Bad Boy Banks Running Wild While Creating Credit Desert

New Orleans  Rather than learning something about proper corporate behavior in the banking meltdown they triggered with their housing securitization schemes and unwillingness to supervise mortgage brokers, the gazillion dollar bailout seems to have taught the banking establishment that they could act in all ways with impunity. As we move towards the ten year mark of this national and community disaster, there are too many examples that come readily to mind.

One of the most disturbing is the way banks are now flaunting the Community Reinvestment Act of 1975 by creating a credit desert in lower income and minority neighborhoods. We are now reading regularly about complaints being filed against banks for outright racial discrimination.

The giant Wells Fargo was finally called to account in a rare exercise by the Office of the Controller of the Currency of its authority in reviewing the annual CRA records of all regulated lending institutions. Wells Fargo was given a “needs to improve,” and given the watered down nature of the CRA now, a bank really has to mess up to get such a negative rating by the OCC. The CEO said he was disappointed, but to quote one banking newsletter:

10 government inquiries over the past decade prompted the OCC to lower its overall score of the company’s compliance with community banking laws to “needs to improve.” Enforcement cases cited by the OCC faulted the bank’s treatment of minority neighborhoods, military personnel and women who had recently given birth. “Bank management instituted policies, procedures and performance standards that contributed to the violations for which evidence has been identified,” the OCC wrote in a report. Abuses occurred in “multiple lines of business,” the regulator said.

This will hurt Wells Fargo because it is a critique of the pervasive and arrogant culture of the bank. Whether it will get them to modify their behavior is uncertain.

Another case in point with another giant based North Carolina this time rather than based in California, found a bankruptcy judge administering a beat down to the Bank of America for its thuggish handling of a foreclosure in California.

A bankruptcy judge in California fined Bank of America $45 million over the bank’s mistaken foreclosure on a family’s home and mishandling of the loan modification process on their mortgage calling it “brazen” and “heartless.”

In this case Bank of America’s standard trick of losing the loan mod paperwork was exposed for the duplicity that has been infamous in their handling of modifications and ruthless, and sometimes, incorrect foreclosures.

If this is the way the big letter, top of the list banks are handling loans to lower income and imperiled families across the country, is it any wonder that hedge funds and other financial vultures are swooping into our neighborhoods with one predatory lending instrument after another, feeling confident that they can rob and steal without any consequences, preferring to pay the fines, rather than do right?

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