Discrimination is Running Rampant in Bank Lending

New Orleans        One of the toughest questions I got on my road tour of six countries was essentially, “how does it feel to have to keep fighting to hold on to every victory against constant opposition,” or in other words how do we do the work when every victory involves constant struggle.  My answer, most simply put, was that constant struggle is the nature of the work and relentless opposition to our demands, defines the necessity of building powerful, mass-based organizations.

At the same time the example I often gave was the significant accomplishment over thirty years from the 1977 to 2007 in home ownership in American by lower income families, African-Americans, and Latinos from the passage of the Community Reinvestment Act, joined aggressively by ACORN and many other community organizations, to the housing bubble crash at the leading edge of the Great Recession.  Now most of those home ownership gains have been erased in the last decade of foreclosures and the widening expanse of the credit desert.

It turns out there is even an uglier story underneath that disaster.  Reveal, the online publication of the Center for Investigative Reporting, picked up a task that used to be ACORN’s annual labor for thirty years through 2008 and examined 31 million mortgage records to understand current banking practices in making loans.  They found that the odds of African-Americans and Latinos being denied conventional mortgages compared to whites of equivalent income, loan size, and other factors were worse in sixty-one metropolitan areas.  The list of cities suffering that infamy included Atlanta, Denver, Philadelphia, St. Louis, and San Antonio.  African-Americans bore the worst brunt of discrimination in the South, unsurprisingly, in cities like Mobile, Alabama, Greenville, South Carolina, and Gainesville, Florida.  Latinos took the worst beating in Iowa City, Iowa.

The litany of discrimination by banks and heartbreak for families trying to build citizen wealth is relentless.  Blacks were turned down more often in 48 metro areas, while Latinos experienced the same in 25, Asian-Americans in nine, and native Americans in three.  Take a bet with me that these are areas where each group is significant in the overall population.  In Philly, African-Americans received ten times fewer loans than whites even though their numbers are about equal.  In Washington, D.C, all minority groups faced discrimination compared to whites, so welcome to the nation’s capital where banks discriminate across the board.

Banks have been hiding behind their errors, compounded with multi-billion-dollar settlements, for the last decade, just as they have hidden their discrimination behind the  confidentiality of credit scores, that often have the reliability of lie detector tests.

Can we count on the Federal Reserve to step up as the regulator here?  Not likely.  How about Congress, where campaign contributions are king?  Not likely.

As I answered in Brighton, struggle is constant, and this example is a reminder that the battle needs to be engaged again on the housing front with new tactics and new demands now that banks have reverted to newer and more subtle systems of discrimination.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Bank Redlining Increasing and Wealth Plummeting in Minority Communities

Seattle 1964

Seattle 1964

New Orleans        The Federal Reserve report on the continued decrease in lending to African-American and Hispanic families is unambiguous.  In 2013, 4.8% of total home loans were to African-Americans, 7.3% were to Hispanics.  In 2012, the numbers were only marginally better at 5.1% and 7.2% respectively.  As recently as 2006, before the real estate meltdown the numbers were almost 50% higher when combined, exceeding 20% of the total loans.

The other thing that is clear in the total failure of the Obama Administration to provide any real relief to so many homeowners is that citizen wealth for these same families has plummeted, putting more families underwater, owing more than the value of the loans in black and brown communities. While home values have declined about 10% in white communities, values have dropped by 20% in predominantly African-American neighborhoods and 26% in Hispanic-majority communities. It is virtually impossible not to conclude that banks are neither loaning, nor are they providing relief in such communities. If that’s not redlining, then let’s come up with a new name for it, because whether you say tomATo and I say toMAto, it’s all the same thing.

Reading the Wall Street Journal on this issue the only other thing that is crystal clear is that everyone responsible wants to point the finger somewhere else, usually at the government, rather than their own behavior, and muddy the water as much as possible, rather than moving to fix the problem with more rational policies and programs. The banks want to claim that they are raising credit scores higher than required because they don’t want to pay billions of penalties for their criminal behavior in robbing and fleecing both rich and poor. Does that sound like taking responsibility for your crimes and endeavoring to do better? Hardly!

And, how can blaming the lack of lending or relief to minority neighborhoods on these homeowners when every indication is that the roots of the securitization scandals were deeply set in speculation and largely white, middle-income and suburban communities? Count on the head of the Mortgage Bankers’ Association to voice the racism inherent in these new, whitewashed policies. David Stevens, their CEO, says the hammering of minority communities is “just simple math…tightening the credit has an unusually high impact on minority borrowers.” Stevens and the MBA are the lobbyists for bankers and banking in Washington, DC, so this is scary. They seem not to have gotten the memo that underlies the Federal Reserve report required by the Community Reinvestment Act and Home Mortgage Disclosure Act, which is the fact that they are supposed to be proving that they are doing better and doing everything possible to increase lending in minority areas, not just show up, and sign the attendance list.

Home ownership for lack of any better plan in place is still the largest source of wealth for lower income and minority communities so this level of inaction, blame shifting, and rationalizing puts the heavy fist of bankers on the scale to further increase the shift of inequality between the rich and poor, towards the rich. The underlying racism insures that lower income, minority communities by damn stay that way.

It’s not simple math. It’s simple racism, and that’s what the Federal Reserve is supposed to be stopping, not enabling, and it’s what these reports are supposed to be exposing for action, not simply noting in passing.

Facebooktwittergoogle_plusredditpinterestlinkedinmail