Tag Archives: racial discrimination

Source: Newsday

Community Reinvestment Still Matters, Why Gut it More?

New Orleans       Newsday, the big Long Island, New York newspaper, reported on a three-year investigation of real estate practices in this suburb that is well-known as one of the whitest suburbs in America.   Using a classic tactic to determine such racial discrimination, they sent out 100 teams of black and white testers in order to compare how racial differences might have led to disparate advice and steering into or away from white neighborhoods.  They found that real estate agents treated people of color unequally 40% of the time compared with white people.  In what may have seemed a throwaway comment, Newsday thought that their investigation should have been unnecessary, as another paper commented, because the work should have been done by the government or nonprofits.  Hats off to Newsday for doing the work, but shock and awe that they did not realize that no one in government is really guarding against racial discrimination in real estate, and nonprofits are drastically underfunded by HUD in the current administration on the issues of fair housing.

Case in point is the steady drive to eviscerate the Community Reinvestment Act (CRA) yet again, this time led by the Office of the Comptroller of the Currency.  Remember that the CRA since 1977 has been one of the few bulwarks against not only discrimination in housing lending based on race and ethnicity, but the only real incentive for banks to assure that they are investing and approving loans in lower income communities.

The Federal Reserve Bank is the overseer of CRA and its individual bank ratings.  The Federal Deposit Insurance Corporation (FDIC) is also a CRA player. For some spurious excuse, likely rooted in bad faith and worse politics, after years of meetings to find a path where all three agencies agreed, the OCC has broken ranks and is trying to move alone to rewrite CRA rules.  Nothing good will come of this.

According to the Wall Street Journal, the negotiations broke down over the critical issue of whether CRA activity should be measured by the number of loans made, advocated by the Federal Reserve, or the dollar amount of CRA lending in an area, which is the OCC’s position.  None of these regulators are heroes in this story, but the OCC’s position is especially suspect.  One can look at the way developers have manipulated CDBG funding in Detroit’s downtown census tracks or the way developers and rich investors are pulling trucks up for cash delivery to distort the enterprise zones, ostensibly for lower income areas, created in the Trump tax giveaway.  Dollars would presume real investment, even though not to the real CRA targets.

Additionally, OCC seems to want to use a metric that looked at lending ratios compared to bank deposits from families in lower income areas.  The last forty years have seen most banks shutter branches as part of their business model in our communities, while the number of payday lenders and check cashing outlets have exploded in lower income areas to fill the vacuum.  How could this be a realistic metric?

Hopefully, the OCC’s political game will run into some serious resistance.  In that sense we are lucky that the other agencies have not signed on.  The real problem, whether in Long Island or wherever you might live, is that discrimination of all kinds is still rife in low-and-moderate communities everywhere in the United States, and CRA is one of the few tools that still works, when it is allowed to do so.  We definitely ought to be doing some work to revise CRA, like forcing more financial institutions under its requirements and lassoing in all of the on-line, Quicken and Zillow types as well, but the OCC’s political play needs to be taken off the table ASAP.

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Banks Shirking Responsibility for Foreclosed Property Maintenance

bank-owned-foreclosures-12New Orleans  I woke up to headlines indicating that the National Fair Housing Alliance has accused Minneapolis-based U.S. Bank of effectively “red lining” blight into largely African-American and Latino neighborhoods in 35 different cities in 15 metropolitan areas.  Recently the alliance added New Orleans, Dallas, New Haven, and Hampton Roads, Virginia to an amended complaint charging that US Bank had not maintained foreclosed properties in minority neighborhoods compared to what it does in white areas.  Similar complaints have been filed against Bank of America and Wells Fargo, though reportedly Wells Fargo settled with the group.

            So, what says U.S. Bank?  Their defense is that they are simply the corporate trustee for a security pool of investors and claim that they have no legal right to maintain the properties.   Well, I’ve been there and heard that, so at best U.S. Bank and the rest of these banks are hiding behind half-truths.   They are the legal trustee for the properties though and it’s their name on the property titles.  In reality at best U.S. Bank is trying to have its cake and eat it too.  They get paid to be the holder of the investment pool and the named owner of the mortgage properties, but they are essentially trying to sing a verse with the old rock group, Dire Straits, and “get money for nothing and get their chicks for free.” 

ACORN struggled with this problem for years and interestingly in negotiating with Deutsche Bank, which at the time in 2007-2008 was a trustee for a huge number of mortgage security pools, we learned quite a bit about how it really works. The bottom line is that the banks know the owners, and in a wink-and-nod in those days, Deutsche agreed to give us the information on specific properties that were problems in our neighborhoods when they became issues.  My point in that U.S. Bank and the other bankers are in effect earning their money by allowing the real owners and their lack of maintenance to hide behind their corporate veil, so they deserve to go down.

And, their problem just gets bigger when the fair housing alliance and others do the ground work around the country and bust them for not lifting a finger to take care of properties that are foreclosed in black and brown neighborhoods, while in fact making sure that properties are maintained in white areas. 

Call it redlining or just flat out racial discrimination, U. S. Bank and the boys can keep whining about it, but they are just shucking and jiving for the real owners and it is past time for them to do right and stop ruining our neighborhoods with callous disregard, while they count their money for doing nothing.  They can either name out the real owners or take the weight and step up.

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