Inner City Press Community Reinvestment Reporter Archive 2005-2006

We note that last week's Inner City Press exclusive, concerning Merrill Lynch driving subprime lender Own It out of business, was picked up without attribution by other papers last week. One of them reported a new fact, that JPMorgan Chase was also an enabler of OwnIt: "JPMorgan Chase & Co., the disbursement agent for Ownit's "wet line." (This was a small warehouse line Ownit used to finance loans temporarily before transferring them to its main warehouser, Merrill)."

And now for more on Chase, this: an Inner City Press source in Ohio informs us, of the Ohio Bureau of Motor Vehicles, about "a mailing I got from the agency today. Enclosed with vehicle registration renewal is coupon from Chase Bank worth $75 upon opening a Chase bank account. Cute. This is nothing more than state agency acting as 'bird-dog' for a major bank that finances automobile loans. As you know, this bank has a blemished history here in Cleveland and Ohio." Predatory...

The battle in Philadelphia against Wachovia's branch closings and under-performance has continued. Last week the Office of the Comptroller of the Currency agreed to hold public hearings about the branch closings. Wachovia has told locals that it will not, and does not, commit to anything in writing. Was this the experience of West Coast advocates in connection with Wachovia's acquisition of Golden West / World Savings? Or does it just prove that without the leverage provided by a merger deal important to the bank, the mind wanders and the community's ill-served?

In subprime fall-out, HSBC has seen a deterioration across its American mortgage operations. Combined third-quarter profits for the country's nine largest mortgage lenders were $991m, less than half the level for the same period last year. So says The Economist.

Meanwhile Royal Bank of Scotland now says it might get directly into subprime. An RBS spokeswoman last week said: "Currently, we do not participate in the sub- prime mortgage market. Like all areas of the market, the strategy is reviewed on a regular basis to determine whether the current offering meets our customers' needs." Of course, RBS is already indirectly profiting from standardless subprime lending through RBS Greenwich Capital Markets, which lends to and securitizes for other subprime lenders...

From Singapore, consider the recent case of helpless car buyers caught between dealers and financiers. A company repossessed five cars from people who did not buy the vehicles from the company and had not defaulted on repayments. GE Money financed two car buyers, who found - to their horror - that their cars had been towed away by Kenso Leasing in October. These buyers thought they had no relationship with Kenso. But as elsewhere with GE Money, the consumer is left in the dark until they get foreclosed on...

With all the turmoil in the subprime lending field, worth noting is that on December 5, HSBC's share price fell around 2.7% following the pre-close announcement of earnings and predictions. HSBC's price is down almost 10% on its year high. This fall was attributed to the bank's comments on both the UK unsecured consumer and US secured consumer bad debt. HSBC said that "The trend of rising personal bankruptcies and IVAs seen since the second half of 2005 looks unlikely to abate in the medium term and continues to be the major influence on loan impairment charges in personal loans and credit cards." HSBC added that "challenges continue" in the US second mortgage market: more stringent underwriting in the high risk mortgage market has led to a fall in new business and that this lower level of generation is likely to continue, while the US unsecured consumer market is said to be performing well.

This last would mean, the high-cost personal loans through Household and Beneficial and also tax refund loans. The self-declared world's local bank is a predator...

Also last week, on Wednesday, Royal Bank of Scotland's Sir Fred (the Shred) Goodwin told reporters that RBS' Citizens does not lend to subprime borrowers. "We don't do sub-prime lending which puts us in an advantageous position,'' Goodwin said. But RBS' Greenwich Capital Markets enables other companies which engage in not only subprime, but also predatory lending...

Deutsche Bank, which has bought two subprime mortgage lenders, Chapel Funding and MortgageIT, now says it plans to buy a subprime servicer next year, and it projects its subprime securitizations to jump 50% this year, to $21 billion.

Meanwhile ACC, the imploding parent of Ameriquest and Argent, last week announced a plan to sell its subprime auto lender Long Beach Acceptance Corp. for $282.5 million to AmeriCredit. What will they sell next?

To: Inner City Press
Sent: Wed, 6 Dec 2006 1:29 PM

This is my first time contacting somebody about extremely unfair business practices. Own it Mortgage shut down yesterday. One of my best friends worked there. They were told Merrill Lynch called in their note. Approximately $100+ million. Ownit only had about $50 million in reserve. It seems when Merrill Lynch bought First Franklin they decided to get rid of one of its chief competitors. You guessed it -- Own it Mortgage! ML called due their note last week effectively shutting down their wharehouse line which was close to $250 million. Own it threatened to file bankruptcy and ML said go ahead we'll buy you for pennies on the dollar then... I have also gotten word this same thing is happening to Sebring Financial... I would think Institutions who call in notes of companies competing against one of their newly acquired subsidiaries would be highly unethical and illegal in some way. Even if its in the subprime markets.

HSBC continues to grow in predatory lending. On December 1 it announced a plan to acquire 30,000 customers from KeyCorp's Champion Mortgage division. Some may remember that Champion kept making super high-cost HOEPA loans even after Key said it would stop. This is the type of business that HSBC is looking for -- including to take overseas.

A scandal is growing in Ireland, leading to the introduction of legislation to close off a loophole in Irish law that allows subprime financial service companies to operate without being regulated by the Irish the Consumer Protection Code. Unregulated firms can avoid supervision for solvency purposes and are not subject to 'conduct of business' checks by the regulator. Among the companies named as not regulated is Citigroup's CitiFinancial, which makes "personal loans at rates as high as 26 percent, according to a recent survey from the Financial Regulator." GE's subprime motor loan provider GE Capital Woodchester Ltd has admitted it was not regulated, saying in a statement that "The company is supportive of regulation and consumer protection and has chosen to comply with the Consumer Protection Code, although it's not obliged to do so for its loan products."

Meanwhile, AIG's subprime lender American General Finance is expanding overseas. Last week, AIG announced a plan to purchase Ocean Finance and Mortgages Ltd., a British finance broker for home loans. American General Finance claimed this acquisition marks the first time the company has operations located outside North America. Maybe the first, technically, for American General -- but it's just that American General is now AIG's vehicle for exporting predatory lending...

"In the fall of 2005, the FDIC targeted special examinations of 47 banks with HMDA data that showed the largest loan pricing disparities, according to April Breslaw, FDIC acting associate director in the Supervision and Consumer Protection division. So far, the agency has completed 33 examinations of HMDA "outliers" and two other institutions face possible referrals to the DOJ. A DOJ official recently told a fair lending conference that the Civil Rights division has received HMDA-related referrals from federal banking regulators. But he declined to say how many or what agencies made the referrals... The Office of Thrift Supervision has examined 20 HMDA outliers and the pricing practices of one thrift raised serious questions. On future examination, OTS concluded the disparities were based on underwriting criteria, mainly credit scores. OTS did not make a referral, a spokesman said. The Federal Reserve Board made one fair lending referral in 2005, but it is unclear if it was related to the HMDA pricing data. The Office of the Comptroller of the Currency did not respond to an inquiry about its HMDA referrals."

So let's get this straight -- the OTS explained away the problem, while the OCC refused to answer. So Treasury Department, oh-for-twenty-plus. FDIC, two for 47. And the Fed, one (at most) for unknowable. It's pretty pathetic...

Last week we said we'd have move on Wachovia's Philly abuse. When Corestates was bought by First Union, many promises were made. Now, as Inner City Press foreshadowed, the Philly Inquirer now reports that Wachovia

"expects to shut its Coatesville, Clifton Heights, Five Points (Levittown), Lower Chichester, and Township Line (Drexel Hill) branches Dec. 6. It has previously said it planned to close two Philadelphia branches, at Front Street and Allegheny Avenue and at Germantown and Lehigh Avenues, that day; two branches in Allentown will also be shut. The protesters say... Wachovia failed to consult community groups in advance of the closures, or to develop specialized loan programs targeting neighborhood residents, as the bank's predecessor, First Union, promised in 1998 agreements with the groups. The Coatesville branch is more than three miles from the nearest surviving Wachovia branch, making it tough on lower-income customers."

So where now is the Federal Reserve, which recited the Corestates merger pledge? Where is the OCC, Wachovia Bank's main regulator? We forgot - the OCC is too busy taking no action on HMDA disparities...

From the November 18 Cleveland Plain Dealer: "National City is the only bank that didn't sign a formal agreement with the city laying out specific lending goals by loan type. The report ranked National City Bank next to last, and said the bank made no consumer loans in Cleveland in 2004. But National City's profit from holding city deposits and charging fees was the second-highest of the nine banks in recent years, an analysis of city records obtained by The Plain Dealer shows.

For its part, JP Morgan Chase "has removed all of its loan officers from the city and region," the report notes. "The bank has also significantly reduced its office presence in the city." It ranked JP Morgan Chase third from the bottom. However, it profited more than most of the other banks in recent years from its business with the city. And JP Morgan Chase held more than $13 million of Cleveland's money, according to the city's bank statements." This is the kind of detailed reinvestment reporting of which we want to see more...

More on Chase: In auto finance, three years ago, Chase Auto Finance was nearly neck and neck with DaimlerChrysler Financial Services, which was then the No. 3 lender behind General Motors Acceptance Corp. and Ford Credit. "We were booking $2 billion to $2.3 billion a month,'' says Joseph Scimone, president of Chase Auto Finance. "We had the best rate in town.'' According to Crain's, "as interest rates climbed, Chase shifted its strategy. It increased its loan rates to boost profitability and it reached out to a broader spectrum of customers. Chase used to target only superprime and prime customers. Now it also goes after near prime and subprime customers." Chase goes more and more subprime all the time, including by putting a predatory CitiFinancial official in charge of all of Chase's mortgages.

Wells Fargo Auto Finance brags that its "Full Spectrum Pricing'' program enables the bank to serve prime and nonprime customers -- more predatory lending...

On the subprime tip, Wachovia now brags that its merger this year with WFS Financial enables it to serve nonprime vehicle customers. Wachovia also pitches financing for used vehicles, which don't qualify for captives' promotional rates, gushes Tom Wolfe, who heads dealer services for the merged company.

In Philadelphia, Wachovia branch closings, and community fight-back, are brewing. We'll have more on this as more next comes in.

Last week Inner City Press sat down for an interview with the president of the Nagorno-Karabakh Republic, Arkady Ghoukasyan, and asked him about the fires, about the United Nations and other matters. Click here for the footage, on Google Video.

In Washington, the (CRA) talk is of oversight hearings, more likely in the House than Senate, on the agencies' non-enforcement of the Community Reinvestment Act and consumer protections. Examples given include last week's Federal Reserve approval of Capital One buying North Fork, in which the Fed's order ignores the Cap One predatory lending issues including not only in timely comments to the Fed, but even Business Week, in its November 6 expose. The Fed's rubber-stamp approval of the Regions - AmSouth merger, despite the banks' records in the Katrina Zone, is exhibit number two.

The FDIC, as has now been noted to the highest level of the agency, doesn't even issue orders explain its approvals. Supposedly the FDIC will increase its grassroots outreach. But why aren't the large Industrial Loan Companies reviewed for CRA and fair lending in more than just Salt Lake City? Especially with many of their parents now owning subprime lenders?

For the OCC, hearing-fodder includes the agency's recent blessing of JPMorgan Chase buying more than 300 branches from Bank of New York, and closing an untold number of them. On the OTS, things might be more forward-looking: why is Countrywide interested in a thrift charter? And what are conglomerates' thrifts, like AIG FSB, being allowed to get away with?

There is also the question of Dodd, Chris Dodd, and where he stands on consumer protection. He has spoken of credit cards, but less of insurance. In anti-predatory lending he has largest been unseen. Will Capital One, and the Fed's velvet glove treatment of Cap One's gouging of consumers, trigger some Dodd deeds? We'll see.

The spread of subprime lending is exemplified by GE Money, this time in Ireland: "Fresh Start Homeloans, which also trades as The Money Group, is based in Cornwall and is not authorized to do business in the Republic. The company operates a brokerage promoting personal loans, mortgages aimed at those whose marriages have broken up and equity release. It also targets people with poor credit histories, known as sub-prime lending. Its loans are provided by GE Money." Good job, GE -- not only predatory, but also illegal.

This week, the spread of predatory lending by GE and Citigroup. Is GE angering the wrong people? In the UK, "Jack Straw last week pledged to report GE Money's CEO Brad Cooper to trade and industry secretary Alistair Darling after a fellow MP claimed the company had taken advantage of one couple with an astonishing 21.9% interest loan. Siobhain McDonagh, Labour MP for Mitcham and Morden in London, complained to Straw that two of her constituents, Mr and Mrs Webster, face the prospect of being evicted from their home because they have fallen behind on a loan provided by GE.... Straw told MPs that he would seek to open up a debate on the issue and would pass on his concerns to Darling. And he told McDonagh: 'My honorable friend might wish to invite the company's chief executive to the House to explain its policies because GE claims to be a company of high status and high standing.' GE has since arranged a meeting with McDonagh on November 9 to discuss the Websters' case."

As they do in the U.S., maybe GE will try to buy silence, without changing its practices...

Citigroup, which was blocked for more than a year from making any big U.S. acquisitions, now seeks to buy the largest credit card issuer in Central America, Grupo Financiero Uno, which has 1.1 card customers and over 100 branches throughout Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama. The proposal will require at least some regulatory review in each of these countries. In the United States, while Citigroup will file a "notice," it appears there will be no public notice or comment period. In announcing the deal, Citigroup bragged of its " more than 1,600 retail bank branches and 500 consumer finance branches in Mexico and Latin America."

The consumer finance offices are CitiFinancial, which in 2004 settled predatory lending charges with the U.S. Federal Reserve Board.

It was also reported last week that Citigroup has won the right to buy a stake in China's Guangdong Development Bank after a competition with French bank Societe Generale and China's second largest insurer Ping An Group. Citigroup and GDB are expected to sign an agreement to finalize the acquisition, which has been approved by the China Banking Regulatory Commission. On December 28, Citigroup submitted an offer of 24.1 billion yuan (US$3.01 US), while Societe Generale bid 23.5 billion yuan and and Ping An 22.6 billion yuan for an 85-percent stake in GDB. But they had to revise their bids after banking rules issued in May imposed the foreign ownership restrictions. Citigroup, "together with its wholly-owned subsidiary Associates First Capital," would secure a share of no more than 25 percent in GDB.

Who knew that Citigroup continued with the brand and corporate identity of Associates First Capital, sued for predatory lending by the Federal Trade Commission...

Citigroup has "opened 574 bank and consumer-finance branches so far this year, mostly in faster-growing places like India" -- and mostly subprime finance offices, not bank branches...

From last week's Philly News: "Weill said Citigroup had improved its lending practices after criticism by regulators and consumer advocates. And, after all, he asks, didn't Bangladesh's Grameen Bank win a Nobel Peace Prize for lending money to poor people -- albeit at lower rates of interest?"

From a press release last week: "Cash Now, a public company engaged in the design, manufacturing, marketing and distribution of customized payday loan and check cashing software and systems, internet based payday loans, and other sub prime financial utility tools, today announced that its Chief Executive Officer Kevin Price will begin a three-week trip to Australia and South East Asia early next week, in support of the company's planned expansion into the Asian region." Just what they need there...

" In the past two years, GE Money Asia has spent about $3bn on a string of small and medium-sized acquisitions in Taiwan, China, the Philippines and South Korea, including the $1.7bn purchase of minority stakes in two South Korean companies: leading car-financing group Hyundai Capital Services, and Hyundai Cards, the country's third biggest credit card issuer. GE Money's latest deal a $600m investment in the Bank of Ayudhya, Thailand's sixth largest lender has been delayed because of the uncertainty surrounding the recent military coup." FT. Yeah, a military coup will temporarily slow down the expansion of predatory lending by purchase...

This week, predatory lending in Japan, by Citigroup and GE Money, and in Hungary by Provident. The Japanese Financial Services Agency has told GE that it is considering penalties against the group for violating Japan's money lending law by calling a borrower at his workplace, even after the borrower had asked GE not to contact him there. GE has admitted the violation, issuing a statement last Wednesday that "We apologize deeply for the trouble we have caused." The company faces penalties ranging from a few days' suspension of business at the offending branch office to a wider suspension involving offices throughout Japan. In April, Aiful, one of Japan's leading moneylenders, was ordered to suspend all lending operations for up to 25 days after a borrower complained it had allegedly used illegal debt collection tactics. FT.

This might be a lesson to U.S. regulators, that rather than set monetary fines (which mean little to companies the size of GE), stopping all business for a period of time is a fairer punishment...

More generally, in Japan consumer finance companies are allowed to charge annual rates of up to 29.2 per cent. Now, the government plans to reduce that rate to 20 per cent. CitiFinancial has lobbied against the lowering of the country's interest rate cap, saying it would lead to a credit crunch and force weak borrowers to use loan sharks. Not unlike Citi's lobbying against anti-predatory lending laws in the U.S....

Meanwhile Chuck Prince last week said that "buying a big bank in western Europe is not on my agenda." He added that a big acquisition in the U.S. would "re-weight us very significantly to the US - which is not what I want to do." And so, Turkey -- on Tuesday, Citigroup agreed a $3.1 billion deal to buy 20 per cent of Akbank, Turkey's largest privately owned bank. Prince said it was "a great deal and a perfect example of what we want to do more of." We'll see.

In Hungary, Provident Financial said it is temporarily suspending operations while it introduces new procedures requested by local regulators. Hungarian financial market regulator PSZAF said it had prohibited Provident's Hungarian unit, Provident Penzugyi, from signing new loan contracts until it restores appropriate operations. PSZAF said it would carry out an on-site audit of the company. It also levied a fine of HUF 2m on Provident Penzugyi, the maximum amount for financial businesses. PSZAF said it had found in an investigation that Provident Penzugyi had seriously breached regulations regarding accounting and registration, outsourcing and the use of agents, among others. The regulator will allow Provident Penzugyi to make new loan contracts again if it finds that the credit provider fully conforms with measures prescribed to it by PSZAF. Another precedent the U.S. regulators could learn from...

In the U.S., Wall Street is going subprime. Bear Stearns is buying Encore / ECC. Merrill Lynch has agreed to buy National City's First Franklin. And in the summer Morgan Stanley signed a deal to buy Saxon Capital of Virginia....

Telling news from Investor's Business Daily of Oct. 16: "Ezcorp broke out of a double bottom Friday with a buy point of 41.85 after the subprime lender upped its fourth-quarter earnings guidance by about 40%... After Thursday's close, the Austin, Texas-based operator of pawn-shops and payday loan centers announced its sharply revised outlook. Ezcorp's earnings were already on the upswing. Gains of 23%, 52%, 93% and 150% were put up the last four quarters. Sales rose in the last five periods, from 8% to 31%." Big growth in payday and pawnshop and other high-cost loans... Perhaps that's why Bear Stearns on Oct. 10 announced that it had agreed to buy the subprime mortgage origination assets of ECC Capital Corp. and its Encore Credit Corp for $26 million. Or this rumored deal, in the subprime auto field:

Commerce Group has acquired an 8.2 percent stake in National Atlantic Holdings Corp. (NAH), a "sub-prime auto insurance company. NAH shares shot up more than $1 to $11.48 on the news of the 13D and closed at $11.33 at press time. NAH has hired Citigroup to advise it on the situation."

Ah, Citigroup and subprime. Consider this, from the New York Banking Department's Weekly Bulletin:

"September 27, 2006 (LL-LFS)
CITIFINANCIAL, INC.
300 St. Paul Place, Baltimore, MD 21202

Notification requesting authorization to solicit credit card application on behalf of a bank from licensed location, received."

So now, beyond the move to use the predatory lending outlets of CitiFinancial to collect deposits (without, it seems, being covered by the Community Reinvestment Act, a matter on which Citigroup has provided closed-door briefings to the Office of the Comptroller of the Currency without sufficient public disclosure), CitFinancial would be "soliciting credit card application" too -- at a low interest rate, we're sure...

I have a question regarding the upper level management of Ameriquest and this large penalty they paid. Will any of them do time in prison? How about civil law suits against them to take all their assets and give it to the people who were defrauded. My neighbor is Mary Jo Shelton and I know she was the National VP of Sales. Will she be doing any time? We have not seen her at this house here in Eagan for 5 years (they own several properties in MN), now all of a sudden she’s home every day and volunteering at school. So I did a little research on the internet and “discovered” her involvement with Ameriquest. I knew she worked with them, but I didn’t realize her position, etc. Well she looks great driving around town in her brand new Land Rover...

Becoming evermore perfunctory, the Federal Reserve on September 19 asked Wachovia to "discuss the extent of any subprime loans in the World Savings Bank loan portfolio." Wachovia's Courtney D. Allison's misleading answer, dated September 25 but mailed only days later to Inner City Press, was received after the Fed had approved the merger, and it had been consummated...

Similarly, in an email of September 26 to National City that was not cc-ed to Fair Finance Watch, the Fed has apparently asked questions about Harbor Florida Bankshares' appraisal company, with an eye toward allowing National City to continue in the business. Since the Fed in violation of its own rules on ex parte communications didn't send Inner City Press a copy of the questions it posed to National City, and Nat City's curt answer didn't repeat the questions, there's no way to know...

From ;[ ]
To: MLee [at] InnerCityPress.org
Sent: Fri, 6 Oct 2006 8:40 PM
My name is Dr. Randal Christensen, I reside in the state of Utah. I would like to relay an experience I am currently having with AIG's American General Financial. The Office I am referring to is located in the city of Riverdale, Utah. I have a loan through that office. I had to declare bankruptcy back in 2003 due to a accident I had which put me nearly $500,000.00 in debt with medical bills. I was not able to return to my work for over a year. Needless to say it has been a struggle to pay my bills. American General to the rescue NOT Another victim of this companies predatory lending practices. They provided a loan, "To catch-up my past due bills," as they called it however they needed collateral for the loan. Now after chapter 7 bankruptcy, losing my house, plus everything else I owned, except for a 1994 Pickup which I had the title to. I used that as collateral. pretty scary because that was my only transportation. I had no choice, so I signed the contract with the unbelievable interest rate of 32% this made the payment $372.00 per month. They again tied insurance premiums to the loan with no disclosure. Which I thought was outrageous, I had fallen one payment behind on that loan and they called and left a message they were going to repo my truck. I found a financial advisor who has help me get my bills in order and paying them off. Now the fun begins, during the 6-7 months that I was behind 1 payment. I have been told by the front desk receptionist of the Riverdale Branch office I Quote " I'm a dead beat, a liar, I don't deserve a chance, just about everything you can imagine. I have been left phone messages with the same language on them. Now I was able to get $3000.00 saved up so I went down to their office to pay on the loan. I called and made arrangements with the manager to get my truck title released. He said " for a payment of $3000.00 he would release the title. I did take the money to him on Oct. 2, 2006 and he released my title. Now today Oct 6 2006 I get a call from them saying I am a month behind on my payment. That the $3000 I paid them was just to release the title of the truck and did not count as a payment. I said no I paid you a payment on 2 Oct and the manager said no that wasn't a payment. and that it was company policy to not record it as a payment but a release of collateral. He said "it was his branch and he would run it how he wanted, so I was still a payment behind " I still owe $2700.00 on the original loan. I have reported the Manager of the Branch and the front desk receptionist to the district manager who is Bill Kishton of South Jordan Utah, he did nothing then I reported the events to Russell Barrett of Westminster Colorado the Division Manager he does no thing so now I am going on up the food chain to a Matt Mitchel of Tempe Arizona who is Western region Manager. I am sure I will get the same results. NOTHING, NADA, just more B S. Just another example of how this company does business and treats people. They need to be stopped. I think the work y'all are doing is great. You have my permission to print all or any of this.

When AIG bought American General, they said it wasn't predatory... And re GE Money Bank, not overseas but in Texas:

From: [ ]
To: MLee [at] innercitypress.org
Sent: Sat, 7 Oct 2006 6:14 PM
Dear Mr. Lee, I am writing to you after reading several online postings about the deceptive business practices of GE Money Bank. Below is a record of discussions that the Cash Office of IKEA Frisco, Texas has had with GE Money Bank (Kate and Dennis in the emails below). We were offered and granted by IKEA a "24 month no interest no payment" purchase plan when we purchased a kitchen from IKEA in July 2006. Since then, GE Money Bank has sent us bills for finance charges, late fees, and minimum payments due on our account in total disregard for the terms of our purchase agreement with IKEA. The IKEA sales rep on the floor of the kitchens department and the after-sales department told us numerous times that we made this purchase on a 24 month no interest no payment plan, and we would not have made this purchase under any other terms. The only way they were able to sell this bill of goods was by their promotional offer. I can tell below that IKEA has contacted GE Money Bank numerous times to tell them to fix the terms of our plan to the "No Interest" plan, and GE Money Bank still has us on a fixed payment plan at 13% interest. Kate below writes that she has taken care of everything, but what she writes is that she put us on a deferred interest plan, which is very different from the No interest plan. Also, I got a call from a GE Money Bank debt collector early this Saturday morning, and she says that there is no evidence that IKEA ever placed us on a promotional plan, and she has no evidence that IKEA has ever contacted GE Money Bank to change our plan! GE Money Bank is either intentionally misapplying these promotions or their data processors are absolutely incompetent. Furthermore, GE Money Bank has entered my wife's name incorrectly on our account: This is alarming because my wife's name will now be reported to credit bureaus incorrectly, and it will be a hassle to correct, and GE Money Bank can use this identity error to its advantage in multiple ways. In addition, I also recently opened a credit card with The GAP, and GE Money Bank apparently owns Gap credit card accounts as well. The disturbing fact about this is that my name was incorrectly entered on my Gap credit card with GE Money Bank as well. I am deeply skeptical that these multiple identity errors are innocent. They appear to be a calculated policy by GE Money Bank. Please consider my experience as you become aware of more complaints about the business practices of GE Money Bank.

Meanwhile, GE Money plans to enter the Colombian financial market, the newspaper Portafolio reported on October 5, 2006. A number of articles in the Colombian press have recently opined that GE Money is interested in the privatization of the public bank Bancafe... In India, GE Money has over 170 offices of its high-cost consumer finance, non-banking finance company. Citigroup in India, as in the U.S., is more focused on high-cost consumer finance (non-banking finance companies, NBFC) than on banking. Citigroup's NBFC has a branch network of over 400 compared to a bank network of 39.

Shameless Citi-spin of the week, from Brownsville, Texas: "CitiFinancial announced it will host an identity theft prevention seminar from 6 to 7 p.m. Oct. 19. The seminar is open to the general public and will be at CitiFinancial's 2921 Boca Chica Blvd. location. The seminar is part of the bank's financial education program. 'We'll give them (attendees) examples of how ID theft occurs and what to do if your ID has been stolen, like contacting the fraud departments of the three major credit bureaus,' said Joseph Babineaux, CitiFinancial's branch manager."

Given that CitiFinancial has released millions of customers private information, the seminar is more than a little ironic...

Predators into predatory lending: the private equity company Lone Star is moving to buy a high-cost lender in Japan, Korakuen Finance, for $430 million. Japan is moving to limit the maximum interest rate to 15%, and to cap the amount of debt that borrowers can take on. Lone Star is embroiled in a scandal in South Korea for its buying and selling of a bank there...

Also, AIG has applied to the Bank of Thailand for a banking licence by the end of this year, after it sent the central bank the information it requested regarding allegations of accounting fraud by AIG. "Last week, we turned in the required information to the central bank. I think at this time we have submitted all [requested] information," AIG Consumer Finance Group country manager Chaiwat Utaiwan told reporters. Sure, let a fraudster into banking...

In terms of stealing consumers' personal information, Florida is suing a "Tampa-area company called Global Information Group Inc., claiming it made thousands of calls impersonating customers of companies including Verizon Communications Inc., tricking them into providing private call records. Earlier this year the company's principals agreed to pay $250,000 to settle the case, and to cease any pretexting activities." Global Information's customers include Wachovia's subprime auto lending WFS, two Citigroup units, Chase Bank and Wells Fargo...

"also alleged that World Savings directs customers to low- or no-documentation loan products as a means to exaggerate the customer’s income and places the customers in loan products that exceed their ability to repay, which ultimately results in foreclosures. According to information provided by Wachovia and Golden West, World Savings requires low- or no-documentation on 90 percent of the loan applications it processes and uses the same underwriting standards for all applications."

But ICP Fair Finance Watch pointed out that this absurd level of no- and low-doc lending results in forced sales of homes, not foreclosures. The Fed recites that ICP Fair Finance Watch

"expressed concern about Wachovia’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 in which they operate when so required. Wachovia stated that it makes loans to these types of nontraditional providers under terms, circumstances, and due-diligence procedures that are more stringent than those it applies to other borrowers."

"more than 200 comments supporting the proposed transaction. These commenters stated that Wachovia and Golden West have been responsive to the needs of their communities through innovative mortgage products designed for LMI borrowers and have provided significant financial, technical, and personnel support for community development projects."

None of these were sent to Inner City Press, despite its timely challenge to the deal....

And we're back: former Treasury Secretary John Snow will serve on the board of directors of Marathon Oil Corp., officials with the company announced last week...

This week, OCC punts on JPM Chase's branch closings, and a voice with inside -- or, just leaving -- the industry:

Dear Mr. Lee: I was previously employed by Argent Mortgage for two and a half years and managed, among other areas, the corporation's fraud investigation, borrower complaints and repurchase departments. There are currently over 568 open fraud investigations involving hundreds of brokers and hundreds of millions of dollars in fraudulent loans that are being covered up by top executives in the company. If a broker sustains a certain monthly volume, Argent management looks the other way and, not only does not suspend the bad brokers, but knowingly sells these fraudulent loans on the secondary market to unwitting investors.

I was terminated today and left with just my purse in tow, but I have names of individuals in the company who need to be served with subpoenas to enable them to turn over their spreadsheets and boxes full of documentation and evidence of all the fraud they have found that is being covered up by Argent Mortgage's executive management. The state regulators need to know the truth about the blind eye Argent turns to the fraud perpetrated on innocent consumers by high volume brokers. They also need to be aware that Argent knowingly bundles these fraudulent loans and sells them as mortgage-backed securities on Wall Street, thereby compromising the SEC, as well as our country's economic stability.

At a recent fraud seminar attended by hundreds of mortgage lenders in Washington D.C. a week ago, an attorney who works for Argent's retained law firm, Buchalter Nemer, stood up and told the seminar attendees that the wholesale lenders in the audience had better beware, unless their name is Argent. Argent is safe from investigation because the government got their $325 million settlement from Ameriquest and won't be looking into Argent, per the settlement agreement. I hope this isn't true because Argent Mortgage funded over $50 billion in 2005 and is gearing up to fund well over $80 billion dollars of fraudulent loans in 2007.

Gearing up, indeed. On another front, the closure of bank branches offering normally priced loans, here's from the Office of the Comptroller of the Currency's craven September 15 approval of JPM Chase's application to acquire branches of Bank of New York: Fair Finance Watch

"expressed concerns about the potential closure of certain branches. JPMCB... expects that it may close approximately 50 branches. JPMCB has represented that in NYC, some of the branches under review are located in L[ow or] M[oderate] I[ncome] census tracts. [Footnote: In most cases, the branches being considered for closing or consolidation are less than one-fifth of a mile apart, and none is more than about one-third of a mile apart.]"

