Brownlining Banks: The Bank Merger Movement and Urban Redevelopment
Bank consolidation in the United States began in earnest in the 1970s, extended in the 1980s with the ascendance of multi-state bank holding companies, and has continued with massive recent asset concentrations. This reorganization has stimulated application of institutional theories of financial markets and findings of inherent instabilities [Carter 1989; Lawson and Lawson 1990; Raines and Leathers 1992]. Centralization of control of bank assets also has been found to result in increased overall risk aversion by financial institutions [Larson 1996, 41; Prasch 1992].1 Since bank commercial and mortgage lending is crucial to redevelopment of urban real estate, these two trends portend future problems for the reclamation of so-called "brownfields," that is, sites that suffer from perceived or real environmental contamination. The argument that defacto "brownlining" of urban areas tainted by reputed past pollution may pose a problem for redevelopment is not new [Yount and Meyer 1994]. The industry itself has flagged environmental risk as a manageable problem in recent argument [Bisset 1995; Griggs 1994]. Our argument here is that tendencies to avoid lending in particular areas in cities is exacerbated by the centralization of control of banking assets and has emerged as a serious and growing problem. We begin with a quick overview of recent bank consolidation patterns and their implications. Next, we turn to how financial institutions approach environmental risk, drawing on the banking trade literature and on studies of the brownfield redevelop-