborhoods and, 82–­84, 89, 92, 106, 120, 144–­45, 84, 148–­49; UDAG and, 154; unprocessed papers of, 15; urban housing crisis and, 87, 88, 91; Urban Lending Law and, 167; William Proxmire and, 114, 119, 130–­32, 135–­38, 143–­45, 189, 197 NPA /NPAH affiliate organizations, 91, 93, 104, 111, 150, 177, 203, 206; Alinsky-­ style organizing and, 86–­87; cities with, 85f; commercial banks and, 181; CRA and, 173, 174, 176–­78, 183, 219; disclosure and, 103, 105, 114, 118, 218; displacement and, 179; Federal Reserve

index and, 192, 200; HMDA and, 123, 177, 178, 218; housing studies conducted by, 87; meeting of, 127f; moratorium on federal housing programs and, 89; Neighborhood Housing Services (NHS) and, 97, 98, 128; NPAH’s respect for the autonomy of, 86; number of, 130; People Acting through Community Effort (PACE), 105, 106, 122; redlining and, 114, 117, 194; reinvestment activists and, 173; research conducted by, 117, 163; savings and loans and, 81, 141, 143, 174–­77; staging mock funerals for the American dream, 192; transitional neighborhoods and, 148–­49; UDAG and, 154; urban housing crisis and, 81 NPA /NPAH conferences, 104, 131f, 215; 1976 conference in Washington, DC (“People’s conference”), 126, 130; conference on urban housing crisis, 75, 76, 77f, 80, 87; “State of the Neighborhoods” conference in Washington, DC (1977), 147, 149 NPA /NPAH leaders, 87, 91, 92, 94, 100–­105, 124–­26, 143, 151, 155, 159, 181, 187, 191, 202, 203; commercial banks and, 144, 167, 180, 212; CRA and, 136–­38, 146, 159, 172, 180, 196, 219, 220; credit allocation and, 191, 197, 201, 203; educating affiliate groups, 172; farmers and, 204–­5; Federal Register and, 129; Federal Reserve and, 196–­98, 201, 202, 212; interest rates and, 202–­5; meetings of, 126, 205; monetarism and, 204–­5; Paul Volcker and, 195, 198–­ 99, 199f; planning conferences, 126, 147; race of, 12; Reclaim America campaign, 202f, 206, 207f; savings and loans and, 167; Shore Bank and, 173; testimony of, 115f, 127, 146 NPA /NPAH members, 83, 99, 106, 156, 179, 184; Battle of New Orleans (protest) and, 182; Community Investment Fund (CIF) and, 168, 170; CRA and, 159, 175; Federal Reserve and, 175; Jimmy Carter, the Carter administration, and, 134, 149, 156 O’Connell, William, 162 older neighborhoods, 106, 111; banks and, 1; Community Development Block

307 Grant (CDBG) program and, 128, 129; CRA and, 142, 144, 145; discrimination against, 164; FHAed, 115; funding/support for, 125, 129, 143–­45; Gale Cincotta on, 122, 126, 145; NPA and, 8, 125, 148–­49; reinvestment activists and, 7, 125, 143–­44; Robert McKinney and, 163, 164, 183; savings and loan industry and, 144, 163, 183 older people. See elderly “one-­drop” logic, 7, 83 open-­housing campaigns, 37–­38. See also Chicago Freedom Movement /Chicago open-­housing movement Operation Unravel (political campaign), 181 Organization for a Better Austin (OBA), 17, 18, 29, 40–­42, 46–­49; activists, 32, 39, 250n43; characterizations of, 31; Chicago Commission on Human Relations (CCHR) and, 34; committees of, 31; community meetings and, 31; evolution and changing focus of, 48, 49; formation of, 22, 29; founding conference of, 31; Gale Cincotta and, 17, 29–­32, 34, 47; goals and mission of, 17, 31–­32; and the government, 34; Housing Referral office, 36–­39; infiltrated by undercover police officer, 48; leaders, 47, 48; Leadership Council for Metropolitan Open Communities and, 36, 38; Mark Salone and, 48; in the media, 36–­37; members, 17, 18, 26, 27, 30–­35, 38–­40, 42–­45, 47– ­49 (see also Bailey, Ed; Volpe, Mary); most important work of, 31; North Austin whites and, 25; panic peddlers, panic peddling, and, 17–­18, 32–­36, 40–­42, 48–­49; politics and, 48; race and, 17, 18, 25, 31–­33, 35–­39, 45–­49; racial change and, 31–­32, 34, 39; real estate abuse and, 31–­32, 39, 41, 49; real estate agents and, 17, 32–­38, 40, 46, 47; savings and loans and, 42, 43, 46; segregation, integration, and, 29, 31–­33, 36, 39, 46–­ 49; Shel Trapp and, 34, 37; South Austin and, 36, 38, 39, 47; speculators and, 40–­42; staff of, 30–­31, 37; strategies and tactics of, 34–­41; transitional neighborhoods and, 18; and West Side, Chicago, 32, 35, 41, 42; West Side Coalition against Panic Peddling

