Tag Archives: low-income families

Signing of CRA in 1977

City National Bank Shows Why Some CRA Proposals are Wrong

New Orleans      There’s a big split within the federal banking establishment about what to do about revisions to the 1977 Community Reinvestment Act.  This is not your run of the mill, chest thumping, and elbow pushing in Washington over turf and regulatory jurisdiction.  It’s actually very important, particularly to low-and-moderate income families and their hopes of obtaining decent and affordable housing.

Recent reports had the Office of the Comptroller of the Currency (OCC) moving forward without agreement from the other major players, the Federal Deposit Insurance Corporation (FDIC) and, most importantly, the Federal Reserve Bank, which is the primary enforcer of the banks CRA obligations in lending.  The OCC gang wants to give banks credit for putting big dollops of dollars somewhere close to lower income neighborhoods and letting the big one-off expenditures cover their CRA requirements without focusing on family lending.  The FDIC has joined them in large part.  The Federal Reserve has finally come out foursquare against allowing the CRA score to be tilted towards big community development projects such as loans to hospitals, universities, and other claimants and in favor of maintaining an emphasis on individual lending in lower income areas for home mortgages.  The OCC/FDIC plan would also allow banks to “buy” their way out of their obligations by claiming packages of loans in rural areas and to small businesses, even where they have no operations, rather than doing the hard work of upgrading the areas that need investment where they have operations and branches.  The OCC/FDIC plan would start with the dollar amount claimed by a bank as CRA eligible, rather than breaking the loans into the key baskets for evaluation that have been the sharpest teeth left in the Act over the last more than forty years grinding it down.

Looking at the acquisition of City National Bank (CNB) in Los Angeles by the Royal Bank of Canada (RBC) is a good example of why the OCC/FDIC changes would be disastrous.  The CNB community reinvestment work had been lackluster prior to the merger discussions, and numerous groups didn’t hesitate to make that known to the Federal Reserve.  RBC finally prevailed in the acquisition largely by agreeing to make a $11 billion investment in CRA loans over a multi-year period that is now going into its final year.  ACORN requested the public file on CNB’s CRA work recently to see how they have fulfilled their commitment.  I’ll keep you out of the weeds, although we’ll invariably comeback to CNB and RBC in the future, but they are failing on their commitment pretty drastically, and with the clock running out, it’s hard to see how they would be able to pass muster without a miracle.  This is largely the case because from the numbers it appears that they have continued to not take loaning in lower income areas seriously.  They claim that they have made some big community development loans and they have purchased some community development loans.

CRA was about raising all boats in lower income neighborhoods, especially for families, and not just shoring up some remote islands to look over vast oceans of poverty starved for loans and investment.   Looking at the public file, CNB/RBC seems to be betting and believing that the OCC/FDIC proposal has already succeeded, and that there will be no consequences to their failure to live up to their loan commitment to low income families and their neighborhoods.

The OCC/FDIC proposal must be stopped or the failure of CNB/RBC will be the rule, not the exception, and once again lower income families will be left in the cold while banks preen and pretend to have served the purposes of their charters.

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Please enjoy Never Enough Money by Martha Wash.

Thanks to KABF.

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Internet as a Weapon at Home and Abroad

Houston   Silicon Valley and its fans argue that tech is a tool enabled by the wonderful world of the internet.  They aren’t totally wrong, though like all tools, tech and the internet, have to be used correctly of course.  We all know that, right?  We also are finding out more and more that these tools in the wrong hands for the wrong purpose, quickly become weapons.

When India went after its Muslim state and citizens in Kashmir, what did it do quickly?  Turn off the internet.  Zimbabwe dealing with civil strife and unhappiness with the economy responded to its people by doing what?  Turning off the internet.  We’ve seen turning the internet off and on frequently as a weapon used by countries to contain and coerce their citizens around the world.

In another way, we see the internet used as a weapon by big telecoms against the populations that need and depend on the service.  An investigation by the Dallas Morning News found that AT&T, whose headquarters is in the Dallas area ironically, had weaponized access to the internet for profit.  More than that, they had targeted lower income families and census tracts using access to the internet and its affordability as blunt instruments against the poor.

The paper found that AT&T determined where to establish faster internet by property values.  Higher values, indicating higher incomes, got faster internet first.  Lower property values got faster internet either later or not at all.  There’s more though.  AT&T also charged lower income customers in those areas more for the slower service than they charged those with higher valued locations.

Local 100 and ACORN in the US, Canada, and elsewhere have campaigned aggressively under the banner “Internet for All” to lower the digital divide.  Amazingly, AT&T in Dallas, and likely other cities once these investigations spread, is not only profiting from the digital divide, it is building a digital wall with the rich on one side and the poor on the other.

Reading the Dallas Morning News article was not exactly a surprise to us.   Several years ago (BT, before Trump) when the FCC had required Comcast to offer $10 per month internet access in acquiring Times-Warner, they touted this program on a voluntary basis to other companies.  Our Dallas office was never able to get AT&T to respond or meet with us to join a similar program.  Now, (AT, after Trump), there’s no mention of a voluntary or mandatory program.

AT&T is likely using a similar geo-placement strategy throughout the country.  They are unlikely to be the only company practicing this scam on their customers and larceny against the poor.  Will the FCC act?  Unlikely.  Will local public service regulators step into the breach?  Let’s hope so.

This is outrageous!

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