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.

***

Please enjoy tUnE-yArDs’ Heart Attack.

Thanks to KABF.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Banks are Building “Credit Deserts” in Birmingham and Elsewhere

182984189-465119Edinburgh   We have real deserts like Sahara, the Gobi, Mohave, or Chihuahuan in the world. We have food “deserts” in many lower income communities with little choice but mom-and-pops, corner stores, kiosks, and bodegas to serve millions. Now there’s increasing evidence that banks have been allowed to build “credit deserts” in many cities, and work in Birmingham, the second largest city in the United Kingdom, makes it clear the map of the desert is also the outline of lower income communities in the city.

It shouldn’t be a surprise. Reportedly, British banks have shut down 42% of their branches over the last 15 years, and of course a huge percentage of the closures have been in lower income areas. Fleeing from the responsibilities of community banking has long been a trend in the United States of course, but in the United Kingdom the concentration of most banking in a handful of companies exacerbates the crisis. The U.K.’s antitrust regulator, the Competition and Markets Authority, recently said that Britain’s retail banking market isn’t competitive enough, but then didn’t do much about it and made no proposals for forcing the country’s big lenders from making any radical changes to their businesses. U.K retail and business banking is dominated by four banks: Lloyds Banking Group , Royal Bank of Scotland Group , Barclays and HSBC Holdings holding approximately 70% of personal current accounts and 80% of business accounts in the U.K.

Now as data is becoming available in recent years on where small businesses, mortgage loans, and smaller consumer loans are being given by banks, the city council of Birmingham did some number crunching, and then laid out the results on a map. In general Birmingham citizens had less access to credit than virtually any other part of the UK, but more specifically when a comparison was made on where loans were NOT being made, the overlap with lower income communities was precise. There is no question that banks are discriminating against low and moderate income families as a matter of policy and as a key part of their business plan.

While the banks build a “credit desert,” the vultures that sweep in to feed on the people are of course the payday lenders and cities in the UK, just like the US and Canada are seeing a feeding frenzy. ACORN organizers not only in Birmingham but in other cities in England and Scotland were quickly able to rattle off the names and addresses of payday lenders, pawn shops, and other quick money spots in our neighborhoods.

While visiting we looked up the regulations on payday lenders in the UK. Not much hope for relief there in the credit desert. Pretty much everything goes if the interest rate on the loans was less than 100% of the loan itself. Checking the popular internet money lender, Wonga, to our shock they boldly displayed an APR or annual percentage rate for their lending rate at 1509%.

The plan seems to be to discriminate in lending and then open the door wide so that the pockets of lower income families can be picked clean.

***

“Payday Loan Song”by Erich Vieth

Facebooktwittergoogle_plusredditpinterestlinkedinmail