Inner City Press: Investigative Reporting from the United Nations

In 2010 Subprime Lending Grew More Disparate at Citi, Chase, Wells & BofA

By Matthew R. Lee

NEW YORK, April 3 -- In the first study of the just-released 2010 mortgage lending data, Bronx-based Fair Finance Watch has found that the Big Four survivors of the banking meltdown, Citigroup, JPMorgan Chase, Wells Fargo and Bank of America, continued with high cost loans and had even worse disparities by race and ethnicity in denials and higher-cost lending than in 2009.

2010 is the seventh year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.67 times more frequently than whites in 2010, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

Citigroup confined Latinos to higher-cost loans above the rate spread 2.92 times more frequently than whites in 2010, worse that its 1.72 disparity in 2009, the data show.

JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 2.08 times more frequently than whites in 2010, worse than its own 1.98 disparity in 2009 and almost as pronounced as its 2.69 disparity between African-Americans and whites in 2010, worse than its 2.17 disparity in 2009.

For Bank of America NA, the disparity for African Americans in 2010 was 2.59; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2010 was 2.56.

“Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by this predatory lending,” said Fair Finance Watch. “When these four banks were allowed to buy up others with very little oversight, the regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts. These worsening disparities are the result.

"Now it is not clear if the new Consumer Financial Protection Bureau will get to this problem. As things are going, it will be worse and more disparate in 2011. The disparities in the 2010 mortgage data of the Big Four further militate for aggressively watchdogging and breaking up these banks," Fair Finance Watch concluded.

Dimon of JPMC, Pandity of Citi, et al: regulators not shown

Regional bank Keycorp in 2010 confined African Americans to higher-cost loans above the rate spread 2.24 times more frequently than whites.

U.S. Bancorp in 2010 confined African Americans to higher-cost loans above the rate spread 2.12 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread an even worse 2.2 times more frequently than whites.

Huntington in 2010 confined African Americans to higher-cost loans above the rate spread 2.2 times more frequently than whites, and confined Latinos to higher-cost loans above the rate spread an even worse 2.8 times more frequently than whites.

Growing Southern bank Regions in 2010 denied applications by African Americans 2.56 times more frequently than whites. BanCorpSouth in 2010 denied applications by African Americans 2.6 times more frequently than whites.

Fair Finance Watch has begun an enforcement project in the South, most recently raising issues under the Community Reinvestment Act on Hancock of Mississippi's application to acquire Louisiana-based Whitney, see “Flag raised on merger of Hancock, Whitney banks,” New Orleans Times Picayune, March 13, 2011.

Fair Finance Watch has also been active in raising issues concerning Bank of Montreal / Harris and their proposal to buy M&I. In response, while the Federal Reserve Board asked some fair lending questions, the majority of the banks' response has been blacked out, which Inner City Press is challenging under the Freedom of Information Act.

Using the 2010 HMDA data, Fair Finance Watch has commented that Bank of Montreal's Harris confined African Americans to higher cost, rate spread loans 2.35 times more frequently than whites.

M&I Federal Savings Bank confined African Americans to higher cost, rate spread loans 2.1 times more frequently than whites. Bank of Montreal's Harris denied the applications of African Americans 2.35 times, and Latinos two times more frequently than those of whites. The Fed extended the comment period on the merger once, but now seeks to close it with the fair lending information still outstanding.

Fair Finance Watch has submitted another timely comment, that Comerica, which is seeking to acquire Houston-based Sterling, in 2010 confined African Americans 6.26 times more frequently than whites to higher cost, rate spread loans. At Comerica, 11.3 percent of loans to African Americans were over the rate spread, versus only 1.9 percent of loans to whites.

The law required that the 2010 data be provided by April 1, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline. Trustmark provided its data at the deadline but only in paper format, such that it could not yet be computer-analyzed. Further studies will follow: watch this site.

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Extension on Bank of Montreal - M&I Comment Period After Withholding Hit

by Matthew R. Lee

NEW YORK, March 24 -- On Bank of Montreal's application to buy M&I, the Federal Reserve on March 24 granted a one week extension of the comment period to Inner City Press / Fair Finance Watch (ICP), which has protested the proposed merger under the Community Reinvestment Act.

ICP has raised to the Fed, for example, that in the Chicago area “Bank of Montreal's Harris Bank in 2009, the most recent year for which Home Mortgage Disclosure Act data is available, denied the conventional home purchase loan applications of Latinos 2.52 times more frequently than those of whites. An even more extreme disparity exists for African Americans in the Gary Indiana MSA.”

