A. William Reynolds, chairman;
Jerry L. Jordan, president;
Sandra Pianalto, first vice president; and
G. Watts Humphrey, Jr., deputy chairman.

With passage of the landmark Community Reinvestment and Home Mortgage Disclosure Acts in the 1970s, Congress called on financial institutions to identify and meet the credit needs of their local communities, including low- and moderate-income neighborhoods.

We’ve learned since then that the economic problems of our depressed inner-city communities cannot be solved by the lending institutions alone. If banks are to contribute fully to the economic development and revitalization of neighborhoods, they must be joined by nonbank institutions, governmental entities, local businesses, and community leaders.

Clearly, the most viable and lasting solutions to stemming the blight of inner-city neighborhoods will come from those closest to the problem. We must trust and encourage people in the states, cities, and communities across the nation to explore opportunities to improve local conditions. Recent trends have led to partnerships in which nonprofit agencies and local governments team up with for-profit banks and developers not merely in a spirit of altruism, but to create lasting change through mutual self-interest.

Federal Reserve Banks are in a strong position to facilitate community-based partnerships through their involvement with banking and civic organizations. Reserve Banks evaluate commercial banks’ fair lending performance, support the activities of community affairs and economic development professionals, and directly partner with local banks and community-based organizations to improve neighborhood economic conditions.

The Greater Cleveland Residential Housing and Mortgage Credit Project, the subject of this year’s annual report essay, is a fine example of the Federal Reserve’s ability to build alliances among diverse constituencies.

Like many good ideas, the "Cleveland project"—designed to ensure equal access to credit in the home buying process—started from a conversation between two individuals from different organizations but with a common goal in mind. From there, it blossomed into a successful partnership among the Cuyahoga County Department of Development, the Greater Cleveland Roundtable, the Ohio Civil Rights Commission, and the Federal Reserve Bank of Cleveland. Bringing together 140 representatives from the real estate, housing, and lending industries, the Cleveland project inspired candid dialogue about discrimination in the home buying process.

Those who conceived the Cleveland project realized that such a large gathering of racially and functionally diverse participants could engender vigorous, possibly discordant, debate about unequal treatment and access to credit. But it seemed to us that the process of well-intentioned people coming together could ultimately inspire tangible strategies for addressing the daunting problems of discrimination and disparate treatment in the mortgage lending and housing markets.

The Cleveland project did indeed generate numerous practical recommendations. To all those who participated, we thank you for your commitment and energy. As a result of your efforts, we have taken an important step toward improving the fairness of the lending process and the prosperity of our community. The project has also served as a model for programs in Cincinnati/Northern Kentucky and in five other Reserve Bank cities. We like to think of this groundbreaking effort as creating local solutions to effect lasting change, and we’re proud to highlight its history in the 1996 annual report essay.


In performing our central banking functions and providing financial services, the Federal Reserve Bank of Cleveland is guided by our 23 directors, to whom we extend our deepest gratitude. Our directors represent a variety of banking, business, labor, and consumer interests from throughout the District. Their valuable and dedicated service and guidance, as well as that of our Community Bank and Business Advisory Councils, are very much appreciated.

We are especially grateful for the leadership of A. William Reynolds, chief executive of Old Mill Group, who served as chairman of our Board of Directors from 1993 until his retirement at the end of 1996. Bill, who joined the Board in 1991, made far-reaching contributions to the Bank and leaves us in a stronger position to meet the challenges of the future. We are indebted to him for his wise counsel, leadership, and dedication. G. Watts Humphrey, Jr., president of GWH Holdings, Inc., and a member of our Board since 1993, has been appointed chairman.

We also extend special thanks to those directors who have completed their terms of service on our Boards: Alfred C. Leist (chairman, president, and chief executive officer of The Apple Creek Banking Company) and Thomas M. Nies (president of Cincom Systems, Inc.), who served on our Cleveland Board; John N. Taylor, Jr. (chairman and chief executive officer of Kurz–Kasch, Inc.), who served as chairman of our Cincinnati Board; and Randall L.C. Russell (president and chief executive officer of Ranbar Technology, Inc.), Wesley W. von Schack (former chairman, president, and chief executive officer of DQE), and Sandra L. Phillips (former executive director of the Pittsburgh Partnership for Neighborhood Development), who served on our Pittsburgh Board.

The insight and dedication of our member of the Federal Advisory Council, Frank V. Cahouet (chairman, president, and chief executive officer of Mellon Bank Corporation and Mellon Bank, N.A.), will also be missed. Frank represented the Fourth District on the Advisory Council since 1994. Our directors have chosen Robert W. Gillespie (chairman, president, and chief executive officer of KeyCorp) to represent the District during 1997.

The officers and staff of the Federal Reserve Bank of Cleveland worked together to realize many accomplishments and innovations over the past year (outlined in the "Operational Highlights" section on pages 26-27). None of these achievements would have been possible without their energy, creativity, and commitment. I wish to extend my personal gratitude to all employees of this Bank for making 1996 a successful year.

Sincerely,

Jerry L. Jordan
President


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