A tale of two banks Affirmative action: Should skin color determine who gets to buy an inner-city bank?

November 25, 1995

THE IRONY IS glaring in a dispute concerning the sale of the nation's largest black-owned bank, Indecorp Inc. of Chicago, to a white bank that actually has a better record of investing in the minority community. Should the symbolism of black ownership count more than the actual dollars and cents impact a company may have on life in black neighborhoods? Answering that question may require a greater degree of maturity on the subject of race relations than the American people seem to have right now.

The owners of Indecorp would like to sell it to South Shore Bank. The merger seems a natural match, a black bank being purchased by a bank that was created 23 years ago to help spur urban renewal in largely African American neighborhoods. But only one of South Shore's founders, current bank chairman Milton Davis, was black. Black Chicagoans are protesting that selling Indecorp to South Shore would be too great a symbolic loss, another black-owned business falling by the wayside. The symbolism is important at a time when African Americans are pressing hard to become less economically dependent on white businesses.

But symbolism can only take you so far. The reality is that Indecorp's Independence Bank has been given a "needs to improve" rating by federal regulators for its failure to make loans in neighborhoods where it takes deposits. South Shore, on the other hand, has consistently received "outstanding" ratings for making loans in the black community. Studies indicate that many of the nation's 38 black-owned banks take fewer risks making loans in the inner city and most of those that have been more aggressive in lending eventually collapsed.

There is no ideal solution to the Indecorp/South Shore dilemma. In an America that Martin Luther King only dreamed of, skin color would not matter. That it does matters means those protesting the sale of Indecorp need to think long and hard about where it matters most. Affirmative action opponents already claim too much emphasis is placed on who owns a company, rather than who the company hires or serves. The failure of this merger would be used as evidence that preference programs too often favor the few while ignoring the many.

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