First, in New York City "about" a third of a mile can be further than it sounds, particularly with obstructions which must be walked around. The OCC should have required JPM Chase to disclose its branch closing plans, as even the Federal Reserve did in connection with Chase - Chemical. JPM Chase is going backwards here....

A trend is for investment banks to buy up subprime lenders, to have high-cost loans to pack into pools and sell off. Deutsche Bank's being doing it, and last month Morgan Stanley announced a deal to buy the subprime Saxon. Now Merrill Lynch as well. Merrill agreed to buy the San Jose, Calif.-based First Franklin from National City for $1.3 billion. The sale includes National City's loan processor National City Home Loan Services Inc. and online lender NationPoint. Now rumored to be on the block is New Century.

Subj: Employment Practice Abuse: The Travelers, Citigroup Connection
Date: 9/12/2006 10:33:43 PM Eastern Standard Time
From: [Name withheld]

I came across your excellent publication while searching the web. Want to include a story relating to my own experience as an Asset Manager in Commercial Real Estate. After nearly two years appraising commercial properties, I was terminated while recuperating and on paid medical leave resulting from an injury I sustained while inspecting one of their income properties. I missed six weeks of work, and asked to be accommodated through the flex-work initiative propounded by the corporate offices. The HR department told me that my request had been denied due to some late reviews and that I would have to return to the office to complete a conference call. When I came in I was called into a manager's office with my immediate supervisor, and his manager and told that my request was denied, there would be no further discussion and if I wanted to continue working there I had better sign the forms being presented to me. Although I was, and am still under a doctor's care, the forms basically stated that I felt ready to return to work and that a new work-plan was being devised to "accommodate" me. No copies were provided. I was also informed that my previous work load would increase by 100%, that nobody has completed any work of mine during my six week absence and the appraisals had been traded for others in different territories that I was unfamiliar with. Additionally, many of the projects were unusual types such as self-storage, mixed use, and industrial properties that require far more research than a typical apartment building.
Although I made a grand attempt at this Herculean task, and worked late into the evening, and over the memorial day weekend, I was still short of the goal (and working on painkillers, and a heavy dose of Ibuprofen)..Despite hiring a part-time data entry person using my personal funds, the project simply could not be finished in the allotted time. Five weeks after I returned, I was terminated and escorted from the building by 4 vice presidents and the head of building security. I told then that this seemed unnecessary, and was certainly humiliating since it would appear that I was some terrorist being escorted out of the Citigroup tower.
I would not have thought much more of the situation except for the fact the other employees told me of similar occurrences with "mature" workers over the age of fifty. Just one month before me a 20 year veteran returned from hip-replacement surgery and was terminated exactly 4 weeks later.
Interestingly, while I was on leave I applied for a home equity loan, since my disability payments were "administratively" delayed by Met Life, their short term disability carrier. According to Citibank, they were unable to verify my employment and my loan application was denied...but not until the refinance of my current mortgage had already been approved! It seems they were willing to take on a $250,000 loan at 8%, but had no interest in the variable rate, lesser borrowing relating to the equity line. This leads me to think that the management had already determined that my employment would not continue after my medical leave ended. In addition, they did not provide the required Worker's Comp forms, did not respond to verification requests from the disability insurance provider (Met Life) and Travelers (a former fully owned subsidiary) denied my workers comp claim based on the fact that the forms were not filed until after the expiration of the short term disability claim. They also had a myriad of other defenses based on the fact that the medical reports were not received (although the HNO has proof that they were sent on two different occasions)
In summary, for many years Citigroup was providing what looked like a generous employee benefits program, when in fact the employees disability coverage (1/2 paid by the employee) was being provided by their owned subsidiary, and the long term care (Travelers) an optional coverage was entirely paid by the employees. With over 300,000 employees...that's not chump change! Why are the financial back office worker's not organized as under a labor union? Thank you for your in depth reporting.

September 11, 2006 -- Targeting of African Americans For High Cost Mortgages Grew Worse in 2005, While Fed Downplays Its Own Findings

NEW YORK, September 8 -- The targeting of African Americans for higher cost mortgage loans grew more pronounced from 2004 to 2005, data released Friday by the Federal Reserve show.

The disparities between the mortgage industry pricing for African Americans and whites worsened, even controlling as the industry argues for the change in overall interest rate environment. However, given that the Federal Reserve has yet to take any enforcement action on disparities in lenders' 2004 lending, it is unclear if this new even more disparate data set for 2005 will end what many consumer advocates view as the Federal Reserve's laxity in regulation.

The report issued by the Federal Reserve on Friday waits until its 39th page to disclose, in the intentionally opaque style of former Fed chairman Alan Greenspan, that "the fact that both spread-adjusted gaps are lower than the comparable unadjusted figures suggests that to the extent that the yield curve changes affected the measurement of racial and ethnic pricing differences, they widen gaps rather than narrow them." Translation: even using the industry's main defense, the yield curve, the disparities grew worse.

The non-governmental organization Fair Finance Watch, which has raised lending discrimination as a human rights issues, including to United Nations Habitat director Anna Tibaijuka (video of Q&A on U.S. Community Reinvestment Act and discrimination here). Where a nation does not act on known discrimination within its borders, FFW argues, it violates treaties it has signed.

Mortgage lenders were required to release their raw Home Mortgage Disclosure Act data for 2005 on April 1 of this year. 2005 is the second year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. While the Federal Reserve waited six months to compile and analyze the data, a study by Inner City Press of the largest U.S. banks, beginning with Citigroup reached the following findings:

Citigroup in 2005, in its headquarters Metropolitan Statistical Area of New York City, confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, worse than in 2004. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004. Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

Fair Finance Watch designed a way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at Citigroup for conventional first-lien loans, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup. Nor at HSBC, where less than half of upper income white borrowers were confined to rate spread loans, versus 61.87% of upper income African Americans and an even higher percentage of Latinos, 62.82%. HSBC, which bought Household International in 2002 just after its predatory lending settlement, has increased the interest rates changed by its former Household units. Over eighty percent of HSBC's home purchase loans to African Americans and Latinos were higher-cost loans over the rate spread, much higher than in 2004 at these ex-Household units. In Buffalo, HSBC's long-time headquarters, HSBC in 2005 confined African Americans to higher cost rate spread loans 2.15 times more frequently than whites.

In 2005, HSBC made over five thousand super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at least eight percent over comparable Treasury securities. Wells Fargo made 795 HOEPA loans in 2005. Keycorp, which has said it had discontinued HOEPA loans, made 755 such loans in 2005.

National City Corporation's First Franklin made 177,526 higher cost loans over the rate spread in 2005. Merrill Lynch has recently announced a proposal to acquire First Franklin, in order to be able to pool and sell its higher cost loans on Wall Street.

Considering all conventional first-lien loans, among the most disparate was Washington Mutual and its higher-cost affiliate, Long Beach Mortgage -- together they confined African Americans to rate spread loans 3.70 times more frequently than whites. Wells Fargo was nearly as disparate, confining African Americans to rate spread loans 3.31 times more frequently than whites. Royal Bank of Scotland and its Citizens Bank units came in at 3.11, and JP Morgan Chase at 2.98. The disparity at Wachovia was 2.58, and at Atlanta-based SunTrust it was 2.40. The disparity at GMAC, a stake in which Citigroup and others are seeking to buy, was 2.92, while at Countrywide it was 2.86.

Countrywide's disparity between pricing to African Americans and whites was even worse when considering conventional first lien home purchase loans: Countrywide confined African Americans to rate spread loans 3.53 times more frequently than whites. Countrywide was topped, however, by Milwaukee-based M&I, with a disparity of 3.78, and by Bank of America's MBNA unit, with a disparity of 4.23.

Bank of America also enabled other subprime lenders in 2005 by securitizing loans through its generically-named Asset-Backed Funding Corporation unit for, among others, Ameriquest, which earlier this year settled predatory lending charges with state attorneys general for $325 million. The settlement only required reforms at Ameriquest Mortgage and two affiliates, but not its largest affiliate, Argent Mortgage. The 2005 data show that Argent made 220,069 higher cost loans over the rate spread, while Ameriquest Mortgage made 122,868 such loans. The reforms announced in support of the predatory lending settlement with the attorneys general cover barely 35% of ACC's high-cost lending.

Like ACC / Ameriquest, Citigroup and HSBC, other large subprime lenders also increased the percentage of their loans that were over the rate spread, from 2004 to 2005. At New Century in 2005, fully 215,579 of the company's 268,101 loans were over the rate spread. Countrywide in 2005 made 190,621 loans over the rate spread. 199,249 of 237,700 loans were over the rate spread at H&R Block, which also in this season offers problematic high-cost tax refund anticipation loans. Further on fringe finance, the study notes that Citigroup helped Dollar Financial to go public, and since continued to lend to and assist this pawn and payday lender.

The nation's largest bank, Citigroup, was disparate in Metropolitan Statistical Areas all over the country in 2005. In Los Angeles, Citigroup confined African Americans to higher cost rate spread loans 2.13 times more frequently than whites; its disparity for Latinos was 2.02. Citigroup's African American to white disparity was 2.27 in the Washington DC MSA, and 2.72 in Chicago. In Philadelphia, Citigroup confined African Americans to higher cost rate spread loans 3.43 times more frequently than whites; its disparity for Latinos was 2.50.

Another of the top four banks which enables predatory lenders is North Carolina-based Wachovia, whose pending application to merge with Golden West has been protested on mortgage discrimination and other grounds. Most recently, the U.S. District Court for the Southern District of New York denied a motion by the Federal Reserve Board to get reconsideration of a decision won by Inner City Press, requiring the disclosure of Wachovia's connections with a range of subprime lenders, including payday as well as mortgage lenders. Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211. On the Federal Reserve Board's motion, the Court ruled that:

"The Board made absolutely no showing in its summary judgment submissions, however, that the disclosure of data regarding Wachovia’s aggregate exposure and loan outstandings to the [subprime lending] clients listed in Exhibit 3 would cause competitive harm to Wachovia or that the public disclosure of this information would make it difficult for the Board to elicit similar information in the future... The Board points to portions of a document entitled 'Subprime Lending and Related Activities' that Wachovia submitted in the public portion of the Merger Application as a ‘glimpse into the conclusory statements [regarding due diligence practices] defendant can expect in future filings’ if merger applicants know such information is to be released to the public. This argument was not made in the Board’s original submission. In any event, without more specific testimony from Wachovia’s representative regarding why Wachovia would not wish its due diligence practices with regard to its subprime lending clients to be made public, it cannot be said that this document represents the limits of what Wachovia would willingly reveal at the Board’s request."

On January 5 Inner City Press made a request under the Freedom of Information Act request to determine what the Federal Reserve had done on the previous year's data. More than six months later, the Federal Reserve issued a letter stating that is was withholding five linear feet of documents, and would only provide a garbled portion of a single document, described as "a description of the methodology used in generating the HMDA lenders list." The document states:

"The purpose of the Federal Reserve's matched-pair analysis is to compute lender-specific racial or gender disparities in denial rates, high rate pricing incidences and average APR spreads for loans above the threshold controlling for other factors including, market, income and loan amount. Each minority (or female) is matched to as many non-minority (or male) applicants (or borrowers) as meet the matching criteria. The outcomes of the minority (female) is compared with the average outcome of the non-minority (males) matched to it. The difference is the individual minority's (female's) 'matched pair disparity.' The disparities of all matches minorities (females) are averaged by product area or for sub areas such as MSAs...

"Optionally, the matched pair procedures can be used to test for 'steering' within an organization such as a holding company. The outcome variable is the selection of a particular subsidiary of an organization (say a subprime lender) over another (say a prime lender) and the analysis tests whether this choice is related to the race of gender controlling for other factors including, market, income and loan amount. The user needs to specify how to classify lenders into the 'subprime' and 'prime' groups."

While Inner City Press will have more once it receives the required mailed version of this document, we now we note Citigroup's recent announcement that it will merge its subprime CitiFinancial into its mostly-prime CitiMortgage, thereby evading this "optional" steering analysis.

There is a need for more information, including the credit score information that the lending industry opposed being included in Home Mortgage Disclosure Act data. In fact, some lenders resist providing even the data required by law, at least in an analyzable form.

Fair Finance Watch is demanding action on all of these issues from the relevant regulatory agencies, including the Office of Thrift Supervision (responsible for AIG and Lehman Brothers Bank, among others), the FDIC (still considering giving a bank charter to Wal-Mart), the Office of the Comptroller of the Currency (which since suing to New York last year to block fair lending enforcement has done little to none of its own) and also the Federal Reserve Board.

Fair Finance Watch responded, "Now that a second year of data is out, with worsening disparities at the largest bank in the nation and many of its peers, there is no more time for the Federal Reserve and other regulatory agencies to equivocate. The time for enforcement actions to combat this discriminatory and predatory lending is now."

Beyond its substantive, industry-wide whitewash, the Fed last week spun HMDA for Espiritu Santo Bank, an affiliate of France's Credit Agricole. In an approval order the Fed recited in footnote 30 that ICP Fair Finance Watch

" questioned the veracity of ES Bank’s reporting of no denials of home mortgage applications in 2001 and 2002 and generally alleged that the bank prescreened its home mortgage applications. Specifically, the commenter contended that ES Bank violated HMDA by not accurately reporting its home mortgage applications and violated the Equal Credit Opportunity Act (“ECOA”) (15 U.S.C. § 1691 et seq.) by not providing adverse action notices when required. ES Bank has represented that it reported no denials because it is a wholesale bank engaged primarily in international private banking and that its residential mortgages are generally extended as an accommodation to private banking customers where a mortgage loan approval would be expected. The commenter also questioned ES Bank’s characterization of loans generated by brokers as accommodation loans. Applicants represented that ES Bank began using two licensed mortgage brokers in 2001 in an effort to increase its loan portfolio during a period when internal referrals had slowed. Applicants also represented that ES Bank’s brokers referred a small number of mortgage loans to the bank in 2005."

In footnote 16, the Fed doesn't even bother spelling correctly, writing that FFW

"alleged Credit Agricole and Credit Lyonnais are signatories to international human rights and environmental agreements and that the organizations have exhibited a lack of envirnonmental and human rights standards."

This week, predatory lending domestic and overseas. Regulators in Australia have caught GE Money in a lie. While charging a $25 fee, GE advertised that ''There is no annual fee for your GO MasterCard. That means it costs you nothing to have it - pay nothing and make it your card of choice year after year.'' Australian Securities and Investments Commission charged that the statement was likely to mislead customers. Ya don't say... This follows an ASIC finding in March 2006 that GE Money had advised clients to take out life insurance when they already had coverage. As we've reported, GE is taking predatory lending global.

Ameriquest was hit with a class action lawsuit last week in Baltimore City Circuit Court. According to the complaint, Ameriquest instructed its affiliated title settlement companies to charge borrowers an illegal notary fee, and engaged in a scheme to receive kickbacks on that fee. The real estate settlement statements given to borrowers at closing identified a $250 fee payable to Baltimore-based JM Closing Services Inc. as a notary fee, the suit alleges. JM Closing was "formed solely to facilitate illegal payments and kickbacks to Ameriquest" and, in most cases, "did not actually provide any notary services to Ameriquest mortgage clients who paid for such services," the complaint says. It just goes on and on...

In the run-up to the Federal Reserve's spin of the 2005 Home Mortgage Disclosure Act data, Inner City Press can this week report on the Fed's partial Freedom of Information Act response to its request for all records concerning the Fed's list of lenders with disparate 2004 HMDA data. The Fed withheld "five linear feet of documents," and has so far sent only a fax of parts of a single document, a mailed copy of which Inner City Press is awaiting in order to file its FOIA appeal. This fax, which the Fed's cover letter describes as "a description of the methodology used in generating the HMDA lenders list," is in fact a manual directed at the Fed's examination staff. It states that

On Regions - AmSouth, the sleazing has begun. Regions has provided Fair Finance Watch with a copy of a CRA submission, with the names of all groups it funds blacked out. Meanwhile Regions solicits letters of support from such groups. Separately, Regions writes to thank such groups, starting "Thank you for taking the time to write a letter of support for the application by Regions Financial Corporation to merge with AmSouth Bancorporation... We at Regions very much appreciate your positive attitude toward our organization." But the identity of funded groups must be unmasked to weigh their testimony. Developing...

ICP Fair Finance Watch has just filed a 15-page challenge to the proposed announced on May 24 by Regions Financial Corporation to acquire AmSouth for over $10 billion. Regions' mortgage lending is mostly subprime -- nationwide, over 77% of its 2005 loans to African Americans were higher cost loans over the rate spread (of 3% over Treasuries on first liens, 5% on subordinate liens). Therefore Regions supposed Community Reinvestment Act plan would only produce more high cost lending. In comments filed with the Federal Reserve Board in Washington, Fair Finance Watch demands public hearings on the proposal's potential to raise prices, on AmSouth's and Regions' continuing enabling of title lenders and pawnshops, and on the disparities in Regions' 2005 Home Mortgage Disclosure Act data, including disproportionately confining people of color to higher cost loans. AmSouth refused to provide its HMDA-LAR in computer analyzable form, another ground for hearings

Fair Finance Watch presents in its August 21 challenge an analysis of the 2005 data of Regions' HMDA data-reporting affiliates (referred to as "Regions") and calculating the distribution of loans over the Federally-defined rate spread of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens (referred to as "high cost loans").

In its home state of Alabama in 2005, Regions confined 51.66% of its African American borrowers to higher cost loans over the rate spread, versus only 23.15% of its white borrowers. That is, Regions confined African Americans to high cost loans 2.23 times more frequently than whites, while denying 30.69% African Americans' applications for loans, versus only 21.29% of whites' applications.

In neighboring Mississippi, Regions in 2005 confined 38% of its African American borrowers to higher cost loans over the rate spread, versus only 18.38% of its white borrowers. That is, Regions confined African Americans to high cost loans 2.07 times more frequently than whites, while denying 35.87% African Americans' applications for loans, versus only 24.68% of whites' applications.

In Louisiana in 2005, Regions confined 54.92% of its African American borrowers to higher cost loans over the rate spread, versus only 27.88% of its white borrowers. That is, Regions confined African Americans to high cost loans 1.97 times more frequently than whites, while denying 30.71% African Americans' applications for loans, versus only 22.27% of whites' applications.

While FFW directs the regulators most specifically to these three Katrina Zone states, note that nationwide in 2005, Regions confined fully 73.55% of its African American borrowers to higher cost loans over the rate spread, versus only 51.78% of its white borrowers. In Florida in 2005, Regions confined fully 66.97% of its African American borrowers to higher cost loans over the rate spread, versus only 45.98% of its white borrowers. And in North Carolina, headquarters of Regions' subprime unit Equifirst, Regions ion 2005 confined a whopping 88.76% of its African American borrowers to higher cost loans over the rate spread, versus 71.66% of its white borrowers. Regions is presumptively a predatory lender. FFW requesting public hearings, and that Regions' applications be denied.

Regions and AmSouth have continued supporting other subprime lenders. The UCC filings attached hereto are evidence of that, to be further explored at the requested public hearings. For example, Regions on July 18, 2005, made a loan secured by all "accounts and proceeds" to Eagle Title Loans, Inc. of Athens, Alabama. Also in Alabama, Regions lends to Twin States Pawn of Butler, AL and Sand Mountain Pawn of Boaz, AL. In Louisiana, Regions lends to LA Pawn Shop of West Monroe, Louisiana. In Arkansas, Regions lends to A-1 Pawn of Russellville, Arkansas. In Florida, Regions lends to Deerfield Pawn Brokers of Deerfield, FL.

AmSouth, which has refused to provide FFW with its HMDA-LAR in computer analyzable form, lends to Rent to Own Pasco of Pasco, FL, and Pasco Jewelry and Pawn in the same city. AmSouth cynically insistence on providing its HMDA-LAR only in paper form, and in refusing to answer questions about its lending to fringe financiers, despite its recent violation of anti-money laundering laws, further militates for the public hearings FFW is requesting. FFW's comments state that while the merger should be denied on all of thee above grounds, FFW is requesting public hearings because any merger of this size in the still-unrepaired and underbanked zone impacted by last year's hurricanes militates for a required Katrina Zone CRA Lending Plan, and for public hearings. Developing...

A federal appeals court ruled on Wednesday that it was unconstitutional for Delaware to deny public documents to nonresidents under a provision of the state’s Freedom of Information Act. The ruling by the United States Court of Appeals for the Third Circuit, in Philadelphia, affirmed an earlier decision by a Federal District Court in Wilmington.
In 2003, Matthew Lee, a consumer advocate and lawyer who lives in New York, sued the State of Delaware for denying him access to documents related to a nationwide settlement with the consumer lender, Household International, after the company was investigated for deceptive lending practices. "We sought the records to be able to show how widespread the problem of predatory lending was within Household," said Mr. Lee, who is also the publisher of Inner City Press, a nonprofit Bronx newsletter about the practices of banking and financial services companies. M. Jane Brady, then the Delaware attorney general, denied Mr. Lee access to records regarding her handling of the settlement. Ms. Brady cited a provision of the state’s Freedom of Information Act law limiting access to records "to any citizen of the state." Mr. Lee then sued... In the 17-page decision, Judge D. Brooks Smith, writing for the three-judge circuit panel, said, "Delaware’s public records law discriminates on its face between citizens and non-citizens. Although the state has a substantial interest in ‘defining its political community,’ the citizens-only provision” of the law bore no “substantial relationship to that interest,” Judge Smith wrote. Delaware’s current attorney general, Carl C. Danberg, said Wednesday that he would not appeal... While he said the state had been processing other freedom of information requests to comply with the earlier ruling, Mr. Danberg said that Mr. Lee would still not receive the Household documents because they were protected under a separate Delaware law by an "investigative file privilege." Mr. Lee was surprised by the news and called the decision "an outrage." He questioned why he could not receive the documents, particularly, he said, "because other states have given us reams of documents about their settlements on predatory lending with Household"

Fair Finance Watch (FFW) has just filed a challenge to the applications by National City Corporation to acquire Florida's Harbor Federal Savings Bank and Fidelity Bankshares. ICP's timely comments, filed under the Community Reinvestment Act with the Federal Reserve Bank in Washington, and with the Federal Reserve Bank of Cleveland, are based on worsening lending disparities at National City. Mortgage (HMDA) data reported for 2005 show that National City disproportionately charges African Americans and Latinos higher prices than whites. ICP also documents National City enabling fringe financial institutions such as pawn shops (sample listed below).

FFW's comments analyze National City's 2005 Home Mortgage Disclosure Act ("HMDA") data which no CRA or fair lending exam has taken into account, considering the distribution of loans over the Federally-defined rate spread of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens ("high cost loans").

Nationwide in 2005, National City confined fully 60.83% of African American borrowers and 58.74% of Latino borrowers to high cost loans, versus only 37.13% of white borrowers.

In Florida in 2005, National City confined fully 67.36% of African American borrowers and even higher percentage of Latino borrowers, 68.25%, to high cost loans, versus 54.38% of white borrowers.

In its home state of Ohio in 2005, National City confined fully 60.07% of African American borrowers and 44.76% of Latino borrowers to high cost loans, versus only 34.66% of white borrowers.

In New York State in 2005, National City confined fully 73.92% of African American borrowers and 72.11% of Latino borrowers to high cost loans, versus only 60.96% of white borrowers.

National City is systemically predatory. In a previous response to ICP comments, National City Bank acknowledged inter alia its lending to "Advance America (HQ in Spartanburg, SC)." National City also enables such fringe financiers as pawnshops. Attached hereto are sample Uniform Commercial Code filings. Here are some more:

Mr. Pawnshop, Inc.; Ace East Jewelry and Pawnshop, Inc.; Quick Cash Advance, Inc.

Harbor's market is already anticompetitive and becoming more so what with Wachovia-Golden West (the counsel for which cite National City, in a July 14 letter to the FRB only just provided to FFW). Given this record, FFW is requesting public evidentiary hearings, and that, on the current record, National City's applications be denied.

Subject: Ameriquest
Sent: Thu, 10 Aug 2006 3:14 PM
From: [Name withheld in this format]
To: Ameriquest-Watch [at] innercitypress.org

Just found your website on Ameriquest. I guess that explains how they appraised our house at $72,000, and when we contacted another lender to refinance, their appraiser gave an estimate of $46,000.

This hot week, the expansion of subprime -- CitiFinancial in Hong Kong, GE Money in Singapore, and Chase's subprime auto in the suburbs of Atlanta.

Citigroup exports predatory lending, and brags about it. Last week in Hong Kong it issued a press release: "CitiFinancial has opened two branches at Aberdeen and Sheung Shui which offer convenient, speedy and tailor-made products and services to customers in two key hubs in Southern and Northern Hong Kong. This development underscores CitiFinancial's commitment to expand its reach in the territory. The opening of these two new branches together with two others previously opened at Wanchai and Sham Shui Po are important milestones in CitiFinancial's strategic expansion plan to have a total of 20 branches in Hong Kong by the end of 2006." Watch out...

Subprime Singapore -- GE Money runs ezyCash, an unsecured loan scheme for lower-income borrowers through Singapore Post branches...

Chase in a press release last week said it "will expand its presence in the Atlanta area this month by opening a Prime/Near Prime business center to focus even more attention on area auto dealers looking to provide their customers with auto loan solutions. The new office will occupy space with Chase's existing Custom Finance Business Center at 500 Town Park Lane, Suite 100 in Kennesaw." Just what Georgia needs - more subprime lending. It should be noted that when Georgia sought to control subprime mortgage lending, Chase threatened to leave the state...

A recent employee of World Savings has contacted Inner City Press, describing in detail what he calls World Savings' predatory lending. He states that over time, World Savings' no- and low-documentation loan program, initially designed for small business owners who might have difficulty fully documenting their income, grew to account for a larger and larger portion of World Savings' business. He states that applicants' incomes were routinely overstated, on forms the applicants did not themselves fill out. He states that these applicants, whose incomes were overstated, were put in loans that they could not afford, on which they would foreseeably fall into delinquency -- an indicator of predatory lending used by the FRB itself. This does not show up in World Savings' "default" or foreclosure rate, the individual states, because the borrowers sell their homes to avoid losing them.

The individual states that many of these abuses take place under World Savings' "Q Q" or "Quick Qualifying" program. The FRB should forthwith ask World Savings to submit an answer, into the record and to FFW while the comment period is open, information concerning what percentage of World Savings' loans are QQ, Quick Qualifying or otherwise no- or low-documentation. World Savings should be required to explain, into the record with a copy to FFW, why it would accept and encourage no- and low-documentation applications by salaried employees with IRS Form W-2s. World Savings should be required to respond to the two pages attached hereto, supplied to FFW by the recent World Savings employee, who states that they reflect illegal targeting of protected classes. The individual states to FFW that he is willing to speak with regulators (as for example were FFW's similarly proffered CitiFinancial witnesses, leading to an FRB enforcement action) -- but he is concerned with further retaliation. He was already fired, he states, for having pointed out the above-described abuses, and having stated that he would inform Wachovia, during due diligence, of them. Therefore protection against retaliation should be arranged, as a first step.

Additionally regarding Wachovia, see the Philadelphia Inquirer of July 28, 2006, by the ever-intrepid Joe DiStefano:

"Wachovia and PNC Bank, which together handle the majority of city deposits, sharply reduced their mortgage lending in what the government calls low- and moderate-income neighborhoods from 1999 to 2004, while mortgages from other lenders in those same neighborhoods rose, according to federal loan records. That includes census tracts where families typically make less than $40,000 a year. Most of those tracts in Philadelphia and its four surrounding Pennsylvania counties are in the city: North, West and South Philadelphia, Germantown, Frankford, Kensington and Olney, including many African American and immigrant communities, as well as some of the city's oldest predominantly white neighborhoods... What happened to Wachovia? Spokeswoman Barbara Nate blamed a shift in the bank's small-business-lending tactics, from specialized business lenders to branch-based lending, along with changes in the way Wachovia reports business loans.... For this year, the banks have set conservative loan targets for lower-income Philadelphia neighborhoods. For example, Wachovia hopes to make 1,770 home mortgages in low- and moderate-income neighborhoods this year. But Nate, the spokeswoman, pointed out that that included refinancing and home-improvement loans as well as home-purchase loans -- and the total is slightly below what the bank did in 2005. "

See also, the analysis of systemic disparities in Wachovia's 2005 lending submitted as part of FFW's first comment.

Given this record, Fair Finance Watch is requesting public evidentiary hearings, and that, on the current record, Wachovia's applications be denied.

Last week the Wall Street Journal covered Citibank trying to collect deposits through CitiFinancial, but mentioned neither the Community Reinvestment Act (which requires reinvestment in communities in which deposits are taken) much less CitiFinancial's two predatory lending settlements. Or check out the below sample email chain, cc-ed to Inner City Press:

Ms. Lang, I am writing in response to your letter dated 6/29/06. It states you are in receipt of my e-mail and will respond no later than 7/10/06. I assumed since this was put in writing and it was from the Office of the General Counsel, I had finally reached the correct party at CitiFinancial to respond to my request. Unfortunately, this is not the case since it is now almost three weeks after I was supposed to receive a reply and I have heard nothing. Attached are all of my correspondence regarding this matter. Please note this communication began in MAY. It is now almost three months later and my frustration level is at its maximum. Please refer to the last communication to Mr. Schrom. Dated 6/29, I requested the automatic deduction be stopped effective immediately. Since the July payment was deducted anyway, I decided to give you the benefit of the doubt and assumed my request was made too close to the deduction date. There will be no "benefit of the doubt" if the August payment is deducted.

Mr. Schrom,Please let me list several facts for you to ponder: My first email was on 5/5, where I requested the response be via e-mail or regular mail but also included my cell phone number. The response was that my e-mail was FORWARDED to Sharon Ocasio on 5/8 and included her phone number. After receiving NO response, I resent the e-mail on 5/27 and reiterated that I wanted all correspondence in writing. On 5/30 I was advised the e-mail was forwarded to you. Lo and behold, the notification I received about the change in payment was dated 6/1. On 6/12, I resent the e-mail and copied you advising the effective date was incorrect and the new payment amount was not as I calculated it. You asked Toni to "get" the information I requested so we could resolve this issue. Her response was a phone number for ME to call to fix CitiFinancial's error! To add insult

to injury, I received a letter from Sharon Ocasio dated 6/14 asking me to call her as the number she has is disconnected and she has no way to communicate via e-mail. How can an e-mail be forwarded to someone who has no way to communicate via e-mail?

toni, if what the customer states is true we need to adjust her rate for 2 months effective

5/1/06. also, she is requesting an explanation as to new payment calculation. can you help get the information she is requesting so we can resolve this issue? thanks for your help. ron schrom.

Ms. Lawrence, I wanted to let you know that I received a "Notice of Change in Payment

Amount and Interest Rate" form that was dated 6/1/06. However, there is an error in the effective date. My contract states after 24 consecutive payments, the rate would lower. Our first payment was 5/1/04, which means the 24th payment would have been 4/1/06. The lower interest rate should have been effective with the 5/1/06 payment, yet the form indicates it will not be effective until the 7/1/06 payment. It clearly states the current rate is in effect for 26 months and it should be 24 months. Also, I cannot seem to verify the new payment amount and would like an explanation as to how it was calculated.

