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.

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Attack on Community Reinvestment Latest Battle in Republicans War on the Poor

Little Rock   A headline in the Wall Street Journal marked another salvo in the vicious war that the Republicans and the Trump administration has launched on low-and-moderate income and minority families across the country. This time it was not transferring tax subsidies to the rich or attempting to eviscerate their healthcare and kill them. This time they are trying to force them to be permanent renters or homeless in order to transfer more benefits back to banks by trying to further gut the Community Reinvestment Act of 1977.

CRA, as it is known, coupled with HMDA, the Home Mortgage Disclosure Act, has been the key tool for forty years in forcing banks to lend to lower income and minority neighborhoods. CRA was critical in ending the governmental sanctioning and encouragement of housing discrimination called redlining, which created zones where banks would not issue mortgages. And, it was – and is potentially about to be – even worse. For those with long memories part of the proof that drove CRA was the statistical evidence that there was a lending and deposit deficit and transfer between lower income communities and higher income ones. Excess money from banking customers’ deposits from low income communities enabled loans vastly in excess of deposits in higher income communities in the same urban area that financed sprawl and suburban development and created blight and abandonment in urban, lower income and minority communities. This was not just discrimination, but devastation triggered by banking disinvestment.

The Treasury Department and the Office of the Comptroller are preparing today to announce proposals to lighten the load on banks. Remember these are the same banks that created the credit deserts before CRA in 1977 and have now intensified desertification in these communities in the wake of their ineptness and reckless speculation that triggered the Great Recession in 2007. If there was any sense of irony in political philosophy and policy, this would be the case study, as Treasury now attempts to “reward” banks for not lending in lower income areas over the last decade, by making it easier for them to, yes, you got it, NOT lend in lower income areas.

They are masking this outright robbing from the poor and racism by hiding under the banner of there being burdensome regulations on the banks that cost “billions” in their words. Billions in banking is the equivalent of their bar bill for the trillions that they collectively handle, hoard, and sometimes lend. If any one needed more regulations, rather than less, it’s banks!

The details are still emerging but the headlines are another battle cry in the ongoing war on the poor.

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Please enjoy tUnE-yArDs’ Heart Attack.

Thanks to KABF.

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