South Bronx, NY, September 12 -- As the Federal Reserve Board released today its spin of the 2006 mortgage lending data, left unsaid is that the largest bank in the U.S., Citigroup, has a worse lending record to people of color and low-income communities than the industry as a whole. The Fed's 77 page report does not name any lenders, and it routinely allows acquisitions by and of disparate lenders, for example Citigroup's acquisition of the remainder of the flamed-out subprime lender Ameriquest. The Fed talks but doesn't act.

   First, some facts: 2006 is the third year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. Citigroup in 2006, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread 4.41 times more frequently than whites, according to Fair Finance Watch. Citi's disparity to Latinos was 2.38. Meanwhile Citigroup is buying a unit of Ameriquest, 91.65% of whose loans in 2006 were subprime. At HSBC, over 63% of 2006 mortgages were subprime, including 6295 super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities -- more than HSBC made in 2005.

           Alongside the chaos in the subprime industry, predatory lending has grown and not diminished at Citigroup, HSBC and other companies, and the Federal Reserve has done nothing about it.

Fed's Bernanke: in 2006, the racial disparities in subprime lending got this wide

 The company-specific disparities in the 2006 data call out more than ever for immediate action by the Federal Reserve and other enforcement agencies, and by private attorneys general to grassroots consumers and community groups. Despite corporate claims of best practices, predatory lending is getting worse, and is now being exported overseas.

            Redlining and continued disproportional denials to people of color are also evidenced in the 2006 data. Nationwide for home purchase loans, Citigroup denied the applications of African Americans 2.10 times more frequently than those of whites, and denied the applications of Latinos 1.84 times more frequently than whites. Wells Fargo, 19.23% of whose 2006 mortgage were subprime, denied the applications of African Americans 1.72 times more frequently than whites, while denying those of Latinos 1.57 times more frequently than whites. Wells Fargo in 2006 made 889 super high-cost HOEPA loans.

         JP Morgan Chase, 19.28% of whose 2006 mortgages were subprime, was particularly disparate in the New Orleans MSA, where Chase confined African Americans to higher-cost loans 2.74 times more frequently than whites.

   Citigroup was most disparate in the lowest-income borough its headquarters city. Citigroup in 2006 confined borrowers in Bronx County to higher cost loans 19.6 times more frequently than borrowers in Manhattan. The disparity between Manhattan and Brooklyn at Citigroup in 2006 was 14.77.

  Citigroup was disparate in Metropolitan Statistical Areas all over the country in 2006. In Los Angeles in 2006, Citigroup confined African Americans to higher cost rate spread loans 1.70 times more frequently than whites; its disparity for Latinos was worse, at 1.90. Citigroup's African American to white disparity in the Chicago MSA in 2006 was 2.44. Nationwide at Citigroup in 2006, 59.24% of African American borrowers were confined to higher cost loans over the rate spread, versus only 31.62% of whites. At HSBC, half of white borrowers were confined to rate spread loans, versus 68.97% of African Americans and 63.27% of Latinos.

       HSBC, which bought Household International in 2002 just after its predatory lending settlement with state attorneys general for $484 million, in 2005 made some five thousand super high-cost loans subject to HOEPA. This rose to 6295 HOEPA loans by HSBC in 2006, even as HSBC gave earnings warnings.

           Nationwide at Royal Bank of Scotland's Charter One Bank unit, African Americans were confined to higher cost loans over the rate spread 1.49 times more frequently than whites. And at Countrywide and its higher-cost Full Spectrum, upper income African Americans were confined to higher cost loans over the rate spread 1.92 times more frequently than whites. In 2006, 24.70% of Countrywide's total mortgages were subprime. Now Countrywide is laying off 12,000 workers, while being propped by by Bank of America, on whose application to acquire LaSalle Bank in Chicago the Fed has closed the comment period. The Fed issues opaque studies but does nothing about the bad actors. What prevails is a form of impunity.

    The Federal Reserve of the 2005 data said that

”black and Hispanic borrowers taken together are much more likely than non-Hispanic white borrowers to obtain credit from institutions that report a higher incidence of higher-priced loans. On the one hand, this pattern may be benign and reflect a sorting of individuals into different market segments by their credit characteristics. On the other hand, it may be symptomatic of a more serious issue. Lenders that report a lower incidence of higher-priced products may be either less willing or less able to serve minority neighborhoods. More troubling, these patterns may stem, at least in part, from borrowers being steered to lenders or to loans that offer higher prices than the credit characteristics of these borrowers warrant. Reaching accurate determinations among these alternative possible outcomes is one goal of the supervision system.” See, www.federalreserve.gov/pubs/bulletin/2005/3-05hmda.pdf

   What the Federal Reserve, with its reflexive defense of large banks, hasn't yet acknowledged is that these disparities are most stark at the largest conglomerate in the country, Citigroup, including in its headquarters city's lowest-income borough. Citigroup in 2006 confined borrowers in Bronx County to higher cost loans 19.6 times more frequently than borrowers in Manhattan. The disparity between Manhattan and Brooklyn at Citigroup in 2006 was 14.77.

  Where the rubber will meet the road will be in how the Federal Reserve and other agencies act on specific disparities at specific lenders, including as these are formally raised to them in timely comments on merger applications.