Federal Deposit Insurance Corporation
Community Lenders Luncheon
Kansas City, Missouri
June 18, 1996
For many years, the economy of Kansas City revolved
around the railroad and the stockyard. Wealth from cattle
trading and grain farming turned Kansas City into a booming
Midwestern city, with -- I have been told -- more miles of wide
boulevards than any city other than Paris and more public
fountains than any city other than Rome -- and the world's
first shopping center.
Kansas City, however, did not start life as a cattle
trading center. It originally -- and for about thirty years -- was
a town that outfitted settlers and miners headed west.
That changed -- dramatically -- soon after the Civil
War. Before the construction of the Hannibal Bridge across
the Missouri River at Broadway Avenue, there were no bridges
across the river for its entire length. The railroads ended at the
unincorporated town of Harlem on the river's north bank.
Hannibal Bridge opened on July 3, 1869. A year later, Kansas
City was a railroad hub, with eight different radiating lines.
By 1880, it was the nation's largest cattle trading center. The
people who planned and built that bridge made it happen.
In 1880, William Rockhill Nelson arrived in Kansas
City from Indiana. He founded the Kansas City Star and as
editor of that newspaper spent the following decades exhorting
and working with his fellow citizens to develop Kansas City
economically and culturally. He persuaded Col. Thomas H.
Swope to donate his 1,344-acre farm to the city -- while Swope
was still alive -- because the city needed a public park. Kansas
City's place among the top convention cities can be traced
back to Nelson -- who persuaded his fellow citizens to build the
city's first convention hall at the turn of the century. The
remarkable range of 19th- and early 20th-century buildings in
Kansas City today is a monument to the vision and efforts of
Nelson and his contemporaries.
They made things happen -- as did the people whose
vision and efforts more recently have led to the building of the
Kansas City International Airport, the City's foreign trade
zone, its underground storage industry, and Crown Center.
Economic diversification in the last few decades has again
transformed Kansas City -- from a boom town into a booming
Midwestern metropolis, the area being home to nearly a score
of major insurance companies and to operations of about 200
of the Fortune 500 companies. In Kansas City today, the
wholesale and retail trade industries employ the greatest
number of people, with the service industry ranking close
None of this happened by accident. The development
and prosperity of Kansas City occurred because people here --
business people, officials, media people, citizens -- had a strong
sense of shared purpose and community. Because of that
strong sense of shared purpose and community, people made
Because of the vision and effort of the people who live
here, Kansas City, Kansas, was named an All-American City
in 1992 -- Kansas City, Missouri won the award in 1994 -- and
in 1994 Kansas City was named an Urban Enhanced
The success of Kansas City as an economic and cultural
center rests upon a partnership that has spanned
neighborhoods and jurisdictions, the public and the private
sector, and generations of community-minded people.
When people work together, things happen.
Because of the partnership of banks and community
representatives -- and the partnership of banks and the Federal
Deposit Insurance Corporation -- some things are happening in
community development here in Kansas City.
For example, Central Bank of Kansas City -- a $45
million institution -- recognized a need to encourage
remodeling and improvements for homeowners in the
Northeast Community. Its goal was to help stabilize the
community. The bank believed that the income restrictions on
traditional grants and low-rate programs eliminated middle-income
owners and prospective home buyers who were needed
in the community. The bank requested that Old Northeast, a
local community development corporation, develop an
approach. The result is a remodeling and home improvement
loan program within a seven-neighborhood area serviced by
Old Northeast. The interest rate on the loans is five percent
with no fees to the borrower. If the home is located on what
Old Northeast designates a model block, the rate can be
lowered to 3 percent. There are no income restrictions. The
only restriction is that the applicant must be the
owner/occupant. These low cost funds give middle income
owners an incentive to stay in the area and prospective buyers
a reason to move in. So far, the bank has loaned $115,000 for
home improvements under the year-old program.
Working together, two of the sponsors of this luncheon,
the Community Development Corporation of Kansas City and
Hillcrest Bank, a $68 million institution, arranged financing by
the bank for a 14-unit complex as part of Mercy Housing
Kansas City. This organization is a not-for-profit corporation
whose purpose is to renovate deteriorated housing or construct
new homes for rent to families whose annual incomes are no
more than 60 percent of the area's annual median income.
Hillcrest also works with the CDC of Kansas City to provide
loan opportunities for low- to moderate-income persons
through the Revolving Loan Guarantee Fund -- and it works
with the Entrepreneur Assistance Corporation to create
business ownership and employment opportunities in the inner
Missouri Bank and Trust, a $51 million institution,
worked with the Westside Housing Organization to develop 15
units of low-income housing. Construction is complete and
there is a waiting list for occupancy. The bank has recently
formed a loan committee -- which includes residents of the
Westside -- that will be making home improvement loans in the
community. The loans are expected to be in the $2,500 to
$10,000 range and interest rates will be from one percent to
seven percent, depending upon the applicant's income.
