Business Social Responsibility: Mortgage and Credit Marketing in Low-Income Communities

Abstract

Increasingly, banks and other lending institutions have come under fire for failing to market their credit services adequately in lower-to-moderate income communities. An important dimension of the ongoing debate about the responsibility of banks centers on recently released federal study which reveal the existence of significant disparities in lending and marketing of credit and mortgage services to low-to-moderate income and minority communities. In this connection, I would seek to verify this assertion by analyzing the federal report and other available data. While a large number of studies have examined the phenomenal inequity that characterize marketing and lending of credit services in lower income communities, no studies have examined the underlying factors or the benefits of a proactive compliance policy. This article will discuss these factors from the Legislative, Industrial and Consumer perspectives and provide some insights and examples of proactive compliance policy with the Community Reinvestment Act of 1977 and the Financial Institution Recovery Reporting and Enforcement Act of 1989 (CRA/FIRREA).