Union Squeezes Food Company By Way of Bank

The Teamsters union has launched an unusual campaign aimed at winning a strike that may, in the process, encourage more lending to nearby minorities.

Teamsters Local 601, made up largely of Hispanic women in Stockton, Calif., has been on strike against food-processing company Diamond Walnut since 1991, demanding higher wages and an end to what it calls on-the-job racial discrimination. The latest union tactic: pressuring Bank of America, which it says is Diamond Walnut's main creditor.

If the bank stopped financing the struck company, Diamond Walnut will be forced to settle the strike, reckon the Teamsters and about 60 community groups that are helping to press the issue.

The coalition has found what it considers to be the bank's Achilles heel - alleged redlining in minority communities. A recent Teamster study of the Stockton area shows the Bank of America turned down high-income minority loan applicants far more frequently than white applicants. The coalition argues that a bias against lending to minorities represents the flip side of financing companies that discriminate.

The two-front battle may be unique in the nation, says Harley Shaiken, a labor expert at the University of California, Berkeley. The union isn't just asking for community support, he says. "Labor is supporting the community in its demands. Stockton is a prototype of a new labor strategy in an era when labor is very much trying to break out of its previous isolation."

Both companies deny the union's charges.

Diamond Walnut does not engage in racial discrimination, says spokeswoman Sandra McBride, calling union assertions "a misrepresentation of our employment practices."

Russ Yarrow at Bank of America says the firm's lending practices "are on a par" with other financial institutions in the Stockton area. The bank more than doubled its loans to Stockton minorities from 1990 to 1995, he says. "We're working with special programs to reach out to the minority community, and we think we're making progress."

But the Teamster study, drawn from bank statistics given the federal government, found that in 1994 the Bank of America rejected high-income blacks 192 percent more often than whites in the same income group.

Bank of America says many factors influence loan acceptance besides income, including other debts, assets, and credit history.

The Teamster coalition has asked that the bank make $150 million available in Stockton's low-income and minority communities. And it seeks a bank/community oversight committee to advise on lending policies.

Bank of America meets often with the coalition, but has no intention of discussing its loans with struck companies, Mr. Yarrow says. "That's ... between the Teamsters and the employers."

"Bank of America shouldn't back companies seeking poor contracts with their unions," says Lucio Reyes, a local Teamsters official.