In New Orleans, While Bone Is Thrown in Superdome, Parishes Still In Distress

Byline: Matthew Russell Lee of Inner City Press in Louisiana

   FRENCH QUARTER, September 25 -- Thirteen months after Hurricane Katrina, rusting washing machines still stand in the street one block off Route 46 in St. Bernard Parish, a five-minute drive from downtown New Orleans.

   This neighborhood of one-story homes just past the lights of an oil refinery is still largely vacant, except from the few trailers set up in some front yards. Several of the trailers are equipped with wheelchair ramps. Those who lived here, and those who have returned, are disproportionately senior citizens. Many had long ago paid off the mortgage loans on their homes, and did not have insurance when the hurricane struck last year.

   Now they compete for the services of the workmen, mostly immigrants, who tear down sodden sheetrock and drag rusted appliances to the curb. Most of this is done without any outside financial assistance, from charities or government.

            "So where is the money?" So asks the director of a Kenner, Louisiana-based non-profit housing group. She asks not to be named since she has funding applications pending with the state of Louisiana. In its 24 years of existence, the organization she directs has built 350 homes and helped double that number of families. It is a housing counseling agency approved by the federal Department of Housing and Urban Development. Nevertheless, none of the money raised for post-hurricane reconstruction has reached the group. Sunday over fish in meuniere sauce she told her story to Inner City Press.

            Her mother had 11 children and lived in the Lower Ninth Ward. Prior to Katrina, eight of the 11 siblings lived in Louisiana. Now, a year after the hurricane, only three of the siblings remain in the state. The mother is still tracking down lost friends, largely through questions to pastors of churches.

            The woman's best friend died while in exile in Houston. Her husband had been conscripted, at gunpoint he says, to cover dead bodies in the Convention Center. Even now, downtown has many empty storefronts. The Ritz Carleton, which got water in the basement and later filled with mold, will remain closed until December. One enterprise that remains open, even late on Sunday night, is Ace Cash Express, a fringe financier where high-cost payday loans are made. In a Walgreen's on Canal Street, the deodorant is kept under lock and key for fear of shoplifters. Further out in St. Bernard Parish there are ruined Popeye's Chicken stores and gas stations surrounded by razor wire.

            Local TV in New Orleans is in post-hurricane mode. The law firm of Shorty, Dooley & Hall, whose slogan is "We do it all," emphasizes its skill in cleaning up houses chain of title, so that new loans can be made. Channel Six has a countdown to Monday Night Football, the New Orleans Saints' return to the Superdome after a season in San Antonio. On ESPN, director Spike Lee jokes that perhaps a voodoo ceremony has cleansed the Dome of the spirits collected while displaced people sought refuges in its stands. "Sports matter," he says. The housing director in Kenner disagrees. "It's a big waste of money," she says, referring to the $170 million dollars reportedly spent refurbishing the Superdome while so many remain homeless, and those seeking fix-up loans get overcharged.

            JPMorgan Chase is the largest money center bank in the city. In the most recent year for which data is available, JPMorgan Chase in Louisiana confined African Americans three times more frequently than whites to high-cost mortgage loans over three percentage points higher than the prime rate. Meanwhile JPMorgan Chase lent to such fringe financiers as the Big Easy Pawn Shop at 4050 Chef Menteur Highway here in New Orleans.

            Another major bank in the city is Regions Financial, which in Louisiana in 2005 confined 54.92% of its African American borrowers to such higher cost, versus 27.88% of its white borrowers. As part of its proposed merger with AmSouth, Regions would close 139 bank branches, 32 of them in low- or moderate-income census tracts.

            Along the French Quarter's Bourbon Street, there are at least three storefront with Larry Flynt's Hustler in their name. At barely six p.m., there is already a vomit smell amid the signs for Daiquiris and pizza. Much advertised, on sandwich boards and in neon, is the drink called Hurricane. The housing director says only her faith has carried her through the storm. She will not watch this Monday's football game. She is working on a home, in the darkness on the outskirts of town, for a family still displaced in Houston. Since promised money has not come through, the director is doing construction herself. Unless one is careful, the sound of such hammering is drowned out by football and French Quarter hoopla.

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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.

Targeting of African Americans For High Cost Mortgages Grew Worse in 2005, While Fed Downplays Its Own Findings

Byline: Matthew Lee of Inner City Press

   NEW YORK, September 8 -- The targeting of African Americans for higher cost mortgage loans grew more pronounced from 2004 to 2005, data released Friday by the Federal Reserve show.

   The disparities between the mortgage industry pricing for African Americans and whites worsened, even controlling as the industry argues for the change in overall interest rate environment. However, given that the Federal Reserve has yet to take any enforcement action on disparities in lenders' 2004 lending, it is unclear if this new even more disparate data set for 2005 will end what many consumer advocates view as the Federal Reserve's laxity in regulation.

   The report issued by the Federal Reserve on Friday waits until its 39th page to disclose, in the intentionally opaque style of former Fed chairman Alan Greenspan, that "the fact that both spread-adjusted gaps are lower than the comparable unadjusted figures suggests that to the extent that the yield curve changes affected the measurement of racial and ethnic pricing differences, they widen gaps rather than narrow them." Translation: even using the industry's main defense, the yield curve, the disparities grew worse.

