Lending Grew More Disparate at Citi, Chase,
Wells & BofA
3 -- In the first study of the just-released 2010
mortgage lending data, Bronx-based Fair Finance Watch has found that
the Big Four survivors of the banking meltdown, Citigroup, JPMorgan
Chase, Wells Fargo and Bank of America, continued with high cost
loans and had even worse disparities by race and ethnicity in denials
and higher-cost lending than in 2009.
year in which the data distinguishes which loans are higher cost,
over a federally-defined rate spread of 1.5 percent over Treasury
data show that Citigroup confined African Americans to higher-cost
loans above this rate spread 3.67 times more frequently than whites
in 2010, worse that its 2.25 disparity in 2009, Fair Finance Watch
confined Latinos to higher-cost loans above the
rate spread 2.92 times more frequently than whites in 2010, worse
that its 1.72 disparity in 2009, the data show.
even more disparate to Latinos, confined them to higher-cost loans
2.08 times more frequently than whites in 2010, worse than its own
1.98 disparity in 2009 and almost as pronounced as its 2.69 disparity
between African-Americans and whites in 2010, worse than its 2.17
disparity in 2009.
NA, the disparity for African Americans in 2010 was 2.59; for the
largest of Wells Fargo's many HMDA data reporters, the disparity for
African Americans in 2010 was 2.56.
laxity, at least on fair lending, has continued despite the financial
meltdown caused by this predatory lending,” said Fair Finance
Watch. “When these four banks were allowed to buy up others with very
little oversight, the regulators did not put
any conditions on the mergers or Troubled Assets Relief Program
bailouts. These worsening
disparities are the result.
is not clear if the new Consumer Financial
Protection Bureau will get to this problem. As things are going, it
will be worse and more disparate in 2011. The disparities in the 2010
mortgage data of the Big Four further militate for aggressively
watchdogging and breaking up these
banks," Fair Finance Watch concluded.
in 2010 confined African Americans to higher-cost loans above
the rate spread 2.24 times more frequently than whites.
in 2010 confined African Americans to higher-cost loans above the
rate spread 2.12 times more frequently than whites, and confined
Latinos to higher-cost loans above the rate spread an even worse 2.2
times more frequently than whites.
confined African Americans to higher-cost loans above the rate spread
2.2 times more frequently than whites, and confined Latinos to
higher-cost loans above the rate spread an even worse 2.8 times more
frequently than whites.
Regions in 2010 denied applications by African Americans 2.56
times more frequently than whites. BanCorpSouth in 2010 denied
applications by African Americans 2.6 times more frequently than
Watch has begun an enforcement project in the
South, most recently raising issues under the Community Reinvestment
Act on Hancock of Mississippi's application to acquire
Louisiana-based Whitney, see “Flag
on merger of Hancock,
Whitney banks,” New Orleans Times Picayune, March 13, 2011.
has also been active in raising issues concerning Bank of Montreal /
Harris and their proposal to buy M&I. In response, while the
Federal Reserve Board asked some fair lending questions, the majority
of the banks' response has been blacked out, which Inner City Press
is challenging under the Freedom of Information Act.
HMDA data, Fair Finance Watch has commented that Bank of Montreal's
Harris confined African Americans to higher cost, rate spread loans
2.35 times more frequently than whites.
Federal Savings Bank
confined African Americans to higher cost, rate spread loans 2.1
times more frequently than whites. Bank of Montreal's Harris denied
the applications of African Americans 2.35 times, and Latinos two
times more frequently than those of whites. The Fed extended the
comment period on the merger once, but now seeks to close it with the
fair lending information still outstanding.
has submitted another timely comment, that Comerica, which is seeking
to acquire Houston-based Sterling, in 2010 confined African Americans
6.26 times more frequently than whites to higher cost, rate spread
loans. At Comerica, 11.3 percent of loans to African Americans were
over the rate spread, versus only 1.9 percent of loans to whites.
that the 2010 data be provided by April 1, following March 1 joint
requests by Fair Finance Watch and Inner City Press. Several banks
did not provide their data by the deadline. Trustmark provided its
data at the deadline but only in paper format, such that it could not
yet be computer-analyzed. Further studies will follow: watch this
3/13/11 - “Flag
on merger of Hancock,
Whitney banks,” New Orleans Times Picayune
in The Guardian (UK), Feb. 16, 2010, on Wells Fargo's subprime
-- Subprime Survivors
Wells, BofA and JPM Chase Were
More Disparate By Race in 2008 than Wachovia or Countrywide, Study Finds
7, 2008 -- First Study of
lending data, disparities at Chase, Citigroup, WaMu, Wachovia, Bank of America
and Countrywide, in run-up to Federal Reserve
public hearings. Bank
Beat: Disparities at targets National City and KeyCorp, US Bancorp's
Fed's Bear Stearns deal (Reuters of March 16,
Campaign advisers tied
to lending crisis
(USA Today of April 2, 2008, re subprime Delta)
July 4, 2007 - 1st challenge to ABN Amro's
proposes sale of LaSalle to Bank of America
April 10, 2007 - Subprime Racial
Disparities By Banks in New York State Worse than at Countrywide, Which
Settled Predatory Lending Charges in NYS in 2006
April 4, 2007 - First study of
2006 HMDA data and see, "Banks Prone to Sell Minorities Pricy Loans,"
2006 - FFW study of mortgage lending
in Detroit: Ameriquest,
Some coverage (click here for more):
Challenge,” by Conal Walsh, The Observer, September 18,
2005 -- FFW's Campaign
against Riggs Bank’s cheap settlement for money laundering
for human rights
abusers, and the sale of Riggs to PNC - click here.
