Inner City Press -- Investigative Reporting From the Inner City to Wall Street to the United Nations

In 2011 Subprime Lending Continued Disparate at Citi, Chase & Wells as Fed Lax

By Matthew R. Lee

SOUTH BRONX NY,  April 2, 2012 -- In the first study of the just-released 2011 mortgage lending data, Inner City Press and Bronx-based Fair Finance Watch have found that banking behemoths Citigroup, JPMorgan Chase and Wells Fargo continued with high cost loans and disparities by race and ethnicity in denials and higher-cost lending.

  2011 is the eighth year in which the data distinguishes which loans are higher cost, over a federally-defined rate spread of 1.5 percent over Treasury bill yields.

  The just released data show that Citigroup confined African Americans to higher-cost loans above this rate spread 3.38 times more frequently than whites in 2011, worse that its 2.25 disparity in 2009, Fair Finance Watch has found.

  Citigroup confined Latinos to higher-cost loans above the rate spread 2.42 times more frequently than whites in 2011, worse that its 1.72 disparity in 2009, the data show.

“Even after the bailouts, lending disparities grew worse and not better," said Fair Finance Watch. "Regulatory laxity, at least on fair lending, has continued despite the financial meltdown caused by predatory lending."

  For JPMorgan Chase, the disparity for African Americans in 2011 was 2.21; for the largest of Wells Fargo's many HMDA data reporters, the disparity for African Americans in 2011 was 2.28.

  "The Federal Reserve is becoming more and more bank-friendly, including with the recent nomination of former hedge funder and Deutsche Bank official Jay Powell for a seat on the Federal Reserve Board. It is still not clear if the new Consumer Financial Protection Bureau will get to this problem," Fair Finance Watch continued. "The disparities in the 2011 mortgage data of these banks further militate for aggressively watchdogging and breaking up these banks."

  Regional bank Keycorp in 2011 confined African Americans to higher-cost loans above the rate spread 1.70 times more frequently than whites -- more than a third of Keycorp's loans to African American were rate spread or high-cost loans.

  U.S. Bancorp in 2011 confined African Americans to higher-cost loans above the rate spread 2.13 times more frequently than whites, worse than in 2010.

  Regions Financial in 2011 denied applications by African Americans 2.44 times more frequently than whites.

  Comerica, not yet including its Texas-based purchase Sterling, in 2011 confined African Americans to higher-cost loans above the rate spread 2.81 times more frequently than whites

  Growing Southern bank BB&T, even absent its subprime unit Lendmark, in 2011 confined African Americans to higher-cost loans above the rate spread 2.59 times more frequently than whites

  Fair Finance Watch has continued its enforcement project in the South, most recently raising issues under the Community Reinvestment Act on BB&T's proposal to acquire BankAtlantic. In response, the Federal Reserve Board extended the comment period. Much of BB&T's application has been blacked out or withheld in full, which Inner City Press is challenging under the Freedom of Information Act.

  Another acquisition, that of MetLife's deposits by General Electric, has proceeded stealthly with the Office of the Comptroller of the Currency belatedly stating that it plays no role in the review since GE is using a Utah-based "non-bank bank." These loopholes, like GE, played a role in the subprime meltdown.

  Inner City Press & FFW have also joined others concerned with Deutsche Bank's decertification as a financial services holding company to escape Dodd Frank including its capital adequacy rules -- particularly given Deutsche Bank's role in the subprime scandal, as lender, securitizer and now major forecloser.

    Expect these issues to be increasingly scrutinized by Occupy Wall Street and others, given their link to the global meltdown.

  The Home Mortgage Disclosure Act required that the 2011 data be provided by March 31, following March 1 joint requests by Fair Finance Watch and Inner City Press. Several banks did not provide their data by the deadline, most notably Capital One and Bank of America, despite confirming receipt of the request. Further studies will follow: watch this site.