ICP Fair Finance Watch has just filed a 15-page challenge to the proposed announced on May 8 by Wachovia to acquire Golden West Financial Corp. for $25.5 billion. In comments filed with the Federal Reserve Board in Washington, Fair Finance Watch demands public hearings on the proposal's potential to raise prices, on Wachovia's continuing enabling of payday lenders and pawnshops, and on the disparities in Wachovia's 2005 mortgage data, including disproportionately confining people of color to higher cost loans.

Fair Finance Watch presents in its July 24 challenge an analysis of the 2005 data of Wachovia four HMDA data-reporting affiliates, cumulating these four lenders (referred to as "Wachovia") and calculating the distribution of loans over the Federally-defined rate spread of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens (referred to as "high cost loans").

In its home state of North Carolina in 2005, Wachovia confined African Americans to high cost loans 2.93 times more frequently than whites, while denying African Americans' applications for loans more than twice as frequently as whites. Specifically, Wachovia confined 12.38% of its African American borrowers to higher cost loans over the rate spread, versus only 4.22% of its white borrowers. Also in North Carolina, Wachovia in 2005 denied the applications of Latinos 1.8 times more often than whites.

In 2005 in Texas, a state in which Wachovia wants to further expand, Wachovia confined African Americans to high cost loans 2.36 times more frequently than whites, while denying African Americans' applications for loans 1.75 times more frequently than whites. Also in Texas, Wachovia in 2005 confined Latinos to high cost loans 1.86 times more frequently than whites, and denied the applications of Latinos 1.54 times more frequently than whites.

In Pennsylvania, a state whose consumers were injured by Wachovia under its previous name First Union, through massive branch closings and otherwise, Wachovia in 2005 confined 14.76% of its African American borrowers to higher cost loans over the rate spread, versus only 3.61% of its white borrowers. That is, Wachovia confined African Americans to high cost loans a whopping 4.09 times more frequently than whites, while denying African Americans' applications for loans 1.54 times more frequently than whites. Also in Pennsylvania, Wachovia in 2005 confined Latinos to high cost loans 1.99 times more frequently than whites, and denied the applications of Latinos fully 2.03 times more frequently than whites.

In California, a state it which Wachovia wants to further expand after buying a subprime auto lender and exotic mortgage originator based in the state, Wachovia in 2005 denied African Americans' applications for mortgages 2.11 times more frequently than whites. In Delaware in 2005, Wachovia denied African Americans' applications for mortgages 2.02 times more frequently than whites. In New Jersey in 2005, Wachovia confined African Americans to high cost loans 2.32 times more often than whites, while denying African Americans' applications for loans 1.85 times more often than whites.

Wachovia's disparities are not limited to African Americans and Latinos. Note for further example that in New York State in 2005, Wachovia denied fully 72.82% of the applications it received from American Indians, 3.79 times its denial rate for whites in NYS in 2005. Also in New York State, Wachovia denied the applications of African Americans 2.03 times more frequently than whites.

While FFW is formally asking the Federal Reserve to investigate and act on these regional disparities, overall in 2005 Wachovia confined African Americans to higher cost loans 2.54 times more frequently that whites. FFW requesting public hearings, and that Wachovia's applications be denied.

Wachovia has continued supporting subprime lenders, after previously misinforming the FRB about support of subprime lenders, then demanding secrecy, giving rise to FOIA litigation, a partial chiding of the FRB by District Court Judge Cote, and the recently-heard appeal in the Second Circuit. An August 6, 2004, letter from Wachovia to the Federal Reserve admitted active credit relationships with ten pawnshops "or related entities," and tried to explain why this is not inconsistent with its earlier claim, in its merger application, about a "policy not to lend to pawn shops, pay day lenders, check cashing companies or other MSBs" [Money Service Businesses]. That statement was made without equivocation, in Exhibit 6 of the merger application, filed July 12, 2004. When that merger was announced, Fair Finance Watch issued a report showing that both SouthTrust and Wachovia fund pawnshops, payday and car title lenders. The banks said they would respond, and included the above-quoted, about SouthTrust's "policy," in their application. FFW submitted to the FRB 45 Uniform Commercial Code filings showing SouthTrust's loans secured by pawnshops, including all of their proceeds.

Wachovia's August 6, 2004, response stated: "Of the 15 SouthTrust relationships cited by FFW, four loans have been paid out and a loan relationship no longer exists. Two other UCC filings reflect loans to parties for which the businesses in question served solely as collateral. Four other entities cited are not pawnshops or money service busineses or provide MSB services only as an incidental service. Five such relationships do exist with pawnshops and were made as exceptions to SouthTrust's policy. In addition to those five relationships, we have identified five other credit relationships with pawnshops or related entities, some of which were acquired through mergers with other institutions. However, the total loan outstandings of these 10 credit totals just $755,056... Moreover, it is standard industry practice to allow exceptions to credit policies based on legitimate reason."
But what are those reasons? Wachovia told the Fed that "It is SouthTrust's policy not to lend to pawn shops, pay day lenders, check cashing companies or other MSBs." There was no footnote, no statement "except for ten pawnshops." The statement was false, and militates for public hearings in this case.
Wachovia itself stated that it "has commercial lending relationships with select check cashing companies, pawnshops and payday lenders. In recognition of the higher risk these businesses present, the Credit Risk policy on lending to them is very restrictive. Any new credit, or the renewal or modification of such a credit, requires the approval of one of the top found Chief Risk Offices of Wachovia... Please see Confidential Exhibit 3 for information concerning these customers." FFW filed a FOIA appeal, and later sued.

FFW's comment also include sample UCC filings. For example, on January 4, 2006, after the above-described, Wachovia made a new loan to Value Pawn Holdings, Inc. of 101 Sunnytown Road, Casselberry, Florida;

--in November 2004, Wachovia made a new loan, secured by "all inventory," to Alvarado Pawn, Inc. of Alvarado, Texas;

--in June 2005, Wachovia formally continued a loan to A 1 Pawn Shop of Goldsboro, North Carolina;

--in March 2005, after the above-described, Wachovia formally continued a loan to Garden State Check Cashing Services, Inc.; and

--on April 10, 2006, Wachovia made a new loan to Atlanta Check Cashers, Inc. of 1000 Hurricane Shoals Road, Lawrenceville, Georgia.

As yet another adverse managerial issue, see Associated Press of July 6, 2006, "Wachovia pays nine states $25M in settlement" --

(AP) - The nation's fourth-largest bank, Wachovia Corp., has agreed to pay nine states, including Utah, $25 million to settle allegations that its stock analysts issued biased research to win investment-banking business. The Charlotte, N.C.-based company agreed Wednesday to pay $20 million for failing to supervise its employees, $1.65 million for not retaining required e-mail records, and $350,000 for costs of the investigation. Investigators said Wachovia employees had conflicts of interest between equity research and investment banking. They said the company did not comply with state securities laws by failing to keep certain electronic records. The probe was led by securities regulators in Nebraska, Virginia and North Carolina, according to the Washington, D.C.-based North American Securities Administrators Association. Alabama, Georgia, Maine, Connecticut and New Jersey were also involved."

FFW is requesting public hearings, including on managerial issues, and that Wachovia's applications be denied. The hearing and denial-request are also on competition and higher-pricing grounds. Even Wachovia's application admits that at least three markets are outside of the antitrust guidelines:

--West Palm Beach, where Wachovia already has an anticompetitive 25% market share (and Golden West has 5.9% -- the application blacks out the percentage of Golden West's deposits in certificates of deposits, which FFW contests);

--the Indian River market, where Wachovia already has an anticompetitive 28% market share, and Golden West has 5% -- the application blacks out the percentage of Golden West's deposits in certificates of deposits, and the entire last paragraph of the argument, which Fair Finance Watch has now contested to the Federal Reserve. So much for transparency.

FFW has formally requested such public hearings on Wachovia's applications, and contends that on the current record, these applications could not legitimately be approved.

With all the hoopla around the FDIC's consideration of applications to get into banking by Wal-Mart and Home Depot, the Office of Thrift Supervision is more quietly reviewing a proposal by the Paris-based investment bank Societe Generale to form a savings bank. The purpose of the proposed savings bank is to "engage in purchasing residential mortgage loans in the secondary market from other financial institutions and licensed mortgage bankers... SG sees the Bank's involvement in this market as a natural extension of its current securitization activities." Given those activities, Inner City Press / Fair Finance Watch submitted a timely challenge to SocGen's application, citing along with troubling reports of money transmission for terrorism other lacks of standards, including environmental. Soc Gen has been identified as having "loaned funds to Transneft in the past and can be expected to be approached for financing on the ESPO project" -- a highly controversial oil pipeline project in Siberia which would destroy habitats including around Lake Baikal.

Other of Soc Gen's oil loans include the $2.8bn Qatargas 3 deal and as Olefins II advisory in Kuwait. See also, Project Finance of March 1, 2006, " Inca cooler: the Peruvian capital markets have become essential sources of funding for mines, pipelines, roads, and even LNG terminals. But can the country's financial sector continue to ignore political instability?" --

"According to Alejandro Valencia, a director in the project financegroup at Societe Generale, adviser to the consortium of Hunt Oil (50%), SK Corp (30%) and Repsol YPF (20%), 'Peru LNG, a Peruvian entity, will be the borrower and we expect the project to be financed at a minimum debt-to-equity ratio of 60/40.'"

Another question about the safety and soundness of Societe Generale's global lending is raised by the $1 billion loan to the Russian energy company Yukos in September 2003. See, e.g., " Russian court upholds ruling to void Yukos' loan guarantee," Tass Newswire, May 16, 2006.

Societe Generale submitted a response to the OTS, bragging among other things that "Societe Generale is one of a limited number of corporations that has signed The Global Compact of the United Nations (July 2000), which encourages the private sector to advance responsible corporate citizenship and universal social and environmental principles to meet the challenges of globalization, the United Nations Environment Program Statement by Financial Institutions on the Environment and Sustainable Development."

But reporting from the United Nations, Inner City Press has uncovered Societe General misusing the United Nations logo, specifically the UNHCR "visibility logo," and improperly presenting itself to the public as having "teamed up" with the UN, in a way that brought rebuke from legal staff in UN Headquarters. Click here for that Inner City Press UN Report. And so in reply: Societe Generale should be asked to make full public disclosure of all communications to it from UNHCR regarding its use of the logo(s) and of such phrases as "teaming up with" the UN. Also, it has emerged that in the program at issue SocGen demonstrated its lack of compliance standards by investing in a fund controlled by an individual on the UN Investment Committee, Ivan Pictet. SocGen should be required to make full public disclosure on this matter as well.

So Soc Gen's defense to the OTS is problematic, as its proposal to start a federal savings bank, with which it could preempt all states laws. Developing...

In predatory lending news from the UK, Royal Bank of Scotland is under investigation after an expose of one of its customers who committed suicide, heavily in debt. Richard Cullen, a 65-year-old mechanic from Wiltshire, killed himself after building up debts of 130,000 pounds on credit cards. Cullen owed the Royal Bank of Scotland (RBS) more than 35,000 pounds through four different cards, despite having an annual income of just 15,000 pounds. In November 2004, two weeks after he was chased for arrears on his Mint card, which is operated by RBS, the credit limit on his Tesco Personal Finance card, also run by RBS, was increased by 1,000 pounds to 7,700 pounds. In January last year he was found dead in his garage after inhaling exhaust fumes...

Seven months ago, Inner City Press submitted to the Federal Reserve Board a Freedom of Information Act request, for records "regarding the Federal Reserve System having compiled a list of lenders with disparate 2004 Home Mortgage Disclosure Act data and transmitting such lists beyond the FRS."

Under the Freedom of Information Act, the Fed is supposed to provide records within twenty business day. But with a single letter six months ago, the Fed unilaterally extended its time to respond. Now, as it prepares its required annual FOIA report to the Department of Justice, the Fed begrudgingly sends a second letter, which states that "approximately five linear feet of documents will be withheld from you... no reasonably segregable nonexempt information was found."

An appeal will follow... Also last week, Synovus' Columbus Bank & Trust along with CompuCredit were forced to pay $11 million in restitution to residents of New York State for failing to disclose activation fees of up to $179 on Aspire Visa cards. Inner City Press has raised Synovus' consumer abuse to the Federal Reserve a number of times in recent years. Now what will the Fed do?

From reading the fine print of regulatory notices: the New York Banking Department on June 14 quietly "authorized" CitiFinancial to "solicit deposits on behalf of a bank" -- Citibank. So, a confessed predatory lender now solicits deposits?

Given the disparities in Citigroup's 2005 HMDA data, the Federal Reserve's wordless lifting of its 2004 cease-and-desist predatory lending order against CitiFinancial is shameful... And what do others agencies do? According to an audit of the FDIC:

"For the period January 1, 2003 through November 7, 2005, CRC identified 23 possible predatory lending complaints and inquiries. In response, CRC investigated or referred complaints to the responsible federal banking regulator as deemed appropriate, or otherwise disposed of the complaints. More specifically:
* eight complaints were investigated by the FDIC, and no evidence was found that the financial institution violated a consumer protection law or regulation;
* seven complaints were referred to other agencies because those circumstances did not involve FDIC-supervised institutions;
* four inquiries were information requests from consumers about payday or predatory lending;
* two complaints were investigated by the FDIC, and the Corporation did not intervene due to litigation between the consumer and the financial institution; and
* two complaints were not investigated by the FDIC because the consumer did not provide enough information about the nature of the complaint."

So the answer, including on Mercantile, is that the FDIC does very very little...

This week we raise a programmatic point, infinitely domestic: whatever happened to the nexus between CRA and the communities hit by Katrina? There are of course larger questions, of Federal funding and what's become known as the Brownie factor, the good ol' boy's network. But other than a bit of forbearance, what have the banks with CRA duties done?

We called this programmatic and it will remain. Since Hurricane Katrina we've reported on the HMDA data, mortgage lending patterns and the deep Deep South disparities. But this is a proposal, or a journalistic prediction: in the recently-announced merger of the largest Birmingham-based banks, Regions and AmSouth, a post-Katrina plan should be required. If smart, the banks will include it in their application. If not, it should come at the demand of community groups and regulators. But it should be produced, commented on and improved. And then it should be implemented, and demanded of other lenders.

There's been CRA slippage. Just as the focus of "Low Income Housing Tax Credits" has been shifted from the poor to anyone at all, so too CRA credit has been given without regard to those most hurt, and those most in need of assistance. The historical redlining in these areas Inner City Press / Fair Finance Watch has documented on applications as far back as Bank One - Baton Rouge in 1995. In AmSouth - First American, ICP was contacted by activists in Louisiana and Mississippi, with proof of First American's predecessor Deposit Guaranty selling out NAACP youth to a local racist sheriff. Of these charges, the Federal Reserve said they were too old to count. But a month later, DOJ announced the settlement of discrimination charges by AmSouth. In SunTrust - NCB, ICP showed SunTrust's extensive enabling of payday and car title lenders. SunTrust responded with a commitment to stop all such loans, due to consumer and reputational harm. That the loan may not have entirely stopped is another matter to follow.

On Regions - Union Planters, the disparities of the subprime EquiFirst were combined with the banks' support of a payday lender with explicit Mafia connections. Of this the Fed said the organized crime links were from the 1980s, too old to act upon. While the Federal Reserve will consider the main application, the issues must be raised beyond. And then on other banks.

On Friday June 16, Inner City Press / Fair Finance Watch filed a timely challenge to Capital One's application to acquire North Fork Bancorporation - it is summarized in this week's Inner City Press Bank Beat report. This space, we devote to the global state of cities, a matter to be discussed this week at a forum in Vancouver, as previewed June 16 at the United Nations. But first, these three updates: HSBC months ago categorically denied the contents of ICP's report on its violations of the Servicemembers Civil Relief Act, by limiting the required interest rate reductions to those in "hostile zones" rather those on active duty. Now, in a response to ICP's initial comments on HSBC's applications to put its high-cost tax refund loan operation into a previously-trust bank in Delaware, HSBC finally admits: "a situation did exist where a few employees of Household Credit Card Services, a division of what is now HSBC Bank Nevada, N.A. (an affiliate of HSBC Trust Company (Delaware), National Association) did not follow this bank's SSCRA policy and erroneously restricted benefits under SSCRA to only those military personnel deployed in hostile or combat zones." So what happens now?

"Federal Home Mortgage Disclosure Act statistics analyzed by Wells Fargo Home Mortgage, for example, show that single women took out 13,246 home mortgages in the Portland area in 2005, about 20 percent of all loans for purchases. That's roughly in line with the Realtor association's national average. The numbers crunched by Wells Fargo also suggest, however, that single males made 16,389 purchases in the Portland area during the same period, or 25 percent. That's significantly higher than the association's numbers. The problem is that the two sets of numbers don't allow for apples-to-apples comparisons. Walter Molony, spokesman for the National Association of Realtors, said the federal HMDA numbers don't include cash purchases and mortgages from small lenders. So they show only part of the picture, he concludes."

So now Wells Fargo is "crunching" HMDA data for newspapers? But Wells Fargo elsewhere says that HMDA data don't prove anything....

In a June 16 letter to the OCC, JPMorgan Chase's outside counsel at Wachtel Lipton argues that the bank doesn't have to disclose the locations of the (at least) 50 branches to be closed, because as to some of the closings, they'll be later public notice. But this ignores that Chase made exactly these disclosures when it merged with Chemical. So what's the difference, other than that Chase has gotten more and more disdainful of the public, particularly in low income neighborhoods, as it has done each merger since Chemical?

UNITED NATIONS, June 16 (InnerCityPress.com) -- The world is a ghetto. Behind a lengthy PointPoint presentation and thick glossy report of which there were not enough copies, that was the message the UN-Habitat brought Friday to United Nations Headquarters, en route to a World Urban Forum on the topic next week in Vancouver. One billion people now live in slums, as defined by Habitat. This figure is growing globally at 2.2 percent a year, and at a higher rate in the developing world. The report takes on what it calls the Urban Penalty from a number of angles: health and environmental justice, poor education, vulnerability to conflict and natural disaster.

At the UN press conference (available here, in Real Player format), Inner City Press inquired into whether Habitat considers the private sector's financing, or lack thereof, of housing and small business in low-income areas, and if Habitat works with the UN Global Compact on the issue of banks' inclusion or exclusion of urban slums from their lending, along the lines of the U.S. Community Reinvestment Act. Agency director Anna Tibaijuka acknowledged that the issue of private finance "is not covered adequately in this report." As to the Global Compact, at first no answer was given. When the issue was raised a second time, the response by rote was that all UN agencies work with the Global Compact, but that such collaboration has yet to take place on these issues. Here's hoping.

New Orleans and the disparate impacts of Hurricane Katrina are addressed in one of Habitat's case studies. Analogy is made to Kobe, Japan: "when that city was destroyed by an earthquake in 1995, many residents lived in temporary housing for eight years, and areas of the city that had been affordable for families were rebuilt with housing beyond their financial reach." While Ms. Tibaijuka jibed that mass evictions "used to happen even here, in the past," the reality is that in many cities in the developed world, the mass evictions continue in slow motion. Neighborhoods are gentrified and housing costs soar. Even the conversion of informal settlements to "security of tenure" is viewed skeptically, unless the de facto cost of the housing stays low.

Inner City Press also asked about Habitat's view of the role of discrimination. Ms. Tibaijuka noted that many cities in the developing world are "colonial cities" and that the nationalist governments that took over and "not all in partnership with their own people." There is discrimination by race and ethnic group, by gender and by religion, she said. The report's case study on immigrants in Paris states that in France, employers are "known to discriminate against those who lived in stigmatized suburbs" and "a similar study in Rio de Janeiro found that living in a favela appeared to be a bigger barrier to gaining employment that being dark skinned or female." Call it the Urban Penalty, or more precisely the Ghetto Penalty.

Asked to crystallize the dangers of not acting on these issues, Ms. Tibaijuka said that "if the poor are not empowered, they are sure going to empower themselves." She mentioned crime and terrorism and even, if reporters heard her right, revolution. The World Is a Ghetto, indeed...

The Federal Reserve hits new lows daily. Last week we reported that the Fed has for months stopped responding to Freedom of Information Act requests, including a request Inner City Press filed months ago about the Fed's actions (or inaction) on disparities in the 2004 Home Mortgage Disclosure Act data.

Now the Fed is turning a blind eye to glaring disparities in the 2005 data. For example, in its BB&T Order last week, the Fed ignores the issues raised about BB&T's refers-down to its subprime unit Lendmark. BB&T's response to Inner City Press / Fair Finance Watch's comments included the volume of loans referred up in 2005, but no such figure for referrals-down. Nor did the Fed request it. Despite the speechmaking about HMDA data, the Fed is hitting new lows daily.

And this coming week, on June 22, the Fed will be in the Second Circuit Court of Appeals in New York, on the cross-appeals concerning the Fed's withholding of the names of subprime lenders assisted by Wachovia and SouthTrust. While the case has been pending, the Fed has stopped responding to ICP's FOIA requests, and has stopped asking application for the names of the subprime lenders they assist. Like we said, the Fed is hitting new lows daily...

Inner City Press / Fair Finance Watch has just learned that a stealth application by HSBC, filed with the Federal Reserve and FDIC, to convert a trust bank, actually involves creating a national platform for HSBC's high-cost tax Refund Anticipation Loans (RALs). On May 19, ICP submitted an initial comment to the FDIC and asked for a copy of the application, since the public notice did not explain what the conversion was about. ICP has just received the application, which states

"RALs are the primary business driver... Notable business relationships include: H&R Block," Jackson Hewitt, Drake, UTS, Petz and Orrtax. "HTCD is seeking regulatory approval to expand its limited purpose trust charter into a full service national bank. With an expanded charter, HTCD will originate all refund lending business under the Block agreement and for all other refund lending business tax preparers in states outside HBUS's current footprint. Servicing for the products continue to be per formed [sic] by HSBC Taxpayer Financial Services (TFS) through its Bridgewater, New Jersey administration center as well as operational sites in New Castle, Delaware and India."

HSBC did not disclose in the applications the interest rates at which its RALs are made (often well over 100% interest), nor the controversies including but not limited to class actions that have followed this line of business, from Household/Beneficial to HSBC. ICP's initial comment to the FDIC, even before it could know what this application was about, noted that earlier this year, a federal judge denied even preliminary approval to HSBC’s and H&R Block’s attempt to settle-on-the-cheap a class action for high-cost tax Refund Anticipation Loans. Judge Elaine Bucklo of the U.S. District Court in Chicago said the proposed settlement did not offer enough value to those ripped-off by HSBC’s loans (not unlike HSBC-Household’s 2002 predatory mortgage lending settlement with state attorneys general). This rejected settlement would have divided among 28 million customers a $110 million cash payment and $250 million in coupons, each with a $6 face value, redeemable for... H&R Block tax services. Judge Bucklo said the coupons offered little value. "It seems likely that the $6 coupon fee would simply be lost in higher fees and it is at any rate too little to be meaningful," she wrote. "The coupons here appear to be the classic free advertising, which Block is free to provide, but which cannot be given value in considering the reasonableness of a settlement... At the very least, counsel for plaintiffs, who should not need reminding that they owe a fiduciary duty to every member of the plaintiff class, need to obtain and present the best possible proposal for giving reasonable and adequate notice to the class, and to provide the court with a reasoned analysis of how many claims are likely to be made," Bucklo wrote. The Seventh Circuit Court of Appeals rejected an earlier settlement.

Just last week, the American Banker newspaper reported that HSBC is now making "pay stub" loans, a new low (and a new high, in terms of interest rates).

It was and is disingenuous to not include information about RALs in the application and especially the notice thereof -- the FDIC and Federal Reserve comment periods must be reopened and credible notice given. ICP is contesting the withholding of the Business Plan, "Confidential" Exhibit 1, and board information (Exhibits 2-5), loan policies (Exhibit 11), and insider transactions, etc. (Exhibit 6).

HSBC is a regulatory "player" -- in its acquisition of Household International, for example, Household's savings bank was extinguished and some operations sold to Panhandle Bank, for the sole purpose of avoiding an applications process. Since then, HSBC has played arbitrage and shifted its charter from (New York) state to national, and its bank headquarters from Buffalo to Delaware. In Delaware, HSBC has gotten the state Attorney General to use specious grounds to withhold information about complaints against its subprime lending, specious grounds rejected by the federal district court and debated, on the state's appeal, in Federal appeals court in Philadelphia last month (see, e.g., Dow Jones and AP of May 11, 2006, NY Times and Wilmington News-Journal of May 12, 2006).

Now HSBC has quietly applied to convert its previously limited purpose trust bank to a full service bank, to do its RALs. ICP has opposed it; developing.

In the FDIC proceeding, Wal-Mart's main defense has been that other retailers have banks, and no one opposed them. So with Home Depot trying to acquire a Utah bank, it was time for opponents to make their voices heard. Inner City Press / Fair Finance Watch filed comments, summarized below.

Re: Initial comment opposing the proposal by The Home Depot, Inc. to acquire control of EnerBank USA

On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is an initial comment opposing, and requesting public hearings on and a complete and supplemented copy of, the applications by The Home Depot, Inc. to acquire control of EnerBank USA.

Many adverse issues surround Home Depot Inc. at this time, militating for public hearings on this proposal. These issues include findings of employment discrimination, detailed allegations of accounting fraud, and dramatic over-compensation of management and contempt for shareholders. As was not done in Wal-Mart, the CRA Strategic Plan alluded to in Home Depot's application should be made available well before the public hearing, so that it can be testified about. The comment period must be formally extended until the CRA plan is filed.

Most recently with Home Depot, its over-compensation of its executives, the failure of its outside directors to even show up for the annual meeting, and a demonstrated contempt for the public, all militate for hearings and the denial of this application. As reported in the Atlanta Journal-Constitution of May 25, 2006,

"At issue are the steadily rising pay packages awarded to Home Depot Chairman and Chief Executive Bob Nardelli, despite an overall drop in the company's stock price in his five years at the helm. Nardelli last year got about $29.7 million in salary, bonus and restricted stock awards, a 4.3 percent boost. During his entire tenure, he's gotten packages worth $154.3 million --- not counting the value of stock options. His package is well over double that of Wal-Mart's CEO and dwarfs that of the CEO at archrival Lowe's, which has posted stock gains of more than 170 percent this decade."

Home Depot is also being sued for customer abuse. See, e.g., Atlanta Journal-Constitution of May 24, 2006, "Home Depot named in grout sealer suit," by Patti Bond:

"Home Depot has been named in a $111 million personal injury lawsuit involving a defective grout sealer product that was recalled last summer. Lilburn resident James Flynn claims he suffered respiratory problems and permanent lung damage after exposure to the fumes in a product known as 'Tile Perfect Stand 'n Seal 'Spray On' Grout Sealer,' according to a lawsuit recently filed in Cobb County State Court."

Home Depot is also being sued for accounting fraud. See, e.g., NY Post of May 18, 2006, "DEPOT-SITION - CLASS-ACTION SUIT ALLEGES FRAUD AT HOME RETAILER" --

"Home Depot is the subject of a class-action securities lawsuit that alleges the company falsified financial results by improperly inflating the amount of money it charged vendors to cover the cost of damaged or defective merchandise. The complaint, filed by John Mizzaro, who purchased Home Depot shares from May 29, 2001, to Feb. 22, 2005, also names members of Home Depot senior management as defendants, including Chief Executive Robert Nardelli, Chief Financial Officer Carol Tomé and co-founder Kenneth Langone, among others. During fiscal 2001 to 2004, Home Depot "was engaged in a scheme to inflate the company's earnings through fraudulent RTV practices," according to the complaint, filed in United States District Court for the Northern District of Georgia. The complaint also states that Home Depot derived a "material portion of its revenues and profits" from this so-called return-to-vendor practice, and that the company had deficient internal controls."

It is particularly in this light that ICP is timely demanding access to all improperly withheld portions of the application, including the business plan and all (now contested) financials.

On an application to acquire control of a bank or industrial loan company, the Federal Deposit Insurance Corporation must consider a range of factors, including managerial integrity, compliance with law and regulation, such as anti-discrimination provisions, including as a predictor of Community Reinvestment Act performance.

Significantly, including as a predictor of (weak) Community Reinvestment Act and fair lending performance, Home Depot has recently been found guilty of employment discrimination by a federal appeals court. See, e.g., Business Insurance of May 1, 2006 , "Sunday work rule constitutes bias" --

"According to the opinion, Mr. Baker was initially permitted to take Sundays off by supervisors at the Henrietta, N.Y., Home Depot store in which he worked. A new store manager objected, though, and offered him the option of a later shift on Sundays, which Mr. Baker refused. He also refused to work part time, which would have permitted him to take Sundays off, explaining he needed to work full time. The supervisor said Mr. Baker also rejected a suggestion that he find another sales associate to swap shifts with him. Mr. Baker was subsequently terminated for unexcused absences. He sued the Atlanta-based Home Depot, charging religious discrimination. The shift change "offered to Baker was no accommodation at all because, although it would allow him to attend morning church services, it would not permit him to observe his religious requirement to abstain from work totally on Sundays,'' says the unanimous opinion by the three-judge panel. Simply put, "the offered accommodation cannot be considered reasonable...because it does not eliminate the conflict between the employment requirement and the religious practice,'' said the court, in quoting a 1996 opinion. The opinion adds, "Although we are constrained to vacate the judgment of the district court because of the inadequacy of the offer of shift change on Sundays as an accommodation, we express here no opinion as to whether Home Depot's offer of part-time employment or its allowance of the exchange of shifts with other employees would constitute reasonable accommodations. We leave the consideration of those matters to the district court.'' The opinion notes also that the Home Depot says giving Mr. Baker Sundays off would place an undue burden upon it. "It contends that Baker's request for Sundays off would require his `co-workers to shoulder a larger workload of undesirable shifts, which, in turn, fosters lower morale and decreased productivity, while at the same time increasing the likelihood that the employer would have to pay overtime premiums,''' says the opinion. ``We leave this defense also for consideration by the district court in the first instance.'' Briefs in support of Mr. Baker were filed by the U.S. Equal Employment Opportunity Commission and the U.S. Dept. of Justice, Civil Rights Division, in Washington and by the American Jewish Congress in New York. Bradley Baker, plaintiff-appellant, vs. The Home Depot, defendant-appellee, United States Court of Appeals for the 2nd Circuit, No. 05-1069-cv.

As simply another example of findings of employment discrimination at Home Depot, see the Bangor (Maine) Daily News, January 24, 2006, "Rights panel rules against Topsham Home Depot" --

"The Home Depot store in Topsham discriminated against a man who had broken his back earlier in life, but The Home Depot in Rockland did not discriminate on the basis of age against two employees of that store, the Maine Human Rights Commission ruled Monday... In the complaint by Patrick Farris, who now lives in Georgia, against The Home Depot store in Topsham, his attorney told the commission a supervisor taunted him over his broken back injury, throwing a pencil on the floor and demanding that he pick it up. When Farris was in pain from the injury, store officials argued in a written submission to the panel, he grimaced as he helped customers. One day, when Farris was in particular pain, he was told not to "punch in" at work because his pain was obvious. The panel ruled this action on the part of The Home Depot equated to a "constructive discharge," which means he was effectively put out of work. The commission voted that reasonable grounds existed for Farris' claim. Complaints that win reasonable grounds rulings from the panel proceed to conciliation. If no settlement is reached, the complainant may proceed to Superior Court, where a financial award may be granted. Peter Sullivan of South China and Karen Claywell of Friendship also filed claims against The Home Depot for their experiences in the Rockland store. The attorney representing the two, Tracy Adamson, argued that Sullivan's peers at the store taunted him about his age, and were aware that he was under a program of improvement on the job. Claywell refused to cooperate with the systematic discrimination, Adamson argued, and suffered on the job because of it....Commission investigator Brenda Haskell told commissioners that while she believed the Rockland branch of the home improvement chain was "a store that went amok," no violations of the Maine Human Rights Act could be demonstrated.

