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Bender: A Story of Subprime Finance/Toxic Credit in the Global
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Copyright 2004 MarketWatch.com Inc., All Rights Reserved
April 23, 2004 Friday
SECTION: NEWS & COMMENTARY; MARKETS; DUE DILIGENCE
LENGTH: 1733 words
HEADLINE: A David takes on banking Goliaths
BYLINE: David Weidner covers Wall Street for CBS MarketWatch.com.
NEW YORK (CBS.MW) - On Claremont [Parkway], in the economically battered South Bronx, a
low-income housing project of 25,000 people is several blocks from the nearest bank
For some residents, the easiest place to cash a paycheck is across the street. But it's
not a bank branch, it's a check-cashing storefront by the name of Claremont Check Cashing
Co. Like other companies of its ilk, it charges a fee to cash a check.
It can cost as little $7 to cash a $500 paycheck. In some states, the firms can charge up
to 7 percent of the face amount.
That outrages Matthew Lee, the executive director of Inner City Press/Fair Finance Watch.
At a Federal Reserve hearing earlier this month, Lee pointed out that Claremont Check
Cashing was actually financed by a more familiar name, J.P. Morgan Chase (JPM).
In the last decade, J.P. Morgan has closed a dozen branches in the South Bronx, already
the most underserved part of the city on a per capita basis. But the bank points out that
it still has 29 branches in the borough, more than any other bank.
"No one even comes close to matching our branch commitment," said bank
spokeswoman Kristen Batteria. "We're very proud of our record in serving the
community in the Bronx."
Based in the rough-and-tumble South Bronx, ICP has filed an opposition to the $60 billion
purchase of Bank One by J.P. Morgan Chase on the grounds that the banks engage in
Today, the Federal Reserve will close a public comment period on the proposed merger, but
Lee has already made his case. By poring through hundreds of state and federal filings,
Lee's determined that both banks have financed hundreds of check cashing stores, payday
lenders and pawn shops while closing branches in poor neighborhoods.
For example, Bank One finances First Cash Financial Services (FCFS), a top-ten pawnshop
chain with 130 outlets in 11 states, and First American Cash Advance, a top-10 payday
lender with 330 storefronts operations in 11 states.
To counter such criticism, J.P. Morgan and Bank One last week unveiled an $800 billion
pledge to provide lending, education and small business support over the next 10 years to
minority and low-income communities.
Critics such as Lee say the pledge, made the morning before a Federal Reserve public
hearing on the merger, lacks enough detail to be enforced.
The merger, "would limit competition and raise prices; it would create another
too-big-to-fail, scandal-plagued mega-bank," Lee testified. "The banks' eleventh
hour vague pledge does nothing to address these issues."
Lee, the author and activist behind the protest, is a rumpled attorney who did not receive
an undergraduate degree, but earned a law degree from Fordham University. He worked odd
jobs before finding his calling as an activist with ICP/Fair Finance Watch. He seems an
unlikely leader of a national movement against predatory lending. He does not own a cell
Lee has even fictionalized his work. This year he published "Predatory Bender:
America in the Aughts." It's the story of an employee of a huge financial services
company, EmpiGroup, and the series of events that force him to blow the whistle on
EmpiGroup's predatory lending practices.
"I'm aiming for a reader who doesn't necessarily believe at the beginning that
consumer advocates are right," Lee said.
As Lee explains, it's not a change of heart or attack of conscience that moves the
protagonist to turn on EmpiGroup and its villainous CEO, "Sandy Vyle." Instead,
the company turns on the hero. There are also some very funny moments.
"It would have been way too cartoonish" to have the banker character have an
attack of conscience, Lee said. "It's a dark comedy."
But balancing the book is its subtitle and a non-fiction afterward called "Predatory
Lending: Toxic Credit in the Global Inner City." The work is a manifesto on Lee's
cause with global statistics and first-person accounts.
"I'm not Karl Marx," Lee said. "I think things are out of whack. Everything
is measured by money. You can make good money by taking advantage of vulnerable people.
But sometimes you have to leave that last dollar on the table."
In an interview with CBS Marketwatch, Rev. Jesse Jackson, who has battled bank mergers
with Lee for more than a decade, said Lee is a key figure in the current stage of the
civil rights fight, the access to capital.
"He, in terms of financial freedom, is the Ralph Nader of the movement," Jackson
said. "He is an enemy of predatory exploitation."
