As director of San Diego's City-County Reinvestment Task Force, it's Jim Bliesner job to enforce a near 30-year-old requirement that banks do business in low- and moderate-income neighborhoods they might otherwise avoid.
The Community Reinvestment Act of 1977 is not a favorite of bankers. Most see the regulation as unnecessarily costly and burdensome. They claim, as bankers, it's their job to find borrowers regardless of location.
So if you ask Bliesner how local banks are doing in CRA compliance, he'll offer a pessimistic response.
"I have to say they're never doing enough," he said in a recent interview.
However, the truth is bank investments in disadvantaged San Diego communities have never been higher. In the last 10 years, for instance, local reinvestment dollars have grown from $173 million to $1.9 billion. Then there's the favorite claim of former councilman George Stevens that the highest rate of homeownership in the city was in his own fourth district, an area that includes most of southeast San Diego.
Bliesner doesn't see that as reason to celebrate. That his position exists at all is because banks have avoided lending opportunities in poor neighborhoods to focus on wealthier locations. The by-product of which stunts the economic development of any neglected area.
"Banks have the power to destroy neighborhoods," Bliesner said.
Before CRA was enacted, banks were notorious for so-called red-lining of low-income neighborhoods. The term red-line resulted from banks actually circling in red ink on a map neighborhoods where they would not do business.
In San Diego, the task force defines low- and moderate-income neighborhoods as those where personal income levels are 100 percent or more below the average of the entire metropolitan area. CRA compliance is required for banks with more than $250 million in assets.
For Bliesner, 58, a Milwaukee native with a master's in social ethics from Boston University, tracking CRA compliance is not easy. He has no authority to punish non-compliers and institutions are not required to periodically file CRA records with the task force or bank regulators. Regulators do audit banks for CRA compliance every few years, however.
What Bliesner does, as one of only two employees at the Reinvestments Task Force, is trace CRA dollars through San Diego's network of nonprofit organizations focused on community development, some of which the task force created.
When banks withhold reinvestment dollars, the task force contacts bank regulators. Three weeks ago, Bliesner requested CRA records from San Diego-based First National Bank because he doubted they had made any investments in disadvantaged neighborhoods. A year earlier the bank declined an opportunity to co-author a CRA plan with the task force, preferring action unhampered by a specific agreement.
Bliesner plans to forward the letter to the U.S. Federal Reserve. Should he file enough complaints it could complicate matters if or when the bank is sold. Rancho Santa Fe-based First Community Bancorp (Nasdaq: FCBP), owner of First National, is thought to continually be on the lookout for a good buyer.
Bliesner prefers to get involved when banks merge. In 2002, the task force held-up Citigroup's (NYSE: C) purchase of Golden State Bancorp, which then owned San Diego's second biggest thrift, for several months because the New York City-based finance company refused to honor the thrift's local CRA pacts. The task force only backed off when Citigroup agreed to a $1.2 billion agreement that included $100 million in loans to small businesses in low- and moderate-income neighborhoods.
Since the inception of the task force in 1977, the organization has developed more than a dozen non-profits, community development corps and loan products. It has influenced the opening of seven new bank branches and created one bank, San Diego's Neighborhood National Bank.
The 6-year-old, $60 million asset bank primarily makes loans in local low- and moderate-income neighborhoods. It made a profit of $676,000 in the fourth quarter of 2003, according to statements filed with the Federal Deposit Insurance Corp.
"I always credited Jim with being a founder of this bank," said Bob McGill, chairman and chief executive of Neighborhood National.
Bliesner doesn't plan on going anywhere soon. He says there are still too many misconceptions about the creditworthiness of low-income borrowers.
"A lot of (risk) is subjective and a lot of it has to do with the corporate culture," Bliesner said. "There are a lot of myths that go into the institutional behavior ... Nobody has ever asked a bank to make an unnecessary risky loan."
"We're asking them to modify their perception of what risk is," he added. "And to do it realistically and to do it based on facts and not on misperceptions."
The real truth, it turns out, is that as long the Community Reinvestment Act is around, banks in San Diego must learn to deal with Bliesner.