But Home Depot run "amok" must be inquired into by the FDIC, now that Home Depot proposes to acquire control of an insured depository institution.
See also, for the record, NYT of May 27, 2006, "The Board Wore Chicken Suits" ... This is not a company, not a management, that should be allowed to acquire control of an insured depository institutions. ICP asks for hearings, and that Home Depot's applications be denied.

If you have any questions, please immediately telephone the undersigned, at (718) 716-3540.

Respectfully submitted,
Matthew Lee, Esq., Executive Director
Inner City Press / Fair Finance Watch

In other news, it now emerges that ACC Capital Holdings last year paid $360,070 to board member Deval Patrick, whose staffer says this was for having attended about four or five board of directors meetings and acting as ACC's liaison in the settlement discussions with 49 attorneys general over predatory lending which required "four or five special briefings" for the board. That's over $36,000 per meeting... Among the slipperier arguments in the Federal Reserve reply brief in the ICP v. FRB Second Circuit FOIA case is that Wachovia's provision of a list of the subprime lenders it assists was "voluntary" because Wachovia submitted it early in the process. The Fed acknowledges that in cases "prior to Wachovia" SouthTrust, it asked for the names of subprime lenders assisted, but that Wachovia include this in its application, making it voluntary. How this will play out in Wachovia - Golden West is anyone's guess.

Concerned with these disparities in Trustmark's 2004 Home Mortgage Disclosure Act ("HMDA") data, ICP in early 2006 wrote to Trustmark requesting a copy of its 2005 HMDA-LAR, in the .dat format in which such data is filed with regulators and in which virtually all of Trustmark's peers have provided their data to ICP. Trustmark responded with data in anachronistic paper print-out form. ICP wrote and asked Trustmark to explain why it would not provide the data in the format in which it had already filed the data with regulators; ICP stated that it could see no other reason that an attempt by Trustmark to avoid analysis of its 2005 lending record. No explanation has been offered.

In 2004 in its headquarters MSA of Jackson, MS, Trustmark denied the conventional home purchase loan applications of African Americans 3.12 times more frequently than whites. For refinance loans, Trustmark's denial rate disparity was even worse: it denied the applications of African Americans 3.84 times more frequently than whites.

Considering loans over the federally-defined rate spread (of 3% over the yield of comparable Treasury securities on first lien loans), in the Jackson MSA in 2004 for conventional home purchase loans Trustmark confined African Americans to loans over the rate spread 3.83 times more frequently than whites. For first-lien refinance loans, Trustmark confined African Americans to loans over the rate spread 3.23 times more frequently than whites.

In the Memphis MSA in 2004, Trustmark denied the conventional home purchase loan applications of African Americans 2.03 times more frequently than whites, and denied the applications of Latinos 2.81 times more frequently than whites. For refinance loans, Trustmark's denial rate disparity was even worse: it denied the applications of African Americans 4.20 times more frequently than whites.

Additionally, Trustmark supports higher cost fringe financial services, for example,

-- A DOLLAR CASH ADVANCE, INC. of Ridgeland, MS (relationship running through at least 2010;

-- NEWMAN'S PAWN SHOP, INC. of Hazelhurst, MA (relationship secured by all “inventory,” that is, the contents of the pawn shop).

Based on prior Federal Reserve precedents, questions must be answered, and the responses should be made public, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”).

Recently the FRB has stopped asking applicants for the names of the subprime lenders they lend to -- the only explanation for this FRB change is the above-referenced court decision, which would require the FRB to release some or all of this information. (See, in the pending appeal in the above-cited case, A-23, Para 6, cited in ICP's reply Brief at n.3 -- the Fed has acknowledged that having the names is "necessary" to "assess the level of risk." The FRB should not limit or change its consumer protection inquiries for such reasons. The questions -- the naming of names -- should resume, on this application.

Inner City Press / Fair Finance Watch was asked to review JPMorgan Chase's lending in Brooklyn, and has done so: In 2005 in Brooklyn, JPM Chase confined African Americans 3.32 times more frequently than whites to higher cost loans over the federally-defined rate spread of 3% over Treasury securities on a first lien, 5% on subordinate liens. JPM Chase confined Latinos 2.84 times more frequently than whites to loans over the rate spread.

Also in Brooklyn in 2005, JPMorgan Chase denied 42.14% of mortgage applications of African Americans, and 36.78% of applications from Latinos, compared to only 29% of applications from whites.

Simultaneously JPM Chase seeks to buy 338 branches from Bank of New York and close 50 of them, including at least four in low- or moderate-income census tracts in NYC, without even disclosing at this stage the locations of the branches.

Finally, for this week, from the mailbag, to Inner City Press / Fair Finance Watch from Gatlinburg, TN ---

... I have Power Of Attorney for my father who is 68 years old and resides in Gatlinburg, Tn. He and my mother who at the time was dying of cancer and Ameriquest knew this refinanced their home in July of 05 because they were convinced by a mortgage specialist that because they were one month behind on their current mortgage they were going to lose their home. Ameriquest falsified income documents and showed rental income where there was none. My mother passed away in January of this year and now this loan is 4 months behind because my father who's total income even when my mom was alive was maybe 2000.00 per month cannot make the payment of 1500.00 per month. I have all of the documents from Ameriquest that they sent to him and am now talking with an attorney because he will have to file Chapter 13 in order to stop the foreclosure and give me time to sell his home. [All told,]my parents received 3,500. and Ameriquest paid some of their smaller bills. Ameriquest made over 15,000 on this loan....

Meanwhile, from NMN -- Ameriquest Mortgage, which three weeks ago closed all of its 229 retail branches, is planning for a substantial decline in production over the next few months, company executives told National Mortgage News. The lender anticipates that its origination volume will fall dramatically for three to six months as it re-engineers its direct-to-consumer channel toward four regional call centers in Arizona, California, Connecticut and Illinois...The Orange, Calif.-based company said its predictions on originations affect only Ameriquest and not its wholesale affiliate, Argent Mortgage. 'Argent is unaffected by this,' said Adam Bass, senior executive vice president and vice chairman of ACC Capital Holdings, the parent of both units." Convenient, isn't it, that the one channel of ACC that is covered by the reforms in the AGs settlement now reduces its volume, with the uncovered and unreformed broker channel doesn't slow down at all...

This week, a battle begun around Washington D.C., in which a Virginia bank wants to sell-out to a Baltimore-based holding company which plays fast and loose with consumers' information, while disproportionately excluding African Americans and Latinos. Inner City Press / Fair Finance Watch has just filed a challenge to the application by Mercantile Bankshares Corporation to acquire James Monroe Bank, based on two main issues: systemic lending disparities in Mercantile's 2005 mortgage data in Maryland, Virginia and Delaware, and Mercantile's negligent treatment of consumers' information, losing 48,000 customers' names and Social Security numbers earlier this month.

Mortgage (HMDA) data for 2005, which ICP obtained directly from Mercantile, show that Mercantile disproportionately excludes and denies African Americans and Latinos. Concerned by disparities in the 2004 lending record of the subsidiaries of Mercantile Bankshares Corporation, ICP requested Mercantile's 2005 HMDA Loan Application Register. Twelve separate LARs were provided, and ICP cumulated them. Overall, Mercantile in 2005 denied the applications of African Americans 2.28 times more frequently than those of whites. This disparity was worse in Maryland (2.42 to 1) and even worse in Virginia (2.91), where Mercantile also denied the applications of Latinos 2.02 times more frequently than those of whites.

Worse is Mercantile's striking failure to lend to communities of color. In Maryland, for example, in full-year 2005 Mercantile made 1199 mortgage loans to whites, and a mere 76 to African Americans, only ten loans to Latinos. This is out of keeping with the demographics of Maryland, and with other lenders' data in the state. In Virginia in full-year 2005 Mercantile made 498 mortgage loans to whites, and a mere 54 to African Americans -- and only 16 loans to Latinos. This is out of keeping with the demographics of Virginia, and with other lenders' data in the state. And, on lower volume, in Delaware in 2005 Mercantile made 105 loans to whites and only four loans to African Americans and only two loans to Latinos. This is out of keeping with the demographics of Delaware, and with other lenders' data in the state, which ICP knows well (see, e.g., Wilmington News-Journal of May 12, 2006, "FOIA filing only puzzles U.S. judges," regarding Delaware-related arguments in the 3d Circuit Court of Appeals).

As timely put before the FDIC by ICP's comments, a scandal had emerged about Mercantile's negligent treatment of over 48,000 consumers' private information, including Social Security numbers. See, e.g., "Mercantile says laptop theft could put customers at risk," Baltimore Business Journal of May 12, 2006 --

"Mercantile Bankshares Corp. said late Friday that a laptop computer containing personal information for more than 48,000 customers was stolen from an employee of subsidiary Mercantile Potomac Bank. Mercantile Potomac Bank, which serves Fairfax and Loudoun counties in Northern Virginia, said it is notifying customers about the incident. The bank said the theft appears to have been random. The stolen computer contained confidential information about some customers, including Social Security numbers and account numbers."

That the Mercantile unit engaged in this anti-consumer negligent action "serves" Northern Virginia, the site of James Monroe Bank, only makes the need for public hearings more clear. The Associated Press' story quoted a privacy expert asking, ""What is the purpose of having the laptop that has the account numbers and Social Security numbers of 50,000 (people) on it? I don't understand." Who can understand negligence like Mercantile's? Given this record, ICP is requesting public evidentiary hearings, and that, on the current record, Mercantile’s applications be denied.

A real rogues' gallery: on March 24, 2006, subprime lender NovaStar simultaneously announced the purchase of a $940 million pool of payment option adjustable rate mortgages, and plans to structure its first securitization of the year as an on-balance sheet transaction. The $1.35 billion on-balance sheet deal closed April 28, led by RBS Greenwich Capital, Deutsche Bank Securities and Wachovia Securities -- three enablers of predatory lending...

On May 11, 2006 in the Third Circuit Court of Appeals in Philadelphia, argument were heard in Inner City Press' ongoing case seeking documents from the Delaware Attorney General about the predatory lending settlement of Household International, now HSBC. Delaware refused to provide any records, saying the Inner City Press request came from out of state. Subsequently the Federal district court in Wilmington declared Delaware's "citizens-only" Freedom of Information Act to be unconstitutional; Delaware appealed, and three judges heard it on May 11.

As recounted in the next day's New York Times, "At the hearing Thursday, a state deputy attorney general, W. Michael Tupman, argued that Delaware had the right to set limits to its records to 'help define the political community and strengthen the bond between citizens and their government.' Judge D. Brooks Smith asked, 'How does restricting a noncitizen strengthen that bond?'" To that, there was no answer. Delaware pressed a narrow definition of journalism, despite (as recounted by Dow Jones), acknowledging that ICP and its requester's "'achievements are truly remarkable on a national level,' Tupman told the court [adding] Delaware fears being deluged with requests for public records if the state's FOIA law is held unconstitutional.'" Too much open government is hardly our problem...

What is a problem, in the fair lending field as in others, is the sometimes lack of follow-up and persistence. On that note, ICP has recently obtained BB&T's 2005 HMDA-LAR, and is comparing it to BB&T's record in 2004. Focusing on BB&T's home state of North Carolina, BB&T appears to have become even more disparate in 2005 than in 2004. BB&T’s Lendmark Financial Services is a largely subprime lender – as noted, in 2004, over 94% of its loans to African Americans were higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). This is the 2005 lending record in North Carolina of BB&T's seven HMDA reporters, cumulated (BB&T).

At BB&T for conventional first-lien loans in North Carolina in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.98 times more frequently than non-Latino whites. BB&T's Latino to white disparity in North Carolina in 2005 was 2.64.

For home purchase loans in North Carolina, BB&T was even more disparate: non-Latino African Americans were confined to higher cost loans over the rate spread 4.04 times more frequently than non-Latino whites; BB&T's disparity between Latinos and whites was even higher, at 4.56.

ICP has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on lenders' own customers. In North Carolina at BB&T for home purchase loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 5.84 times, and Latinos 6.48 times more frequently than upper income non-Latino whites. Income does not explain the disparities at BB&T. Public hearings should be held, on BB&T pending applications.

Half truths on Capitol Hill: from the May 11 testimony of the Office of Thrift Supervision's Scott Polakoff, this claim:

"OTS Community Reinvestment Act regulations provide that an applicant for a federal thrift charter must submit with its application a description of how it will meet its CRA objectives. OTS must take the CRA description into account when considering the application. and may deny or condition the application on CRA grounds. Applications by credit unions to convert to federal savings associations are also subject to publication and public comment requirements."

Mr. Polakoff fails to mention that it is now the OTS' position, stated in letters from him, that the OTS has no duty to provide the public with even a copy of the application before closing the comment period and approving the application. Nor does the OTS explain in writing why it approves applications. And the OTS has turned 180 degrees from its previously practice of holding informal meetings on protested applications. This must change.

Footnote: we're tempted to just ignore it, but here goes -- in a May 12 letter purporting to respond to ICP's May 5 Viewpoint in the American Banker newspaper (somewhat similar to the Report of April 24, 2006, below), an individual from something called "Intrepid Ventures" tries to drum up business by advising that lenders, across the board, aggressively defend their fair lending records. The article ignores the simple point: why did disparities by race get worse from 2004 to 2005? And how can it be said that the flattened yield curve explains this year-to-year worsening? So we visited IntrepidVentures.net and found testimonials from GE Consumer Finance, a headshot like Mr. Burns on The Simpsons, and an empty page entitled "Affiliated Networks." Like we said, a reply is hardly merited...

May 8, 2006 - Click here for Wachovia's disparities and fringe finance, to be raised on Golden West.

Here this week, Ameriquest's shut-down of its retail offices, evading its predatory lending settlement; Citigroup goes stealth with its subprime lending, and JPMorgan Chase's 2005 lending disparities, state-by-state.

Citi's stealth subprime sleaze -- Citigroup will no longer break out the subprime production volume of its CitiFinancial mortgage business, a spokesman for the financial services giant confirmed to NMN, May 1. In reporting to the public, all of Citigroup's residential production will be disclosed as an item under real estate lending. The change became effective in the first quarter. "It's all been consolidated into one reporting line," said the spokesman, adding that "CitiFinancial has opened 200 new branches in the U.S. this year. Overall, CitiFinancial operates 1,000 retail branches in the U.S. and 1,200 overseas." So -- CitiFinancial now has more offices outside the U.S. than within...

Regarding Ameriquest's shutdown of its retail offices (thus dodging reforms in its predatory lending settlement with the state AGs), all we can say is "we told you so" -- including being the first to report the impending layoffs, based on emails we received from (ex) employees...

On JPM Chase-Bank One, ICP submitted a detailed first comment on April 17, which analyzed JPM Chase nationwide and in New York.ICP has continued its review of the worsening pricing disparities in JPM Chase's 2005 lending record, looking at JPM Chase's (and the nation's) major states, beginning with the states in which JPM Chase seeks to buy branches, then in the states impacted by Hurricane Katrina, then in other states.

Connecticut --At JPM Chase for conventional first-lien loans in Connecticut in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.71 times more frequently than non-Latino whites (again worse even that JPM Chase's nationwide disparity of 2.98, set forth in ICP's April 16 comment). JPM Chase's Latino to white disparity in Connecticut in 2005 was 2.76. For home purchase loans in Connecticut, JPM Chase was even more disparate: non-Latino African Americans were confined to higher cost loans over the rate spread 4.69 times more frequently than non-Latino whites. ICP has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on lenders' own customers. At JPM Chase for conventional first-lien loans in Connecticut in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.94 times, and Latinos 4.73 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held, including in Connecticut.

New Jersey -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.98 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in New Jersey in 2005 was 2.64. For home purchase loans in New Jersey, JPM Chase was even more disparate: non-Latino African Americans were confined to higher cost loans over the rate spread 4.69 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was even higher, at 4.56. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.16 times, and Latinos 3.62 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held, also in New Jersey.

Louisiana -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.90 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.70 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.30 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Alabama -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 4.33 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 5.54 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Mississippi -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.74 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.29 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.17 times. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Delaware -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.94 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.54 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was even higher, at 4.27. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.51 times, and Latinos 2.54 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Arizona -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread tw0 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 2.25. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.08 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.35 times, and Latinos 3.42 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Illinois -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.85 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 1.81. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.86 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 1.95. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.84 times, and Latinos 3.37 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Florida -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.01 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was 1.97. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 2.82 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 2.59. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.49 times, and Latinos 2.54 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

California -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.89 times more frequently than non-Latino whites. JPM Chase's Latino to white disparity in 2005 was a whopping 5.16. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.72 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 2.49. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 5.43 times, and Latinos 8.55 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

North Carolina -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 4.04 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 4.33 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 4.86 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Michigan -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 3.19 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread four times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.73 times, and Latinos 1.60 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

Massachusetts -- At JPM Chase for conventional first-lien loans in 2005, non-Latino African Americans were confined to higher cost loans over the rate spread 2.71 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.09 times more frequently than non-Latino whites; JPM Chase's disparity between Latinos and whites was 4.79. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 2.88 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase. Public hearings should be held.

And finally (for now), in Georgia, a state JPM Chase heavy-handedly threatened to pull out of in light of anti-predatory lending controls passed by the state legislature, in 2005 at JPM Chase for conventional first-lien loans, non-Latino African Americans were confined to higher cost loans over the rate spread 3.44 times more frequently than non-Latino whites. For home purchase loans, non-Latino African Americans were confined to higher cost loans over the rate spread 4.98 times more frequently than non-Latino whites. Comparing in the same income tranches, JPM Chase for conventional first-lien loans in 2005, upper income non-Latino African Americans were confined to higher cost loans over the rate spread 3.66 times, and Latinos 2.02 times more frequently than upper income non-Latino whites. Income does not explain the disparities at JPM Chase, including in Georgia. Public hearings should be held.

In a public forum in Brussels last week, marking the formation by NCRC and others of a transnational community reinvestment coalition, Citigroup's Jeff Jaffe spoke of Citigroup's endeavor to re-enter the mortgage market in Europe, due to changes in the Basel capital accords, and singled out Ireland as the type of economy, with limited regulation of financial services, which others in Europe might want to emulate. An Irish advocate quickly begged to disagree. Elsewhere in the forum, advocates from Germany spoke of litigation about Citigroup for high-cost loans and payment protection insurance. Germany-based Deutsche Bank's Jeorg Hohling said among other things that there is not gap in credit availability in the former East Germany, nor elsewhere in Europe or the rest of the "First World." He also stated that while Deutsche Bank wants to hear from its customers (or clients, as translated into French), it has less interest in hearing from organized groups. When asked about credit availability in U.S. inner cities, and Deutsche Bank's role as foreclosing trustee for many high-cost subprime lenders, Mr. Hohling did not respond, at least not only the platform. Whether DB's usury by stealth (as one workshop at the forum put it, with Deutsche Bank diplomatically referred to as "Bank Number 8") gets reformed remains to be seen...

Stateside, National City was sued on April 26 in the Eastern District of Michigan for lending discrimination -- specifically, for denying loans in areas "not desirable based upon National City criteria." In terse a statement, National City disputed the allegation. "We have not been served with the suit, and generally do not comment on pending litigation," according to a statement, issued by spokesman William Eiler. "However, we understand that there is an allegation of discrimination. Our strong record of fair lending certainly disputes that." NatCity's (and its First Franklin's) 2005 HMDA data? Not so much...

Inner City Press / Fair Finance Watch has released a study of the 2005 mortgage lending data in New York City, finding worsening disparities by race and ethnicity in the higher-cost lending of some of the largest banks operations in NYC. 2005 is the second year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

Citigroup in 2005 confined its borrowers in The Bronx to higher-cost loans above this rate spread over 35 times more frequently than in Manhattan, worse than Citigroup's record in 2004. The Bronx is the lowest income and most predominantly African American and Latino county in New York State. In Brooklyn, Citigroup was almost as disparate as in The Bronx, confining its borrowers in Brooklyn to higher-cost loans above the rate spread 23 times more frequently than in Manhattan. For the entire New York City Metropolitan Statistical Area in 2005 Citigroup confined African Americans to higher-cost loans above this rate spread over seven times more frequently than whites, also worse than Citigroup's record in 2004.

JPMorgan Chase was nearly as disparate in New York City. In 2005, JPM Chase confined its borrowers in Queens to higher-cost loans above the rate spread 8.64 times more frequently than in Manhattan. Chase's disparities were also intra-borough: in 2005 at JPMorgan Chase African Americans in Manhattan were confined to higher cost loans over the rate spread 11.42 times more frequently than whites in Manhattan.

Redlining and continued disproportional denials to people of color are also evidenced by the new 2005 data. Citigroup denied applications from The Bronx 4.62 times more frequently than applications from Manhattan; the disparity at Wells Fargo was nearby as bad, at three-to-one. While the disparities are nationwide, they are more pronounced in New York City. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004. Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

Last April, Inner City Press / Fair Finance Watch found similar but less extreme disparities; ICP's studies were reported on in the English and Spanish-language press. El Diario reported for example that "at Citigroup, Latinos borrowers were 3.92 times more likely to receive the higher interest rate loans than were white borrowers." Soon thereafter, the NYS Attorney General (NYAG) requested information behind the data from four large national banks: Citigroup, JPMorgan Chase, HSBC and Wells Fargo. Less than a week later, the Office of the Comptroller of the Currency and the New York Clearinghouse trade association both sued to block this inquiry.

Now the 2005 data has become available, with a few exceptions, allowing a comparison to the previous year and that degree, identification of trends. Focused initially on the NYAG-targeted banks, a review by Inner City Press / Fair Finance Watch of the New York City data of these four shows that not only did a higher percentage of borrowers overall receive loans over the rate spread, but also the disparities between races grew more stark. The banks have tried to blur the two issues, in strikingly similar cover letters they sent along with the data.

Citigroup's senior vice president Eric Eve, for example, wrote in a March 30 letter to Inner City Press that "Citigroup, as we expect will be the case with most other lenders, will show a greater percentage of loans above the threshold for 2005 than 2004... The issue is the narrowing gap between short- and long-term interest rates, a phenomenon known as the 'flattening yield curve.' This is not an indication that borrowers were treated differently in 2005."

Based on Citigroup's 2004 disparities reported, for example, by El Diario, merely denying that practices in 2005 were different that in 2004 might seem to be a strangely limp defense. In fact, Citigroup's 2005 data show worsening disparities. In the state's poorest and least white county, The Bronx, for example, Citigroup confined 7.39% of its borrowers to higher cost loans over the rate spread -- 35.19 times more frequently than in more affluent and less minority Manhattan, where only 0.21% of Citigroup's borrowers were confined to rate spread loans. While of the five boroughs, The Bronx had the highest percentage of loans from Citigroup over the rate spread, Citigroup's percentage of higher cost loans in each of the four outer boroughs was higher than in more suburban, and less diverse, Westchester.

Citigroup's CEO Charles Price and chairman emeritus Sandy Weill were each questioned by Inner City Press about these patterns on April 18 at the company's annual shareholders' meeting at Carnegie Hall. Mr. Weill referred the question to Mr. Prince, who said that the issues are "too complex to be addressed in this forum," adding that the disparities were clearly not so bad that the Federal Reserve would continue to block Citigroup from large mergers. His reference, repeated throughout the shareholders' meeting, was to the Federal Reserve's recent lifting of its year-old ban on significant expansion, which took place before Citigroup's 2005 mortgage data was released.

Mr. Prince's claim that the Federal Reserve has implicitly condoned the disparities in Citigroup's 2005 mortgage data is dubious. In any event, federal regulatory laxity is one of the problem that allows the disparities, from most grassroots communities' perspectives. In Brooklyn, New York, JPMorgan Chase in 2005 confined 6.64% of its borrowers to higher cost loans over the rate spread -- 9.1 times more frequently than in more affluent and less minority Manhattan, where only 0.73% of JPM Chase's borrowers were confined to rate spread loans. Bank of New York, from which Chase is applying to buy 338 branches in the New York metro area, confined its Bronx borrowers in 2005 to higher cost loans over the rate spread 7.87 times more frequently than in more affluent and less minority Manhattan. Bank of New York's disparity-ratio between borrowers in Brooklyn and Manhattan, at 6.5, was almost as pronounced.

While comprehensive income comparisons will not be possible until the aggregate data is released in September, ICP and its academic support team have designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. At JP Morgan Chase for conventional first-lien loans nationwide, upper income African Americans were confined to higher cost loans over the rate spread 3.34 times more frequently than whites. At Citigroup for conventional first-lien loans nationwide, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup or JPMorgan Chase. Nor at HSBC, where less than half of upper income white borrowers were confined to rate spread loans, versus 61.87% of upper income African Americans and an even higher percentage of Latinos, 62.82%. HSBC, which bought Household International in 2002 just after its predatory lending settlement, has increased the interest rates changed by its former Household units. Over eighty percent of HSBC's home purchase loans to African Americans and Latinos were higher-cost loans over the rate spread, much higher than in 2004 at these ex-Household units.

Back in The Bronx, HSBC was the largest subprime lender of the NYAG Four. HSBC's March 29 letter to Inner City Press accompanying its data is nearly identical to Citigroup's, concluding that "had the yield spread between short term and long term interest rates stayed at the 2004 levels, far fewer longer maturity loans would have exceeded the thresholds in 2005. Consequently, a meaningful comparison of the rates at which loans exceeded the rate spread between 2004 and 2005 cannot be made."

While it may be true that a comparison of the raw percentages of a lender's 2004 and 2005 loans that exceeded the rate spread should also take into account "the effect of monetary policy" (as Citigroup's March 30 letter puts it), there is no reason that the disparities between white and African Americans and Latinos cannot be compared year to year. In this comparison, the NYAG Four were more disparate in 2005 than in 2004.

And the 2005 disparities extended beyond this quartet. Strikingly the largest lender, both prime and subprime, to African Americans in NYC in 2005 was Ameriquest and its affiliates including Argent, which made 6394 loans in NYC in 2005, 4656 (or 72.8%) of them over the rate spread. Ameriquest recently settled charges of predatory lending for $325 million, while leaving its Argent affiliate entirely unreformed. In NYC in 2005 Washington Mutual and its higher-cost affiliate, Long Beach Mortgage, together confined their borrowers in The Bronx to higher-cost loans above this rate spread over 35 times more frequently than whites, worse than their record in 2004. ICP's analysis of other NYC lenders continues. Some lenders are trying to avoid such comparisons by only providing data to the public in unanalyzable form, an evasion it's proved surprisingly difficult to get regulatory guidance on. Evaders for now include New York Community Bank, North Fork / Greenpoint, Lehman Brothers and AIG, down through the NYAG-sued subprime lender Delta Funding Corporation. Each federal regulator has an evader in its midst; none of the agencies has yet acted on this issue.

In New York, the NYAG is now focused on running to become state governor; in any event his inquiry has been blocked for now by the courts. So who will take action, on the disparities in the 2005 data? Given preemption and inertia at the federal bank supervisory agencies, it must be regulation from below. As to JPMorgan Chase, the issues can be raised to the Office of the Comptroller of the Currency, on Chase's proposal to buy 338 branches from the Bank of New York. Inner City Press / Fair Finance Watch filed such comments on April 10, as reported on Associated Press and elsewhere. Now that Citigroup is no longer explicitly blocked from large acquisitions by the Federal Reserve, its pent-up M&A hunger may soon trigger the Community Reinvestment Act lending reviews that accompany merger reviews. Wells Fargo is embroiled in fights about its environmental record, with no reforms in sight. HSBC is buying, but in Mexico for now. Everything is growing, including the disparities in the data. And what of 2006, the loans being made today? More scrutiny and enforcement actions are needed, to cut through the fogs of the banks' excuses.

Inner City Press / Fair Finance Watch has just filed a challenge to JPMorgan Chase's proposal to buy 338 branches from Bank of New York, and to close at least 50 of the branches. announced last week by JPMorgan Chase to acquire 338 branches from the Bank of New York, and to close at least fifty of the branches. ICP's comments demand public hearings on the proposal's potential to raise prices and close at least fifty branches, on JPMorgan Chase's continuing enabling of payday lenders and pawnshops, and on the disparities in JP Morgan Chase's just-released 2005 mortgage data, including disproportionately confining people of color to higher cost loans over the federally-defined rate spread of three percent over Treasury securities on first lien loans, five percent on subordinate liens.

Nationwide, JPMorgan Chase in 2005 for conventional first-lien loans confined African Americans to higher cost loans over the rate spread 2.98 times more frequently than non-Hispanic whites. JPM Chase denied 46.03% of applications from African Americans, versus only 24.46% of applications from non-Hispanic whites, a disparity of 1.88. In Bronx County, the lowest income (and most predominantly minority) county in New York State, JPM Chase in 2005 confined 10.78% of its borrowers to higher cost loans over the rate spread -- 14.77 times more frequently than in more affluent and less minority Manhattan, where only 0.73% of JPM Chase's borrowers were confined to rate spread loans. This is significantly more disparate than JPMorgan Chase's peers. ICP has also submitted sample consumer complaints against JPMorgan Chase, including under the Servicemembers Civil Relief Act.

"Since the Office of the Comptroller of the Currency last year sued to block inquiry into New York lending disparities at Chase and three others, it is imperative that the Comptroller hold public hearings about the stark 2005 lending disparities at JPMorgan Chase," ICP's comments to the OCC state.

--JPMorgan has succeed Bank One as a lender to pawnshops and other fringe financiers like payday lenders. On compliance with the Servicemembers' Civil Relief Act, there are questions of JPMorgan Chase's compliance, as demonstrated by the sample exhibits referred to herein. Additionally, JPMorgan Chase's investment bank continues to securitize for other subprime lenders, including Ameriquest, and is in fact growing in this standardless business. Chase not only engages in, but also enables, predatory lending.