Banks take notice
Lee's work and the work of community groups like his has won respect, if grudging, from
some of the banking world's biggest players.
Marge Magner, chairman and CEO of Citigroup's (C) Global and Consumer Group, said she
believes that banks and community groups have improved the services available to
minorities and low-income areas.
"Community advocacy groups are critical in a democracy in making sure that people's
voices are heard," Magner said. "They should speak to the issues and raise
He opposed Citigroup's $27 billion acquisition of Associates First Capital in 2000.
Associates had long been a target of critics who said it engaged in predatory lending
practices. Though the merger was approved, Citigroup agreed to pay a record $240 million
settlement against the charges.
Magner acknowledged that banks do make mistakes when buying companies.
"In the heat of lots of activity and lots of issues a lot of things can be overlooked
by an institution," she said. "When we do mergers we look at the activities. We
try very much to look at the outside issues and not just the inside issues."
Birth of the cause
ICP was founded in 1987 when Lee and some colleagues started a mimeographed newspaper to
help "squatters," or what Lee calls "homesteaders," in abandoned
buildings know their rights, deal with the city and find financing to turn slums into
Aimed at residents of New York's Lower East Side and the South Bronx, ICP found an
audience in the latter. The Bronx had more blight and was virtually ignored by the huge
banks headquartered in Manhattan. ICP was soon hosting meetings for residents of the South
"Our group has always been membership driven," Lee said. "It was about what
people in the buildings thought. They don't think Chase and J.P. Morgan are doing a good
job in the South Bronx. And they're not."
By 1992, ICP and Lee took on their first challenge to a bank merger when Bank of New York
(BK) asked regulators to approve a small branch acquisition from Barclays.
"People began to wonder why these buildings were abandoned to begin with," Lee
said. "Well, it was impossible for people to get a loan to fix up a building."
At the time, Bank of New York served Manhattan and suburban Westchester County, but had no
branches in Bronx. But Lee found out that the bank actually had 13,000 depositors in the
Bronx who commuted and used branches in Manhattan.
Lee brought the information to the New York State Banking Department along with a formal
opposition to the acquisition. The ploy worked. On the eve of the regulators' decision on
the deal, BoNY announced it would include the Bronx as part of its service area,
committing to $5 million in loans.
"At the time it seemed huge," Lee said. "Bank of New York had no idea this
scrappy group could actually document the bank's misdeeds and catch the error of
With momentum, Lee turned his sights to banks with similar policies: European American
Bank, NatWest, Republic and Marine Midland. All refused to change their policies but
offered to give ICP a grant, Lee said. He rejected the idea, saying to the banks,
"'no, you're not serving the area, why should we apply for anything?'"
Two years later, each of the banks agreed to provide loans to the South Bronx. Three of
them opened branches in the neighborhood. Lee and his group have fixed up 24 buildings.
"Those are real results for real people," Lee said.
Lee and ICP/Fair Finance Watch have gone national. There have been challenges to dozens of
mergers. Lee works full time and gets help from law students --Georgetown University
supplies some - and his homesteader constituents in the Bronx.
Currently, he is challenging the $6 billion acquisition of Union Planters (UPC) by Regions
Financial (RF) partially on the grounds that Union Planters helps to finance title-lenders
that are owned by a Florida businessman with reputed mob connections.
Title lenders provide loans in exchange for car owners signing over ownership of their
Lee is untiring in his pursuit of blocking big mergers. But in 12 years he hasn't blocked
one. It's a record that some say shows that Lee's is a Quixotic quest.
"I would never say 'approve it, but conditionally," Lee said. "The better
strategy is to say 'we think it should be denied.' I honestly believe there would be more
reinvestment if the regulators had the gumption to deny one."
In the J.P. Morgan-Bank One deal, Lee concedes that the banks are unlikely to agree to
quit financing pawn and gun shops and check-cashing stores. But he wants people to know
that the banks are not as altruistic as they suggest.
"A lot of people say, 'well, they opposed the merger, but if it's approved they
lost,'" Lee said. "Even this Chase thing, which we are still fighting tooth and
nail, I don't think the $800 billion means anything. But there's no question that they're
doing it because we opposed it, scrutinized it and got a hearing."
Lee also believes that without community opposition J.P. Morgan and Bank One would never
have committed anything to poor communities besides what they are required to by the
Community Reinvestment Act. The federal law requires banks to lend in communities they
"The question becomes what part of that $800 billion goes to communities," Lee
said. "A lot of it is pure fluff, stuff they would have done otherwise. Our job is to
make sure that part of it is something new that they would not have done before."
