Stop Bank Branch Closings and Monopolies in the Katrina Zone, Group Says, Challenging Regions- AmSouth Merger

 Birmingham, Alabama, August 20 -- A year after Hurricane Katrina ravaged Louisiana, Mississippi and Alabama, two of the largest banks in the Katrina Zone have applied to merge and save $400 million, in part by closing branches. With the Federal Reserve's comment period on the application by Regions Financial Corporation to acquire AmSouth running through September 14, and the two banks' shareholders' votes set for October 3, consumers and human rights group Fair Finance Watch has filed a fifteen page protest to the deal, requesting public hearings including on what it calls the Katrina Zone issues.

            The challenge represents the first analysis of the 2005 data of Regions Financial's Home Mortgage Disclosure Act data-reporting affiliates, including the subprime specialist Equifirst, cumulating these lenders as Regions and calculating the distribution of loans over the Federally-defined rate spread of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens (calling these high cost loans).

            The Fair Finance Watch analysis shows that in its home state of Alabama in 2005, Regions confined 51.66% of its African American borrowers to higher cost loans over the rate spread, versus only 23.15% of its white borrowers. That is, Regions confined African Americans to high cost loans 2.23 times more frequently than whites, while denying 30.69% African Americans' applications for loans, versus only 21.29% of whites' applications.

Regions NY self-cheering

            In Louisiana in 2005, Regions confined 54.92% of its African American borrowers to higher cost loans over the rate spread, versus only 27.88% of its white borrowers. Regions confined African Americans to high cost loans 1.97 times more frequently than whites, while denying 30.71% African Americans' applications for loans, versus only 22.27% of whites' applications.

            In neighboring Mississippi, Regions in 2005 confined 38% of its African American borrowers to higher cost loans over the rate spread, versus only 18.38% of its white borrowers. Regions confined African Americans to high cost loans 2.07 times more frequently than whites, while denying 35.87% African Americans' applications for loans, versus only 24.68% of whites' applications.

            Throughout Mississippi and their other footprint states, the banks have been asking community groups and charities to write letters of support, including references to a Community Reinvestment Act pledge the two banks announced.  The Fair Finance Watch comments argue that given the high percentage of Regions' mortgages which are high-cost, the pledge may represent a promise of predatory lending.

            While Fair Finance Watch has focused the regulators on these three Katrina Zone states, nationwide in 2005 Regions confined fully 73.55% of its African American borrowers to higher cost loans over the rate spread, versus only 51.78% of its white borrowers. In Florida in 2005, Regions confined 66.97% of its African American borrowers to higher cost loans over the rate spread, compared to 45.98% of its white borrowers. And in North Carolina, the headquarters of Regions' subprime unit Equifirst, Regions in 2005 confined a whopping 88.76% of its African American borrowers to higher cost loans over the rate spread, versus 71.66% of its white borrowers.

            Regions and AmSouth have continued supporting other subprime lenders.  Uniform Commercial Code filings filed by Fair Finance Watch show for example that Regions on July 18, 2005, made a loan secured by all "accounts and proceeds" to Eagle Title Loans, Inc. of Athens, Alabama. Also in Alabama, Regions lends to Twin States Pawn of Butler and Boaz' Sand Mountain Pawn. In Louisiana, Regions lends to LA Pawn Shop of West Monroe. In Arkansas, Regions lends to A-1 Pawn of Russellville. In the Sunshine State, Regions lends to Deerfield Pawn Brokers of Deerfield, Florida.

            The issue of banks funding such fringe financiers is one that's in evolution. In response to similar comments from Fair Finance Watch, the Atlanta-based bank SunTrust committed to stop lending to auto pawn and payday lenders.

            AmSouth, which Fair Finance Watch says refused to provide its mortgage data in computer analyzable form, lent to Rent to Own Pasco of Pasco, FL, and Pasco Jewelry and Pawn in the same city. The Fair Finance Watch comment conclude that "while the merger should be denied on all of the above grounds, any merger of this size in the still-unrepaired and underbanked zone impacted by last year's hurricanes militates for a required Katrina Zone CRA Lending Plan, and for public hearings." 

            How this call for hearings will fare, in the face of the letters of support solicited by the banks, remains to be seen. But the need to focus on economic justice in the areas hit by Hurricane Katrina is hard to dismiss if one looks at the region, so to speak, in this one-year anniversary of disregard and destruction.

JPMChase to Close Four Branches in Low and Moderate Income Tracts

BRONX, NY, May 18 -- JPMorgan Chase has today for the first time specified that it has identified in low- and moderate-income census tracts four of the Bank of New York branches it seeks to acquire "which are located close to a JPMCB branch." This is essentially code language that these four low-income branches would be closed if the acquisition is approved. JPM Chase's statement, in a May 18 letter responding to Fair Finance Watch's April 17 and May 6 comments to the Office of the Comptroller of the Currency, declines to provide the addresses of these four branches and the 46 other branches, some surely adjacent to low-income tracts, which the letter projects would be closed. The figure "four LMI branches" is qualified by the statement "in New York City." Since many of Bank of New York's branches are outside of the five boroughs, might even more than four low- and moderate-income census tract branches be closed?  Developing...

Other Inner City Press reports are archived on www.InnerCityPress.org -