Minority Report

Banking is still a white man's business, but getting a bit less so. Though blacks, Latins and Indians encounter difficulty swinging loans at many conventional banks, growing numbers of them are turning up behind the loan desks and in the executive suites of some unconventional ones. The National Bankers Association counts 53 banks round the country that are owned and operated by nonwhites, more than triple the number a decade ago. Though that is still a tiny fraction of the nation's 14,000 commercial banks, the growth is accelerating; federal and state authorities are considering charter applications for about 40 proposed "minority" banks.* Indeed, some Government officials now worry that minority banking might be spreading too rapidly, extending the danger that shakily financed institutions will founder.

That view is hotly disputed by minority bankers, who contend that the nation's ghettos need many more such institutions to help customers who have been overlooked by white banks. "Until recent times, Indian people rarely saw bankers and bankers seldom saw Indians," says Barney Old Coyote, a professor of Indian studies at Montana State University. He has formed the American Indian National Bank in Washington, D.C., "to help Indians as stockholders, borrowers and depositors."

Needed Source. Minority bankers further argue that their organizations are a needed source of both pride and investment capital in ghetto communities. "We've demonstrated the capacity of black people to operate complex business institutions," says I. Owen Funderburg, chief executive officer of the Gateway National Bank of St. Louis. A study by the Conference Board, a nonprofit research organization, found that in 1971 minority banks loaned 40% as much money in their communities as white banks did, even though the minority banks' assets equaled less than one-tenth of 1% of the white banks' wealth.

For all its growth, though, minority banking still faces long odds. The lending policies of such banks are inherently chancy: .8% of the loans made by the Gateway National Bank of St. Louis fail, while the national average loss rate for all banks is .5%. Ghetto bankers accept those risks as inevitable if they are to do their job, but they also have difficulty building a corps of experienced middle managers and attracting capital. Richard Linyard, director of the Seaway National Bank of Chicago, wore three hats until he could find a qualified cashier and controller. Some help on the second problem is coming from white bankers: the American Bankers Association has set up a closed-end investment corporation that has raised $4.5 million in just over two years and invested $1.1 million of it in minority banks.

* Plus at least one for what might be called a majority bank: a Manhattan group wants to form the First Women's Bank & Trust Co.

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