The Times (London)
April 15, 2004, Thursday
SECTION: Business; 27 HEADLINE: Novel approach BYLINE:
Matthew Lee, the New York public interest lawyer who gave HSBC such a hard time over
its $ 14 billion acquisition of Household International, the sub-prime lender to America's
poor, has penned a novel.
The book, Predatory Bender (a pun on predatory lender), has a cast of colorful characters,
not least Sandy Vyle, chairman of EmpiGroup, the world's largest bank. Vyle is a
foul-mouthed monster, determined to screw the best terms out of his so-called customers.
Under no circumstances is Vyle to be confused with Sandy Weill, chairman of Citigroup, the
non-fictional world's biggest bank. "This is a creative work. Resemblances to
non-public figures, locales or institutions are coincidental," goes the blurb.
The Washington Post
March 15, 2004 Monday
SECTION: Financial; E01 HEADLINE: A Novel Approach to Predatory Lending
The annual Washington meeting of the National Community Reinvestment Coalition isn't
usually a load of laughs: Last week's meeting, "Bringing Economic Justice Home,"
had speakers such as Jesse Jackson and Sen. Hillary Rodham Clinton (D-N.Y.) and featured
discussions of predatory lenders and competition-threatening bank mergers. But the opening
reception offered a lighter side: New York activist lawyer Matthew Lee hawking
"Predatory Bender,'' which he says he believes is the first novel about predatory
lending. (It is subtitled, "A Story of Subprime Finance.") In it, a sleazy loan
shark for a big New York bank finds a conscience. Turn the book over and you get another
100 pages of an essay on real-life predatory lending.
"In the last 12 months, the term has become much more a part of the national
conversation," Lee said in an interview. "You can't always be dry. People's eyes
He sold out his 12 books at $19.95 each the first day and had another box shipped in.
"Critics' Choices for Christmas," by Paul Elie, in Commonweal magazine, December 5, 2003
"In our time, the equivalent of the Dickensian novel is the
well-wrought thriller, and it is through such a book that Matthew Lee now seeks to upbraid
corporate society. A one-time Catholic Worker in New York, Lee left St. Joseph's House to
'homestead' abandoned apartments in the South Bronx for the working poor; he went on to
earn a law degree, using it first to defend the rights of the people in the neighborhood,
then to file lawsuits charging Citigroup and other banks with 'predatory lending.' Now, in
his storefront office, he was written a novel featuring a lawyer-agitator much like
himself. Predatory Bender is as vivid an account of life in the Bronx as you are
likely to read; more than that, it is a brilliant act of subversion, for within the
thriller plot is found a dramatic account of the ways corporations prey on the poor while
the rest of us aren't looking."
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City Paper of Dec. 11, 2003, says that the "novel Predatory Bender: A Story of
Subprime Finance may, in fact, be the first great American lending-malfeasance
novel... which simultaneously helps us understand why predatory lending goes on, and why
theres hope that it might be curbed." (Click here for that review).
The American Banker
December 1, 2003, Monday
SECTION: WASHINGTON; Pg. 4 HEADLINE: Washington People
A Novel Dig at Citi
Who says there's no drama in financial services? Matthew Lee,
general counsel of Inner City Press/Community on the Move, has published a novel titled
"Predatory Bender: A Story of Subprime Finance."
Though the work is fiction (except for a 90-page afterword to the 360-page
tale), Mr. Lee draws from his years of challenging bank mergers and lending practices, and
appears to blend the images of companies such as Citigroup Inc. and Bank of America Corp.
One section reads: "While ostensibly the fruit of three decades of community
struggle, the land beneath the mall was owned by Anguilla-based EmpiBank. The anchor
tenant, too, was a part of Empi's empire: a storefront office in the high-rate lender
EmpiFinancial. Jack Bender had worked for EmpiBank on the outskirts of Charlotte, North
Carolina, the so-called Queen City."
Hitting his favorite target again, Mr. Lee said Tuesday that his group
would fight Citigroup's deal, announced last week, to buy Washington Mutual Inc.'s
consumer lending unit.
LOAD-DATE: November 28, 2003
Predatory Bender / Toxic Credit in the Global Inner City
ISBN 0-9740244-1-4, 456 pages, endnotes
Library of Congress Control Number: 2003111283
Price: $19.95, trade paperback, 6 x 9
Available for sale on AtlasBooks.com,
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