308 Organization for a Better Austin (OBA) (cont.) (WSC) and, 41, 47; women and, 30–­31; youth crime and, 30 Osman, Suleiman, 246n27 Page, Phil, 143–­44 panic peddlers: characterizations of, 32–­33; defined, 17–­18; dual housing market and, 19, 21, 33; Gale Cincotta and, 53, 54, 108; Organization for a Better Austin (OBA) and, 17–­18, 32–­36, 40–­42, 48–­49. See also “blockbusters” panic peddling: real estate agents and, 17–­21, 32–­37, 40, 41, 46, 53, 73; scope of the term, 34; ordinances, 34, 38. See also under real estate agents/brokers; see also West Side Coalition against Panic Peddling Patman, Wright, 109 pension funds, 55, 57 People Acting through Community Effort (PACE), 105, 106, 122 People’s Action, 234. See also NPA (National People’s Action)/NPAH (National People’s Action on Housing) People’s Platform, 126–­28, 132, 134, 135 Percy, Charles F., 56, 80 Perkins, Beulah, 63, 65 Perkins, John, 181–­82 Perpetual Savings and Loan, 177 Pittsburgh: Neighborhood Housing Services (NHS) and, 96, 98; organizers in, 172, 219–­20 “point system,” FHA’s, 72–­73 Populist movement: of 1890s, 9, 99, 206. See also social democratic populism post-­Depression period. See Great Depression: aftermath of postwar period: Democratic Party and, 13, 131, 232; FHA and, 45, 58; liberalism in, 124, 232; New Deal and, 7, 44–­45; savings and loans and, 42–­45, 107; suburbs in, 11, 29; urban renewal in, 8, 11 power, 48, 49, 131–­33, 233–­35; black (see black nationalism); defined, 249n31; reinvestment activists and, 128, 129, 134, 178; Richard J. Daley and, 103; savings and loans and, 161, 165–­68, 170, 172, 189, 193, 211; shaping the market by

index means of, 31–­42. See also under Alinsky, Saul; Alinsky-­style community organizing; see also empowerment power brokers, 31, 32; vs. reinvestment activists, 3; scope of the term, 3 power relations, 9, 18, 32, 67 President’s Commission on Urban Housing (Kaiser Commission), 56, 59 Pritchett, Wendell, 257n8 Proxmire, William, 114, 164, 188; background and overview, 112–­14; commercial banks and, 119, 139; CRA and, 123, 135–­45, 164, 174–­75, 218; on depository institutions and the private sector, 141–­42; disinvestment and, 135, 138, 139; Gale Cincotta and, 114, 137, 139, 143, 147; HMDA and, 114, 119, 123, 135, 136, 140, 186; HUD programs and, 112, 145; on inflation, 141; Ken McLean and, 113–­14, 136; National Commission on Neighborhoods (NCN) and, 130–­32, 147; NPA /NPAH and, 114, 119, 130–­32, 135–­38, 143–­45, 189, 197; redlining and, 114, 206; reinvestment and, 197; Robert Kuttner and, 113, 114, 135, 143, 234; Senate Banking Committee and, 109, 112, 113, 206 public-­private partnerships. See New Partnerships racial change, 34, 35; in Austin, 20–­23, 25, 31–­32, 34; Organization for a Better Austin (OBA) and, 31–­32, 34, 39; patterns of, 39 (see also block-­by-­block racial change); redlining and, 114; white-­ to-­minority, 184; working class response to, 72. See also integration; racial transitions; resegregation; specific topics racial integration. See integration racial transitions, 12, 20, 117. See also racial change racism, institutional, 12, 75, 83. See also redlining; specific topics Reagan, Ronald, 193; 1980 presidential election of, 201, 205; economic program, 207 real estate abuse, 52, 72, 75; combating, 19, 21, 22, 32, 39, 41, 49, 52, 55; FHA and, 52, 64, 75; NPAH and, 77, 120; Organization for a Better Austin (OBA) and, 31–­32, 39, 41, 49; race and, 21, 22, 31–­32,

