This report provides a new analysis of the payday lending industry and its customers.  Using data obtained from the Illinois Department of Financial Institutions (DFI) and various other sources, it finds major faults in the key defenses that the industry has used against stronger consumer regulation.

Between 1990 and 1996 there was a large increase in the number of lower-income home buyers in the Chicago region. This good news is tempered by the facts of where these households were able to purchase homes. Most of them bought in Chicago and suburban Cook County. Unless lower-income buyers have a choice of homes throughout the six-county region, they will not gain the full benefits of homeownership.

Finds that lending for home purchases throughout the Chicago area has increased dramatically in recent years, with loan volume up by 50 percent from 1990 to 1994. Loans to low- and moderate-income individuals increased at even higher rates than overall loans, increasingby 85 percent over the same period.

The Community Reinvestment Act has brought solid benefits to a critical part of the Chicago economy -- the multifamily housing market. Good quality rental housing is essential to the well-being of low- and moderate-income families in Chicago, and is a sign of neighborhood stability particularly in neighborhoods where a high percentage of the housing stock is multifamily.

This alert examines two proposed changes to the regulation of the Community Reinvestment Act:  A regulation calling for the collection and disclosure of small business loan application and origination data for banks and savings and loans by census tract. Second, a proposal calling for the use of some objective measures as key indicators of a bank's responsiveness to credit and capital needs. Woodstock Institute found that on both these central changes, the revised proposal is a substantial retreat from earlier progress.

The most recently available home mortgage data for the Chicago region show that refinancing loans were not uniformly accessible to all residents.  As a result, many borrowers, particularly African-Americans, have not benefited from the refinancing boom of the 1990's.

Lending test under the proposed 1994 CRA rules show that some large Chicago area mortgage companies have poor lending records in low- and moderate-income neighborhoods.

Describes some of the key features of the proposed 1994 CRA regulation and the advantaages and disadvantages.

Describes the double bottom line of socially responsible investment policies which includes a favorable rate of return and an investment vehicle that meets certain socially responible criteria.  Contains interviews with staff of Shorebank and the Calvert Fund.