Also, on this site, FFW's analysis of
Equatorial Guinea - click here
Navigate using the map below,
on which the area names are links:
Click here re
re Click here for
Click here re
documents and advocates around financial firms'
activities, and how they affect local communities. FFW files its
findings with tribunals, regulatory agencies, and elsewhere, including
on this Web site . Click here to view
analyses of several multinational financial institutions' effects on
consumers and the environment, worldwide: for two examples, Citigroup and HSBC. Click here for some
on the application of human rights and international law to the global
financial services companies, and for citations (where possible, links) to
resource material. Click here for some September 2004 campaigns
-- PNC/Riggs (Finance
Reports of August 16, 2004, onwards), J.P. Morgan Chase,
for an ongoing report on the campaign to reform anti-money laundering,
tax haven, and bank secrecy laws. Click here for the Human Rights Enforcement
project, including its new (9/04) criminal
justice and local human rights project.
2/05 -- FFW's Campaign
against Riggs Bank’s cheap settlement for money laundering
for human rights
abusers, and the sale of Riggs to PNC - click here
Alert named Fair Finance Watch its “Hero” for November
2004 - click here
Beginnings of a FFW initiative:
Human Rights & Finance:
Predatory Lending in a Deregulated Network Economy
If the biggest names in finance
-- Citigroup, HSBC, General Electric and AIG -- have been engaged in
predatory lending in the United States, there's a need for an inquiry
into their behavior in less regulated economies internationally.
An inescapable trend in this
new millennium is the export of subprime lending models beyond the
United States. Citigroup, following its acquisition of Associates First
Capital Corporation in late 2000, began offering subprime loans to
lower-income consumers in countries from Brazil and Mexico to India and
Korea. The Hong Kong Shanghai Banking Corporation (HSBC) bought
Household International a mere month after Household settled predatory
lending charges with attorneys general in 42 states for half a billion
dollars. In making the deal, HSBC chairman Sir John Bond said that the
profits would come from exporting Household's model to the 81 other
countries in which HSBC does business; a month later, HSBC announced it
would compete in subprime with Citigroup in Brazil.
From Australia through North
America and back to Eastern Europe, General Electric, through its GE
Capital unit, has developed a subprime lending capacity on which the
sun never sets. The insurance company AIG has more quietly taken the
subprime lending model of American General, which AIG bought in 2001,
to the other countries in which AIG goes business.
This consensus around high-rate
lending in emerging markets by the world's largest bank (Citigroup),
insurer (AIG) and corporation (GE) is indicative of the way in which
corporate interests are currently out-stripping (or out-racing)
regulation and the public interest. The lenders and their strategies
are global, but the laws are at most national, and in some cases
state-, county- or merely citywide. In the absence of meaningful
regulation, lenders like Citigroup and Household view settlement
agreements as a cost of doing business. Both have announced unilateral
"best practices" commitments that are applicable by their terms only in
the United States (or only in the geographic footprint of the consumers
organizations with which they make the announcements). In the short
term, there is a need to combat this race to the bottom, similar to
anti-sweatshop campaigns and environmental advocacy. In the longer
term, there is a need for meaningful global regulation, from a consumer
and community point of view, of these emerging global lenders.
Related to this inquiry
is the view that predatory lending is not only a consumer
protection and financial soundness issue -- it is also a human rights issue.
This argument holds that various nations' signing of, for example, the
International Covenant on Economic, Social and Cultural Rights (ICESCR)
and the International Convention on the Elimination of All Forms of
Racial Discrimination (ICERD) require them to inquire into and act on
the predatory lending that exists in, and is being exported into, their
countries. Article 2(1)(d) of the ICERD, for example, requires that
"[e]ach state party shall prohibit and bring to an end by all
appropriate means, including legislation as required by the
circumstances, racial discrimination by any person, group or
organization." As explored below, and elsewhere, this may be one avenue
to pursue accountability in global high-rate subprime lending.
It is important to inquire into
how -- and where, and at what interest rates -- global lenders exported
predatory lending in the initial years of the 21st century: for example
(for now), Citigroup,
Fargo and GE.
A Sketched Historical
While the top end of the
financial services industry has for many years been transnational, the
second half of the 1990s saw a quickening of "globalization," of the
expansion, via acquisitions, of financial firms based in what, from the
1950s through the 1980s, was known as the "First World: the United
States, Europe, and Japan.
financial services industries in these countries were being
deregulated, best exemplified by the U.S. Gramm-Leach-Bliley Act of
1999, which allows the convergence of the banking, insurance and
securities industry, and eliminated most requirements for prior
regulatory approval for "overseas" acquisitions.
From whence, then, will
much-needed consumer, environmental and social protections come?
institutions -- the World Trade Organization
and the Bank for International Settlements, for example -- appear to
have little interest in social regulation. These institutions perceive
their mandate as being to "open," deregulated and standardize such
things as accounting guidelines and capital adequacy standards in the
Second and "Third" Worlds -- which, not unrelatedly, makes further
penetration by the First World firms possible, even, inevitable. The
United Nations, to date, has not been able to assert meaningful
jurisdiction over multinational corporations, at least not in the
It is at this crossroads
that the Fair Finance Watch works. Click here for
Overview Part 2: Lender Liability.
with more information, contact us.
Some pages on this site are low / no graphics, for
our dial-up friends in the developing world(s).
Also for More information, see:
& Finance: Predatory Lending in a Deregulated Network Economy