index 39, 73, 75, 78; reinvestment activists and, 11, 55; in transitional neighborhoods, 10, 49, 52 real estate agents/brokers, 75, 90; Chicago Commission on Human Relations (CCHR) and, 34; FHA and, 51, 53, 64, 67–­68, 73; Gale Cincotta and, 10, 34; Housing Act and, 67–­68; independent dealers replacing professional, 40; Organization for a Better Austin (OBA) and, 17, 32–­38, 40, 46, 47; panic peddling and, 17–­21, 32–­37, 40, 41, 46, 53, 73 (see also panic peddlers); Perpetual Savings and Loan and, 177; race and, 17–­21, 32–­38; reinvestment activists and, 32, 76; terminology, 248n13; West Side Coalition campaigns against “fast-­buck,” 41. See also West Side Real Estate Board real estate investment trusts (REITs), 144 Reclaim America campaign, 206; meeting of, 202f; rally for, 207f red lines, 50, 67 redlining: birth of the term, 15–­16; “by class,” 9, 201; community-­bank partnerships and, 2, 6, 123; definitions, 50, 106; FHLBB and, 102, 163, 167; Gale Cincotta and, 1, 89, 114, 118, 127, 201; geographic discrimination and, 50, 103, 138; as an insurance practice, 106; Jimmy Carter and, 134, 147; media’s use of the term, 106; methods of, 100–­101; NPA /NPAH and, 87, 88, 104, 148, 159–­ 60, 173, 181, 194; NPA /NPAH affiliate organizations and, 114, 117, 194; as part of the housing crisis, 87; problem of insurance redlining, 215; as a “problem of the ghettos,” 106; research on, 87; Robert McKinney and, 163, 164, 167; William Proxmire and, 114, 206. See also “economic redlining”; specific topics Regulation Q, 107, 139, 185–­86; commercial banks and, 44, 100, 107, 108, 185–­86, 208; Depository Institutions Deregulation Committee (DIDC) and, 189, 208; DIDMCA and, 189, 208; extensions of and modifications to, 100, 108; overview, 44; savings and loans and, 44, 54, 107, 108 reinvestment, 8; vs. state-­mandated lending, 197. See also specific topics

309 reinvestment activists: affirmative action and, 12–­13, 137, 142, 161, 190; bank mergers and, 172, 216, 227; commercial banks and, 99, 144, 180, 182, 205; common ground of bankers and, 96; community-­bank partnerships and, 2, 5, 6, 100, 216, 230; CRA enforcement and, 183, 224; deregulation and, 6, 126, 193–­ 94, 213, 216; description and characterizations of, 13; disinvestment and, 8, 123, 134, 142, 179; factors that influenced their demands and political worldview, 11; Federal Reserve and, 9, 102, 192, 196–­200, 203–­4; FHA insurance and, 61, 80, 110, 125; geographic discrimination and, 5, 83, 100, 103, 107; HMDA and, 5, 10, 113, 118–­19, 125–­26, 137, 140, 144, 147, 177–­80, 188, 220, 221, 231; integration and, 32, 111, 116; Jimmy Carter and, 133, 134, 150, 276n43; national urban policy and, 6, 125, 146, 150, 156, 208; Neighborhood Housing Services (NHS) and, 96, 99–­101; neighborhood lending and, 180, 182, 194, 226; New Deal financial regime and, 83, 90, 107, 133, 139, 142, 210; NPA /NPAH and, 91, 133, 143, 184, 186, 224; older neighborhoods and, 7, 125, 143–­44; Paul Volcker and, 192, 198–­200, 204; power and, 128, 129, 134, 178; reasons for their success in winning new banking regulations, 5–­6; receptive audience in policymakers, 6; Robert McKinney and, 163, 178, 183, 188; transitional neighborhoods and, 3, 11, 19, 83, 120, 124, 130, 139, 143, 144; and the urban crisis, 5, 9, 49, 105, 150, 231 reinvestment projects. See Neighborhood Housing Services (NHS) reregulation, 16, 214, 230, 233. See also deregulation resegregation: of Austin, 20, 26, 36, 38, 49; bankers and, 116; Organization for a Better Austin (OBA) and, 29, 31–­32, 36, 49 Reuss, Henry, 112–­13 reverse racial steering/countersteering, 38, 39 Rhoades, LeRoy, 35 Rodgers, Daniel, 11

