money, because they don’t want to incur the risk. Is that a real incentive problem?
WILLIAMS: Moral persuasion won’t help, if they don’t have the incentive to do it. You are not going to talk them into doing something that is not in their interests, if their incentives are structured another way. If it’s a regulatory problem, you have to change the incentive structure.
SIMMS: It seems there are missing parts of this information picture. One would seem to be what lenders know about good investment possibilities in the minority-business community. Another may be [that] minority businesses lack information on how to tap into some of these markets. We know that lenders don’t seem to have comfort with minority businesses, in terms of the prospects that loans will be repaid.
COOKE-WELLS: It’s not specifically that they have concerns about credit history or loan repayment. It’s that they are not focusing their marketing efforts, to any significant degree, on this market because they don’t understand the market. They generally tell us that they don’t know a lot about the community.
JAYNES: Some of these points that the lenders are giving are inconsistent with what we are hearing about the growth trends. [The report states that] minority businesses are growing, the new minority-business entrepreneur is younger, highly educated [and] more in hi-tech business services.
SIMMS: More looking like regular businesses.
JAYNES: I think what is really going on here is trying to understand why the institutions and processes that are available now aren’t doing a better job.
GRAVES: It’s a little bit like the old saying, ‘I would love to hire some minority folk; I just don’t know where to find them.’ That is really an excuse. It’s the same thing as saying, well we don’t have the ability to get out in the community and understand. The first thing, hire some minority bankers to be the lending officers for your institution. Of course they don’t understand because they’re not in the community. You can’t have only-white loan officers dealing with people of color as a clientele and say they don’t understand the marketplace.
BRIMMER: If the issue is lending, reflect on how it is done in bank lending. The banks don’t sit and wait for potential borrowers to show up. The principle marketing approach in commercial banking and lending is a calling officer who actually goes out and identifies prospective borrowers, shops the services and goes out to recruit borrowers. They literally recruit borrowers. From the point of view of the bank lending to minorities, they need to have more calling officers who go out into these minority communities and look for opportunities to lend.
BOSTON: The point is we are convinced because we know. We are in that market every day and when they are skeptical about it, we kind of laugh and say well, you’re crazy or you don’t really know what is going on. But we’re there everyday so we see it and we know it. The people who are not, I think that’s part of