Redlining from afar: how consolidation killed off St. Louis's exemplary minority lender.

AuthorFeldman, Brian S.
PositionBoatmen's Bank

Just after Thanksgiving in 1996, a group of 146 St. Louisans, mainly from the black business community, boarded a chartered TWA jetliner and flew to New York City. Their goal? To block the takeover of their hometown Boatmen's Bank by shutting down the New York Stock Exchange.

Led by the St. Louis lawyer Eric Vickers, the group included members of the St. Louis Minority Contractors Association, the National Black Chamber of Commerce, and the Minority Business Enterprise Legal Defense and Education Fund of Washington. Their ultimate target was Charlotte-based NationsBank, which had recently announced plans to spend $9.5 billion to buy the 150-yearold Boatmen's, which many considered a cornerstone of the St. Louis business community.

According to company lore, the founder, George Knight Budd, started the institution in 1847 to assist the working-class longshoremen and boatmen who loaded and crewed the riverboats that plied the Mississippi. This tradition of focusing on working-class citizens and small businesses continued right into the 1990s, when Federal Bank officials and black community groups praised Boatmen's for having one of the nation's most responsive minority loan-lending programs--a bright spot in a city with a long, painful history of commercial redlining.

Bank regulators gave Boatmen's an "outstanding" rating three consecutive times from 1992 to 1995 for its adherence to the Community Reinvestment Act (CRA) of 1977, which required lending institutions to meet the needs of borrowers in all communities. By 1993, Boatmen's was providing $284 million per year under the CRA program.

The St. Louis Small Business Administration ranked Boatmen's as the top SBA lender in both the number of approved loans and dollar volume, a first for any bank in the Midwest. Its Boatmen's Specialized Small Business Lender Program was specifically designed to increase the amount of money given to women- and minority-owned enterprises.

Vickers and a coalition of minority advocacy groups believed that NationsBank would dismantle Boatmen's community lending programs. Their outrage was fueled by a lawsuit filed by John Reiman, a fair-housing director at the Washington Lawyers' Committee for Civil Rights and Urban Affairs. He alleged that NationsBank loan officers engaged in discriminatory lending practices, on a national level. Minority customers in New York City, Memphis, New Mexico, and Texas, where Boatmen's also had a notable presence, opposed the...

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