310 Rodgers, Lenora, 149 rollover mortgage, 209–­10 Romney, George, 94; FHA and, 60–­61, 66, 86, 94, 267n69; as HUD secretary, 60, 66, 79, 86; interest rates and, 60–­61; mortgages and, 60, 61, 66 Roseland, 93, 117 Rosenthal, Benjamin, 215 Rostenkowski, Dan, 76, 127 Rubinowitz, Leonard, 105–­6 Rusin, Jerry, 40 Rutherford, Ann, 36 Rutherford, Norman, 36 Safire, William, 158 Salone, Mark, 48 Santow, Mark, 23 Sargent, Francis, 105 savings and loan (S&L) industry/thrift industry, 44, 96, 170; Congress and, 166, 170; CRA and, 165, 183; credit crunch of 1966 and, 54, 110, 112; deregulation, 185, 227; FHLBB and, 166, 170; New Deal financial regime and, 45; NPAH and, 81; older neighborhoods and, 144, 163, 183; reinvestment activists and, 49, 183; Robert McKinney and, 162–­68, 170, 183 savings and loans (S&Ls)/thrifts: competition between commercial banks and, 99–­100, 107, 108, 161, 167; credit allocation and, 111, 112; deregulation and, 157, 185, 190–­91, 193, 209–­11, 213, 227; DIDMCA and, 157, 189, 193, 208–­9, 211; FHA insurance and, 52, 61, 62, 110; FHLBB and, 102, 103, 140, 163, 164, 166, 167, 169, 170, 183, 185, 187, 200; Gale Cincotta and, 54–­55, 73, 90, 95, 111, 142; HMDA and, 135, 140–­41, 176, 177, 180; homeownership, homeowners, and, 7, 42–­45, 100, 185; integrating neighborhoods and, 19, 55, 110–­11; Jake Garn on, 118; mortgage-­backed securities and, 52, 57, 62; Neighborhood Housing Services (NHS) and, 167, 211; New Deal financial regime and, 44, 45, 51, 53, 83, 108, 116, 118, 132, 165, 194; NPA /NPAH and, 82, 99, 100, 102, 111, 135, 161, 167, 187, 208, 209, 211, 234; NPA /NPAH affiliate organizations and, 81, 141, 143, 174–­77; Organization

index for a Better Austin (OBA) and, 42, 43, 46; and the postwar period, 42–­45, 107; power and, 161, 165–­68, 170, 172, 189, 193, 211; Regulation Q and, 44, 54, 107, 108; reinvestment activists and, 6–­7; relationship between local communities and, 6–­7; Shel Trapp and, 54, 55, 90, 95, 111; terminology, 15–­16; transitional neighborhoods and, 53, 82, 84, 101, 110, 143; variable-­rate mortgages (VRMs) and, 110, 111, 187, 188. See also New Deal savings and loan system; thrift mergers; specific topics Savings Associations, US League of. See US League of Savings Associations school integration, busing for, 78 Schulman, Bruce, 56, 208 secondary discount window, 200 securities, mortgage-­backed. See mortgage-­ backed securities segregation, 11; of Austin, 33. See also integration; resegregation Seligman, Amanda, 20 Senate Banking Committee, 113, 135, 163, 189, 206, 211, 213; Gale Cincotta and, 113, 213–­14; HMDA and, 135, 186; members, 8, 84, 109, 163, 206; NPA and, 130, 135, 186; William Proxmire and, 109, 112, 113, 206 senior citizens. See elderly Shimandle, Mary, 27 Shore Bank, 173 Shriver, Sargent, 132 Shurna, Ed, 27–­28, 39, 49 Sky Realty, 40–­42 slum clearance, 128, 153 “slum landlords”/“slumlords,” 19, 40, 87, 88 “small saver problem,” congressional hearings on the, 186 Snyder, Theodore, 116 social democratic populism, 18, 231; free market and, 18, 231; of reinvestment movement, 3, 128–­29, 210, 234; and transitional neighborhoods, 10–­13. See also Populist movement social responsibility legislation, 158, 166 Solem Realty, 33 Sorteberg, Curt, 204 South Austin, 19, 24–­28; black residents of, 25–­29, 33, 36, 38, 47; Gaynor Realty and,