   The non-governmental organization Fair Finance Watch, which has raised lending discrimination as a human rights issues, including to United Nations Habitat director Anna Tibaijuka (pictured below, video of Q&A on U.S. Community Reinvestment Act and discrimination here). Where a nation does not act on known discrimination within its borders, FFW argues, it violates treaties it has signed.

   Mortgage lenders were required to release their raw Home Mortgage Disclosure Act data for 2005 on April 1 of this year. 2005 is the second 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. While the Federal Reserve waited six months to compile and analyze the data, a study by Inner City Press of the largest U.S. banks, beginning with Citigroup reached the following findings:

            Citigroup in 2005, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, worse than in 2004. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004. Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

            Fair Finance Watch designed a way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at Citigroup for conventional first-lien loans, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup. Nor at HSBC, where less than half of upper income white borrowers were confined to rate spread loans, versus 61.87% of upper income African Americans and an even higher percentage of Latinos, 62.82%. HSBC, which bought Household International in 2002 just after its predatory lending settlement, has increased the interest rates changed by its former Household units. Over eighty percent of HSBC's home purchase loans to African Americans and Latinos were higher-cost loans over the rate spread, much higher than in 2004 at these ex-Household units. In Buffalo, HSBC's long-time headquarters, HSBC in 2005 confined African Americans to higher cost rate spread loans 2.15 times more frequently than whites. 

            In 2005, HSBC made over five thousand super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities.  Wells Fargo made 795 HOEPA loans in 2005. Keycorp, which has said it had discontinued HOEPA loans, made 755 such loans in 2005.

  National City Corporation's  First Franklin made 177,526 higher cost loans over the rate spread in 2005. Merrill Lynch has recently announced a proposal to acquire First Franklin, in order to be able to pool and sell its higher cost loans on Wall Street.

            Considering all conventional first-lien loans, among the most disparate was Washington Mutual and its higher-cost affiliate, Long Beach Mortgage -- together they confined African Americans to rate spread loans 3.70 times more frequently than whites.  Wells Fargo was nearly as disparate, confining African Americans to rate spread loans 3.31 times more frequently than whites. Royal Bank of Scotland and its Citizens Bank units came in at 3.11, and JP Morgan Chase at 2.98.  The disparity at Wachovia was 2.58, and at Atlanta-based SunTrust it was 2.40. The disparity at GMAC, a stake in which Citigroup and others are seeking to buy, was 2.92, while at Countrywide it was 2.86.

            Countrywide's disparity between pricing to African Americans and whites was even worse when considering conventional first lien home purchase loans: Countrywide confined African Americans to rate spread loans 3.53 times more frequently than whites. Countrywide was topped, however, by Milwaukee-based M&I, with a disparity of 3.78, and by Bank of America's MBNA unit, with a disparity of 4.23.

            Bank of America also enabled other subprime lenders in 2005 by securitizing loans through its generically-named Asset-Backed Funding Corporation unit for, among others, Ameriquest, which earlier this year settled predatory lending charges with state attorneys general for $325 million. The settlement only required reforms at Ameriquest Mortgage and two affiliates, but not its largest affiliate, Argent Mortgage. The 2005 data show that Argent made 220,069 higher cost loans over the rate spread, while Ameriquest Mortgage made 122,868 such loans. The reforms announced in support of the predatory lending settlement with the attorneys general cover barely 35% of ACC's high-cost lending. 

            Like ACC / Ameriquest, Citigroup and HSBC, other large subprime lenders also increased the percentage of their loans that were over the rate spread, from 2004 to 2005. At New Century in 2005, fully 215,579 of the company's 268,101 loans were over the rate spread.  Countrywide in 2005 made 190,621 loans over the rate spread. 199,249 of 237,700 loans were over the rate spread at H&R Block, which also in this season offers problematic high-cost tax refund anticipation loans. Further on fringe finance, the study notes that Citigroup helped Dollar Financial to go public, and since continued to lend to and assist this pawn and payday lender.

            The nation's largest bank, Citigroup, was disparate in Metropolitan Statistical Areas all over the country in 2005. In Los Angeles, Citigroup confined African Americans to higher cost rate spread loans 2.13 times more frequently than whites; its disparity for Latinos was 2.02. Citigroup's African American to white disparity was 2.27 in the Washington DC MSA, and 2.72 in Chicago.  In Philadelphia, Citigroup confined African Americans to higher cost rate spread loans 3.43 times more frequently than whites; its disparity for Latinos was 2.50.

            Fair Finance Watch is demanding action on all of these issues from the relevant regulatory agencies, including the Office of Thrift Supervision (responsible for AIG and Lehman Brothers Bank, among others), the FDIC (still considering giving a bank charter to Wal-Mart), the Office of the Comptroller of the Currency (which since suing to New York last year to block fair lending enforcement has done little to none of its own) and also the Federal Reserve Board.

            Fair Finance Watch responded, "Now that a second year of data is out, with worsening disparities at the largest bank in the nation and many of its peers, there is no more time for the Federal Reserve and other regulatory agencies to equivocate. The time for enforcement actions to combat this discriminatory and predatory lending is now."

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