By Matthew R. Lee
SOUTH BRONX NY, March 30, 2013 -- In the first study of the just-released 2012 mortgage lending data, Inner City Press and Bronx-based Fair Finance Watch have found that the Big Four banking behemoths Citigroup, JPMorgan Chase, Bank of America and Wells Fargo continued with high cost loans and disparities by race and ethnicity in denials and higher-cost lending.
2012 is the ninth 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 2.09 times more frequently than whites in 2012, Fair Finance Watch has found.
Citigroup confined Latinos to higher-cost loans above the rate spread 1.83 times more frequently than whites in 2012, the data show.
“Even after the bailouts, lending disparities grew worse and not better," said Fair Finance Watch. "Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by predatory lending."
For JPMorgan Chase, the disparity for African Americans in 2012 was 1.7; for Bank of America it was 1.61; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2011 was a whopping 2.32.
"The Federal Reserve is becoming more and more bank-friendly, including with recent Freedom of Information Act appeal denials by Governor Jay Powell, formerly a hedge funder and Deutsche Bank official Jay Powell. It remains unclear if the Consumer Financial Protection Bureau will get to this problem," Fair Finance Watch continued. "The disparities in the 2012 mortgage data of these banks further militate for aggressively watchdogging and breaking up these banks."
Instead, the Fed allowed the creation of a fifth mega-bank in Capital One when it acquired ING DIRECT and the subprime assets of HSBC.
In 2012, Fair Finance Watch has found, fully 9.93 percent of Capital One's mortgage loans to African American were higher cost loans, versus 7.61 percent of Capital One's loans to whites. To Latinos, the percentage was even higher: 10.31 percent.
And so Fair Finance Watch and Inner City Press have re-doubled watchdogging. Challenged by the groups in 2012 and still pending, with FOIA issues, are applications by Customers Bancorp and by M&T, to acquire Hudson City Savings Bank.
Regulators had allowed Hudson City in 2011, for conventional home purchase loans in the New York City Metropolitan Statistical Area, to make 765 such loans to whites and only FIVE to African Americans (and only 44 to Latinos). Meanwhile, Hudson City denied the applications of African Americans 3.21 times more frequently then those of whites.
In March 2013 Inner City Press and Fair Finance Watch began a challenge to Investors Bancorp's application to acquire Roma. In the NYC MSA in 2011 for conventional home purchase loans, Investors Bank made 220 such loans to whites, and only TWO such loans to African Americans. Its denial rate for Latinos was FIVE TIMES higher than for whites.
The Home Mortgage Disclosure Act required that the 2012 data be provided by March 31, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline, despite confirming receipt of the request. Further studies will follow: watch this site.