Bank of Montreal, though its law firm Sullivan & Cromwell, has sought to withhold large portions of its submissions to the Fed from ICP and the public.

On March 20, Inner City Press challenged the “radical redaction” of information by Bank of Montreal under the Freedom of Information Act, and argued that the comment period, set to close on March 22, could not close while this information was being withheld.

On March 24, Inner City Press received a letter from the Federal Reserve Board, stating in part that the “Secretary of the Board has decided to extend the period of time in which to receive your comments on the proposal to the close of business on Thursday, March 31, 2001.” Click here for the Federal Reserve's March 24 letter to Inner City Press. Click here for some of Bank of Montreal's recent redactions.

The 2010 HMDA data has just been obtained by Fair Finance Watch, and analysis will be submitted to the Federal Reserve during the extended comment period.

The banks' logos, withholding of basic information not shown

Applicable banking law requires the Federal Reserve to consider the Community Reinvestment Act (CRA). On CRA ratings, Harris has a “Low Satisfactory” rating in lending, investment and service in Wisconsin, M&I's headquarters, and a Low Satisfactory under the service test in adjacent Indiana.

Fair Finance Watch notes that the official whom Bank of Montreal has assigned to merger integration, Cecily Mistarz, was previously in charge of strategy for “Harris Private Bank, a unit that provides wealth management services to affluent individuals and families” -- giving rise to concerns that if run by Bank of Montreal, the resulting bank would turn away from low and moderate income communities.

Fair Finance Watch also notes that despite M&I not having paid its TARP bail out back, the CEO of M&I stands to get a $18 million payout from the proposed acquisition. Watch this site.

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As Bloomberg's Treasurer Opposes Rating Banks, Chase & Goldman Slammed

By Matthew R. Lee

LOWER MANHATTAN, March 7 -- Even after the financial industry meltdown based on predatory lending, the Bloomberg administration in New York City on March 7 publicly opposed a proposal local law that would rate banks on community service before the City does business with them.

Bloomberg's City Treasurer protested that “banks are heavily regulated,” despite the finding that lack of regulation allowed banks, many based in New York, to engage in Ponzi scheme like trading of predatory mortgages.

Next, Bloomberg's Treasurer said that it would be hard to replace a bank if it were disqualified. First, given Community Reinvestment Act grade inflation at the federal and state level, disqualification of any large bank would seem sadly unlikely.

Second, it emerged that the City has qualified 35 banks, ranging from small banks like Ridgewood Saving Bank up to Deutsche Bank, HSBC, Citibank, JPMorgan Chase and “Goldman Sachs Bank,” of which Council member Leroy G. Comrie asked, “I wonder why we are still doing business with them? I don't understand, I would use stronger language but it's Monday morning.”

HSBC, it has been noted by Inner City Press, sold a stake to Liby's Gaddafi; Deutsche Bank is among the larger foreclosers, with little accountability. Citigroup's predatory lending arm CitiFinancial is so disgraced it has been renamed One Main and still can't be sold off.

The Treasurer devolved into claiming that only two or three banks can do the City's business, although she didn't name them.

In hearing room, Al Vann et al listen to Bloomberg's Treasurer (c) MRLee

There was talk of layoffs in the Department of Finance, and of DoF's Commissioner being required to answer more questions on Thursday in “Emigrant Savings Bank, the Council's temporary chambers.”

The bill was not slated for a vote at the hearing; there will be more on this, especially the national implications, represented on Monday by NCRC.

Council member Gale Brewer asked if the DoF's lobbyist would engage with national groups around the federal Community Reinvestment Act. “I don't know when CRA is up for renewal,” he replied.

As the hearing stretched on, more and more Council members came in, perhaps sensing Bloomberg's weakness, ranging from Joel Rivera and Helen Foster of The Bronx through Brad Lander to Lewis A. Fidler.

Member Fernando Cabrera said that last night he went to a “nice Mexican restaurant,” and found the Bloomberg administration's health ratings useful. “But it would confuse consumers” when applied to banks, Bloomberg's Treasurer said.

Al Vann and Domenic Recchia introduced the law, and Ricchia specifically denounced JPMorgan Chase as not being willing to modify loans in New York City. As Inner City Press came in to the drab hearing room, in 250 Broadway's 16th floor, another attendee asked, “Is this the hearing about Chase Bank?” Maybe.

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund. Video Analysis here

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.

Inner City Press -- Investigative Reporting From the Inner City to Wall Street to the United Nations