ICP has previously shown that JPM Chase funds and enables payday lenders and pawnshops. JPM Chase has continued funding and enable high cost lenders, including in the communities impacted by Hurricane Katrina. ICP has submitted to the regulators recent Uniform Commercial Code filings such as:

a Feb. 14, 2006 loan from JPM Chase/Bank One to Big Easy Pawn Shop of 4050 Chef Menteur Highway, New Orleans, Louisiana;

a Sept. 22, 2005 loan from JPM Chase "as successor in interest to Bank One" to LaPlace Pawn Shop of 105 West Airline Highway, LaPlace, Louisiana;

a November 2, 2004 loan from JPM Chase/Bank One to Sunset Cash Advance Corp. of Marion, Ohio;

a March 9, 2006 loan from JPM Chase "as successor in interest to Bank One" to JB Pawn, Inc. of Arlington, Texas;

a June 25, 2004 loan from JPM Chase/Bank One to Hilltop Pawn Shop, Inc. of Columbus, Ohio;

an October 26, 2005 continuation of a loan from JPM Chase "as successor in interest to Bank One" to National Pawn and Jewelry Sales, Inc. of Flint, Michigan;

an April 20, 2004 continuation of a loan from JPM Chase "as successor in interest to Bank One" to Great American Sales & Rent to Own, Inc. of Phoenix, Arizona;

an October 4, 2004 loan from JPM Chase/Bank One to Cliff's Check Cashing Stores, Inc. of Carrollton Texas;

a September 19, 2005 filing by JPM Chase concerning Claremont Check Cashing Co, of 510 Claremont Parkway, Bronx, NY;

a March 4, 2004 loan from JPM Chase to Grand at Lincoln Check Cashing Corp. of 153 E. 149th Street, Bronx, NY;

a September 27, 2005 filing by JPM Chase concerning Raythom Check Cashing Co, of 2430 Creston Ave, Bronx, NY;

a September 27, 2005 filing by JPM Chase concerning Money Express Check Cashing Co, of 84 West Fordham Road, Bronx, NY;

an August 18, 2005 filing by JPM Chase concerning P R Check Cashing, Inc. of 2495 Third Avenue, Bronx, NY;

a Bank of New York filing of April 8, 2004 also concerning P R Check Cashing Corp;

a Sept. 16, 2005 filing concerning Freeport Check Cashing Service of Freeport, New York, by both JPM Chase and Bank of New York; and

a December 22, 2004 loan by Bank of New York to Paradise Pawnbrokers, Inc. of 2384 Grand Concourse, The Bronx, New York.

In the first three months of 2006, JP Morgan Chase was among the top ten securitizers of subprime loans, according to the trade publication Inside B&C Lending of April 14, 2006 -- its volume of subprime loans securitized in the quarter jumped to $6.8 billion from just $1.8 billion in the first quarter of 2005. These have included Chase Funding Loan Acquisition Trust, series 2004-AQ1, the loans in which were, according to Fitch (March 13, 2006), "originated by Argent Mortgage Company, LLC and Olympus Mortgage Company." Ameriquest recently settled charges of predatory lending for $325 million. Chase not only engages in, but also enables, predatory lending.

Another sample transaction: on August 9, 2005, much-sued tax refund anticipation lender H&R Block announced that two of its subprime subsidiaries, Option One Mortgage Corp. and Option One Loan Warehouse Corp., have amended their note purchase agreement with JPMorgan Chase Bank N.A.. The amended agreement is to extend the term of Option One Mortgage's off-balance sheet financing arrangement with JPMorgan to fund daily non-prime originations through Oct. 4, according to the filing. Under the arrangement with JPMorgan, non-prime loans originated by Option One Mortgage are sold daily to H&R's Option One Owner Trust 2003-4, which uses the JPMorgan facility to purchase the loans. ICP is requesting public hearings and that on this record, JPMorgan Chase's application be denied.

Military personnel on active duty are being overcharged on high interest loans by JP Morgan Chase, ICP's ongoing investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) has uncovered. The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”

JP Morgan Chase’s practices, and their impact on front-line military personnel, are reflected in the complaint online at www.innercitypress.org/jpmcscra47a.jpg and www.innercitypress.org/jpmcscra47b.jpg Here are other sample consumer complaints, including from the Katrina Zone:

Subject: Chase Home Finance
Date: 12/6/2005 3:03:58 PM Eastern Standard Time
From: [Name withheld]
To: JPMChaseWatch [at] innercitypress.org
My home is located in Hancock County Mississippi.   Hurricane Katrina devastated southern Hancock County causing over 90% of homes and businesses catastrophic damage. My home was one with catastrophic damage.
Shortly after the hurricane I contacted Chase to inquire about payment options. I was told that based on the damage and my federally declared zip code that I would not have to make payments for three months. In December I was to assume payments and the months of September, October and November 2005 would be added to the loan without penalty. On September 29 I received a bill from chase detailing my missed payment as past due. I called and spoke to a representative named Andrew who assured me the bill was automatically computer generated but that the system did not identify my loan as late. I again called in October and November when I received my bills. I was told the same thing. On November 22 I received a letter from chase requesting information about intent to rebuild. Again I called, again I was reassured that my credit would not be affected and I would owe but one payment in December.
Today, December 5, I called to make my scheduled payment and was told that not only do I owe four months of payments but that I would be reported to the credit borough starting January if not paid. I asked to speak to a supervisor who told me that Chase made the decision not to honor full deferrals on November 1, 2005 and anyone I spoke to after that misinformed me.  Between November 1 and November 29 I had no less than six conversations with Chase Representatives; all of them assured me I was fine. The supervisor advised me that payment plans were being set up to bring people current with their mortgages but I do not qualify for such since I am unemployed (Katrina destroyed my place of employment as well). She told me to make my December payment and call back in January. She could offer no assurance that my credit then would not be affected if I am unable to come up with the almost $4000 it would take to make me current.
I have four children, my home is destroyed, my insurance company is not paying for damages, I am unemployed and I feel I have been deliberately misled by Chase.   I was told one thing and at the last moment everything regarding my loan changed.

Subject: Chase Home Finance
Date: 1/11/2006 3:12:40 PM Eastern Standard Time
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org
I wrote in on Dec 5 detailing some of my "Chase Story". Just a quick update. Chase has begun the foreclosure procedures on my home. They are threatening to take what is no longer there.
I have received letters stating that my home has been inspected and appears to be unoccupied; that they will secure the property, change the locks and winterize at my expense if I do not contact them immediately.
First: Since Katrina, I have spoken with a Chase representative at least once a week.
Second: From August 30, I was repeatedly assured my loan was deferred and in good standing, that payments would resume in December. (They neglected to inform me of their change of policy on November 1 despite several phone calls from November 1 to December 1.) Third: I have, again, repeatedly, informed Chase of the structural status of the property. Each time I speak with them I have to tell them that NO the home is not habitable. Fourth: Whomever inspected the property should not be on the payroll. There are no walls! There are no doors! There was no roof until a week ago! What exactly are they going to winterize? 2x4s??
I have managed to hold the foreclosure process off for another month by paying, in addition to my monthly mortgage, a large sum of money. Friends in the area tell me that mine is not the only loan Chase has taken this approach with. They have us. The options are, follow the original payment plan agreed to shortly after the storm and have your credit ruined because they will report you for non payment and/or foreclose on the loan; or do it their way and put out funds that could and should be directed toward rebuilding the very properties they threaten to take. The people in this area have lost everything. Everything. If your good credit is all you have left, holding on to it is going to be paramount to your future. How is it that Chase has the power to take what is left? They did not inform of their change in policy, will answer to no one about this, and in the end will profit from the loss of those most affected by the largest natural disaster in US history.

This too is indicative of the JPM Chase practices on which ICP is timely requesting hearings.

In mid-2005, JP Morgan Chase put out a press release purporting to report on its performance under its Bank One-merger related lending pledge. The press release referred to “loans to families and businesses located primarily in low- and moderate-income communities.” But how can a family or business be “primarily” located in an LMI census tract? The answer is that the pledge include all mortgages made to people at or below the median income - hardly “low and moderate income.” The press release apparently refers to everyone at or below the median income as “lower income.” So much for transparency. It is imperative that this be clarified, in connection with this proposal, along with specifics of the branches to be closed, and the issues above. It is also imperative, since the Office of the Comptroller of the Currency last year sued to block inquiry into New York lending disparities at JPM Chase and three others, that the OCC hold public hearings on the issue of JPM Chase's 2005 lending record. ICP has formally requested such public hearings on JP Morgan Chase's applications, and contends that on the current record, these applications could not legitimately be approved. For or with more information, contact us.

Ten days after the deadline for lenders to provide the 2005 mortgage lending data that Inner City Press / Fair Finance Watch requested on March 1, ICP has released a study of the data, finding worsening disparities by race and ethnicity in the higher-cost lending of some of the nation's largest banks. 2005 is the second year in which the data distinguishes which loans are higher cost, over the federally-defined rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens.

Redlining and continued disproportional denials to people of color are also evidenced by the new 2005 data. Nationwide for conventional, first-lien home purchase loans, Citigroup denied the applications of African Americans 2.69 times more frequently than those of whites, and denied the applications of Latinos 2.02 times more frequently than whites, both disparities worse even than in 2004. Bank of America in 2005 was more disparate to Latinos, denying their applications 2.38 times more frequently than whites, and denying African Americans 2.27 times more frequently than whites.

While comprehensive income comparisons will not be possible until the aggregate data is released in September, ICP / Fair Finance Watch has designed an innovative way to consider income correlations, by calculating upper and lower income tranches based on each lenders own customers. Nationwide at Citigroup for conventional first-lien loans, 37.73% of upper income African Americans were confined to higher cost loans over the rate spread, versus only 11.46% of upper income whites. Income does not explain the disparities at Citigroup. Nor at HSBC, where less than half of upper income white borrowers were confined to rate spread loans, versus 61.87% of upper income African Americans and an even higher percentage of Latinos, 62.82%. HSBC, which bought Household International in 2002 just after its predatory lending settlement, has increased the interest rates changed by its former Household units. Over eighty percent of HSBC's home purchase loans to African Americans and Latinos were higher-cost loans over the rate spread, much higher than in 2004 at these ex-Household units. In Buffalo, HSBC's long-time headquarters, HSBC in 2005 confined African Americans to higher cost rate spread loans 2.15 times more frequently than whites.

Countrywide’s disparity between pricing to African Americans and whites was even worse when considering conventional first lien home purchase loans: Countrywide confined African Americans to rate spread loans 3.53 times more frequently than whites. Countrywide was topped, however, by Milwaukee-based M&I, with a disparity of 3.78, and by Bank of America's MBNA unit, with a disparity of 4.23.

Like ACC / Ameriquest, Citigroup and HSBC, other large subprime lenders also increased the percentage of their loans that were over the rate spread, from 2004 to 2005. At New Century in 2005, fully 215,579 of the company's 268,101 loans were over the rate spread. National City / First Franklin made 177,526 higher cost loans over the rate spread in 2005. Countrywide in 2005 made 190,621 loans over the rate spread. 199,249 of 237,700 loans were over the rate spread at H&R Block, which also in this season offers problematic high-cost tax refund anticipation loans. Further on fringe finance, the study notes that Citigroup helped Dollar Financial to go public, and since continued to lend to and assist this pawn and payday lender.

Another of the top four banks which enables predatory lenders is North Carolina-based Wachovia. Most recently, the U.S. District Court for the Southern District of New York denied a motion by the Federal Reserve Board to get reconsideration of a decision won by Inner City Press, requiring the disclosure of Wachovia's connections with a range of subprime lenders, including payday as well as mortgage lenders. Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211. On the Federal Reserve Board's motion, the Court ruled that:

Inner City Press / Fair Finance Watch is demanding action on all of these issues from the relevant regulatory agencies, including the Office of Thrift Supervision (responsible for AIG and Lehman Brothers Bank, among others), the FDIC (considering giving a bank charter to Wal-Mart), the Office of the Comptroller of the Currency (which since suing to New York last year to block fair lending enforcement has done little to none of its own) and also the Federal Reserve Board.

While the Federal Reserve will wait, as it did last year, until September to release its own study, it has had the 2005 data since March 1, 2006. "Now that a second year of data is out, with worsening disparities at the largest bank in the nation and many of its peers, there is no more time for the Federal Reserve and other regulatory agencies to equivocate," concludes the Inner City Press report. "The time for enforcement actions to combat this discriminatory and predatory lending is now."

On Wal-Mart, the FDIC waited until the business day before its Washington, DC public hearing to make available the Community Reinvestment Act plan -- such as it is -- submitted by Wal-Mart on March 31. The below will be delivered, though not necessarily as expected:

Good morning. Inner City Press / Fair Finance Watch has remained opposed to Wal-Mart's cynically shifting attempts to enter the field of banking since 1999, when Wal-Mart applied to the Office of Thrift Supervision to buy a savings bank. At that time, Wal-Mart admitted it wanted to be a full service bank. Now it aims lower, or claims to. But given its record of destabilizing communities, of mistreating its employees including in sub-contracted sweatshops, and of taking money out of rather than reinvesting in neighborhoods, this application should not be approved. Each of these elements of Wal-Mart's record is detailed in the written submissions of Inner City Press and other opponents. For purposes of today's hearing, Inner City Press wishes to emphasize flaws and unfairness in the FDIC's review.

While initially heartened that the FDIC agreed to hold hearings, Inner City Press asked to testify from the FDIC's office in New York, as the OTS allows. The FDIC said no, stating in a March 17 letter to Inner City Press that "the FDIC does not believe it likely that allowing public participation by videoconferencing with FDIC regional offices would result in our obtaining significant viewpoints that would not be adequately represented by the presentations at the Kansas City, Missouri, and Washington, D.C. locations." This position is contemptuous of the views of grassroots groups not based in Washington (or Kansas City).

More substantively, while Wal-Mart said it would submit a CRA plan -- this in a March 1 letter that the only released later in the month -- the Plan only went up on the FDIC's web site on Friday, April 7, the business day before today's hearing. While ICP had only now begun to review it, page 5 states that Wal-Mart seeks to limit its CRA assessment area to Salt Lake County, Utah. This is laughable, for a corporation of the size and scope of Wal-Mart. Inner City Press formally requests the dismissal and denial of Wal-Mart's application, for the reasons in each of its written submissions (see ICP's ongoing report).

Finally, from our sources low-down in the subprime field, news that California-based subprimer Mandalay Mortgage has laid off half of its employees. In 1999, Mandalay's president, fresh from WMC, was quoted that "For the last 15 years I have built good relationships with people who have built relationships with good people." Yeah, right...

HSBC continues drilling deeper south into subprime. Last week HSBC announced a proposal to pay $65 million to buy a 19.9% stake in what it called a " player in the sub-prime consumer loans market," Financiera Independencia and its affiliate Serfincor. HSBC's press release said that Financiera Independencia "opened its first branch in Toluca, west of Mexico City, and at the end of December 2005 had 120 offices in 69 cities throughout Mexico. Sandy Flockhart, chief executive officer of Grupo Financiero HSBC, said: 'This investment aligns us with one of the country's leading companies in the consumer loans market. It will enable us to pool our experience in developing new products, and better serve our customers in this sector. Strategically it positions both organizations to work together in developing this important economic segment.'

We note that on March 1, 2006, Wal-Mart tersely informed the FDIC (without sending copies to timely commenters such as ICP) that
“Wal-mart will withdraw its original request for a ‘Special Purpose’ designation replacing it with a request for a ‘Wholesale’ designation for CRA purposes. A CRA Plan consistent with this request will be provided.”

But now four weeks after Wal-Mart's letter, and on the FDIC's deadline for written comments, ICP does not have any copy of any CRA Plan from Wal-Mart. (Wal-Mart made a clearly frivolous request for confidential treatment for the above-quoted letter, and is perhaps doing the same for the referenced CRA Plan -- note that such a Community Reinvestment Act plan cannot be withheld under FOIA, and that no other federal bank regulatory agency has withheld CRA Plans, or, as Wal-Mart frivolously requested in this case, even letters projecting the subsequent submission of a CRA Plan).

Perhaps the idea is for Wal-Mart Financial Services' President to suddenly describe a CRA Plan in the twenty-five minutes you have accorded her on April 10 (less than two hours before ICP's five minutes to respond have been scheduled). At a minimum, the period for written comments must be extended. It is also imperative that Wal-Mart provide the referenced CRA Plan as far in advance of April 10 as possible -- or that further public hearings (including by videoconference from the FDIC's other regional offices, see below) be scheduled.The FDIC wrote in its March 17, 2006, letter to ICP that

"the FDIC does not believe it likely that allowing public participation by videoconferencing with FDIC regional offices would result in our obtaining significant viewpoints that would not be adequately represented by the presentations at the Kansas City, Missouri, and Washington, D.C. locations and/or in comments or written testimony."

ICP continues to disagree that all "significant" viewpoints are those held by groups who can afford to travel to either Washington or Kansas City...

Washington medley -- even with Congress out of session, there was action in DC last week. Following the Office of Thrift Supervision's approval of H&R Block's application for a savings bank charter, Inner City Press spoke to OTS director John Reich (and his counsel Robert Russell) in the hallway of the Rayburn House Office Building on March 23. Director Reich defended his agency's H&R Block approval, and asked to be send material on ICP's other beef, the OTS' worsening public information policies. Asked about moves to exempt yet more lenders from reporting Home Mortgage Disclosure Act data, Mr. Reich reeled off statistics about small banks and thrifts being unprofitable, or selling out due to compliance burden. ICP/Fair Finance Watch has followed up with a letter stating among other things that

this letter follows up on our conversation last Thursday in the Rayburn House Office Building. On the first above-captioned matter, we urge you to stay and reconsider the OTS' grant of a thrift charter to H&R Block, just two weeks after the California Attorney General sued H&R Block for its high-rate tax refund anticipation loans (RALs) and just as the New York Attorney General sued H&R Block for $250 million for fraudulent marketing of its Express IRA products. While last Thursday you said that you understand that the suit concerns practices in 2002, we contend that the managerial and financial issues raised by the $250 million governmental lawsuit constitutes a material adverse change within the meaning of the OTS approval's Condition #3 and/or militates for the requested stay and reconsideration. This is particularly the case in light of the following public report, from the National Mortgage News of March 20, 2006 --

"In granting approval to H&R Block to open a savings and loan, the Office of Thrift Supervision did not check with the New York State attorney general about a pending fraud probe of the tax giant, an agency spokesman told National Mortgage News. OTS spokesman Chris Smith said, "We had communication with H&R Block but not the attorney general. The company told us there was an investigation going on." Another agency spokesman added, 'Based on the information provided to us, we were not under the impression that a lawsuit was imminent.'"

This last leaves the public believing that H&R Block led the OTS to believe that no lawsuit was imminent -- and then, contemporaneous with the OTS approval, the $250 million lawsuit was announced. It is important that the OTS stay its approval and address these matters. The article also noted that

"In granting approval to H&R Block, OTS noted that it had received "numerous" comment letters on the application, most of them opposed. 'Commenters expressed concerns about the ability of the mortgage companies' borrowers to receive the best loan product for which they qualify,' the agency said."

ICP's timely comments noted, and ICP raised directly to H&R Block and Option One, the disparities in their 2004 HMDA-LAR, including specifically in Missouri (of obvious CRA relevance in this proceeding, by H&R Block’s own admission and presentation). For the record, fully 71.11% of H&R Block’s (that is, Option One’s and H&R Block Mortgage’s) loans to African Americans in Missouri in 2004 were over the federal defined rate spread (of three percent over comparable Treasury securities on a first lien, five percent on subordinate liens). Over 61% of H&R Block’s loans to Latinos in Missouri in 2004 were over the rate spread. ICP raised that H&R Block’s percentages in other, less CRA-relevant states is substantially lower; H&R Block has still not made any substantive response. Again, It is important that the OTS stay its approval and address these matters.

On another matter we discussed (and on which you invited me to submit further information), attached hereto is the Feb. 10, 2006 letter to ICP by OTS Deputy Director Polakoff, stating that “while OTS often arranges to send ICP copies of applications during the public comment period, we are not required to do so… OTS responded to your FOIA request by letter dated January 27, 2006.”

But that was after the OTS approved the applications. We are troubled, and ask you to reconsider, that the OTS would say it is not required to provide timely requested copies of merger applications prior to approving the mergers. Even the Federal Reserve requires itself to provide copies of applications within three days of a request. The OCC has a policy of extending comment periods if it has not timely provided requested applications. While the OTS remains weaker on CRA than the other agencies -- a matter you've said you'll consider -- there has not even been any public notice that the OTS is weaker than the other agencies on public involvement in pending application -- here, in saying that it alone can refuse to provide a copy of an application until after it is approved.

As also reflected in the attached, OTS’ ombudsman Randy W. Thomas tersely wrote, on February 15, that “The Ombudsman’s Office does not serve as a duplicate channel when members of the public choose to communicate with the Director or other OTS official. I note that Deputy Director Polakoff responded to your concerns on behalf of the Director.”

As noted above, we are deeply unsatisfied by Deputy Director Polakoff's attached response, and ask that it (and the H&R Block approval) be reconsidered.

We'll see. [Editor's note: a paragraph was on February 21, 2008 excised here at the repeated request of an individual who was quoted in the paragraph but later complained that the comments were off-the-record, apparently based on a statement, never answered, "There's no press in the room?" Even recast as a blind (to most) item, it was apparently still of concern to the individual. The paragraph's news purpose having been served, it was ultimately excised for, in the CRA movement, the greater good.]

We can, however, report that long-time House Democrat staff Dean Sager is on the move, to become a lobbying for credit unions. His explanation is children in college. He will advise lobbyists, and not lobby himself at least for one year -- "or more, depending on how the Abramoff lobbying scandal reforms shake out."

Members from NCRC's annual conference marched from the FDIC to in front of the White House, to the chant of "Wal-Bank?" "Hell no!" That same day, Wal-Mart announced it is no longer seeking exemption from CRA. Other issues exist - on to the April 10 hearings.

From the department of Justice-delayed-is-Justice-denied -- it's been reported that even those victims of Ameriquest (but not Argent) Mortgage who are entitled to the attorneys general's restitution wouldn't receive a dime until at earliest 2007, since "the funds won't be distributed until the entire amount is collected in quarterly installments over the course of a year, said Thomas Papageorge, head of consumer protection for the Los Angeles County district attorney's office." (LA Times, March 22).

Meanwhile, in response to Federal Reserve questions, BB&T has disclosed that it has made at least 45 loans to subprime lenders, including to pawn shops, rent to own businesses and even to a "pay day loan provider"...

Subject: Household Finance
Date: 3/23/2006 1:13:00 PM Eastern Standard Time
From: [Name withheld]
To: HSBC-Watch [at] innercitypress.org

I found your website after doing a search on Household finance. HFC has deceived us over and over again and reading your website made me realize I wasn't alone. We refinanced with them in 2003 because they were the only ones who would give us the loan at the time. We would have been better off without it. They charged us $7,800 in points and origination fees but we had no idea that was so high at the time. We learned 5 months ago that we owed $10,000 in deferred interest. We had no idea what deferred interest meant. HFC had changed their billing to reflect this deferred interest when they never had before. I was floored to learn I owed ten grand more than I thought. We now owe more than we borrowed 3 years ago. It took 4 months of calling them and finally going in and confronting them, for them to tell us we have a simple interest loan where interest accrues daily. We were never told this before. We have never made payments on an exact 30 day schedule to avoid more interest. We didn't know we had to. We have been lied to over and over when we call them. My husband became unemployed a couple years ago and we applied for 3 hardships and were denied each time for the same reason. The reason: we need more paper work. We would give them what they wanted, re-file and then it would happen again. Our very first payment was late because we didn't receive the payment booklet in time to make the payment. That right there racked up over $1,000 in deferred interest and we had no idea it was even happening. We currently cannot refinance because we owe more than our house is worth. I am trapped in a mortgage that will only grow as I make payments instead of decrease. I can't see how this can be legal or just.

Wal-Mart's attempts to get into banking, which Inner City Press / Fair Finance Watch began opposing in 1999 (when Wal-Mart tried to buy a savings bank in Oklahoma) through 2005 (when Wal-Mart applied to the FDIC for deposit insurance) will finally be the subject of public hearings, next month in Washington and Kansas City. On March 8, ICP formally asked the FDIC to allow community groups to present testimony through any of the FDIC's regional offices, by video conferencing. Even the Office of Thrift Supervision allows this option -- ICP has participated, from the New York area, in OTS hearings in Dallas (on Greentree / Conseco) and San Francisco (on Citigroup and Washington Mutual, among others). If the FDIC views Wal-Mart's application as important enough to hold a hearing on, shouldn't it do at least what the OTS does, to allow testimony?

"With regard to the first request, the FDIC does not believe it likely that allowing public participation by videoconferencing with FDIC regional offices would result in our obtaining significant viewpoints that would not be adequately represented by the presentations at the Kansas City, Missouri, and Washington, D.C. locations and/or in comments or written testimony."

The FDIC is saying that all "significant" viewpoints are those held by groups who can afford to travel to either Washington or Kansas City -- truly extraordinary. We'll have more on this.

An update on BB&T and its shadowy subprime affiliate, Lendmark: following ICP's comments, the Federal Reserve on March 8 asked BB&T to confirm (or deny) "that BB&T's fair lending compliance program, as described on pages 7 and 8 of BB&T's February 23, 2006 submission, applies to Lendmark Financial Services." To this, BB&T replied that "Lendmark has adopted its own separate fair lending compliance policies." This out of out the norm, particularly for conglomerates the size of BB&T, most of which have corporate-wide compliance policies. This also makes clear that BB&T's Feb. 23 response, on issues ICP raised including the subprime Lendmark, described a fair lending program that doesn't even apply to Lendmark. We'll have more on this, as well.

Last week the subprime lending industry claimed victory over the anti-discrimination law of Montgomery County, Maryland. The law was blocked by Circuit Judge Michael D. Mason, at least until July. The Office of Thrift Supervision issued an opinion exempting federal savings banks from the law's fair lending provisions. Already there is talk about the law being repealed before ever having effect.

Inner City Press / Fair Finance Watch has conducted a study of lenders in Montgomery County in the most recent year for which data is available: 2004. Lehman Brothers Bank, a thrift benefited by the OTS' preemption order, in 2004 confined African Americans in Montgomery County 2.8 times more frequently than whites to higher cost loans over the federally-defined rate spread (of three percent over comparable Treasury securities on first lien loans, five percent on subordinate liens. National City, which also threatened to pull out of the county, through its main subprime unit confined African Americans to higher cost loans over the rate spread 5.3 times more frequently than whites. Other lenders with high volumes of high cost loans to African Americans in Montgomery County include Fremont, Ameriquest / Argent, WaMu's Long Beach, New Century, Countrywide, Citigroup and GE's WMC. Among those with high disparities between African Americans and whites were HSBC Mortgage (at which African Americans were 5.7 times more likely than whites to be confined to rate spread loans); Chase Manhattan Bank (5.6 times more likely); Wells Fargo (3.1 times more likely) and at least two non-banks which ICP is looking into further.

Elsewhere o n fair lending, the Federal Reserve last week approved an application by Whitney to buy 1st National, reciting that Inner City Press / Fair Finance Watch

"alleged, based on 2004 HMDA data, that Whitney Bank and 1st Bank disproportionately denied applications for HMDA-reportable loans by minority applicants in several Metropolitan Statistical Areas... Although the HMDA data might reflect certain disparities in the rates of loan applications, originations, denials, or pricing among members of different racial or ethnic groups in certain local areas, they provide an insufficient basis by themselves on which to conclude whether or not
Whitney Bank or 1st Bank is excluding or imposing higher credit costs on any racial or ethnic group on a prohibited basis."

The "certain disparities" alluded to by the Fed includes these, identified to the Fed by ICP: In the New Orleans MSA in 2004, Whitney National Bank denied the conventional home purchase applications of African Americans fully 3.53 times more frequently than whites. These disparities at Whitney extend into each of its other footprint states: In Mississippi, in the Gulfport - Biloxi MSA, Whitney National Bank in 2004 denied the refinance loan applications of African Americans 5.48 times more frequently than whites. In Alabama, in the Mobile MSA, Whitney National Bank in 2004 denied the conventional home purchase applications of African Americans 3.22 times more frequently than whites. The Fed's approval order also notes that ICP

"expressed concern about Whitney Bank's relationship with a rent-to-own company, which is an unaffiliated, nontraditional provider of financial services. As a general matter, the activities of this type of business are permissible, and such businesses are licensed by the states where they operate. Whitney Bank has implemented a policy for its commercial credit facilities to finance companies or other consumer lenders to fund consumer loans. This policy provides for an evaluation of the practices of such borrowers to identify any potentially predatory lending practices and for ongoing monitoring and management of relationships with such borrowers."

But it's not at all clear in the record what practices or safeguards Whitney has -- and in previous cases, the Fed has tried to withhold such information -- leading to a brief ICP filed last week in the Second Circuit Court of Appeals in the ongoing ICP v. FRB Freedom of Information Act case about Wachovia's enabling of predatory lenders.

Ask and you'll find out -- this week it's the response of North Carolina-based BB&T, submitted by its outside law firm Arnold & Porter. BB&T's subprime finance company Lendmark was a focus of the comments of Inner City Press / Fair Finance Watch. The response admits for example that "in the Charlotte MSA, it is true that 100% of the loans to African Americans borrowers were high cost loans over the rate spread." It continues that ICP's

"Comment Letter also raises a question regarding the fact that BB&T's banks refer mortgage applications to Lendmark. BB&T does refer clients to Lendmark if their request for credit at the bank is denied, but they must follow a strict bank policy on the referral process. This policy lists certain loans types or scenarios where loan applications must not be referred to Lendmark, including real estate loans in amounts under $20,000, lines of credit, loans to applicants with FICO scores below 500, and denied loans due to suspicious loan activity."

This response among other things implies that nearly every applicant denied a loan by BB&T banks who was lent to by Lendmark in 2004 was given a loan over the rate spread (of 3% over comparable Treasury securities on a first lien, 5% on a subordinate lien) -- when even the big subprime lenders made only half of their loans over the rate spread. Those who fall prey to BB&T's referral down policy are ill-served. The response continues on to "note that Lendmark has a 'referral up' policy where every application they receive directly is 'referred up' to the BB&T banks if it meet the Freddie Mac guidelines." But this is not an equal two-way street: the referral up is limited to those fitting GSE criteria, and vaguely to those who apply "directly" to Lendmark. It is unclear if the latter limitation is meant to distinguish between Lendmark's "referral down from BB&T's banks" channel and its other applications, or between these and a broker channel. Despite BB&T's bristling response, there much to inquiry into with this bank -- and we will.

BB&T also claims that the questions even the Federal Reserve has asked other banks about due diligence conducted before lending to pawn shops and payday lenders are "unreasonable and overbroad." But the Fed has asked NC-based Wachovia exactly these questions, and Wachovia answered. BB&T's response is essentially ideological -- not surprising, perhaps, given the bank's CEO's recent fulminations on the AP that his favorite writer is Ayn Rand. Then again, ex-chairman Greenspan was also once a fan…

Also down in North Carolina, last week the payday lenders Check Into Cash, Check 'n Go and First American Cash Advance all signed agreements to stop making loans in the state. Advance America Cash Advance is still appealing the underlying ban. Meanwhile, ACE Cash Express last week put out a press release bragging that that it has "amended its existing bank credit facility to extend the maturity date, increase the facility size …Wells Fargo Bank is the Administrative Agent and Co-Lead Arranger, JPMorgan Chase Bank is the Syndication Agent and Co-Lead Arranger, and KeyBank, Union Bank of California and U.S. Bank are the Co-Documentation Agents. Other lenders in the facility include Amegy Bank, The Bank of Nova Scotia, National City Bank, RZB Finance, LLC, Texas Capital Bank, Allied Irish Banks, p.l.c., LegacyTexas Bank, and North Fork Bank."