Repayment terms will be from two to ten years. In part
because of its community development efforts, Missouri Bank
and Trust has improved its Community Reinvestment Act
rating from four to one.
In the new CRA regulations, federal bank and thrift
supervisors made it easier for lenders to bring their
imagination and creativity to good use in community
development, eliminating the most burdensome of CRA
reporting requirements while assuring that safety and
soundness standards are met. The regulations open up new
possibilities to banks and thrifts in creating partnerships to
promote home ownership and to revitalize communities -- a
fact that has not been lost on any of you, I am sure.
Missouri Bank and Trust became involved in low-income
housing development in the Westside after the bank's
CRA officer, James Goetz, was introduced to Jerry Shecter,
executive director of the Westside Housing Organization, at
one of these community lenders luncheons. They -- and the
people who work with them -- made that development happen.
That is what these monthly luncheons are all about --
promoting better communications between community
representatives and lenders so that they can work together to
address community development needs. I understand that a
survey last year revealed that approximately $3.5 million in
loans had been originated as a direct result of these luncheons --
and, because many of these loans required other sources of
financing, they leveraged at least another $3.5 million.
I am pleased to say that our Division of Compliance and
Consumer Affairs regional office here in Kansas City has
supported these luncheons since its inception because we view
them as important in establishing partnerships between
bankers and community groups. We try to have several
representatives at each monthly meeting. In fact, our people
were instrumental in establishing a similar group in St. Louis
several months ago. Our office here is also helping to initiate a
similar program in Des Moines.
These types of efforts are not isolated to our Kansas
City office. We have people all across the country who are
supporting partnerships between the private and public sectors
for community development in a number of ways. These
partnerships bring business judgment into the community
development process. In doing so, they also help people help
themselves -- and that is good for everyone: for the community
and for business.
Without these partnerships, the neighborhoods of our
cities would have fewer opportunities for economic change.
The Federal Deposit Insurance Corporation is
committed to a partnership with banks to help them identify
and address community development needs. We sponsor focus
groups and roundtables. We give guidance on how to identify
and meet low- and moderate-income lending demand,
including credit for self-employed and small scale
entrepreneurs. We send scores of people to meetings and
conferences every year to help bankers and community
representatives come together.
An initiative in our Atlanta region is one more clear
example of what our role is as a catalyst. Last year, we
brought together 12 local community group and community
development representatives with bankers -- mostly CEOs --
from the ten banks supervised by the FDIC in the South
Carolina counties of Greenville and Spartanburg. The purpose
of the meeting was to talk about community development, and
particularly to talk about the credit needs of minority small
business owners and operators. We sponsored a second
meeting of the group. Since then the group has met four more
times -- without the need for our sponsorship. The group is
trying to create a loan consortium -- to formulate uniform
small business applications to be used by all the banks -- and to
develop a program of technical assistance for small business
people. Coming together, they found a sense of community
and shared purpose. Working together, they are making
Community has been described as the sense of being on
the same lake, even if we are in different boats -- what affects
one, affects all. The FDIC itself was created out of this sense of
community. When Congress established the FDIC in 1933, so many
people were losing their bank deposits that the ties that held
the national community together were breaking. It is no
exaggeration to say that 63 years ago the FDIC saved the
banking system of our country, and in doing so it saved the
country from financial chaos and social upheaval. Federal
deposit insurance was not an end in itself. Although it
probably made individual depositors sleep better at night
knowing their deposits were safe, deposit insurance really was
aimed at keeping the national community together.
As the FDIC's history shows, an investment that
strengthens the community brings important returns:
increased stability and prosperity.
The sense of community here in Kansas City has been
strong historically. I mentioned earlier a convention center
that was built here at the turn of the century. About a year
after it was constructed, the convention center burned to the
ground, but in the light of the flames ordinary citizens
circulated among the crowd around the blaze to collect money
to begin rebuilding. The city had committed to hosting a
national political convention the following summer -- its first
national event -- and the community pulled together to make
sure that the commitment was met. A new convention center
was up and open by the time the delegates arrived.
Generation after generation, the people here have
worked together -- as a community -- building and rebuilding
this city to respond to opportunities and needs. Today you too
are working together to shape tomorrow. In sponsoring
meetings such as this one, and through our many other efforts,
we at the FDIC are happy we are able to be a part of
community development here and throughout this country.