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

As M&T Protest Proceeds, Trustmark Delayed, Apple in Denial, Lax Oversight

By Matthew R. Lee

SOUTH BRONX, October 13 -- Since the bank-led predatory lending meltdown in 2008, have banks become more responsive, or more fair in their lending? Has reporting on banks become more critical?

  From this tale of three mergers the answer appears to be no. As Inner City Press reported on October 7, Fair Finance Watch challenged the application of Buffalo-based M&T to buy Hudson City Savings Bank, the biggest merger proposal in the US in 2012.

  Regulators had allowed Hudson City in 2011, for conventional home purchase loans in the New York City Metropolital Statistical Area, to make 765 such loans to whites and only FIVE to African Americans (and only 44 to Latinos). Meanwhile, Hudson City denied the applications of African Americans 3.21 times more frequently then those of whites.

  Picking up on the challenge, the Buffalo News contacted M&T for its comment. M&T spokesman C. Michael Zabel countered that "we support community-based organizations."

  But reporting by Inner City Press find this questionable, throughout M&T's footprint down to Virginia. M&T's next move was to reach out to friendlier media and announce that its merger application is proceeding - without mentioning the protest or why it was reaching out.

  Similarly, M&T hyped up after the protests it celebration of Hispanic Heritage Month at its Newburg, New York branch, and got it reported without any mention of its lending record, much less the challenge.

  But at least on M&T, the word got out in New York and New Jersey, where Hudson is based. The Deep South seems worse, in lending disparities and weak coverage of banks.

  On August 14, Inner City Press challenged and reported on Trustmark's application to acquire Banktrust, noting in the most recent mortgage data then available that in the Jackson, Mississippi MSA for conventional home purchase loans TrustMark had a denial rate for African Americans more than SIX TIMES HIGHER than for whites: 44.7% denial rate for African Americans, versus 7.3% for whites. It had a 100% denial rate for these and refinance loans for Latinos.

   On October 5, Trustmark wrote to the Federal Reserve and said is was extending the planned closing date of the merger into 2013, because it has rightfully not obtained regulatory approval. Trustmark's lawyers mailed Inner City Press a copy of their email to the Fed -- we'll put it online here -- and then four days after the email, put out a press release about the extension (but not the protest).

   Media reported the extension but not the challenge. How hard is this? On October 11, after its press release and uninformed reports of it, Trustmark answered another round of questions from the Federal Reserve. The regulator may be lax, but the media doesn't help.

  This laxity makes banks arrogant, and regulators non responsive. A recent example of each is Apple Bank, which is seeking to acquire nearly all the branches of Emigrant Savings Bank in New York. Despite the location, when comments were submitted to the New York State Financial Services Department as well as the FDIC, only the FDIC has so far responded.

  The comment noted that in the NYC Metropolitan Statistical Area, Apple in 2011 made 13 conventional home purchase loans to whites, and NONE to either African Americans or Latinos.

  Apple collects deposits in, for example, the South Bronx -- but look at its lending record. It should not on this record be allowed to acquire Emigrant's deposits and similarly redline with them.

For refinance loans in the NYC MSA in 2011, Apple made 27 loans to whites, only one to an African American applicant (while denying another), and NONE to Latinos.

Apple's "Chairman, President and CEO" Alan Shamoon, despite his bank's lack of visibility and weak community lending record, submitted a short response under his own signature, calling the mortgage lending analysis "disparagement" and "devoid of substance," to be "dismissed." Takes one to know one.

Amid too little, too late lawsuits against JPMorgan Chase and Wells Fargo, this tale of three mergers shows an industry, a media and regulatory environment ripe for yet another meltdown. What has been learned? Watch this site.