The last of these, we've heard, has hired staff with experience at Citigroup / EAB in lending to check cashers and other fringe financial business. And so it goes…

Subject: CitiFinancial
From: [Name withheld]
To: CitiWatch [at] innercitypress.org
Sent: Sun, 26 Feb 2006 09:27:32 +0000 (GMT)
Have just found your site on CitiFinancial. It just the ammunition I need in my fight against this despicable company. They have destroyed our lives since June 2003 when we stepped into their office in Northampton here in England. Reading your page it seems that the methods they use there in America are also practiced here, delaying tactics, hiding documents so you don't see the contents (in our case a fraudulent credit agreement we didn't know existed for over a year), lying, slamming the phone down if you catch them out in a lie and financially ruining us with their selling methods. Keep up the good work. Hopefully one day I will have my retribution from this predator.

Ask and you’ll get an answer. Last week we recently reported on a Community Reinvestment Act scam, in which Gold Bank, which M&I is trying to buy, was given CRA credit by the Federal Reserve for buying bonds which in fact never resulted in a single unit of housing, low- or moderate-income or otherwise. In response, M&I and Gold Bank filed letters specifying at least the names and dates of the bonds, while admitting that no housing was built, and that the CRA credit has never been withdrawn or corrected --

“On July 19, 2001, Gold Bank purchased the City of Lee’s Summit, Missouri, Multifamily Housing Revenue Bonds, Series 2001C, for $4,600,000 (the ‘Missouri Bonds’). On February 28, 2002, Gold Bank purchased the Oklahoma Housing Development Authority, Multifamily Housing Revenue Bonds, 2002 Series C, for $5,000,000 (the ‘Oklahoma Bonds’). On August 15, 2002, Gold Bank purchased the Community Development Authority of the City of Manitowoc, Wisconsin Multifamily Housing Revenue Bonds, 2002 Series C, for $4,600,000 (the ‘Wisconsin Bonds’)… In August and September 2005, in large part because no housing projects were funded with the proceeds of the Bonds, the [IRS] notified Gold Bank that it had made preliminary determinations that the interest which the Issuers previously paid Gold Bank on the Bonds was not excludable from the gross income of Gold Bank for tax purposes. On October 17, 2005, Gold Bank paid approximately $3.5 million to settle the IRS claim…

“Gold Bank purchased the Bonds based upon representations from the Issuers that the proceeds of the Bonds would be used by the Issuers to make loans for low and moderate income multifamily housing projects… Notwithstanding such Issuer representations, the Issuers subsequently did not fund any low and moderate income multifamily housing projects with the proceeds of the Bonds… In fact, prior to the CRA examination, Gold Bank had disclosed to the Kansas City Federal Reserve… the impairment in the value of the Bonds and the reasons for such impairment.”

CRA credit given (and not retracted) for a fraudulent investment which never resulted in a single unit of housing. Is this what we’ve come to?

Confusion about the limited scope of Ameriquest's / ACC Holdings’ predatory lending settlement extends to and/or is caused by those involved in the settlement. In a Feb. 23 conference call, Iowa Attorney General Tom Miller called it a good settlement, while speaking about a report which described the settlement as being by ACC Holdings “and its subsidiaries including Ameriquest” – no mention of the exclusion of ACC’s large Argent Mortgage unit. While the call included a question-and-answer, this question was not able to be asked. The eleven who were allowed to ask questions included trade publications, two reporters who blurred mortgages into payday lender, and a radio reporter who said she couldn’t find the report on the website. When asked why more questions weren’t allowed, the public relations firm listed as the contact said that “there were two other reporters we couldn’t fit in,” then claimed that there were 27 who had wanted to ask questions. But since only 11 were allowed, that would leave 16 out in the cold. When asked to explain, the p.r. flack said haughtily that he wasn’t in charge of the queue. Who was, then? When asked how to ask Iowa AG Miller a question (about the exclusion of Ameriquest), the p.r. flack said AG Miller has his own press people. Quite an operation…

Speaking of payday lending, while it’s certain a good step that last week First Bank of Delaware disclosed the end to its rent-a-charter payday lending (hats off to DCRAC and others), given that the company had only thirteen employees, in context the large banks which lend to and fund payday lenders, like JPM Chase, BofA, National City, Wachovia and others, should be banks that should be scrutinized… Shame about First Bank of Delaware, though: its Alonzo Primus was slated to speak about its business model at CFSA’s ho-down at the La Quinta Resort in Cali, March 1-4…

The issue of ACC Holdings / Ameriquest having doled out Rolling Stones concert tickets to politicians and other involved in the January 2006 predatory lending settlement has spread in mainstream media from Nevada to Massachusetts to Maryland.

And speaking of Maryland, in the spirit of the payday lending footnote above, the subprime lenders saying they’ll pull out of Montgomery County, Maryland, because of the anti-predatory lending law there include Lehman Brothers / Aurora Loan Services, National City Mortgage Corp. / First Franklin Corp. and Bear, Stearns (whose EMC subsidiary is already under investigation by the Federal Trade Commission). A real rogues' gallery...

Most needing of watch-dogging is Citigroup’s export of its subprime lending model. In Europe in 2000 CitiFinancial was only in four countries. It is now in a dozen: the UK, Spain, Ireland, Italy, Poland, Slovakia, Romania, Russia, Finland, Denmark, Norway and Sweden. In the first two, mortgages are offered. Everywhere else, it’s high-cost personal loans, which is CitiFinancial’s unreformed focus in the United States as well…

Our focus this week is on scams of CRA. Kansas City-based Gold Bank, which M&I is trying to buy, got CRA credit from the Federal Reserve for buying a supposed housing bond with a 30% rate of return, which never resulted in a single unit of housing. But the CRA credit was never withdrawn. The Office of Thrift Supervision, meanwhile, has now defended granting merger approvals before the public can even see the (amended) applications. The OTS’ ombudsman refuses to consider complaints if they are also sent to the agency’s director. These are scams of CRA, and they need to be brought to an end.

In this space two weeks ago, we described the OTS’ shenanigans in granting fast approval to General Electric, involving HSBC. Inner City Press / Fair Finance Watch raised its complaint to the OTS director and also ombudsman. Last week two responses arrived. OTS Deputy Director Scott M. Polakoff writes that “while OTS often arranges to send ICP copies of applications during the public comment period, we are not required to do so… OTS responded to your FOIA request by letter dated January 27, 2006.”

That was after the OTS approved the applications. Amazing, that an agency would say it is not required to provide timely requested copies of merger applications prior to approving the mergers. Even the Federal Reserve requires itself to provide copies of applications within three days of a request. The OCC has a policy of extending comment periods if it has not timely provided requested applications. The OTS? It says it is not required to do anything.

Mr.Polakoff goes on to say that the amendment that the OTS allowed, without any opportunity for review by the public, made such review unnecessary: “after the amendment of the application, it was no longer subject to public comment nor was it subject to CRA review.” Sneaky, sneaky. Mr. Polakoff concludes: “We strongly disagree that OTS’ practices lack transparency and credibility… OTS staff is available to discuss applications and procedures with the public… I understand you have communicated by phone, letter, email and in person numerous times with OTS staff about applications.”

That doesn’t make this agency any more transparent, much less credible… It stands along in weakening CRA, and now, in doling out approvals before even allowing the public to see the applications…

And the OTS’ ombudsman Randy W. Thomas then tersely wrote, on February 15, that “The Ombudsman’s Office does not serve as a duplicate channel when members of the public choose to communicate with the Director or other OTS official. I note that Deputy Director Polakoff responded to your concerns on behalf of the Director.”

So what’s the point of having an ombudsman? Wouldn’t it be about some “communicat[ion with an] OTS official” that one would complaint to the Ombudsman? But the underlying communication allows the Ombudsman to avoid any substantive response – or review…Meanwhile, last week ICP received this:

Subject: GE Money Bank Unfair Consumer Practices
From: [Name withheld]
To: GE-Watch [at] innercitypress.org
Sent: Tue, 14 Feb 2006 19:31:04 -0500

I have the nearly exact problem as another consumer who wrote to you on 18 January 2006.[Click here for ICP's ongoing GE Watch.] I had opened an account with GE Money Bank in January 2005 with a deferred interest plan, (CareCredit, for dental treatment for my daughter), and had been paying my account as required, with the understanding that I would this would keep my account interest free until I completed my payments. I was not told that I had 1-year to complete the payments or the deferred interest would be added to my account at that point. I too was paying my account, and thought that by paying the required amount by 1 Feb 2006, I was okay. Just as with the other consumer who had purchased the television, in the body of the bill in small print lower on the page GE Money Bank had indicated that my "Promotional Purchase Due Date" was 02/06/2006, and that the "promotional balance" was $492.00. I noticed this but did not know that this meant that I had to pay that amount by that date to avoid the deferred interest being added to my account, and I paid $100 thinking that I was exceeding the required amount due of $19 for the month. Yesterday, I received a bill indicating that I now owe $643.59 because of the deferred interest of $237.97 being added to my account. I immediately called GE Money Bank, spoke to a customer service rep, who told me that I should have called before the due date and they could have explained to me that the full amount was due to avoid the charges. When I asked to speak with a manager, she put on her supervisor, Brock, who was very rude, told me that I should have read the notices every month in the "Promotional Purchase Summary" on my bill, and I would have known that this would happen. He indicated that there was nothing that they could do, that he could not direct me to anyone else, as he was in charge, that he is a Customer Service Supervisor, and that the Customer Service Manager does not take calls from customers. He told me that I have no recourse except to pay the amount owed now, and that it will not be adjusted in any way….Also, what is the possibility of [action] by consumers against GE Money Bank? They are making a lot of money, unjustly, on unsuspecting consumers who trust them.

Yep… Last week the California AG’s office sued H&R Block about tax refund anticipation loans, leaving H&R Block’s opponents wondering if H&R told the OTS that the case was soon to be filed, and whether the OTS will just haul off and give H&R Block a thrift charter anyway. We’ll see.

The Federal Reserve is the primary supervisor, including for CRA, of Kansas-City based Gold Bank. The FRB’s most recent CRA exam of Gold Bank states that

“Examples of the bank’s investment activity included: $4.6 million multifamily housing revenue bonds issued by a local municipality for the purpose of constructing or rehabilitating multifamily housing projects located in Missouri and targeting 50 percent to low-income and 40 percent to moderate-income purchasers.”

But this investment has given rise to a settlement with the Internal Revenue Service – and ICP has recently been informed that no housing was even constructed or rehabilitated with these funds, for which the FRB has given Gold Bank CRA credit, never retracted or acted on. The rate of return to Gold Bank was suspicious on its face. For the record, see The Bond Buyer of November 19, 2005, GOLD BANC SUBSIDIARY, IRS SETTLE OVER $ 14.2 MILLION HOUSING DEAL”

A Kansas-based subsidiary of Gold Banc Corp. has reached a settlement with the Internal Revenue Service in an examination of a $ 14.2 million multifamily housing bond deal that involved artificial inflation of aggregate bond yields and a diversion of arbitrage to transaction participants.Gold Bank Kansas purchased three groups of Series C bonds issued by the Oklahoma Housing Development Agency, the Manitowoc, Wis., Community Development Authority, and the city of Lee's Summit, Mo., in 2001 and 2002, according to a Form 8-K filed yesterday with the Securities and Exchange Commission.

The bonds were part of larger transactions of $ 145.4 million of Series A and Series B multifamily mortgage revenue bonds sold by each issuer. The Oklahoma agency issued $ 5 million of Series C bonds, while the Manitowoc agency and Lee's Summit each sold $ 4.6 million of Series C bonds. All were privately placed and remain outstanding. Stinson, Mag, & Fizzell PC of Kansas City, Mo., the bank's corporate counsel, acted as bond counsel on all three deals, according to official statements.

The IRS ruled earlier this year that interest paid on the Series C Manitowoc bonds was not deductible for federal tax purposes because it believed that the bonds were part of a series of abusive transactions promoted by the same undisclosed individual. The bonds, which had a 30% interest rate, artificially inflated the aggregate bond yield and thereby diverted arbitrage, which was used to provide fees to the promoter, the promoter's law firm, and other individuals, according to a material event notice posted by the Manitowoc authority in January. At that time, the IRS also indicated it suspected the individual of promoting similar deals to other issuers, the notice said.

IRS officials became concerned several years ago about identical blind-pool multifamily housing transactions and so-called telephone book deals, in which hundreds of potential projects are listed but bonds proceeds are never loaned out. As part of the three Series C bond investments, bank subsidiary Gold Capital Management Inc. received an aggregate payment of $ 450,000 in fees paid out of bond proceeds, the bank said in its 8-K filing….Rick J. Tremblay, the bank's chief financial officer, said he had no comment yesterday.

February 13, 2006 - See, “Group challenges BB&T's proposed takeover of Main Street banks,” by Paul Nowell, AP, February 9, 2006, and below in this Report

Looking more closely into what the attorneys general’s settlement excluded, Inner City Press/Fair Finance Watch has examined the sample state of Connecticut. Ameriquest had its license suspended in the state for a time; Connecticut’s attorney general appeared on ABC Nightline the day of the settlement, talking tough. Well, in Connecticut in 2004, Argent was a larger lender to both African Americans and Latinos than was Ameriquest.

Ameriquest made 286 loans to African Americans, 168 of them over the rate spread.

The government’s numbers reflect that ACC Capital Holdings’ largest lender to people of color in Connecticut was left uncovered and unreformed by the settlement.

Meanwhile, more on the Argent layoffs: ACC refused to confirm to journalists the locations of the cuts, but it’s known that many are in White Plains, where ACC had been growing like gangbusters (or a boiler room operation). ACC bought in the driver Danica Patrick, to quasi-bless (or cover for) the operation. And now the cut-backs. And what’s Danica Patrick’s view? We’ll see.

Inner City Press / Fair Finance Watch (ICP) on February 9 filed a challenge to the application by BB&T to acquire Main Street Banks, Inc. and Main Street Bank, a proposal announced on December 15, 2005. Mortgage (HMDA) data reported for 2004 show that BB&T disproportionately excludes and denies African Americans and Latinos and, when loans are made, disproportionately charge African Americans higher prices, primarily through BB&T’s mostly-subprime subsidiary Lendmark Financial Services, which in 2004 made over 94% of its loans to African Americans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). ICP also documents BB&T enabling fringe financial institutions such as pawn shops (sample listed below).

BB&T’s lead bank Branch Banking & Trust Co. a disparate pattern of mortgage lending, for example in its headquarters MSA of Winston-Salem NC in 2004 having denied the conventional home purchase applications of African Americans 4.18 times more frequently than whites, and denying Latinos 3.2 times more frequently than whites. For home improvement loans, Branch Banking & Trust denied the applications of African Americans 4.31 times more frequently than whites. For refinance loans, Branch Banking & Trust denied the applications of African Americans 2.59 times more frequently than whites, and denied Latinos 2.76 times more frequently than whites.

These disparities at BB&T are pervasive throughout its franchise. In the Durham NC MSA in 2004, 2004 Branch Banking & Trust denied the conventional home purchase applications of African Americans 2.17 times more frequently than whites, and denied Latinos fully six times more frequently than whites.

In the Raleigh-Cary NC MSA in 2004, 2004 Branch Banking & Trust denied the conventional home purchase applications of African Americans 2.34 times more frequently than whites, and denied Latinos 2.86 times more frequently than whites.

In the Washington DC MSA in 2004, 2004 Branch Banking & Trust denied the conventional home purchase applications of African Americans 2.49 times more frequently than whites, and denied Latinos 2.30 times more frequently than whites.

Most pertinently for this application, BB&T’s disparities extend into the Atlanta MSA, where in 2004 Branch Banking & Trust denied the conventional home purchase applications of African Americans 3.33 times more frequently than whites, and denied Latinos 2.36 times more frequently than whites. For home improvement loans, Branch Banking & Trust denied the applications of Latinos 4.49 times more frequently than whites. For refinance loans, Branch Banking & Trust denied the applications of African Americans 2.35 times more frequently than whites, and denied Latinos 2.53 times more frequently than whites.

Branch Banking & Trust also exhibits disparities in the higher cost rate spread loans that it makes. In this Atlanta MSA in 2004, for conventional home purchase loans, Branch Banking & Trust confined African Americans 4.51 times more frequently than whites to higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens), while confining Latinos 4.01 times more frequently than whites to such higher-cost rate spread loans.

For home improvement loans, Branch Banking & Trust confined African Americans 6.30 times more frequently than whites to higher cost rate spread loans.

For refinance loans, Branch Banking & Trust confined African Americans 3.74 times more frequently than whites to higher cost rate spread loans, while confining Latinos fully 6.79 times more frequently than whites to such higher cost loans.

ICP has cumulated BB&T’s six HMDA reporters and has submitted to the Federal Reserve an Excel table showing that this cumulation, referred to as “BB&T,” cannot use income as a defense. In fact, BB&T’s disparity between upper income African Americans and whites is worse that its overall disparity. Lendmark is described by BB&T as offering “subprime consumer and mortgage loans through a network of branches and account executives in Georgia, Tennessee, Virginia, Maryland, Florida, and North Carolina. Additionally, the company provides alternative mortgage and consumer loan products to clients unable to meet BB&T’s normal consumer or mortgage loan guidelines.” See, www.bbandt.com/about/companyinformation/subsidiaries.asp

BB&T supports higher cost fringe financial services, such as pawn shops. See attached sample Uniform Commercial Code filing, documenting for the record BB&T’s relationships with, for example,

--Cumberland Pawn & Loan of Fayetteville, North Carolina (relationship running through at least 2007;

--Jerry’s Pawn Shop of Spring Lake, North Carolina (relationship running through at least 2008); and

--Greer Gun & Pawn Shop, Inc. of Greer, South Carolina (relationship secured by all “inventory,” that is, the contents of the pawn shop.

The Federal Reserve has previously included pawn shops and check cashing as alternative financial services. Based on prior Federal Reserve precedents, ICP’s comments argue that at a minimum the following questions must be asked, and publicly answered:

"For any business relationship (e.g. commercial lender, warehouse lender, purchaser, custodian, etc.) that BB&T or Main Street Bank or any of their affiliates have with any subprime lenders (including providers of non-traditional banking products, such as check cashers, title lenders, pawn shops, or rent-to-own businesses): (i) identify the relevant business parties and (ii) describe the nature of the business relationships... Additionally, to the extent not otherwise covered in your responses to the comments of the Inner City Press Community on the Move & Fair Finance Watch, describe any due diligence that the BB&T or Main Street Bank typically conducts concerning any such subprime lender's compliance with applicable fair lending and consumer protection laws prior to BB&T or Main Street Bank entering into these business relationships, including... (c ) any monitoring or other ongoing procedures BB&T or Main Street Bank has adopted to access compliance with these laws. Provide a copy of such procedures that are used to determine whether third party originators are engaged in, or facilitating, abusive and/or predatory lending practices."

ICP’s comments state: these questions must be answered, and the responses should be made public, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”).

Given this record, ICP is requesting public evidentiary hearings, and that, on the current record, BB&T’s applications be denied. And see, “Group challenges BB&T's proposed takeover of Main Street banks,” by Paul Nowell, Associated Press, February 9, 2006.

February 6, 2006 --Predatory Super Bowl: Ameriquest and the Big Banks in Detroit

The national media’s Super Bowl week in Detroit has given rise to contradictory stories praising and critiquing the city, calling it rebuilt or still in decline. "Some of the people kind of had those written before they got here," said Mayor Kwame Kilpatrick (fresh from cutting back the city’s fire department). Detroit’s population has declined from two million in 1954 to under a million today. It’s been noted that 1000 residents still leave every month, but now there’s a ubiquitous Hard Rock Café. Wanting to look at the lending that’s under this surface, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004. Comparing the rate at which African Americans and whites were confined to higher cost mortgages over the federally-defined rate spread (of 3% over comparable Treasury securities on first lien loans, 5% on subordinate liens), some of the biggest names in finance, including Super Bowl advertisers, are among the most disparate.

At Bank of America, N.A., American Americans were over 26 times more likely to be confined to higher cost loans than whites;

At Citigroup's mortgage company, CitiMortgage Inc., American Americans were over 8.6 times more likely to be confined to higher cost loans than whites;

At Wells Fargo Bank, N.A., American Americans were over 7.2 times more likely to be confined to higher cost loans than whites, and Hispanics were over 2.8 times more likely to be confined to higher cost loans than non-Hispanic whites;

At Chase Manhattan Mortgage Corp., American Americans were over 6.7 times more likely to be confined to higher cost loans than whites, and Hispanics were over 2.9 times more likely to be confined to higher cost loans than non-Hispanic whites;

At Wachovia Mortgage, American Americans were over 3.1 times more likely to be confined to higher cost loans than whites.

At ABN Amro Mortgage Group, American Americans were over 13.2 times more likely to be confined to higher cost loans than whites, and Hispanics were over 7.8 times more likely to be confined to higher cost loans than non-Hispanic whites;

At Fifth Third Mortgage, American Americans were over 10.3 times more likely to be confined to higher cost loans than whites, and Hispanics were over 6.3 times more likely to be confined to higher cost loans than non-Hispanic whites;

At National City Mortgage, American Americans were over 7.9 times more likely to be confined to higher cost loans than whites, and Hispanics were over 4.2 times more likely to be confined to higher cost loans than non-Hispanic whites; and

At The Huntington National Bank, American Americans were over 4.1 times more likely to be confined to higher cost loans than whites, and Hispanics were a whopping 29 times more likely to be confined to higher cost loans than non-Hispanic whites.

Significantly, in light of the $325 million predatory lending settlement announced Jan. 23, major Super Bowl advertiser Ameriquest Mortgage in 2004 made 381 loans to African Americans in the Detroit MSA, 315 of them over the rate spread. Meanwhile, Ameriquest’s affiliate Argent Mortgage, which the state attorneys general left out of the settlement and reforms, made 2673 loans to African Americans in the Detroit MSA in 2004, 2142 of them over the rate spread. So the settlement covers less than 12.5% of ACC Capital Holdings’ loans to African Americans, and an even smaller percentage of ACC’s higher cost loans over the rate spread.

A rare lender with an even higher percentage of rate spread loans in Detroit in 2004 was BBVA’s “Homeowners Loan Corporation,” which in November 2005, after petitioning by Fair Finance Watch, settled predatory lending charges with the Office of the Comptroller of the Currency. Last week, insiders at HLC’s Atlanta headquarters told Inner City Press that Homeowners Loan Corporation has just engaged in wholesale layoffs. Not unlike the Big Three auto firms in Detroit. We’re rooting for Detroit – but the predatory lenders must be rooted out…

Inner City Press / Fair Finance Watch has just filed a challenge to the application by National City Corporation to acquire Forbes First National Corporation’s Pioneer Bank & Trust Company and its eight branches, a proposal announced on December 22, 2005. The 2004 HMDA data show that National City disproportionately excludes and denies African Americans and Latinos and, when loans are made, disproportionately charges African Americans higher prices. ICP also documents National City enabling fringe financial institutions such as pawn shops.

National City Corporation’s cumulated 2004 Home Mortgage Disclosure Act data reveals that nationwide, for home purchase loans, NCC confined African Americans 2.10 times more frequently than whites to higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). Specifically, NCC confined to higher cost rate spread loans 28.66% of African American borrowers, versus only 13.64% of white borrowers.

In the target market of this proposal, the St. Louis MSA, National City confined African Americans 2.66 times more frequently than whites to higher cost loans over the rate spread. Specifically, NCC confined to higher cost rate spread loans 47.57% of African American borrowers, versus only 18.64% of white borrowers. Note that these are disparities after NCC acquired Allegiant in this market.

In its headquarters MSA, Cleveland, National City Corporation in 2004 confined African Americans 2.08 times more frequently than whites to higher cost loans over the rate spread. Specifically, NCC confined to higher cost rate spread loans 26.42% of African American borrowers, versus only 12.68% of white borrowers. Additionally, NCC denied the applications of African Americans 2.85 times more frequently than those of whites. (NCC’s lead bank here, National City Bank, Ohio, had an even worse record in the Cleveland MSA in 2004, having denied the conventional home purchase loan applications of African Americans 2.90 times more frequently whites, and denying Latinos a whopping 4.87 times more frequently than whites).

In the New Orleans MSA in 2004, National City Bank of Indiana confined African Americans 3.7 times more frequently than whites to higher cost loans over the rate spread, and confined Latinos 1.7 times more frequently than whites to higher cost loans over the rate spread.

Statewide in Louisiana in 2004, National City Bank of Indiana confined African Americans 3.72 times more frequently than whites to higher cost loans over the rate spread, and confined Latinos 2.48 times more frequently than whites to higher cost loans over the rate spread.

In the state of Mississippi in 2004, National City Bank of Indiana confined African Americans NINE times more frequently than whites to higher cost loans over the rate spread.

Beyond disparate high-cost lending, now Gulf Coast area residents using settlements to pay off mortgages are being hit with pre-payment penalties, including reportedly by National City. St. Bernard Parish resident Melissa Sass told New Orleans CityBusiness that National City “told me that I could use the money from my insurance to pay on the mortgage but there will be a penalty of 30 percent of the interest they will lose out on. They told me that the only way I can pay off my mortgage in full without the penalty is to wait for that 10-year period."
Given the change to explain, National City’s spokesman said: "We have relatively few loans that have prepayment penalties in the first place. For hurricane victims, we are pretty much waiving prepayment penalties across the board." Note the “pretty much” qualifier; see (and inquire into) “Some New Orleans-area borrowers discover early pay penalty,” New Orleans CityBusiness, November 21, 2005.

In an April 16, 2004 response to ICP comments, National City Bank stated: “National City is also a [REDACTED] senior secured Bank of America agented credit facility for Advance America (HQ in Spartanburg, SC).” Beyond the payday lenders it enables – note that its defenses must now be questioned, given recent developments including in North Carolina, with the deeming of National City-enabled business to be illegal – National City also enables such fringe financiers as pawnshops. Attached hereto are sample Uniform Commercial Code filings. Here are some more:

Debtors: E-Z MONEY PAWN INCORPORATED, Secured Parties: NATIONAL
CITY BANK OF KENTUCKY, INITIAL FILING, 3/1/2005, 2005207217995, KYUCC
Debtors: EVANS COIN & PAWNSHOP, INC, Secured Parties: NATIONAL
CITY BANK; RIVER VALLEY STATE BANK (ASSIGNEE), ASSIGNMENT, 3/4/2005, 2:31PM, 2005040833-5, D634321, MIUCC
Debtors: EXPRESS CASH ADVANCE, INC., Secured Parties: NATIONAL
CITY BANK OF PENNSYLVANIA, INITIAL FILING, 12/12/2005, 09:00AM,
OH00096589292, OHUCC
Debtors: INDY CASH CASH ADVANCE, INC., Secured Parties: NATIONAL
CITY BANK OF INDIANA, SMALL BUSINESS BANKING 700E, CONTINUATION, 10/6/2004, 0400009331991, 2310759, 3/10/2000, INUCC

Debtors: A-1 JEWELRY & PAWN, LLC, Secured Parties: NATIONAL CITY
BANK OF KENTUCKY, INITIAL FILING, 3/10/2004, 2004199324266, KYUCC
Debtors: ACE EAST JEWELRY AND PAWN BROKER INC; ACE EAST JEWELRY AND PAWNBROKER, INC., Secured Parties: NATIONAL CITY BANK; NATIONAL CITY BANK NORTHEAST, AMENDMENT, 5/31/2005, 12:15PM, 20051510384, AM28709, 11/13/1995, OHUCC
Debtors: BUCKEYE CHECK CASHING OF ARIZONA INC; BUCKEYE CHECK
CASHING OF ARIZONA INC, Secured Parties: NATIONAL CITY BANK, SUCCESSOR BY MERGER TO THE PROVIDENT BANK; THE PROVIDENT BANK, CONTINUATION, 9/9/2005, 3:14PM, 20052520414, AP320952, 1/24/2001, OHUCC
Debtors: CLELAND'S GUN SHOP, INC., Secured Parties: NATIONAL
CITY BANK, INITIAL FILING, 5/31/2005, 11:34AM, OH00089890040, OHUCC
Debtors: COUTURE ENTERPRISES, INC.; JAY'S PAWN SHOP, Secured
Parties: NATIONAL CITY COMMERCIAL CAPITAL CORPORATION (ASSIGNEE), ASSIGNMENT, 3/7/2005, 2:05PM, 05000235882, 04000202629, 9/10/2004, NDUCC

Debtors: GOLDFISH PAWN COMPANY, INC., Secured Parties: NATIONAL
CITY BANK OF INDIANA, SMALL BUSINESS BANKING 700E, CONTINUATION, 7/28/2004, 0400007026344, 2302591, 1/27/2000, INUCC

"For any business relationship (e.g. commercial lender, warehouse lender, purchaser, custodian, etc.) that National City or Pioneer or any of their affiliates have with any subprime lenders (including providers of non-traditional banking products, such as check cashers, title lenders, pawn shops, or rent-to-own businesses): (i) identify the relevant business parties and (ii) describe the nature of the business relationships... Additionally, to the extent not otherwise covered in your responses to the comments of the Inner City Press Community on the Move & Fair Finance Watch, describe any due diligence that the National City or Pioneer typically conducts concerning any such subprime lender's compliance with applicable fair lending and consumer protection laws prior to National City or Pioneer entering into these business relationships, including... (c ) any monitoring or other ongoing procedures National City or Pioneer has adopted to access compliance with these laws. Provide a copy of such procedures that are used to determine whether third party originators are engaged in, or facilitating, abusive and/or predatory lending practices."

Given this record, ICP is requesting public evidentiary hearings, and that, on the current record, National City’s applications be denied. Note that these are also safety and soundness issues. See, e.g., New York Times of August 28, 2005, “Good News, Bad News: Your Loan's Approved” --

“First Franklin, a unit of the National City Corporation in Cleveland [is] selling interest-only mortgages that it promotes as a way to ‘reduce monthly payments, reduce debt-to-income ratios and boost loan amounts.' Today, such loans are more than half of its new mortgages, up from 27 percent two years ago. First Franklin offers 100 percent financing that its Web site suggests is 'ideal for first-time and low-cash buyers,' and even 103 percent financing for buyers 'to shrink their out-of-pocket expenses or to maximize purchase power.' John Gellhausen, vice president for consumer finance at National City, who is in charge of the First Franklin unit, said customers using interest-only loans were not necessarily financially troubled. They just have better things to do with their money, he said, than make a down payment on a home or pay the principal on the mortgage. Maybe so. But many First Franklin customers also use interest-only mortgages to push their borrowing and buying power as far as it will go. On average, they borrow 94 percent of the value of their homes, mostly through a second fixed-rate loan for the down payment. Even though they are paying only interest, they devote a whopping 45 percent, on average, of their income to debt service.”

Given this record, ICP is requesting public evidentiary hearings, and that, on the current record, National City’s applications be denied.

