- The Washington Times - Friday, January 11, 2002

ASSOCIATED PRESS

Discriminating against minority groups in lending decisions hurts the economy and the financial institutions that engage in such practices, Federal Reserve Chairman Alan Greenspan said yesterday.

"Investors and lenders need to understand that failure to recognize the profitable opportunities represented by minority enterprises not only harms those firms, it harms the lending institutions as well," Mr. Greenspan said.

In his remarks to an economic development summit in Oakland, Calif., Mr. Greenspan said that minority groups had made progress in increasing their homeownership rates and the percentage of businesses they control.

But he said more must be done for the benefit of the economy as a whole.

"To the extent that market participants discriminate, consciously or more insidiously, unconsciously, capital does not flow to its most profitable uses, and the distribution of output is distorted," Mr. Greenspan said.

"In the end, costs are higher, less real output is produced and national wealth accumulation is slowed."

Mr. Greenspan said it was essential for the country's future economic prosperity that efforts be increased to stamp out discrimination in lending practices both to individuals and to minority-owned businesses.


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