Los Angeles mayoral candidate Richard Riordan, who attacked rival Michael Woo for ties to a bank that had issued no home loans to African-Americans, was himself a founder and former director of a bank that made no home loans to African-Americans or Asian-Americans in the last three years, records and interviews show.
A Riordan mailer sent out days before Tuesday's primary election hit hard at Woo's "Cathay Bank Connection"--a reference to a Chinatown-based bank with long ties to the Woo family. The mailer suggested that the bank had a "discriminatory loan policy"--which Cathay officials strongly deny--because it made no home loans in 1991 to African-Americans, and just one to a Latino.
However, records show that a downtown bank closely associated with Riordan--1st Business Bank--also reported no home loans to African-Americans or Asian-Americans in 1990, 1991 or 1992. During the period, the bank made 25 home loans. One loan in 1991 had a Latino co-applicant, and an American Indian received a loan in 1992.
Riordan was a founder and original investor in 1st Business Bank and served on its board from 1987 to March, 1990, according to public records and interviews. He no longer owns stock in the bank, although he is a customer. One of Riordan's chief mayoral campaign fund-raisers, management consultant Peter Mullin, is a current member of the bank's board.
Riordan could not be reached for comment. His campaign chairman, Bill Wardlaw, said comparing Cathay and 1st Business Bank home loan records is "apples and oranges."
"They have a much different focus. The one (Cathay) has substantially greater activity in home mortgages," he said, referring to more than 400 home loans made in 1990 and 1991.
Both 1st Business and Cathay, which says that less than 5% of its business is home loans, stress that they are primarily commercial banks and have been involved in various community development and low-income housing projects.
Riordan's attack on Cathay invited scrutiny of 1st Business Bank's home lending record at a time when Riordan is seeking to win over undecided minority voters in the June 8 runoff.
"Out of the (home) loans they did make, I think it is a fair question: Why haven't you made any to African-Americans or Asians?" asked Quinta Seward, an organizer with Communities for Accountable Reinvestment, a Los Angeles coalition working to increase local banks' lending to minorities.
The coalition has not examined 1st Business' record but is reviewing Cathay's, Seward said. "If they are in the business of making loans, who they make loans to should reflect the diversity of the city," she said. "And if it doesn't, that has to be challenged."
Like Cathay, 1st Business Bank's home lending record does not reflect the racial or economic makeup of the population in the bank's service area, according to interviews with bank officials and U.S. Census data. The population of 1st Business Bank's market area--which includes Los Angeles and Long Beach--is 38% Latino, 13% African-American and 9.6% Asian-American. Records show that borrowers were all well above the area's median family income.
Garry South, Woo's campaign spokesman, said that Riordan, although not now on the board of 1st Business Bank, bears a "hell of a lot more" responsibility for the bank's lending practices because of his years of service on the board.
Woo held stock in Cathay until last year. His father has been an officer or director of the bank for decades, and some of its executives helped raise funds for Woo's mayoral campaign. But Woo has said he had no influence over the bank's lending practices. South said: "Mike was never a (Cathay) director."
Dorthea Montoya, 1st Business vice president, said the bank's directors share responsibility for ensuring compliance with the federal Community Reinvestment Act, which generally requires banks to seek out minority customers and serve the needs of their market areas.
"The entire board (at) the bank is involved in the CRA program and decisions," she said. "It's part of every director's responsibility."
Montoya and Robert W. Kummer Jr., chairman of 1st Business Bank, defended the bank's commitment to the inner city. Although ethnic and income data on borrowers is only publicly available for home loans, Kummer said the data is not an accurate reflection of his bank's overall lending. 1st Business Bank's home loans are primarily made as an accommodation to commercial customers, he said.
Kummer said the bank has made $15.4 million in other types of loans in inner-city enterprise zones, helped fund a low-income housing consortium and participated in Mayor Tom Bradley's small business development program in South-Central Los Angeles. The bank has received "satisfactory" ratings from federal auditors for complying with the Community Reinvestment Act, he said.
"We are doing more than our job--dollar for dollar and pound for pound," Kummer said.
