Fifty years after the federal Fair Housing Act banned racial discrimination in lending, African Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts.
This modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount and neighborhood, according to a mountain of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting.
The yearlong analysis, based on 31 million records, relied on techniques used by leading academics, the Federal Reserve and Department of Justice to identify lending disparities.
It found a pattern of troubling denials for people of color across the country, including in major metropolitan areas such as Atlanta, Detroit, Philadelphia, St. Louis and San Antonio. African Americans faced the most resistance in Southern cities — Mobile, Alabama; Greenville, North Carolina; and Gainesville, Florida — and Latinos in Iowa City, Iowa.
No matter their location, loan applicants told similar stories, describing an uphill battle with loan officers who they said seemed to be fishing for a reason to say no.
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Nobody would look at how the government handled white-collar fraud cases after the financial crisis, when big bankers who sent the economy into chaos escaped criminal charges and often got promoted, and see some kind of model. Nobody, that is, except for James McDonald, the new enforcement chief at the Commodity Futures Trading Commission (CFTC), an obscure US agency that oversees the $483 trillion derivatives market.
In a Monday night speech in New York City, McDonald announced a new initiative to provide significant benefits to financial institutions that “self-report” crimes and cooperate with investigators. In exchange, he said, companies might see civil penalties slashed, and in some instances, cases dropped altogether. A former federal prosecutor, McDonald noted the idea originated in gang prosecutions—he’s done a lot of those—where it made sense to let individuals report on higher-level colleagues in exchange for leniency.
“We’re committed to giving companies and individuals the right incentives to voluntarily comply with the law in the first place—and to look for misconduct and report it to us when they see it,” McDonald said, according to an official transcript.
In a vacuum, this initiative doesn’t sound that bad. McDonald seems to be committing his agency to real police work: going up the chain to find the highest-level individual who can be prosecuted for wrongdoing. And only those companies disclosing all known facts and continuing to actively investigate—including rooting out those responsible—would be eligible for a reduced fine. Oh, and they would have to make sure the misconduct didn’t happen again, either.
Big US commercial banks profited $171 billion off of the American public last year, according to data by startup banker Beam, which noted that the average American loses money on his or her deposited funds when inflation is figured in.
Beam describes itself as an innovative, high-interest, FDIC-insured mobile bank “on a mission to keep money in customers’ pockets by paying 200 times more than traditional bank accounts.”
It’s “an unspoken secret” that many banks make 4 percent to 5 percent on every $1 deposited, notes Beam.
That’s a difference of 500 percent. Nearly 70 percent of bank profits come from this “gap” between the interest they earn, and what they pay out to customers, according to Beam.
In a statement, Beam said it’s a common misconception that the Fed sets the retail bank customer’s interest rate.
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A federal judge granted the FDIC permission to revive lawsuits against Citigroup Inc (>> Citigroup), Bank of New York Mellon Corp (>> Bank of New York Mellon (The)) and U.S. Bancorp (>> US Bancorp) that he had dismissed last September, to recoup more than $695 million of losses on soured mortgage debt that a failed Texas bank once owned.
In a decision made public on Tuesday, U.S. District Judge Andrew Carter in Manhattan said the FDIC could try to show it still had legal standing to sue as the receiver for Austin-based Guaranty Bank, despite having transferred its claims to a “resecuritization trust” when it sold the debt in March 2010.
Law360, New York (June 27, 2017, 3:58 PM EDT) — Bank of America, Wells Fargo, JPMorgan Chase and Citigroup are accused of scamming U.S. agencies out of some $240 million in a False Claims Act suit unsealed Friday in Illinois federal court, which the government has said it will not join.
Relator Timothy Morgan’s March complaint was unsealed Friday after the U.S. declined to intervene. Morgan claims that the banks refused to pay vendors’ bills for foreclosure activity but still turned around and billed the U.S. for the supposed expenses.
The new acting chief of one of Washington’s major banking regulators has agreed to stay away from issues involving dozens of former legal clients, including 14 banks that the agency oversees, according to his ethics agreement.
Keith Noreika, who represented lenders as a private lawyer, plans to recuse himself from matters related to JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc., firms the Office of the Comptroller of the Currency regulates.
WASHINGTON — Some banks want to take on payday lenders.
Financial firms, spurred by the Trump administration’s promises to deregulate, hope to return to offering short-term, high-interest loans after being pushed out of the sector by Obama-era rules. Two leading trade groups, the American Bankers Association and Consumer Bankers Association, recently proposed to Treasury Secretary Steven Mnuchin several steps they say would encourage banks to offer such loans.
The groups call for scrapping 2013 guidelines that forced banks to virtually abandon the market. Also on their wish list: blocking the Consumer Financial Protection Bureau from rolling out the sweeping rules on payday lending proposed last year, which they say would hamper their return to the sector.
Letting banks and credit unions offer small loans, proponents say, would help the millions of U.S. households that pay billions of dollars in fees each year to payday and auto-title lenders that often charge annual interest rates exceeding 300%.
“We feel very strongly that we want to serve all our customer segments,” said Mark Erhardt, senior vice president of retail product management at Fifth Third Bancorp.