General Electric / OTS update: at 5:25 p.m. on Friday, January 27, the OTS faxed to ICP Fair Finance Watch a Freedom of Information Act determination letter about GE’s Belk application. While surely the released documents will arrive in the mail next week, this does not explain how it’s legitimate for the OTS to approve applications before providing any copies to the public. And still no work from the Director or ombudsman, either…

M&I has responded that “based on a review of the NAICS codes in the databases of M&I, Gold Banc, and their respective subsidiaries, Gold Banc identified two (2) loan customers classified as alternative financial service providers, and M&I identified ten (10) loan customers classified as alternative financial service providers.” Nothing is said of the size of the loans / relationships. But M&I would lay off 190 people at Gold Bank…

Subject: predatory lending practices
Date: 1/24/2006 6:56:43 PM Eastern Standard Time
From: [Name withheld]
To: Inner City Press / Fair Finance Watch
Is the definition of predatory loans and the emerging case law therein limited to home loans? I believe that I was misled into a predatory car loan. I have already paid over $10, 000 for a used 2000 Kia Sophia and I still owe $4300. My car is financed by CNAC which is supposed to be a separated and financial leg of JDByrider- however, I have learned that there is no separate entity called CNAC it is one and the same with JDByrider. Car loan payments are made every other week in the amount of $169.97. At the time I took the loan, I needed a car for transportation to work. After spending over five hours at their location attempting to finalize the "deal", I am sure that I was not thinking clearly when they quoted $169.97 as a bi monthly amount, I am sure that I heard it as the monthly payment...this company and franchise have been sued in some states. although they seem to still be under the radar screen here in New York.

Update of January 23, 2006, 8:30 a.m. EST: Both the Los Angeles Times and Washington Post have reported that now comes the Ameriquest settlement, the LA Times reporting that it covers Ameriquest Mortgage, Town & Country and the ex-Bedford, AMC (ACC's smallest unit) – that is, that it does not cover Argent, which is ACC’s largest subprime lending unit. Specifiically, from the 2004 Home Mortgage Disclosure Act data:

We will continue to update this story on Inner City Press' months-ago launched Ameriquest Watch - click here to view.

The Office of Thrift Supervision has hit a new low. On December 17, Inner City Press / Fair Finance Watch filed two letters with the OTS, on applications by General Electric to acquire the credit card accounts and deposits of Belk’s department stores, some of which were held by HSBC Bank Nevada, NA (f/k/a Household International, notorious settler of predatory lending charges). One letter commented on the application, including with detailed consumer complaints submitted to Inner City Press’ GE Watch. The second letter asked for all related GE applications – Belk’s, HSBC and others – under the Freedom of Information Act.

On January 9, Inner City Press got a call from the OTS’ Northeast Region, asking for confirmation that ICP was both commenting on and requesting copies of the applications. Confirmation was given.

On January 17, still not having received any of the requested records, Inner City Press emailed an OTS staffer, asking about the GE-HSBC applications. ICP was told that the GE-HSBC applications had been “very recently” amended, to no longer be Bank Merger Act applications. The following day, ICP was faxed copies of two terse approval letters by the OTS’ Northeast Region: a January 12 approval of GE-Belk, and a January 17 approval of the GE-HSBC applications. Copies were never given to ICP, in response to its month-old FOIA request. Worse, the OTS allowed the amended of the GE-HSBC applications just prior to approving them, so that no one in the public could even conceivably have seen the amended applications and commented on them. Like we said, a new low at the OTS.

As while this all went on, here’s another sample complaint against GE received by ICP:

Subject: Re: GE Money Bank
Date: 1/18/2006 8:40:52 PM Eastern Standard Time
From: [Name withheld]
To: GE-Watch [at] innercitypress.org

If the Bank could nail me, they could get most anyone. I had a deferred payment loan from GE Bank. I had used it to buy a TV. The deadline for the payment was early January, 2006. Just before Christmas, 2005, a bill arrived, demanding the usual $94 payment. I paid it without noticing that in tiny print, well down the bill, was a message saying that the entire balance was due somewhere around the 7th of January. I inadvertently paid the minimum again and after the promotional purchase due date, I received a new bill saying I now owed almost $1,000 in deferred interest. The customer service person, and her boss told me that it was too late to change the result, even if I agreed to pay the remaining principle in full. I wonder how many people miss the deadline and are saddled with big interest payments.

This has now been raised to the OTS Director and the agency’s ombudsman; we’ll see. Also from the mailbag:

Subject: Wells Fargo Financial - Unfair and miss leading Business Practices
Date: 1/18/2006 12:20:37 PM Eastern Standard Time
From: [Name withheld]
To: WellsWatch [at] innercitypress.org

I like to share this with your readers so to warn them of this injustice. I took a loan for $7,500 in July of 2002 for home improvement from Wells Fargo Financial. The loan was broken down to 60 installments of $182.38 totaling to 1,0942.80 from which $3,442.80 was the interests for 60 months. I paid off the loan after I got my first statement in July of 2002. As of December of 2005, I have been receiving statements for the amount of $182.38. I am told that although I paid off $7,500 I paid it towards my payments ahead of time and not paid off the loan. So after 3 years, I still owe Wells Fargo the interest on the original $7,500, which amounts to $3,442.80. I spoke to the Customer service on the phone and he kept saying the same thing and was unwilling to get that I cannot owe any finance charges if I paid of the original loan. I am surprised how a large financial institution will not understand basic mathematics and is playing such tricks on their customers. After having a saving account with this organization for over 20 years, I plan to close my accounts and move on with a more reliable and honest organization with some integrity.

Subject: MERS Inc Fees
Date: 1/18/2006 1:50:21 PM Eastern Standard Time
From: [Name withheld]
To: MERS-Watch [at] innercitypress.org

I have some issues about MERS Ind., and the fees that they charge to borrowers. My husband and I closed on a mortgage refinance a couple of months ago, and found that we were charged a MERS fee of $3.95 at our closing. We asked the closing agent why we were being charged this fee, and how it would benefit us with our loan. The reason for our question is this...We paid a Recording Fee of $100.00. How does MERS INC., benefit the borrower other than charging the borrower a registration fee? We brought this question up to our closing agent, and our closing agent basically told us that ALL loans will be registered under MERS, and that if we wanted to fight her over a $3.95 fee, she wouldn't close our loan. We did not fight her, and we closed on our refinance. Further research on this subject... MERS Inc., has registered over 35 million loans at $3.95 a pop, this fee charged to the borrower. Correct me if I am wrong here. Registered MERS loans do not have to go through any further recording at the county recorder's office, i.e., chain of assignments when a mortgage servicer changes hands. Wouldn't the county recorder's office be losing money, (recording chains of assignments) due to MERS Inc., registered loans? Borrowers get charged to register loans under MERS INC., and still get charged for recording fees.

And who owns the loans is concealed... Until next time, for or with more information, contact us.

This week we turn to the mailbag: HSBC foreclosure threats and JP Morgan Chase on the Gulf Coast. But first some predatory lobbying news from Utah: disclosure forms filed January 10 reveal Ameriquest giving Rolling Stones concert tickets valued (with a dinner) at $200 to nine legislators -- and Utah Attorney General Mark Shurtleff. Since Ameriquest is on record as negotiating a predatory lending settlement with the state attorneys general, might this not be a conflict? And now from the Gulf Coast:

Subject: Chase Home Finance
Date: 1/11/2006 3:12:40 PM Eastern Standard Time
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org

I wrote in on Dec. 5 detailing some of my "Chase Story" (excerpted in the Dec. 12 Inner City Press Gulf Coast Report). Just a quick update. Chase has begun the foreclosure procedures on my home. They are threatening to take what is no longer there.
I have received letters stating that my home has been inspected and appears to be unoccupied; that they will secure the property, change the locks and winterize at my expense if I do not contact them immediately.
First: Since Katrina, I have spoken with a Chase representative at least once a week.
Second: From August 30, I was repeatedly assured my loan was deferred and in good standing, that payments would resume in December. (They neglected to inform me of their change of policy on November 1 despite several phone calls from November 1 to December 1.)
Third: I have, again, repeatedly, informed Chase of the structural status of the property. Each time I speak with them I have to tell them that NO the home is not habitable.
Fourth: Whomever inspected the property should not be on the payroll. There are no walls! There are no doors! There was no roof until a week ago! What exactly are they going to winterize? 2x4s??
I have managed to hold the foreclosure process off for another month by paying, in addition to my monthly mortgage, a large sum of money.
Friends in the area tell me that mine is not the only loan Chase has taken this approach with. They have us. The options are, follow the original payment plan agreed to shortly after the storm and have your credit ruined because they will report you for non payment and/or foreclose on the loan; or do it their way and put out funds that could and should be directed toward rebuilding the very properties they threaten to take. The people in this area have lost everything. Everything. If your good credit is all you have left, holding on to it is going to be paramount to your future. How is it that Chase has the power to take what is left? They did not inform of their change in policy, will answer to no one about this, and in the end will profit from the loss of those most affected by the largest natural disaster in US history.

Subject: Foreclosure By HSBC
Date: 1/12/2006 11:48:54 AM Eastern Standard Time
From: [Name withheld]
To: HSBC-watch [at] innercitypress.org

I am a senior citizen and recently became 4 payments behind on my house payment. I called HSBC on 12-5-05 and was told that they would defer payments until February 2006. All during the time previous and since throughout December they called me every day and harassed me regarding these payments. Sometimes being very nasty and rude. I finally unhooked my phone, and just used my cell. I recently called them 3 days ago and told them that I would be able to make the February pmt and make up the back payments within three months. They told me it was too late and that I would have to send the entire amount due plus past due fees immediately! They refuse to let me speak to a senior loan officer, and after 15 minutes of asking very politely I was transferred to a voice mail that has never returned my call.

For those who follow these things, HSBC has wrangled a series of tax breaks and benefits to move the headquarters of its subprime ex-Household International units fifteen miles north from Prospect Heights, to Mettawa, Illinois…

This week: a new Inner City Press report, some updates (Huntington and Compass), Bear Stearns’ EMC for-the-record and from the mailbag (Ameriquest).

From Appalachia to Wall Street: Behind the Mining Tragedy, UBS and Lehman Brothers

Financial records, from Delaware and Washington DC, show the financing behind International Coal Group, the owner of the Sago Mine where twelve miners have been confirmed dead. Wilbur Ross’ main coal financier, both as a secured lender and then joint book runner on ICG’s public offering in December 2005, was the Swiss-based bank UBS AG. Beginning in 2004, when Ross bought the bankrupt Anker Coal Group, UBS filed security interests in “all assets” of Ashland, Kentucky-based International Coal Group. The lending agreement was twice amended. Then, less than a month before the twelve miners’ death, UBS among with Lehman Brothers managed the initial public offering by which ICG went public, assisted also by General Electric Capital Corporation.

While ICG’s stock price fell more than $4 on January 4, and numerous stock analysts are predicting further scrutiny and turmoil, other analysts are beginning to question, albeit more quietly, what sort of due diligence UBS, and later Lehman Brothers, conducted of ICG and its Sago mine. As the now-promised investigations into the background of the mining tragedy begin, the disclosures made in the Securities and Exchange Commission filings that accompanied ICG’s sale of stock last month are likely to be closely considered, among with the environmental and risk review UBS performed before taking the security interests in ICG it took in 2004. UBS also served as advisor to ICG in connection with its acquisition of Anker Coal Group and the Sago Mine.

In terms of risk, ICG’s November 9,2005 filing with the SEC (Registration No. 333-124393), listing UBS and Lehman Brothers as underwriters, disclosed that “The level of our production is subject to operating conditions and events beyond our control that could disrupt operations and affect production [including] unexpected mine safety accidents, including fires and explosions from methane.”

A question that will be reviewed is whether this explosion was “beyond [the companies’] control.” The Sago Mine was cited for 208 federal safety violations last year, and before UBS and Lehman Brothers signed off on ICG’s initial public offering.

The corporate website of UBS states that “we believe that being transparent about our environmental initiatives is the best way to give our shareholders and other stakeholders a full and complete picture of our efforts in that area… The Investment Bank intends to complete its environmental risk training program in the Americas and Europe in 2005 and then roll out a similar program to the Asia Pacific region.”

UBS’ “Head of Ecology Americas” Anna-Marie Rothkopf signed up for the United Nations Environment Program’s conference in New York in October 2005, at which socially responsible bank practices, particularly with respect to extractive industries like coal mining, were discussed. UBS has in the past resisted becoming a signatory to the environmental “Equator Principles,” stating that it is not involved in project finance.

A November 14, 2005 SEC filing refers to the “Restated Credit Agreement dated as of November 5, 2004 among ICG, LLC, as Borrower, International Coal Group Inc. and UBS Securities LLC, as Arranger, Bookmanager and Syndication Agent, General Electric Capital Corporation, as Documentation Agent, UBS AG, Stamford Branch, as Issuing Bank, Administrative Agent and Collateral Agent, and UBS Loan Finance, LLC, as Swingline Lender.”

These various roles played by UBS, and Lehman Brothers and GE, will be subject to scrutiny as the now-promised investigations into the West Virginia mining disaster proceed.

As Ameriquest tries to finalize a too-narrow settlement with state attorneys general, a sample from this week’s mailbag:

Subject: Ameriquest refinancing
Sent: Thu, 05 Jan 2006 14:54:30 -0500
From: [Name withheld]
To: Ameriquest-Watch [at] innercitypress.org

I refinanced my home in 2004 approximately October with Ameriquest Mortgage through their local office. At the time my job hours had been cut in half and I needed to refi to consolidate debts and needed cash out to hold me until my situation changed.
My loan officer was Kathleen Lewis and she approved me over the phone, within 10 minutes actually, did an on-line appraisal on my property and said she could close in 10 days. I was thrilled. The only thing about the loan that was not perfect was that I was told I would be on a fixed interest loan for two years and then it would become variable. Kathleen said in two years come back to them and they would put me on a fixed 30 yr loan. In the meantime, I was to clear an erroneous item on my credit report in the amount of $3500. This was my mother's nursing home bill by Ensign. After a year of trying to deal with them I decided to forgo that for the moment and get my home refi-ed while the interest rates were even lower.
While looking for lenders I was told by one of the loan officers when she heard my loan was with Ameriquest that they had class action lawsuits going on. I checked to see the reason for the suits and found that everything that happened to these other Ameriquest customers happened to me.
I was told two year fixed changing to variable for the balance of the mortgage, that when I came back to them in two years they would refi AT NO ADDITIONAL CHARGE FOR CLOSING COSTS and get me on a 30 yr fixed. I was told my existing loan would be at 5.6% and when I went to sign papers it was 5.9%. I was told there was no pre-payoff penalty and there was to the tune of $4120. I found out later that the loan was for 3 yr fixed not two years, my closing costs were astronomical, around $11,000 or more. For instance the notary charge was $250.00.
To top it off, I called them about redoing the loan and they flat out said they don't do my type of loan anymore (manufactured home on my property) and were very rude and at that time they told me there was a penalty for early payoff. I couldn't believe it. I do feel they lied and pushed me through the loan process…

Some other updates: the Federal Reserve has asked Compass about its relations with subprime lenders, payday lenders and other “alternative financial services providers,” based on ICP’s comment. Compass’ response includes this enigma:

“Mortgage Financial Services, a division of Compass Bank, has a referral relationship with an unaffiliated mortgage company for mortgage loan applicants who do not qualify for Compass’ standard mortgage products. Compass has a similar referral relationship with another unaffiliated mortgage company for Home Equity Line of Credit referrals.”

But neither of these subprime partners is named in Compass’ response. Meanwhile, on January 3 Compass Bancshares said it will restate annual earnings for 2002 through 2004, as well as results for the first three quarters of 2005. The holding company for Compass Bank said some of its interest rate swap transactions cannot qualify for hedge accounting due to lack of documentation, and will need to be accounted for in a “long haul'' method. Given Compass’ pending (and challenged) application pending before the Fed, will the comment period be re-opened? We’ll see.

The Fed has asked Huntington how its “fair lending analysis is able to detect possible redlining.” Huntington answered vaguely that it compares performance to “deposit market share.” But redlining is not only related to low loan-to-deposit ratios…

Finally for this week, from the prospectus supplement of Bear Stearns Asset Backed Securities Trust, Series 2005-4, LEGAL AND REGULATORY MATTERS:

“EMC Mortgage Corporation, a wholly-owned subsidiary of The Bear Stearns Companies Inc. and an affiliate of the Depositor and the underwriter, has received a civil investigative demand (CID), from the Federal Trade Commission (FTC), seeking documents and data relating to EMC Mortgage Corporation's business and servicing practices. The CID was issued pursuant to a December 8, 2005 resolution of the FTC authorizing non-public investigations of various unnamed subprime lenders, loan servicers and loan brokers to determine whether there have been violations of certain consumer protections laws. EMC Mortgage Corporation is cooperating with the FTC's inquiry.”

Inner City Press & Fair Finance Watch have filed comments on the convoluted Sovereign – Santander – Independence proposal, summarized below. But first this fair lending news:

While various news services reported Bear Stearns SEC filings in the week before New Years disclosing that its subprime subsidiary EMC has received a subpoena from the Federal Trade Commission, few followed up to describe what EMC does, or what other companies may have received subpoenas. Citigroup was asked; CitiFinancial’s spokesman Rob Julavitz issued a “no comment.” As to EMC, this is not even the first time it’s been in trouble in 2005. Earlier in the year, EMC Mortgage Corp. was sanctioned $10,000 for making a false allegation in a motion for stay relief. In re Brown, No. 01 B 37744 (Bankr. N.D. Ill. 01/24/05). In imposing the fine, Judge Jack B. Schmetterer wrote that he hopes the penalty will "deter EMC and other secured creditors from careless record-keeping and giving of false information to their counsel when seeking modification of stay so they can foreclose on homes or seize family autos or other property related to family life…. EMC is a major financial company, and is clearly able to pay a $10,000 sanction. Therefore, should it disobey the court's order and fail to pay within the time fixed, jurisdiction is being retained to add a sanction for such disobedience to cover further legal work necessary to collect the $10,000," the court concluded. EMC is a major subprime servicer, for example on the $583.64 million Bear Stearns SACO I Trust 2005-10 pool.

Inner City Press / Fair Finance Watch (ICP) has just filed two challenges to the proposals by Sovereign Bancorp to sell a 19.8% stake to Banco Santander Central Hispano for $2.4 billion and to acquire for $3.6 billion Independence Community Bank Corp. based in New York. The 2004 HMDA data show that in the New York City Metropolitan Statistical Area, Sovereign Bank denied the conventional home purchase loan applications of African Americans 5.85 times more frequently than whites, and denied the applications of Latinos 2.54 times more frequently than whites. For conventional home purchase loans secured by first liens, Sovereign Bank confined Latinos 3.87 times more frequently than whites to higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens).

ICP’s comments also raise material questions that the regulators must consider exist as to Banco Santander’s and its subsidiaries’ compliance with anti-money laundering laws (see, e.g., the U.S. Senate’s July 2004 report, www.senate.gov/~govt-aff/_files/071504miniorityreport_moneylaundering.pdf 55-56), and concerning Sovereign Bank’s documentable support of fringe finance: for example, Century Pawnbrokers of Asbury Park, NJ, Cash Advance of Carson City, Nevada, and various check cashers and money service business, including in New York and by “Network Capital Alliance, a division of Sovereign Bank” (see below). Here are disparities in Sovereign Bank’s lending in 2004:

In the Newark, New Jersey MSA in 2004, Sovereign Bank denied the conventional home purchase loan applications of African Americans 3.18 times more frequently than whites, and denied the applications of Latinos 3.51 times more frequently than whites. For conventional home purchase loans secured by first liens, Sovereign Bank confined African Americans 4.02 times more frequently than whites to higher cost rate spread loans, and confined Latinos 4.65 times more frequently than whites to higher cost rate spread loans. This is a market, like New York City, in which Sovereign (and Banco Santander) propose to acquire Independence Savings Bank.

In the Philadelphia MSA in 2004, Sovereign Bank denied the conventional home purchase loans of African Americans 2.78 times more frequently than whites, and denied the applications of Latinos 3.56 times more frequently than whites. For refinance loans, Sovereign Bank denied the applications of African Americans 2.57 times more frequently than whites, and denied the applications of Latinos a whopping 4.73 times more frequently than whites. For refinance loans secured by first liens, Sovereign Bank confined African Americans 4.08 times more frequently than whites to higher cost rate spread loans, and confined Latinos a scandalous 25.5 times more frequently than whites to higher cost rate spread loans.

In the Boston MSA in 2004, Sovereign Bank denied the conventional home purchase loan applications of African Americans 3.23 times more frequently than whites, and denied the applications of Latinos 3.48 times more frequently than whites. For conventional home purchase loans secured by first liens, Sovereign Bank confined Latinos 2.87 times more frequently than whites to higher cost rate spread loans.

In the Providence, RI MSA in 2004, Sovereign Bank denied the conventional home purchase loan applications of African Americans 2.55 times more frequently than whites, and denied the applications of Latinos 2.56 times more frequently than whites. For conventional home purchase loans secured by first liens, Sovereign Bank confined Latinos a whopping 6.78 times more frequently than whites to higher cost rate spread loans.

In the Hartford MSA in 2004, Sovereign Bank denied the conventional home purchase loan applications of African Americans 4.55 times more frequently than whites, and denied the applications of Latinos 2.31 times more frequently than whites.

In the Reading, PA MSA, for refinance loans in 2004, Sovereign Bank denied the applications of African Americans 2.49 times more frequently than whites, and denied the applications of Latinos a whopping 5.07 times more frequently than whites. For home improvement loans, Sovereign Bank denied the applications of African Americans 3.33 times more frequently than whites, and denied the applications of Latinos 3.55 times more frequently than whites.

In the Camden NJ MSA in 2004, for conventional home purchase loans secured by first liens, Sovereign Bank confined African Americans 5.59 times more frequently than whites to higher cost rate spread loans, and confined Latinos a scandalous 7.64 times more frequently than whites to higher cost rate spread loans.

ICP has cumulated the 2004 data, on pricing, of Sovereign Bank, and has found that systemwide, Sovereign Bank in 2004 confined African Americans 3.14 times more frequently than whites to higher cost loans over the federally defined rate spread. Sovereign Bank’s disparity was even higher between upper income African Americans and upper income whites: 7.35. ICP has demanded public hearings and fair housing referrals and enforcement actions, and the denial of these applications.

Inner City has also presented evidence that Sovereign Bank enables fringe finance: Uniform Commercial Code (UCC) filing showing secured loans from Sovereign Bank to Century Pawnbroker, Inc., of Asbury Park, New Jersey, secured by “all inventory” (of the pawnshop, that is). Likewise, a Nevada UCC filing (attached) shows Sovereign support of Cash Advance Systems of Carson City, Nevada, secured by all “accounts receivable” and “inventory.”

Other UCC filings show Sovereign Bank’s support of Staten Island-based 1 Stop Check Cashing Corp.; of Express Check Cashing, Inc.; and of New York-based G&R Check Cashing Corp. and Mount Vernon Money Center Corp. (by “Network Capital Alliance, a division of Sovereign Bank”). This is an issue ICP has raised since last year, see, e.g., <www.fairfinancewatch.org/enforce.html>, <www.investors.com/breakingnews.asp?journalid=22274151&brk=1>. The Federal Reserve has previously included pawn shops and check cashing as alternative financial services and must now ask questions and release the answers thereto, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”).

There are also Santander-related consumer compliance issues. See, e.g., The London Independent of May 26, 2005, “ABBEY FINED POUNDS 800,000 FOR MISHANDLING COMPLAINTS” --

“Abbey received a pounds 800,000 fine from the Financial Services Authority yesterday for mishandling mortgage endowment complaints, its third fine from the City watchdog. Abbey, which was taken over by Spain's Banco Santander Central Hispano… In a damning verdict, Clive Briault, the FSA's director of retail markets, said: 'By putting its own interests ahead of those of its customers with a mortgage endowment complaint, Abbey has singularly failed to treat its customers fairly. Its failings were made more serious as they occurred at a time when there was a high level of awareness within the industry about mortgage endowments and concerns regarding the fair handling of complaints.' The fine is the largest the FSA has handed out to companies mishandling mortgage endowment complaints.” Also for the record, ICP’s comments note the Santander money laundering issues in the U.S. Senate’s July 2004 report, www.senate.gov/~govt-aff/_files/071504miniorityreport_moneylaundering.pdf 55-56 -- for more, see ICP’s Bank Beat report, which will continue following this story.

This week, a secret subprimer: M&I Bank FSB. Inner City Press / Fair Finance Watch has filed comments on the application by M&I Marshall & Ilsley to acquire Gold Bank, focusing on M&I’s subprime unit. M&I’s subsidiaries, particularly but not only M&I Bank FSB, are disparate mortgage lenders. Set forth below are some of the disparities of M&I’s most-prime lenders in Milwaukee, its headquarters MSA. M&I Bank FSB is a largely subprime lender, which reports MSA-specific data in very few of the MSAs in which it does business, even those included in its CRA assessment area / superficial CRA plan. ICP has cumulated the 2004 data, on pricing, of M&I Bank FSB with M&I Mortgage and M&I Marshall & Ilsley Bank, and finds that this cumulation, referred to hereinbelow as “M&I,” confined African Americans 2.47 times more frequently than whites to higher cost loans over the federally defined rate spread (of 3% over comparable Treasury securities on first liens, 5% on subordinate liens). M&I’s disparity was even higher between upper income African Americans and upper income whites: 2.98.

In the Milwaukee MSA in 2004, M&I Marshall & Ilsley Bank denied the conventional home purchase loans of African Americans 4.81 times more frequently than whites. The disparity at M&I Mortgage was scarcely better, at 3.36. For refinance loans, M&I Mortgage denied the applications of Latinos 3.19 times more frequently than whites, and denied African Americans 3.54 times more frequently than whites. The disparities at M&I Marshall & Ilsley Bank were 2.73 for Latinos and 2.33 for African Americans.

In 2004 in the Milwaukee MSA – one of only four MSAs in which M&I Bank FSB reported race/ethnicity-specific data – M&I Bank FSB for refinance loans, first lien, confined 75% of African Americans to higher cost, rate spread loans, versus only 58% of whites. As stated above (and in the attached Excel table), nationwide in 2004 the cumulated M&I confined African Americans 2.47 times more frequently than whites to higher cost loans over the federally defined rate spread.

Note that Gold Bank in 2004 in the Kansas City MSA for conventional home purchase loans denied the applications of African Americans an amazing 15.69 times more frequently than whites, and denied the applications of Latinos 4.9 times more frequently than whites. ICP has also submitted a sample Uniform Commercial Code filing showing Gold Bank enabling pawnshop / fringe finance…

In other subprime news, three days before Christmas, the Office of Thrift Supervision finally granted access to information about lawsuits against tax-refund anticipation lender H&R Block that Inner City Press had requested under the Freedom of Information Act in May 2005. After seven months of secrecy, all that the OTS has released to ICP and the other groups together challenging H&R Block’s application to start a savings bank are the names of cases pending against H&R Block. The company’s analysis of each case is whited-out. The cases, the states of New York, Ohio, Illinois, Maryland, Pennsylvania, Alabama, West Virginia, Tennessee and Texas, include:

Lynn Becker, et al. v. H&R Block, et al., Case No. CV-2004-03-1680 in the Court of Common Pleas, Summit County, Ohio, filed 4/2004;

Lynne A. Carnegie, et al. v. Household International, Inc., H&R Block, Inc., et al. (formerly Joel E. Zawikoski, et al. v. Beneficial National Bank, H&R Block, Inc. Block Financial Corporation, et al.), Case No. 98 C 2178, United States District Court of the Northern District of Illinois, Eastern Division (Carnegie II), filed 4/8/98;

Joyce A. Green, et al. v. H&R Block, Inc., Block Financial Corporation, et al., Case No. 97195023, Circuit Court for Baltimore City, Maryland, filed 7/14/97;

Sandra J. Bastile, et al. v. H&R Block, Inc. et al., April Term 1993 Civil Action no. 3246, Court of Common Pleas, First Judicial District of Pennsylvania, Philadelphia County, filed 4/23/93;

Levon and Gerald Mitchell, et al. v. H&R Block and Ruth R. Wren, Case No. CV-95-2067, in the Circuit Court of Mobile County, Alabama;

Deadra D. Cummins, et al. v. H&R Block, Inc., et al., Coase No. 03-C-134 in the Circuit Court of Kanawha County, West Virginia, filed 1/22/03;

Tamkea Johnson, et al. v. H&R Block, Inc., et al., Case No. 04-2417-II, in the Chancery Court for the State of Tennessee, filed 9/2004;

Lorie J. Marshall, et al. v. H&R Block Tax Services, Inc., et al, Civil Action 2002L000004, in the Circuit Court of Madison County, Illinois, filed 1/18/02;

Ronnie and Nancy Haese, et al., v. H&R Block Inc, et al, Case No. CV96-4213, District Court of Kleberg County, Texas, filed July 20, 1996;

New York City Department of Consumer Affairs litigation, Supreme Court of New York, Index No. 02401201), filed March 2002, amended July 2002 –

Regarding Compass Bank, a letter it submitted on December 23 states, among other things, that while Inner City Press named nine fringe financiers funded by Compass, “in fact, the bank has relationships with only three of the customers cited.” Compass does not state which three, nor any standards it might have to as funding and enabling subprime lenders. Compass’ responses resolves no issues. And see, ”Community group objects to Compass-TexasBanc deal,” MarketWatch, December 12, 2005, by David Weidner.

We must start by noting the passing last week of William Proxmire, the sponsor in the 1970s of both the Community Reinvestment Act and the Home Mortgage Disclosure Act. While most obituaries mentioned his “Golden Fleece” awards for government waste, his effect through CRA is ongoing.

And efforts to enforce (and oppose evasions of) the CRA and HMDA are ongoing. Inner City Press / Fair Finance Watch has just filed comments with the Office of Thrift Supervision opposing applications by General Electric’s GE Money Bank, including to acquire the credit card bank of Charlotte, NC-based department store Belk. From ICP’s comments:

GE has been getting deeper and deeper into higher cost subprime lending without, ICP contends, sufficient regulatory scrutiny. In fact, quite the opposite: GE “disappears” the subprime lending operations it acquires, removing them the scrutiny that comes along with the public reporting of Home Mortgage Disclosure Act (HMDA) data, which now includes pricing information. In June 2004, GE acquired the major subprime lender WMC Mortgage Corp. (Respondent ID 0458600405-7). This is a lender which in 2004 (including the half of the year it was owned by GE) confined over 65% of African Americans and Latino borrowers to higher cost loans over the federally-defined rate spread (of three percentage points over comparable Treasury Securities on first liens, 5% on subordinate liens. To non-Hispanic whites, the percentage was below 53%. This compares unfavorably with GE WMC’s peers, and militates for further scrutiny. But if the past is any guide, GE will try to take this unit beyond any scrutiny by the public, as it did with the previously HMDA-reporting unit(s) it acquired from Conseco. ICP is requesting public hearings, including on this additional specific data of GE’s WMC Mortgage:

In the New York City MD in 2004, GE’s WMC for conventional home purchase loans confined 55% of African Americans to higher cost rate spread loans, compared to 39.5% of whites. For refinance loans (secured by first liens) in this NYC MD, GE’s WMC confined 36.9% of African Americans and 34.7% of Latinos to higher cost rate spread loans, compared to only 22.1% of whites (African American to white disparity 1.67; Latinos to white disparity 1.57%).

In the Charlotte, NC MSA (Belk’s headquarters) in 2004, GE’s WMC for conventional home purchase loans confined 57.9% of African Americans to higher cost rate spread loans, compared to 40.3% of whites. This compares unfavorably with GE WMC’s peers; ICP is requesting public hearings.

