BANKING: Women Move Toward Credit Equality

One of the least arguable contentions of the feminist movement is that a woman should be able to borrow as much money, and as easily, as a man of the same ability to repay. But women can cite many examples of pervasive discrimination against them in the granting of credit, such as these:

> Cynthia E. Harrison, a New Jersey woman, was turned down by Chase Manhattan Bank for a BankAmericard although she maintained a considerable balance in a savings account. Just two weeks later she got a form letter from the bank addressed to a sexually unidentifiable “C.E.” Harrison, who was greeted as “Dear Preferred Customer” and offered a card.

> Mary King, of Washington, D.C., organized her own management consulting firm two years before she was married. Even so, her banker recently asked her to get the co-signature of her husband, who has nothing to do with the business, before he would grant a small loan.

> When Carol Faill returned to school at age 38 and won approval of a Pennsylvania government agency for a stateinsured college loan, she complimented her banker on his enlightened disregard for a husband’s co-signature. “Oh,” said the banker, “I didn’t realize …” Her husband had to cosign.

Now prospects for the lessening of discrimination are brightening. A federal law banning sex bias in the granting of credit goes into effect next week, and last week the Federal Reserve Board published rules for enforcing it that are tougher than many creditors would have liked. Also last week a movement by women to organize their own banks and credit unions gained momentum when the long-delayed First Women’s Bank opened in New York.

Strict Rules. Of the two developments, the pending enforcement of the Equal Credit Opportunity Act of 1974 is clearly the more important; the law applies to all banks, finance companies, credit-card issuers, department stores and other major lenders. Congress wrote the act in general terms and left it to the Federal Reserve to spell out just what lenders must do to comply (though the act will be enforced mostly by the Federal Trade Commission). The Federal Reserve last April proposed a fairly strict set of rules but in response to protests from creditors came out in September with a greatly weakened set of regulations. That raised a howl from women, and in the final rules announced last week, they won back much of what they had lost.

Among other things, the regulations specify that lenders may not consider sex or marital status in judging an applicant’s worthiness to receive credit and that wives who open accounts after Nov. 1, 1976 must be given credit ratings separate from those of their husbands. The rules flatly forbid lenders to ask a woman about her birth control practices or childbearing plans—an intrusive procedure that has been declining in frequency but still exists. Also, as of Jan. 31, a lender who refuses credit must, when asked, tell the would-be borrower why. This point had been eliminated altogether from the September regulations.

The activist National Organization for Women (NOW) said it was “generally pleased” with the new rules. Nonetheless, women’s groups still have some reservations. They are disappointed that the new rules do not force a lender to spell out reasons for refusing credit in writing, but permit it to be done orally. If a creditor had to write out reasons for turning down a loan, feminists point out, he would be answerable in court for a flimsy excuse. Some feminists also wonder how vigorously the law will be enforced. Recently, several states have passed fair-credit laws, but, complains Carole De Saram, president of the New York chapter of NOW, “all the banks did was to become a little more sophisticated in turning down credit.”

Consequently, many women still believe they need their own financial institutions. In the past two years, about a dozen credit unions operated primarily by and for women have been started around the country; at least six more are scheduled to open in the next few months. The oldest, the Feminist Federal Credit Union in Detroit, was chartered in August 1973 with 50 accounts totaling $20,000; today it has 2,600 members and deposits of $580,000. Generally, the credit unions accept deposits from and make loans to members of feminist organizations—including some men.

The First Women’s Bank, which opened in the Manhattan premises once occupied by the swank restaurant Le Pavilion, is a more ambitious undertaking. It has raised an initial capitalization of $3 million from some 7,000 stockholders across the country, mostly women: some were so enthusiastic that they sent in long typewritten lists of potential customers. The bank is headed by President Madeline McWhinney, 53, a banker’s daughter from Denver who was once an assistant vice president of the New York Federal Reserve Bank. A dozen or so other women’s banks are being organized around the country; one in Los Angeles and another in San Diego expect to open before year’s end.

No Favor. Officers of the bank and the credit unions insist that they apply sound commercial standards in granting or refusing credit. “No women will get loans just because they are women,” says McWhinney. “If she cannot repay it, it doesn’t do her or the bank a favor to give her the money.” McWhinney hopes, however, to show that women are capable of handling credit.

Already, there are signs that conventional banks and financial institutions are becoming more responsive to women’s needs. For example, under the motto “Women Mean Business,” the State National Bank of Maryland has opened a special women’s branch in Bethesda, including a small nursery where mothers can leave their children while chatting with loan officers, and E.F. Hutton, a big Manhattan brokerage house, is conducting special seminars for women investors. All together, women seem to be making major strides in winning financial equality with men—but they still have a long way to go.