at this time. The objectives of our examination programs are designed both to determine compliance with the laws concerning nondiscrimination and to determine the extent of association managements' familiarity with those laws. The results of our examinations, of course, enable the Board and its staff to take formal and informal remedial action to correct any violation of law found to have occurred.

Finally, we have appended copies of the agenda and some of the case study materials used during the Fair Housing Training sessions. In addition, sample loan files are utilized as case studies to increase examiners' familiarity with potential problem areas. As part of the instruction in these sessions, attorneys from the Justice Department discuss the legislative background of the various laws dealing with nondiscrimination as well as the techniques used by their investigators in handling complaints of discrimination. An example of the type of materials utilized by the Justice Department attorneys is also attached.

(8) In cases where lenders appear to adopt different criteria for minority and majority applicants and/or white and integrated or minority neighborhoods, what would be an appropriate remedy, in your view? Have you ever imposed such a remedy?

Where violations of nondiscrimination regulations or statutes are found, the Board intends to follow our normal supervisory procedures to obtain compliance. This clearly would involve both seeking informal corrective action, and the issuance of formal cease-and-desist orders, if necessary. In addition, relief in the form of corrective action may be requested or required on a case-by-case basis. It is not possible, however, to state a general rule concerning corrective action since such decisions can only be made on a case-by-case basis after careful review of all the pertinent facts.

(9) What arrangements do you have to refer pattern or practice cases to the Justice Department for action under Title 8?

The Board presently plans to handle the referral of such cases on a case-by-case basis. Over the past three years, members of the Boards' staff have worked closely with the staff of the Civil Rights Division of the Justice Department, and, in particular, with members of the Housing Section. During this three-year experience various matters have been referred to the Board by the Justice Department for investigation and resolution. In addition, the Board has made available to the Justice Department information which it has had in its possession regarding institutions which the Justice Department was investigating.

The Board also serves with the Justice Department and three other Federal financial regulatory agencies and HUD on an interagency task force established to coordinate enforcement procedures under the Fair Housing laws. The task force has met periodically to discuss the various agencies' enforcement programs, and to agree on criteria for determining pattern and practice cases by the agencies and when such cases should be referred to the Justice Department. To date, the primary product of the task force is an interagency Memorandum of Understanding under which each participating agency agrees to forward information on discrimination complaints to other concerned agencies.

(10) Based on the 1974 pilot survey by the Federal financial supervisory agencies, have you examined any associations which seemed to be avoiding making real estate loans to minority borrowers or minority neighborhoods? Association identified as exception institutions on the basis of the 1974 Fair Housing Information Survey data have been examined with special attention to fair housing and nondiscrimination policies. This cycle of examinations is using a special procedure for determining compliance with and findings of the Fair Housing Information Survey in conjunction with EOP 127, our regular nondiscrimination procedure.

Because of the extremely low accuracy of the census tract information in the FHIS, the Board made no attempt to identify associations "which seemed to be avoiding making real estate loans to ... minority neighborhoods."

The Board's initial impression of these examination results is that a system such as the FHIS may not be as effective a method as we had anticipated of directing our attention toward certain associations for non-discrimination examinations. The Board is therefore placing increased emphasis on examiner training in non-discrimination.

Sincerely,

The CHAIRMAN. I'd like to ask the next witnesses to come up together if they would. We have Msgr. Geno Baroni from the Center for Urban Ethnic Affairs; Dr. Arthur Naparstek from the University of Southern California; Mr. Carl Holman, National Urban Coalition; Ms. Gale Cincotta, National Peoples' Action who Senator Garn has already introduced; Prof. Pierre De Vise, University of Illinois; and Prof. Calvin Bradford of the University of Illinois. Lady and gentlemen, we are delighted to have you here. I think you have done marvelous work and you've done it with considerable personal sacrifice and I know how very deeply you feel. If there's anything better in the world than doing good, I'd like to know what it is. I certainly welcome all of you.

I understand that Monsignor Baroni and Dr. Naparstek may have a statement which they can join together. Monsignor, would you leadoff, sir?

STATEMENT OF MSGR. GENO BARONI, NATIONAL CENTER FOR URBAN ETHNIC AFFAIRS

Mr. BARONI. Senator Proxmire, Senator Garn, may name is Geno Baroni. I'm with the National Center for Urban Ethnic Affairs.

