Making a difference.

Author:Perez, Alfonso J.
Position:Community Reinvestment Act of 1977
 
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Meeting CRA requirements can go beyond just making moreloansto oftenoverlooked markets. Financial institutions can help nurture these communities by contracting out more legal work and other business to women and minority law firms.

Regulations implementing the Community Reinvestment Act (CRA) provide guidelines designed, in part, "to encourage national banks to help meet the credit needs of their local community or communities." Under the rules, banks are required to post a public statement in their lobbies indicating the impact of the CRA and the fact that the bank is required by the Comptroller of the Currency to file a statement on how it intends to serve the "credit needs of each community" where it has a presence.

Private affirmative procurement programs

These regulations served as a kind of natural springboard from which one national bank - Nationsbank-developed a variation on typical CRA compliance. The innovation comes in the form of an "affirmative procurement" program, and the innovators have found that it makes good business sense on top of the fact that it assists in meeting CRA goals. The program is NationsBank's minority and small-business development program, an outreach program to bridge the gap between the bank and minority- and women-owned businesses that the bank may not have traditionally used in the past.

The philosophy is simple. If the banking industry is being encouraged to help meet the credit needs of the small/minority businesses within their communities, it also benefits banks to support those businesses by directly contracting with them, when appropriate, to provide goods or services. This includes "professional services" of law firms for the wide variety of legal work required by banks in the natural course of doing business.

According to Andrea Noriega, the Florida coordinator of minority and small business development at NationsBank, contracting minority- and women-owned firms makes good business sense because of "competitive pricing, better quality work and better service." This is a function of the fact that minority- and women-owned businesses will often bid more competitively against established law firms and will work extra hard to provide the kind of high-quality work and service necessary to satisfy the bank's needs and keep its business.

Hugh L. McColl Jr., president and chief executive of NationsBank Corporation, said, "We at NationsBank are truly committed to serving all of our banking communities, and I cannot emphasize enough how important I consider this outreach program."

While the Community Reinvestment Act speaks of the credit needs of each community, many have interpreted the act to include a true commitment to each community in every sense of the word. The use of local law firms, including minority- and women-owned law firms, is clearly a manifestation of that commitment.

There is considerable pressure being brought to bear on the banking community by civic leaders and regulators to develop such affirmative hiring programs as the one at NationsBank. Yet, amazingly little is being done by most major banks to support the very communities to which they are being encouraged to lend. It is undeniable that there is legal business to be had for minority- and women-owned firms in both the banking institutions that have formalized minority and small-business development programs and those without such programs.

But how do these law firms go about getting this business? The simple answer is to start by contacting the persons in charge of making the institution's minority and small-business contracting and procurement decisions, if the bank has a minority business development program.

At NationsBank, these decisions are orchestrated nationally by National Program Director...

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