index 33; Leadership Council for Metropolitan Open Communities and, 36, 38; Mike Thompson on, 47; Organization for a Better Austin (OBA) and, 36, 38, 39, 47; organizers in, 24–­25; pattern of racial change in, 39; Shel Trapp and, 25–­26, 29; sociodemographics of, 24, 27–­29; Tom Gaudette and, 24–­25, 28 South Austin Coalition Community Council, 154 Sparkman, John, 118 speculation, 10, 67, 144, 193 speculative lending, 67, 196 speculators, 10, 42, 52, 71, 74; FHA and, 52, 64, 67, 129; George Romney and, 79; Organization for a Better Austin (OBA) and, 40–­42. See also panic peddlers Stefaniak, Ed, 82 Sternlieb, George, 106 Stevenson, Adlai, 90–­91, 93 Stresser, William, 61–­62 Sugrue, Thomas J., 250n43 Sullivan, Barry, 220 tax breaks, 4–­5, 56 tax policy, 184, 195, 230; nonprofits and, 86 tax revenue, 8, 139, 144, 169, 184; CRA and, 141, 144; loss of, 103, 121 Taylor, Keeanga-­Yamahtta, 33–­34 Thompson, Elnora, 229–­30 Thompson, Mike, 47 3-­6-­3 rule, 187–­88 thrift industry. See savings and loan (S&L) industry/thrift industry thrift lending, New Deal–­style, 83, 88 thrift mergers, 183, 226 thrifts. See savings and loans (S&Ls)/thrifts Tower, John, 140 Town Hall Assembly, 29 transitional neighborhoods, 18–­22, 25–­26, 33, 63, 68, 73, 75, 78, 80, 111, 116, 117, 124, 177, 179; Bell Federal and, 52–­53; Community Development Block Grant (CDBG) program and, 129; commercial banks and, 144; CRA and, 139, 144–­45; deindustrialization and, 148–­49; disinvestment and, 89, 139; FHA and, 52, 53, 63, 68, 73, 75, 83–­84, 89, 92–­94; foreclosure and, 68, 92, 93; geographic discrimination and, 83; HMDA and,

311 121; HMDA data and, 143, 144; local governments and, 18; Neighborhood Housing Services (NHS) and, 99, 101; New Deal financial common sense and, 139; NPA /NPAH and, 82–­84, 89, 92, 106, 120, 148–­49; Organization for a Better Austin (OBA) and, 18, 33; racial discrimination, racism, and, 29, 117, 177; real estate abuse in, 10, 49, 52; real estate agents and, 33; redlining and, 3, 129; reinvestment activists and, 3, 11, 19, 83, 120, 124, 130, 139, 143, 144; savings and loans and, 53, 82, 84, 101, 110, 143; Shel Trapp and, 25, 52–­53; social democratic populism and, 10–­13; terminology, 130. See also racial change transitional real estate markets, 184 Trapp, Shel, 12, 30, 49, 67, 70, 126; Alinsky training, 70; Anita Miller and, 96–­97; background and overview, 3–­4, 25; banks and, 104; Bell Federal and, 50, 52–­54, 65; cooperation (approach) and, 27; CRA and, 172, 175, 179; Disclosure and, 95; FHA abuse and, 65, 67; FHA and, 51, 52, 66–­68; finances, 96, 97; Gale Cincotta and, 3, 4f, 29, 41, 54, 55, 57, 60, 65–­70, 127f, 133, 147, 172, 175, 179; Geno Baroni and, 71, 72; HUD and, 65; HUD Act and, 57, 60; interracial organizing and, 130; John Waner and, 68; Ken McLean and, 113; March 1972 organizers’ conference and, 68–­72, 78; Mark Salone and, 41; national disclosure bill and, 114; Neighborhood Housing Services (NHS) and, 96; New Deal financial regime and, 52; Northwest Community Organization and, 41, 63; NPA /NPAH and, 3–­4, 88, 96–­97, 126, 127f, 147, 172, 179; Organization for a Better Austin (OBA) and, 34, 37; panic peddlers and, 108; panic peddling and, 54 (see also West Side Coalition against Panic Peddling); “perceptions of risk” and, 66; power relations and, 67; race and, 12, 29, 133; real estate abuse and, 52; Richard J. Daley and, 103–­4; Robert Kuttner and, 113; savings and loans and, 54, 55, 90, 95, 111; Senate Banking Committee and, 113; South Austin and, 25–­26, 29; Tom Gaudette and, 25, 27;

