WASHINGTON — Washington. -- Does all federal action to benefit cities, to help avert more Los Angeles-style disasters, have to cost megabucks?
Not at all. Low- or cost-free options for helping inner cities abound. And they start with enforcing the laws we already have on the books.
Consider the 1977 Community Reinvestment Act and its requirement that banks invest in the communities from which they get deposits. Applying that law with vigor could channel billions of bank, and savings-and-loan, dollars into hard-hit communities.
And the need, in places starved for home mortgage and business lending, is immense. Few Americans living outside these communities appreciate the devastating effect of credit denied. Blocks of housing crumble. Businesses close down, or never open. Despair follows.
Reporting provisions of the 1977 law were tightened substantially in 1990 and now there's a fresh flow of information about lending practices -- a lot of it very disturbing.
The Federal Reserve Board, for example, reviewed 6.3 million applications for mortgages and home-equity loans made in 1990. It discovered that blacks get their applications denied twice as often as whites.
ACORN, the poor people's advocacy group, has released a 14-city study comparing, neighborhood by neighborhood, how many loans banks and thrifts make compared to deposits. The result: proportionately, minority areas get only half as many loans as white areas. ''We trust them with our deposits, but they won't trust us with a home loan,'' ACORN president Maude Hurd told the Wall Street Journal. ''Investment practices in the banking industry are contributing to urban decay and decline,'' she asserts.
The bankers last month received a stiff piece of advice from Federal Reserve Bank governor Lawrence Lindsey: Increase lending to low-income and inner-city neighborhoods or the government will step in and do it for you. Mr. Lindsey called for more aggressive lending to small businesses, reconsideration of rejected mortgage applications, and using ''mystery shoppers'' -- undercover blacks and Hispanics -- to reveal discriminatory practices by loan officers.
Will the feds' bite be as good as that bark, especially if there are no more L.A.-type disturbances? The precedents aren't favorable: Past warnings have rarely led to much action.
And the feds have a big, built-in problem. Their regulators, in such agencies as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp., too often assume, as the bankers do, that lending in minority areas is riskier. The irony, of course, is that hundreds of banks went belly-up after wildly speculative real-estate lending. But few have ever lost their shirts on home-mortgage lending.
Rep. Joseph Kennedy, D-Mass., is pressing the idea of a new federal regulatory agency charged solely with investigating discrimination in lending. Maybe it's time.
And once the existing law is enforced, there are many other fairly low-cost steps Washington could take to aid cities.
Carrots for good bank performance is one idea. Ron Grzywinski, chairman of Shorebank and pioneer of community-responsive lending in Chicago's South Shore neighborhood, suggests that banks which demonstrate solid commitment to financing in poorer communities could be granted privileges not normally granted banks. Examples: selling insurance, or permission to set up branches nationwide.
One important measure is now pending in Congress: to push the multibillion-dollar federally chartered mortgage brokers, Fannie Mae and Freddie Mac, to dramatically widen their activity in low-income neighborhoods.
Washington could put pressure on states to police ''red-lining'' of poor neighborhoods by insurance companies.
Federal agencies need to think about employment opportunities for poorer people each time they make a siting decision -- whether it's an office building or a post office. That means more inner-city, fewer suburban sites. There was a federal policy along those lines during Jimmy Carter's presidency. Ronald Reagan promptly scuttled it. It ought to be resurrected.
The federal Community Development Block Grant program, one of the few big-dollar city programs to survive through the Reagan-Bush years, needs tighter targeting to poor neighborhoods -- an effort Housing Secretary Jack Kemp, to his credit, attempted, only to be shot down by Congress.
The bottom-line question in all this is whether official Washington -- Congress, the White House, the agencies -- really cares. Is there genuine commitment to aiding the multiracial city neighborhoods that have so cruelly been cut off from national economic growth since the 1960s? Or is there not?
The argument is made that the national treasury can't ''afford'' -- significant new programs for the cities, even in a post-L.A. world.
Even if you buy that piece of sophistry (why wasn't the same thinking applied to bailing out broke banks and thrifts?), there's no avoiding the need to enforce the pro-city laws we have, and to create reasonable new ones. If official Washington won't do that, then it's guilty of callous bad faith.
Neal R. Peirce writes a column on state and urban affairs.