Inner City Press

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

These reports are usually available through Google News and on Lexis-Nexis

  Search Search WWW (censored?)

In Other Media-eg Nigeria, Zim, Georgia, Nepal, Somalia, Azerbaijan, Gambia Click here to contact us     .

Home -

These reports are usually available through Google News and on Lexis-Nexis


Subscribe to RSS feed

Video (new)

Reuters AlertNet 8/17/07

Reuters AlertNet 7/14/07

Support this work by buying this book

Click on cover for secure site orders

also includes "Toxic Credit in the Global Inner City"




Bank Beat

Freedom of Information

How to Contact Us

Banker Allison of BB&T in Meltdown Misdirection, Subprime Loans Were Shielded

Byline: Matthew R. Lee of Inner City Press on Wall Street: News Analysis

SOUTH BRONX, February 1 -- Given the hundreds of billions of dollars being thrown at banks in response to the subprime lending-triggered meltdown, holding accountable those who turned American finance down the subprime path would seem to be important. Conservatives blame the Community Reinvestment Act, saying that this law enacted in 1977 to combat the redlining of and refusal to lend in inner city areas was something of a time bomb, set to explode 30 years later.

    But the explosive growth of subprime lending took place in parts of financial holding companies which are not covered by CRA, like Citigroup's CitiFinancial and similar consumer finance subsidiary in Wells Fargo and HSBC, purchased as Household International. The subprime loans were securitized by investment banks not only like the defunct or swallowed Lehman Brothers, Bear Stearns and Merrill Lynch, but also Goldman Sachs and Morgan Stanley, entirely outside of CRA, before they ran to the Federal Reserve to get their bailout money.

  One tier down the world of finance, the chairman of regional bank BB&T John Allison gave a speech on January 29 in which he blamed the CRA for the financial crisis. This is more than a little ironic, given BB&T's engagement under Allison in subprime lending.  When the Bronx-based Fair Finance Watch documented to the Federal Reserve that BB&T's banks referred turned-down loan applicants to their high-cost subprime affiliate Lendmark Financial Services, during the public comment period on BB&T's application for approval to acquire Georgia's Main Street Banks, the Federal Reserve ignored the issues. Click here for 2006 coverage from Inner City Press, and here in 2009 for Lendmark's own website, still reciting "non-conforming mortgage loans" from "104 branch locations throughout Georgia, Tennessee, Virginia, Maryland, Florida, North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."

BB&T's once and future chairmen, subprime Lendmark and CRA not shown

  Click here for the Federal Reserve approval order, which recited from the comments of Fair Finance Watch

  "concern about referrals of loan applicants to Lendmark Financial Services ('LFS'), a nonbank subsidiary of BB&T that makes subprime loans. BB&T has represented that it might refer to LFS applications denied by a BB&T subsidiary bank that do not meet the bank's underwriting guidelines. Before making a referral, however, these applications undergo an internal second-review procedure. In addition, BB&T notes that LFS has a policy to refer applicants who meet the Freddie Mac underwriting guidelines to BB&T's subsidiary banks."

   But as Inner City Press noted, BB&T's referrals up and down do not use the same standard. On fringe finance the Federal Reserve said that Fair Finance Watch

"expressed concern about BB&T's relationships with unaffiliated pawn shops and other nontraditional providers of financial services. As a general matter, the activities of the consumer finance businesses identified by the commenter are permissible, and the businesses are licensed by the states where they operate. BB&T has stated that it does not focus on marketing credit services to such nontraditional providers and that it makes loans to those firms under the same terms, circumstances, and due diligence procedures applicable to BB&T's other small business borrowers."

   BB&T admitted in its responses into the record before the Federal Reserve relationships with 45 payday and other fringe financiers. BB&T under Allison ran headlong into subprime -- as Fair Finance Watch and then the Fed noted, in its order

"A commenter asserted that the Board should, in the context of the current proposal, review BB&T's recently announced plans to acquire the assets of FSB Financial Ltd. ('FSB'), Arlington, Texas, a nonbanking company that purchases automobile-loan portfolios. The FSB acquisition is not  related to the current proposal. Moreover, if the FSB acquisition is consummated under authority of section 4(k) of the BHC Act, the acquisition would not  require prior approval of the Federal Reserve System. BB&T would require prior Federal Reserve System approval if the acquisition were proposed under sections 4(c)(8) and 4(j) of the BHC Act, and the transaction would be reviewed in light of the requirements and standards discussed above."

  The Gramm-Leach-Bliley Act of 1999 amended the Bank Holding Company Act of 1956 and made it easier for subprime lenders to be acquired with no prior review by the Federal Reserve, no public comment period, no CRA review. BB&T John Allison's fulimations notwithstanding, that deregulatory GLB Act, passed in part to legalize after the fact the merger that created Citigroup, is the statute investigators should be looking at. And the acts of subprime-hungry bankers like John Allison of BB&T. We'll have more on this meltdown misdirection, in the spirit of accountability.

  For now, consider this buzz about Lendmark in 1997, this 2006 BB&T investor relations presentation (also of its subprime Liberty Mortgage Corporation), and again, Lendmark's own website, still reciting "non-conforming mortgage loans" from "104 branch locations throughout Georgia, Tennessee, Virginia, Maryland, Florida, North Carolina, South Carolina, Kentucky, West Virginia, and Delaware."

Inner City Press on Geithner (video stream) click here

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here for Inner City Press' December 24 debate on UN budget, Niger

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press' November 25 debate on Somalia, politics

Click here for Inner City Press Nov. 7 debate on the war in Congo

Watch this site, and this Oct. 2 debate, on UN, bailout, MDGs

and this October 17 debate, on Security Council and Obama and the UN.

* * *

These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

Feedback: Editorial [at]

UN Office: S-453A, UN, NY 10017 USA Tel: 212-963-1439

Reporter's mobile (and weekends): 718-716-3540

  Search  Search WWW (censored?)

Other, earlier Inner City Press are listed here, and some are available in the ProQuest service, and now on Lexis-Nexis.

            Copyright 2006-08 Inner City Press, Inc. To request reprint or other permission, e-contact Editorial [at] -