In one sense I'm happy to be here but in another sense I wish we didn't have to be here, for our sake and your sake. I will submit to the record our joint statement which Dr. Naparstek will make in a few minutes and also I'd like to show you a new document, “Disclosure and Neighborhood Reinvestment," a citizens' guide which we put together with a number of neighborhood groups.

I'd like to thank the committee, particularly you, Senator Proxmire, for giving citizen groups the opportunity to come here and help develop the law and help to get the law passed. I think it's interesting to note that the group that opposed the legislation cannot be totally expected to legitimately monitor that legislation from any position except from their own interests. From what I heard this morning, I guess I'm happy that they are and seem to be taking it seriously. I wish there weren't so much paperwork involved. I believe also their staff and seminars and task forces present their point of view, the point of view of the financial institutions.

Second, that raises the issue of the overwhelming representation of the banking industry and financial interests on the Federal Home Loan Bank Board. Somehow, I wonder if it wouldn't be better if there would be consumer interests, people interests, neighborhood people, represented on those regulatory agencies and maybe that's something I think perhaps is for the future. But if it wasn't for your interest and this committee's interest and the Congress' interest, we would have no bill and if we had no bill our older cities, Baltimore, Boston, and over to Wisconsin and down to Illinois, would be the ones to suffer. The 75 cities in that area that we have looked at particularly from this point of view would bear the burden.

Working class whites live in these older cities in many of these older neighborhoods that have been disinvested-their money has been taken and sometimes used and deposited or invested somewhere else and then when they want to borrow they are redlined. They live

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in a changing neighborhood. In one sense they are called racists if they want to stay in this changing neighborhood. In the other sense they are called racists if they want to get out of the declining neighborhood.

The real challenge is that if we lose the working class and lower middle class and homeowners in these older neighborhoods who happen to be white and heavily ethnic, if they leave the cities, then the cities are going to become black, brown, and broke and you have a new kind of American apartheid with the hostile suburbs and I think that would be tragic. I think the tragedy of the decline of our neighborhoods where people live is a more serious problem for the American society than the depression was. It's more complicated. It's more difficult when neighborhoods die.

If the center ward has cancer, then the other neighborhoods have cancer. It could be the small businessman that has trouble getting a loan or reinvesting. So the whole mentality, the personal mentality is that people are encouraged to move out to new subdivisions.

They should have all those options. I'm against blockbusting. I'm against redlining. I'm for open housing. I'm for a pluralistic kind of urban society. But if we don't help people change their attitudes personally about disinvestment, about staying or not staying to help revitalize an urban neighborhood, then there really isn't an urban policy. Then our cities will continue to decline and it will cost more in the long run.

Money is very scarce. We have had to raise the money. We have had to do research, neighborhood research-we went to work as partners, as a voluntary sector with the public sector government. In fact, we need less government in that sense. But we'd like to work with the Federal, State and local governments, with the banks, the industry, and the financial sector, but that third sector that makes life viable in the cities is those community groups, those associations, those voluntary associations that make life civil in a society, and if those voluntary groups can't participate as partners with the public and private sectors, then we'll cease to build domocracy and we'll have less participation. We'll have increased alienation and increased frustration.

So the people do live in the neighborhoods and those neighborhoods are dying, yet the burden seems to be to do research, to try to get enough knowledge to work with bankers, to work with small businessmen, to work with industry, to work with the mayors, to negotiate to create viable communities, pluralistic communities, viable cities, to develop policy strategies and programs for reinvestment in our society. That takes the voluntary sector. But we have to go and get $100,000 from church money and I think church money is used for a lot worse things. So I don't mind at all trying to get money out of church groups or foundations to help community groups become partners. like in Baltimore or other places, to develop the background where NHS's and urban reinvestment task force programs can succeed, where people can get together and become partners with the public and private sector.

So it was the community groups and your interest that brought the issue of redlining up in the first place and it was the industry

there was even such an issue. That's why we're concerned, then, not only in terms of how this law works-and I don't think laws solve all the problems either-but there's an attitude. There's a mentality toward investment and disinvestment and reinvestment. We find in many of these neighborhoods, people do have money and they do have to make choices about reinvesting in their community, especially our older cities.

