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Obama's Proposal By Splitting Community Reinvestment Act from Mergers Would Cut Enforcement, Lost in (Fed) Sauce

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

CRA LAND, June 17 -- The Obama administration's financial regulation proposal, on the issue of the Community Reinvestment Act, bears the fingerprints of the Federal Reserve, not only Tim Geithner but also Ben Bernanke. While quickly praised by, for example, Paul Krugman, since the proposal shifts CRA evaluation away from the regulators who review the mergers on which CRA is actually enforced, bankers will like it, and may be behind it.

   CRA is only enforced in connection with banks' applications for regulatory approval for mergers and expansions, as confirmed by the Department of Justice Office of Legal Counsel. Without taking this into account, the Obama administration is proposing that CRA be a core function of the Consumer Financial Protection Agency, which will not be responsible for merger review.

   Had this proposal been made under the Bush administration, CRA advocates would have howled that it weakened the CRA. Since it's Obama, the response appears generally to be, let's wait and see.

Obama and Geithner, CRA on mergers not shown

   But not only did Obama appoint and fight for Tim Geithner, who at the Federal Reserve Bank of New York oversaw some of the most predatory moves by Citigroup and others -- Obama also continues to praise Ben Bernanke.
  In late 2008 at the Federal Reserve in Washington, Inner City Press asked Ben Bernanke about his decision to waive any CRA public comment period when he allowed Goldman Sachs and Morgan Stanley to become bank holding companies.

Bernanke responded that it makes no sense to limit CRA review to regulatory approval time -- despite that being the only legal enforcement of CRA. Now that thinking seems to have insidiously spread within the Obama administration.

  But who will blow the whistle? Krugman for example takes the proposal as a "poke in the eye to right-wingers." To skeptics, it's a perfect Obama era move: cheered by ideological but ill-informed liberals, but actually serving big business. Watch this site.

Tales of Subprime Meltdown Resonate from Coast to Coast as Regulators Spin

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

NEW YORK, June 11 -- As subprime enabler Larry Summers prepares to belatedly propose new regulation in a speech Friday in New York, Thursday in the Midwest one of the beneficiaries of Summers' deregulation and the meltdown, Wells Fargo, was protested by workers and consumers. Employees of Quad City Die Casting employees in Moline, Illinois called on Wells Fargo to restore financing before the plant is closed and their jobs lost on July 11.

  The protest was part of a nationwide day of action by NCRC members, from California to New York. Meanwhile, Wells Fargo Bank in 2008 confined African Americans to higher-cost loans above the Federally defined rate spread 2.18 times more frequently than whites, according to South Bronx - based Inner City Press / Fair Finance Watch in its April 2009 study, "Subprime Survivors Wells, BofA and JPM Chase More Disparate By Race in US in 2008." Since that study came out, Citigroup has been dropped from the Dow Jones index, marking the end of one era and the beginning of another.

Bankers laugh as victims are evicted, regulators not shown

  In North Hollywood, for example, according to organizers there, "sixty community activists and a horde of media outlets gathered in North Hollywood for a press conference in front of a four unit apartment building from which tenants were being evicted. Lizette Guevara, a ten year resident of the building, who with her children and a blind neighbor are being evicted, spoke about her efforts to stay in her home... Participants included community organizations and neighbors from the nearby dog park."

  In North Carolina, numerous groups participated in a "Financial Freedom Fest Day of Action." In the Detroit Council Chambers, it was standing room only. In Indiana, they "talked about the foreclosure mitigation counseling program and had 2 families there to give testimonials about how they were helped by the program."

 At an event in Mississippi, a representative of the City Jackson deplored "wrongful eviction of tenants being told by landlords that they do not need to show up in court and being offered to 'work something out' only to be evicted five days later."

  And that was a consistent theme from coast to coast: lower income people are bearing the brunt of the financial crisis, and the bailouts are not helping them, despite what Larry Summers says, despite some banks now paying back the TARP.

  When people feel that their champion's in power, and still they have no justice, what do they do? Watch this site.

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Subprime Survivors Wells, BofA and JPM Chase More Disparate By Race in US in 2008, Study During G-20 Meeting Finds

NEW YORK, April 2 -- In the first study of the just-released 2008 mortgage lending data, Fair Finance Watch has found that the seeming survivors of the banking meltdown, Wells Fargo, Bank of America and JPMorgan Chase, had worse disparities by race and ethnicity in denials and higher-cost lending than the banks they acquired, Wachovia and Countrywide. Mortgage lending in the U.S. will become more and not less disparate because of the emergency mergers and bailouts engineered by the regulators, the FFW study predicts.

   Fair Finance Watch notes that JPMorgan Chase's massive closing of branches of Washington Mutual will also make credit harder to come by, especially in poor neighborhoods.  2008 is the fifth year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of 3 percent over the yield on Treasury securities of comparable duration on first lien loans, 5 percent on subordinate liens.

            Wells Fargo Bank in 2008 confined African Americans to higher-cost loans above this rate spread 2.18 times more frequently than whites, according to Fair Finance Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which Wells Fargo acquired, had a lower disparity, at 1.46.

            Bank of America NA in 2008 confined Latinos to higher-cost loans above the rate spread 1.51 times more frequently than whites, the data show. Countrywide Bank, which B of A acquired, had a lower disparity, at 1.22.

            JPMorgan Chase was even more disparate to Latinos, confined them to higher-cost loans 2.10 times more frequently than whites, almost as pronounced as its disparity between African-Americans and whites, 2.26. Citigroup, perhaps due to its shrinking, some say dying, business had disparities of 1.90 for African Americans and 1.23 for Latinos. For US Bancorp, the disparity for African Americans was 1.55 and for Latinos, 1.35.

Big bank execs before Congress: growing disparities in lending not shown

            "The banks the regulators favored in 2008, allowing emergency takeovers like JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide and Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial disparate lenders," states the Fair Finance Watch report. "The regulators did not put any conditions on the mergers or Troubled Assets Relief Program bailouts, for example allowing Chase to close dozens of Washington Mutual branches. As things are going, it will be worse and more disparate in 2009. The new administration in Washington has yet to make any substantive change to this, and global predatory lending is hardly being discussed at the G-20 meeting in London."

            Several lenders had worse denial rate disparities in 2008 between Latinos and whites then between African American and whites, a change from previous years. Bank of America NA, for example, denied applications by African Americans 1.44 times more frequently than whites, while denying Latinos fully 1.57 times more frequently than whites. Atlanta-based SunTrust in 2008 denied applications by African Americans 1.37 times more frequently than whites, while denying Latinos fully 1.78 times more frequently than whites.

  The law required that the 2008 data be provided by April 1, following March 1 requests by Inner City Press. Some lenders did not provide their data by the deadline. Regions Financial provided its data at the deadline but only in paper format, on over 2000 pages, so that it could not yet be computer-analyzed. Further studies will follow.

Click here for Inner City Press March 12 DC (and AIG bailout) debate

Click here for Feb. 12 debate on Sri Lanka

Click here for Inner City Press' Jan. 16, 2009 debate about Gaza

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

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

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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

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