312 Trapp (cont.) training organizers, 130, 172, 234; transitional neighborhoods and, 25, 52–­53; and West Side, Chicago, 50, 52, 54, 55, 60, 67, 224; West Side Coalition against Panic Peddling (WSC) and, 41, 50; William Proxmire and, 114 Tripp, Alice, 205 Udall, Morris, 132 “underserved areas,” defined, 142 unions, 23, 111, 127, 207 United Property Group, 22 Urban and Regional Policy Group (URPG), 146–­47, 149 urban crisis: banks and, 8–­9, 189, 231; concern about, 5, 127, 189, 257n8; CRA and, 8–­9; FHA and, 72; nature of, 77, 257n8; reinvestment activists and, 5, 9, 49, 105, 150, 231; solutions to, 49, 150, 189, 231, 257n8. See also housing crisis, urban Urban Development Action Grant (UDAG) program, 9, 124, 152–­54, 168, 196 Urban Development and Neighborhood Preservation, Committee on, 132 urban history: bringing finance into, 6–­10; financialization and, 10 Urban Lending Act of 1977, 166–­67 urban rebellions, 1960s, 5, 51, 55, 94 urban reinvestment. See reinvestment urban renewal, 8, 11, 40, 131, 150, 153, 232; areas of, 40, 166; projects, 18, 40 Urbank (National Development Bank), 151 US League of Savings Associations, 110, 113, 118, 162; CRA and, 174; FHLBB and, 162, 167, 187; Gale Cincotta and, 118, 142; HMDA and, 118–­19; savings and loans and, 110, 162, 174, 187, 188 US Savings and Loan League, 144. See also National Savings and Loan League variable-­rate mortgages (VRMs), 111, 188, 209, 210; FHLBB and, 187; vs. fixed-­rate mortgages, 110, 111, 188; reinvestment activists and, 188; savings and loans and, 110, 111, 187, 188 Vasquez, Ramon, 63, 65 Velto, Al, 41

index Volcker, Paul, 199f, 208; credit allocation and, 197, 198, 200; Credit Control Act and, 198; description and overview, 195; Federal Reserve and, 192, 194–­98, 200, 201, 204, 216; Gale Cincotta and, 198, 201; inflation and, 194–­95; interest rates and, 196–­99, 211; Jimmy Carter and, 194, 198; monetarism and, 195, 211; money-­targeting approach of, 195–­97; NPA and, 195, 198–­201, 199f, 216; redlining and, 196; reinvestment activists and, 192, 198–­200, 204; reinvestment leaders and, 200; reputation of, 194–­95; secondary discount window and, 200; “Volcker’s disease,” 192–­93 Volpe, Mary, 20, 21, 27, 30–­31, 226–­27; Organization for a Better Austin (OBA) and, 20, 30, 31, 226 Walker, Daniel, 104, 118 Wallace, Mary, 31 Waner, John, 67–­68, 70 Watergate scandal, aftermath of, 8, 12 Wessel, Pauline, 203 West Side, Chicago, 1, 46, 49, 98, 224–­25; Chicago open housing movement and, 77–­78; community-­bank partnerships and, 224; FHA and, 58, 62, 67, 82; HUD Act and, 58, 60; mortgages issued in, 82; neighborhoods, 20, 32, 58, 67, 70 (see also Austin); Organization for a Better Austin (OBA) and, 32, 35, 41, 42; organizers in, 49, 64–­66; peddling in, 41, 42; racial change in, 20; Shel Trapp and, 50, 52, 54, 55, 224; Sky Realty and, 41–­42 West Side Coalition against Panic Peddling (WSC), 74; campaigns against panic peddling, 41–­42; FHA and, 53, 68; formation of, 41; Gale Cincotta and, 41, 47, 49, 53, 68; leaders, 47; member organizations, 42, 74; members, 48, 50, 53, 74; Shel Trapp and, 41, 50; shift in focus, 49 West Side Real Estate Board, 35 Whiteside, William, 96 Wilmington United Neighborhoods, 87 Woodstock Institute, 220 World War II, aftermath of. See postwar period Wysocki, Ted, 20, 149