Therefore, we are interested in developing a neighborhood reinvestment strategy, a neighborhood reinvestment policy, and there ought to be those advocates not on the outside but they ought to be on the Federal Home Loan Bank Board. They ought to be in HUD. They ought to be at the community level to work with the neighborhoods. They ought to work with the banks-communities have to work together in this sense.

This legislation has been useful. It's been very helpful and in the long run the only problem I do have is that it's on the back of the weakest sector, the neighborhood sector, the community sector, to do its own little research, to find out what's in those big computers and how to use the data. That always has to be private money that you have to scrounge around-not to throw dirt on the mayor's lawn or desk or on the banker's desk, but to truly become partners in the whole attitude of reinvestment and whole attitude of redeveloping an urban society that has its civility where it's pluralistic, where we can deal with urban life.

The CHAIRMAN. Very good. I understand, Dr. Naparstek, you share that presentation and you'd like to add something to it.

STATEMENT OF DR. ARTHUR NAPARSTEK, UNIVERSITY OF

SOUTHERN CALIFORNIA

Dr. NAPARSTEK. When we originally began to meet on the need for some type of disclosure legislation, we were concerned about providing a tool to community groups to counter disinvestment. In fact, in the earlier hearings on the proposed disclosure legislation, a major focus of community and public interest groups was on the need to document disinvestment in hopes to prevent it. Today, we are here before you, as many of the hearing's participants are, to examine disclosure in the context of how it is being and will be used by communities organizations. In addition to the documentation of disinvestment, we believe disclosure provides community groups the data and the vehicle to begin initiating neighborhood reinvestment programs with other community organizations, city officials, and local lending institutions.

As we all know, the Federal disclosure law is a direct result of community organizations' efforts to take stock in their neighborhoods. Disclosure provides community groups with a necessary tool to determine the relationship between investment in their neighborhoods and their housing and credit needs. Further, it can be supportive to cooperative ventures between community groups, lending institutions and city government to respond to the decline of their neighborhoods. It, therefore, makes sense to us that any evaluation of the legislation. include:

How it is being used by neighborhood groups, and public officials; What it does not provide which is needed by neighborhood organizations;

What are the Federal responsibilities to monitor and strengthen disclosure.

We would like to address some of these issues today.

Even at this early stage we are familiar with several community groups which are using the disclosure data to better understand what their housing and credit needs are and to begin working on reinvestment programs for their neighborhoods.

The National Center, through a grant from the campaign to human development, works with four community groups which are organizing around disclosure and possible reinvestment programs. In Cincinnati, a survey of local lenders was taken to document their feelings on disclosure prior to filing their reports. The research helped provide a basis to determine which lenders might be the most responsive to meeting with a community group after the disclosure reports were released. In Washington, D.C. interviews were conducted after disclosure reports were released to get a sense of how they felt disclosure was being used.

The New Jersey Citizen's Action Alliance is compiling and analyzing the disclosure data for several counties surrounding the Newark area. It also plans to develop specifics neighborhood analysis reports trying the lending patterns information with conditions of neighborhoods information. The alliance has been so aggressive about its role with disclosure that State and local public agencies have been using it as their central source for lending data. Given a little more time, more stories like these will be available.

There has also been supportive activity for the Federal legislation on a State level. While a few States have their own laws for disclosure, some are looking at the Federal law to see how it can be best utilized. The Michigan State Task Force on Redlining, administered through the Bureau of Financial Institutions, is planning to collect the disclosure data and analyze it in conjunction which the socioeconomic characteristics of each area. The State Department of Community Affairs in Pennsylvania is considering a range of options to evaluate disclosure data. They want to create a statewide analysis system which show the relationship between lending patterns and neighborhood disinvestment. Pennsylvania is currently considering a strong State regulation for disclosure of mortgage loans and deposits. There are also city agencies which are responsive to disclosure and how it can be used to insure reinvestment strategies and actions for their communities. Examples include the Seattle Task Force on Reinvestment, the NYC Commission on Human Rights' Neighborhood Stabilization Committee and the Neighborhood Reinvestment Commission in the District of Columbia.

The strength of these additional State and city actions is that they can enact and enforce policies to back up and move beyond the Federal disclosure legislation. Further, community groups have easier access to State and local agencies enabling them to work with their officials. While the Federal disclosure legislation is a victory for community