-----Original Message-----
Subject: GE Money Bank - Unfair/Predatory Lending Practices
From: [Name withheld but available to OTS on request]
To: GE-Watch [at] innercitypress.org
Sent: Wed, 14 Dec 2005 16:27:53 -0800

...I opened a $14k account with them in March of this year through the Honda Card program at a special promotional rate of 6.9% for the first 24 months and payments of $69 for the first 24 months. My contract also reads, "If you do not make your required Minimum Payment within 1 month after the Payment Due Date, the Delinquency Rate will apply to all existing balances..." I have consistently paid my bill well within these guidelines. I learned today that they changed the due date from the 10th of each month to the 5th back in July and claim to have included a notice in all billings. My statement reads, "If you received no additional notice, your account is not effected". I keep everything and have no additional notice. They also included a new stipulation that your payment is now considered "late" if it is not received by the Payment Due Date. Under these new terms, if you are "late" 2 times your account automatically converts to the Delinquency Rate, which is at 28.9%...a 418% increase of my original rate. I spoke to 2 separate Customer Service Reps and one Supervisor (I have the first names, dates and times I spoke to them) and all claim they can do nothing.

GE’s predatory lending is not limited to the United States. See, e.g., “Office of Fair Trading Delivers Damning Verdict on Store Cards,” Cards International, April 2, 2004. GE is under fire not only for high cost credit cards, but also mortgages. See, e.g., “Mortgage Giants Faces Court Over ‘Unfair’ Loans,” Sunday Express, May 12, 2002:

“A support group set up by an ex-teacher is taking one of the world's largest financial companies to court in a case that could save millions for thousands of mortgage borrowers. The National Association of Mortgage Victims (NAMV) will next month ask a court to set a date to hear test cases against US firm Ocwen and international giant GE Capital... the terms of its loans are unfair. Its mortgage interest rates can be doubled if borrowers are late with payments, for whatever reason. High early redemption penalties are also payable.”

Note that GE continues acquiring consumer finance capability, including higher cost / subprime capability, around the globe, from Central America (BAC) through Turkey (Garanti) to the Philippines (Keppel Bank) – and now China and elsewhere. ICP has also requesting any and all information the OTS has its in its possession or control concerning consumer compliance at GE not only in the United States but also overseas. We’ll see.

Meanwhile HSBC, trying to defend its below-described violations of the Servicemembers' Civil Relief Act to the UK newspaper The Observer, argued that "Household's credit card business had once offered reductions only to those serving in combat zones, but had updated this policy in line with legal changes in 2003." See, “HSBC 'overcharging' US troops,” by Conal Walsh, The Observer (UK), December 18, 2005. But this defense doesn't fly: even prior to the 2003 amendments, the interest rate reduction was required for those on active duty, with no reference to combat zones. So HSBC's mis-speaking, to put it diplomatically....

Finally for this week, speaking of regulation and inside the Beltway, Inner City Press / Fair Finance Watch commented last week to the FDIC, opposing the agency’s proposal to like the OCC preempt state consumer laws. ICP used three examples of problematic FDIC-supervised lenders, all inter-state:

Synovus Mortgage Corp (which in Alabama in 2004, for all HMDA-reported first lien loans, confined African Americans 6.77 times more frequently than whites to higher cost loans over the federally defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens);

RBS’ Citizens Bank(s), and Citizens Mortgage Corp. (which in Pennsylvania in 2004 confined African Americans four times more frequently than whites to higher cost loans over the federally defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens);

Fulton Bank (which also in Pennsylvania in 2004 on lower volume confined African Americans 3.84 times more frequently than whites to higher cost loans over the federally defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens), and regarding which, see Baltimore Sun, November 22, 2005, ”Group challenges Howard bank buyer: Fulton accused of bias against minorities” -- in honor of William Proxmire.

Inner City Press / Fair Finance Watch (ICP) has just filed a challenge to the application by Compass Bancshares, Inc. to acquire TexasBanc Holdings Co. and TexasBank, a $464 million proposal announced on September 19, 2005. ICP's timely comment, filed under the Community Reinvestment Act with the Federal Reserve Bank in Washington, and with the Federal Reserve Bank of Atlanta, is based on mortgage lending disparities at Compass Bank Mortgage lending (HMDA) data reported for 2004 show that Compass Bank disproportionately excludes and denies African Americans and Latinos and, when loans are made, disproportionately charge African Americans higher prices. ICP also documents Compass Bank enabling fringe financial institutions such as pawn shops and check cashers.

Compass Bank, in 2004 in the Houston Metropolitan Statistical Area (MSA), denied the conventional home purchase applications of Latinos 6.53 times more frequently than whites. In terms of pricing disparities, Compass Bank in Houston in 2004 for refinance loans confined African Americans 8.5 times more frequently than whites to higher cost loans over the federally-defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens. In its headquarters MSA of Birmingham Alabama, Compass Bank in 2004 denied the conventional home purchase loan applications of African Americans 2.93 times more frequently than whites, and denied the applications of Latinos 6.81 times more frequently than whites. In the Dallas MSA, Compass Bank in 2004 denied the refinance loan applications of African Americans 3.22 times more frequently than whites.

ICP’s comments include as exhibits a sampling of Uniform Commercial Code filings, documenting Compass Bank’s enabling relationships with among others:

Kingwood Pawn of Kingwood, Texas (relationship continued in July 2005, running through at least 2010);

Big Cash Pawn of Orange Park, Florida (relationship continued in 2004, running through at least 2009);

Quintard Jewelry and Pawn of Anniston, Alabama (Compass Bank has a collateral interest in “products”);

B&K Family Pawn of Oxford, Alabama (relationship continued in 2004, running through at least 2009).

"For any business relationship (e.g. commercial lender, warehouse lender, purchaser, custodian, etc.) that Compass or TexasBank or any of their affiliates have with any subprime lenders (including providers of non-traditional banking products, such as check cashers, title lenders, pawn shops, or rent-to-own businesses): (i) identify the relevant business parties and (ii) describe the nature of the business relationships... Additionally, to the extent not otherwise covered in your responses to the comments of the Inner City Press Community on the Move & Fair Finance Watch, describe any due diligence that the Compass or TexasBank typically conducts concerning any such subprime lender's compliance with applicable fair lending and consumer protection laws prior to Compass or TexasBank entering into these business relationships, including... (c ) any monitoring or other ongoing procedures Compass or TexasBank has adopted to access compliance with these laws. Provide a copy of such procedures that are used to determine whether third party originators are engaged in, or facilitating, abusive and/or predatory lending practices."

These questions must be asked and answered, and the responses should be made public, pursuant to Inner City Press v. Federal Reserve Board, 380 F. Supp. 2d 211, and the subsequent denial of the Federal Reserve’s motion for reconsideration, at 2005 U.S. Dist. LEXIS 23376 and in New York Law Journal of October 21, 2005, “Reconsideration Denied as to Federal Reserve's FOIA Disclosure of Bank Merger Documents”).

Beyond the disparities in Birmingham, Dallas and Houston set forth above, ICP’s ongoing analysis of Compass Bank’s 2004 HMDA data finds similar patterns in other Compass states. For example, in the Phoenix, Arizona MSA for refinance loans in 2004, Compass Bank denied African Americans’ applications 2.73 times more frequently than whites. In the Denver, Colorado MSA, for refinance loans, Compass Bank denied the applications of Latinos 1.94 times more frequently than those of non-Hispanics. And in the Tampa, Florida MSA for refinance loans, Compass Bank denied the applications of Latinos 2.3 times more frequently than those of non-Hispanics. Again, given this record, ICP is requesting public evidentiary hearings, and that, on the current record, Compass Bank’s applications be denied. See also, ”Community group objects to Compass-TexasBanc deal,” by David Weidner, MarketWatch, December 12, 2005.

Military personnel on active duty are being overcharged on high interest loans by some of the largest banks in the United States, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered. Through documents obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses. See, e.g, US soldiers’ families allege loan discrimination by HSBC," by Karl West, The Herald (Glasgow, Scotland), December 5, 2005.

The nation’s largest bank, Citigroup, is described in consumers’ complaints as demanding original copies of initial deployment orders, of refusing to deal by telephone with servicemembers’ immediate relatives, and of reporting adversely to credit agencies. HSBC / Household is described as seeking to narrow SCRA’s interest rate reductions to only those “in a hostile zone,” leaving that term undefined. Other banks most complained-of include JP Morgan Chase, Wells Fargo, MBNA and Bank of America. Regarding these last two, ICP has asked the Federal Reserve to collect and consider the evidence of SCRA violations before ruling on the Bank of America – MBNA merger application.

The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”

The purpose of the SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” Section 502. The above-named banks, however, routinely seek to deny the SCRA protections to servicemembers. Citigroup, for example, beyond deployment orders has demanded original enlistment papers, as reflected in this complaint to Citigroup’s AT&T Universal credit card unit in Jacksonville, Florida, now placed online at www.innercitypress.org/citiscra4.jpg

“We received your letter telling us that you could not process [REDACTED]’s request to reduce the Annual Percentage Rate (APR) under the Soldiers and Sailors Civil Relief Act of 1940. We understand that you need another document to show when exactly she enlisted in the Army. We, her husband and children, regretfully inform you that we do not have access to any of her documents that pertain to her military career. As she is already in Kuwait, there is no way that she can send these documents to you until her return home. She is not expected to return for six months to a year.”

Using prior military service as an excuse to maintain high interest rates despite the SCRA appears to the strategy as other Citibank units as well, as reflected by the complaint to Citibank’s regulator, the Office of the Comptroller of the Currency (OCC), now online at www.innercitypress.org/citiscra4.jpg

“I am writing in regards to a dispute with The Associates credit card company of Citicorp Credit Services, Inc. (USA). The dispute pertains to my eligibility to receive the interest credit from the Sailors’ and Soldiers’ Relief Act (SSCRA) (50 U.S. App. Sec. 526).

“I first contacted The Associates in May of 2002. At that time I was denied enrollment. I was told that because I originally entered the military in 1989, I was ineligible. However, my tour of duty was over in 1993. I opened my account with The Associates in 2000. At that time, I was a civilian and had no intentions of signing back up with the military. Yet, in March of 2002, I entered into the US Army on full-time, active military duty. As the law states, the SSCRA regulates the amount of interest I am to be charged for any credit accounts I opened before entry into military service.

"I have disputed this matter with The Associates to no avail. I have sent them copies of my original orders showing my current enlistment date, as well as a copy of the law. Still I was denied. I was then forced to go to my JAG office on base to seek legal counsel. From there I was directed to the Attorney General’s office in Irving, TX, the headquarters for the aforementioned party. The Attorney General’s office then put me in touch with the legal representatives of the [REDACTED] County, where I received contact information for the OCC Customer Assistance Group.

"The Associates have repeatedly denied my claims based on prior service. Yet, I have found nowhere in the law where it states this as a deciding factor. So I write to you now, to examine the law and enforce the necessary actions. I have enclosed all pertinent documents in regard to this matter. I have been enrolled in a debt consolidation company, and have made payments to The Associates monthly for the last year.”

The attachment, on Department of the Army stationary, reflects Citigroup’s Associates charging 12.99% interest. In April 2005, a mother wrote to the OCC, in a letter now online now online at www.innercitypress.org/citiscra12.jpg

“Enclosed is a copy of my son’s military orders calling him to active duty, a copy of the affidavit designating me as his authorized representative, and a copy of my letter to Citibank, Sioux Falls, SD, dated 8 December, 2004. Citibank has given me all kinds of excuses for not acting on this matter. First they wanted an affidavit specifically addressed to them. They desisted on their request once I explained to them that the military do not have the time and manpower to prepare affidavits in the manner Citibank wanted. Then they told me that my son’s active duty orders were not with the correspondence I had mailed them. Then they said I needed to prepare a document which they were going to mail to me; I have never received such document. Last time I called I was told that they were still investigating!”

…”His unit was deployed to the Middle East. In February 2003 his fiancé and I applied to Citibank to have his finance charges reduced under the Soldier’s and Sailor’s Relief Act of 1940. (Account # [REDACTED]). We have supplied Citibank with several letters of proof of my son’s service (copy of one enclosed) with no satisfaction. We recently received a letter requesting a “Proof of Service Letter” from Citibank. While the people at Citibank that I have spoken with are polite and helpful, nothing has been accomplished. Telephone calls to the customer service number are no help as the group that handles Soldier’s and Sailor’s Act requests are in Jacksonville, FL and can’t be reached by telephone, only by mail. I think the enclosed letter (which Citibank already has) from the Headquarters of II MEF should be sufficient proof of my son’s service and that Citibank’s foot dragging is nothing more than an attempt on their part to make the process so long and drawn out so that we will give up as they do not want to lose the 24.24% interest that is being paid on the account.”

Even when compliance is belatedly obtained from Citigroup, accounts are still turned over to collection agencies, and credit ratings impacted, as reflected in this complaint to the FDIC, placed online at www.innercitypress.org/citiscra5.jpg

“My husband enlisted in the United States Marine Corps during the recent war in Iraq. Upon the advice of his recruiter, I requested relief from our creditors in accordance with the Soldiers’ and Sailors’ Civil Relief Act of 1940. Citibank finally responded and complied with the Act. However, they ALSO have turned this account over to TWO COLLECTION AGENCIES (copy of letter enclosed).

“I am filing a complaint against Citibank because they are ruining our credit rating by ignoring my requests regarding relief and selling this account to collection agencies.”

The attached notice – even the name of the collection agency has been redacted by the Office of the Comptroller of the Currency – reflects a balance of $1,937.13. It begins: “This is to advise you that Citibank (South Dakota) Na (P) has transferred your delinquent account to our office for pre-legal collection.”

HSBC’s subprime consumer finance units, operating under names including Household, HFC, Beneficial and Orchard Bank, also stretch to find excuses to maintain high interest rates contrary to the SCRA, as reflected by this sample complaint now online at www.innercitypress.org/hsbcscra15a.jpg and www.innercitypress.org/hsbcscra15b.jpg

“My husband reenlisted into the US Navy on 12/[ ]/02. I have placed all of our pre-existing financial obligations under the Sailors and Soldiers Civil Relief Act which sets the maximum finance charge of 6% on all of our debts. Every one of our creditors have placed our accounts under this Act and lowered our interest rate, except for Household Bank. Household Bank told me that my husband’s reenlistment was only a ‘formality’ and that they are not going to honor the Act or my request to have our account placed at 6%. They continue to charge us 15.90%.”

Contrary to the above-quoted language of the SCRA (applying to “the period of military service”), HSBC’s Household came up with the novel argument, reflected in the complaint now online at www.innercitypress.org/hsbcscra18.jpg that the interest rate must only be reduced if the soldier is in a “hostile zone” –

“All phone calls and faxes from 2-26-2004 have been ignored, misplaced and denied by Household Credit Services. One customer service rep stated that Buper orders could not be used in accordance to the SSCRA and unless the ‘soldier was in a hostile zone, the lowering of the APR would not be enforced.’”

Even to those in “hostile zones,” HSBC sends bill collection notices over the Internet, as reflected in the May 2005 complaint now online at www.innercitypress.org/hsbcscra22.jpg

“I am currently deployed for operation Iraqi freedom serving FOB [REDACTED]. I am having a problem with one of my creditors and am requesting assistance. I was mobilized on October 16, 2004 and have since paid off an account with Household Bank / Orchard Bank (same company) I had 2 accounts with them. I have sent in my TCS orders, my mobilization orders, a letter from my commander, my promotion orders to 1LT, and a personal memo from my explaining my situation and specific requests according to the SSCRA. Since then, I have sent this information 4 times to the company and they continue to harass me via internet for payment. They tell me that I owe $30 and form October they have charged me an inflated interest rate and given me late fees. They actually owe me money from the 2 accounts since they had not ever reduced my interest rates nor stopped the fees. I do not have regular phone lines however I have a DNVT line [REDACTED] or via email…. Your soldier in arms.”

“On [ ] January 2003, my Army Reserve Unit, the [REDACTED] received notification of mobilization and deployment to the Persian Gulf area. Within days I received my individual mobilization order, which specifically stated I was mobilized in accordance with Title 10, a Presidential call up, in support of Operation Enduring Freedom. I contacted Wells Fargo whom I had 2 home equity accounts with, and advised of my mobilization and the fact that I was eligible to receive a reduced interest rate of 6% on my two outstanding home equity accounts per the Soldiers and Sailors Civil Relief Act of 194[0]… In mid July 2003 I returned to my residence from the Persian Gulf at which time I learned from my wife that Wells Fargo never reduced our interest rate to 6% as is required by Federal law…”

“I am writing you from Baghdad, Iraq asking, once again, for Bank One to drop my interest rate on these three cards to 6%. I have phoned in and spoken with your customer service on two previous occasions, once in May 2004 when my deployment began, and again in September 2004, before I actually deployed to Iraq. Both times I was instructed by the customer service that because the three accounts in question were for Overdraft Protection, they did not qualify under the Soldiers and Sailors Relief Act. This makes no sense to me, considering the accounts are clearly operated like a credit card. I have used these accounts to complete balance transfers, operate as a Visa credit card, and for overdraft protection. It is clear that even though the account functions as a credit card, Bank One is using the technicality of it being classified as an Overdraft Protection to ensure that soldiers like me cannot benefit from the Soldiers and Sailors Relief Act on these type of accounts. I am asking you to please reconsider. The following three accounts in question are as follows:

…In November 2004 my wife, pregnant with twins, had a miscarriage due to increased stress from the deployment and current financial burdens. She has also had to sell my car to help meet current financial responsibilities. Right now, in Baghdad, I am responsible for the well being of 117 soldiers. Everyday we are facing multiple threats every time we leave the gate. In 60 days my soldiers and I have been hit by 31 roadside bombs. I, personally, do not have the time to get involved, nor do I need to be worrying about the bills back home.”

The purpose of the Servicemembers’ Civil Relief Act is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” 50 USCS Appendix Section 502. Given the lack of compliance with the SCRA by the above-named largest banks and bank holding companies, Inner City Press / Fair Finance Watch has formally petitioned for action from both the Office of the Comptroller of the Currency and the Federal Reserve, including by submitted copies of complaints of SCRA violations by Bank of America and MBNA, and demanding that they be pursued prior to any ruling other than denial on Bank of America’s application to acquire MBNA. ICP will be pursuing these issues further.

Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens. Some interim results, one lender per state (and more in New Orleans);

In Mississippi, Citigroup’s CitiMortgage was 5.4 times more likely to confine African Americans to higher cost rates spread loans than whites.

In Alabama, Synovus Mortgage Corporation was 6.8 times more likely to confine African Americans to higher cost rates spread loans than whites.

In Louisiana, Union Planters Bank (now owned by Regions) was 5.2 times more likely to confine African Americans to higher cost rates spread loans than whites.

And (a trifecta), in the New Orleans Metropolitan Statistical Area, AmSouth Bank was 11 times more likely to confine African Americans to higher cost rates spread loans than whites. Chase Manhattan Mortgage Corporation was 5.7 times more likely to confine African Americans to higher cost rates spread loans than whites. And (see below), National City Bank Indiana was 3.7 times more likely to confine African Americans to higher cost rates spread loans than whites.

Beyond disparate high-cost lending, now Gulf Coast area residents using settlements to pay off mortgages are being hit with pre-payment penalties. For example at National City, owner of the subprime lender First Franklin: St. Bernard Parish resident Melissa Sass told New Orleans CityBusiness that National City “told me that I could use the money from my insurance to pay on the mortgage but there will be a penalty of 30 percent of the interest they will lose out on. They told me that the only way I can pay off my mortgage in full without the penalty is to wait for that 10-year period."

Given the change to explain, National City’s spokesman said: "We have relatively few loans that have prepayment penalties in the first place. For hurricane victims, we are pretty much waiving prepayment penalties across the board." Note the “pretty much” qualifier. More justification was given by their trade association "These guys are required to pay the bondholders the return on the bond investment," said Bruce Coffman, president of the Louisiana Mortgage Lenders Association. "They couldn't begin to consider not meeting their obligation to the bondholders or they would be out of business. They have to pay the bondholders so they are funding that shortfall out-of-pocket. If you are talking about $100 million worth of bonds, the shortfall that has to be made up by the mortgage company can run into millions of dollars. They can get coldhearted real quick." Yep… Louisiana’s AG office says that residents have paid penalties as high as $14,000 for paying off mortgage loans in the wake of Hurricane Katrina.

Meanwhile, Dutch-based ABN Amro, which claims to eschew high-cost subprime lending in the United States, has bought into a subprime lender in Australia. On November 22, ABN Amro Capital Australia agreed to buy a 39.2% stake in Australian “non-conforming lending specialist” Bluestone Group for an undisclosed sum. Its spokesman JP Kaumeyer bragged that “Bluestone is very well-positioned to benefit from the forecasted ongoing growth in the issuance of nonconforming mortgages as well as the expected growth in equity release mortgages.” Great…

This week, in further review of the 2004 Home Mortgage Disclosure Act data (particularly of those lenders who refused or neglected to provide their data when first requested), Inner City Press / Fair Finance Watch has filed commented on Fulton Financial Corp.’s application to acquire Maryland’s Columbia Bancorp.

Fulton Financial has been expanding by purchases of relatively small banks with, ICP contends, insufficient scrutiny by the Federal Reserve Board, including on Community Reinvestment Act and fair lending issues. ICP has reviewed Fulton Financial’s and its affiliates’ Home Mortgage Disclosure Act- 2004 modified HMDA Loan Application Registers (LARs) and has found, for example, that at Fulton Financial Corporation’s Resource Bank in 2004, in its headquarters Metropolitan Statistical Area (MSA) of Virginia Beach - Norfolk, for conventional home purchase loans, African Americans were confined 4.83 times more frequently than whites to higher cost loans over the defined rate spread of 3% over comparable Treasury securities on first liens, 5% on subordinate liens. For refinance loans, Fulton’s Resource Bank confined African Americans to higher cost, rate spread loans 7.56 times more frequently than whites. By denials, African Americans were denied conventional home purchase loans six times more frequently than whites by Resource Bank. For refinance loans, Fulton’s Resource Bank denied African Americans 12.25 times more frequently than whites in the Virginia Beach - Norfolk MSA.

In the Richmond MSA, for conventional home purchase loans, Fulton Financial Corporation’s Resource Bank in 2004 denied African Americans 4.12 times more frequently than whites.

In the Washington DC MSA, for conventional home purchase loans, Fulton Financial Corporation’s Resource Bank in 2004 confined African Americans to higher cost, rate spread loans 3.91 times more frequently than whites.

Others of Fulton Financial Corporation’s banks blatantly exclude protected class from their lending. Fulton’s People’s Bank of Elkton, in the Wilmington MSA in 2004, made 81 home purchase and refinance loans to whites, and none to African Americans or Latinos. (Its denial rate for African Americans was 100%). Also in the Wilmington MSA, Fulton’s Delaware National Bank denied the refinance applications of African Americans 11.6 times more frequently than whites. Fulton’s Somerset Valley Bank, in the Edison NJ MSA in 2004, made 14 home purchase and refinance loans to whites, and none to African Americans or Latinos.

Fulton Bank, throughout its franchise, denied the applications of African Americans 3.72 times more frequently than whites, and denied Latinos 4.13 times more frequently than whites. In its headquarters MSA of Lancaster, for conventional home purchase loans, Fulton Bank denied the applications of African Americans 8.76 times more frequently than whites. This is an outrageously disparate record. Fulton’s application to acquire Columbia Bancorp should be denied.

Expanding its global subprime lending presence, CitiFinancial is reportedly opening at least one new office every week in India. This according to Citi’s William Rhodes, bragging at the APEC conference last week in South Korea. Rhodes said of India, “’There are pretty significant restrictions with acquisitions, so until that changes it will be quite hard to expand inorganically. But we are looking to grow our organic business quite strongly.’ The group is already opening outlets of CitiFinancial, its non-banking arm, at a rate of one a week, taking advantage of regulations that do not consider the mortgage and personal loan provider a bank. Mr. Rhodes said Citibank's acquisition of South Korea's KorAm bank was proceeding well and would serve as a template for other purchases in the region.” Of course, as reported, Citigroup's Koram has already been charged with predatory lending, by its own employees...

In the news last week were a variety of Ameriquest scandals, County Bank pulling back from payday lending, and a Chicago Tribute series on mortgage fraud, including involving Citigroup. CitiFinancial spokeman Rob Julavitz blames it all on Associates; even the Tribune notes that “the Federal Reserve Board fined Citigroup an additional $70 million--another record payout--for alleged subprime mortgage abuses from 2000 and 2001, after Citigroup took over Associates.” We’ll add that the Fed’s fine was not limited to actions stopping in 2001, and that Citigroup’s spin that it put the issues behind it by stopping making super high cost HOEPA loans was disproved by Citi’s 2004 mortgage data. Continuing with its lack of standards, Citigroup is underwriting $2.57 billion home equity deal by Ameriquest, even as Ameriquest is investigated for predatory lending in over thirty states. For more CitiFinancial analysis, click here (BankRate.com article).

Inner City Press / Fair Finance Watch has drilled deeper yet into the 2004 Home Mortgage Disclosure Act data, for example conducting a review by income as well as race and ethnicity of the data of Toronto Dominion’s Banknorth, which is applying to buy Hudson United (a bank half of whose 2004 mortgage loans were higher cost loans over the rate spread, of 3% over comparable Treasury securities on first liens, 5% on junior liens). As reported by the AP, ICP challenged TD Banknorth’s application on October 18. TD Banknorth’s first and only substantive response stated that ICP’s figures did not agree with the bank’s; it has been made clear that TD Banknorth was downplaying its disparities by for example comparing Latinos to all non-Latinos (including African Americans), etc. ICP has now more precisely analyzed the data, by non-Latinos whites, non-Latino African Americans, and Latinos, and by income tranches within each group.

This new analysis reveals for example that moderate income non-Latino African Americans were denied by TD Banknorth 2.86 times more frequently than moderate income non-Latino whites in 2004; upper income Latinos were denied by TD Banknorth 2.57 times more frequently than upper income non-Latino whites. Furthermore, TD Banknorth’s denial rate for upper income Latinos (14.29%) was higher than its denial for moderate income non-Latino whites (8.94). This is highly problematic.

TD Banknorth’s first and only substantive response to date acknowledged deficiencies, stating:

“Banknorth recognizes that the number of applications of African Americans and Latinos is low and this is of concern to us... since the markets questioned by ICP are fairly new markets that TD Banknorth entered through acquisition, it will take some time for us to further penetrate them effectively.” [TD Banknorth’s October 27, 2005 submission at 2, 5].

Question: how long? Why should TD Banknorth be allowed to acquire another (troubled) institution, while these deficiencies / shortfalls in already-entered markets admittedly exists? TD Banknorth’s terse second response (which claims that litigation against Toronto Dominion which goes to managerial resources is somehow not “relevant to the statutory factors” on an application by TD and Banknorth) admits, in its exhibit, that TD Banknorth’s self-reported denial rate disparity for Latinos, 2.35, is higher than each and everyone of its self-identified peers’ -- up to three times higher.

TD Banknorth’s deficiencies may be explained by the strategy or preference stated by its CEO at a conference of the BancAnalysts Association of Boston on November 3, 2005:

“Again, kind of like you remember my Boston strategy several years ago. Didn't really want to go to Boston, I really don't want to go to New York City. I'm really happy being in the suburbs.” Fair Disclosure Wire, November 3, 2005.

Question: combining this statement and the disparities now of record, how is this different in kind that the pattern for which Chevy Chase was sued by and settled with the US DOJ for fair lending violations in 1994?

Perhaps most troublingly, given the lack of regulatory approval, TD Banknorth’s CEO stated:

“I sent the top retail person at our company, a woman by the name of Wendy Suehrstedt down to Hudson United. She is going to be the CEO of that company and she is there three days a week now getting involved in running that company.”

Question: how is it permissible for the applicant, without regulatory approval, to be “getting involved in running” the target, prior to regulatory approval, including antitrust regulatory approval?

TD Banknorth’s CEO at this conference also stated: “I'll share with you a comment my friends in Canada said, ‘How come you're not in northern Maine? You know, you've got a void there.’ I said, ‘No, there's not a void. There's just no towns in northern Maine for us to be’” -- the irony of this is that the Maine bank superintendent, the grandly named Lloyd P. LaFountain, III, recently ruled that he only has to consider on this proposal Banknorth’s impacts on Maine and not, as he states ICP has analyzed, “large metropolitan areas” not “located in Maine.” Maybe other large and disparate banks should set up in less urban, less diverse states as a way having their increasing disparities elsewhere go unacted on. This will be raised to the Conference of State Banking Regulators; ICP is also working on other state-level enforcement projects, which will be reported soon in this space. For now, click here for details on not only denial rate disparities but also pricing, by income and race / ethnicity, by Huntington National Bank.

The fair lending news of last week was the enforcement action announced November 4 by the OCC against Laredo National Bank and its the subprime affiliate Homeowners Loan Corporation. When Banco Bilbao Vizcaya Argentaria applied to acquire both companies, Inner City Press / Fair Finance Watch submitted comments, demonstrating disparities at Homeowners Loan Corporation (and reported in the December 14, 2004, American Banker and December 13, 2004 MarketWatch). The regulators in March 2005 approved BBVA’s applications, but the story continued, leading to the OCC’s $14 million fine.

While some may say that the OCC announcement shows that the OCC, having sued to block state attorney general investigations of national banks and its subsidiaries, is finally taking its own enforcement actions, this one was brewing since before the 2004 mortgage data was submitted. ICP in comments to the regulators identified disparities in the 2003 data. BBVA withheld from ICP most of its answers to regulators, and, tellingly, tried to give ICP its 2004 HMDA data in paper form, making further analysis difficult. ICP finally got the information and filed more comments. So the November 4, 2005, enforcement action still leaves the OCC with a glaring deficit in its own investigatory and enforcement actions, now that it claims sole jurisdiction over national banks and their subsidiaries...

As to BBVA / Homeowners Loan Corporation, ICP has now raised the issue to others of BBVA’s regulators, including in Colombia and Spain...

Better late than never? It took the Federal Reserve five weeks to ask Bank of America to retract or justify its September 8 demand that basic fair lending information be withheld. Then BofA took a full two weeks to answer the Fed’s questions. Finally the following disclosures:

“Bank of America indirectly owns 24.9% of the voting common equity of Ownit... In August 2005, Bank of America, N.A. transferred the Ownit residential mortgage loan portfolio purchased during March 2005 to Asset Backed Funding Corporation (‘ABFC’). ABFC is an affiliate of Bank of America Corporation that is a limited purpose corporation that securitizes residential mortgage loans... ABFC securitized these Ownit loans, along with similar loans from another loan originator, in its approximately $1.2 billion ABFC Asset-Backed Certificates, Series 2005-HE2 transaction. Banc of America Securities LLC served as the underwriter in that transaction.... In two separate transactions on March 9 and March 14, 2005 Bank of America N.A. purchased Ownit residential mortgage loans in an aggregate amount of approximately $265 million. These loans were held for the account of Bank of America, N.A. until they became part of the August 2005 securitization described at Item 2.b above. These loans were purchased in a competitive, arms-length process at fair market terms” -- followed by more than half a page blacked out.

Bank of America’s attempt to hide its argument may be understandable -- it is simply not credible that BofA bought “in an arms-length process” subprime loans from a subprime lender of which it owns 24.9% (to fall just below 25%). Similarly, Bank of America still blacks-out its answer about servicing for subprime lenders, and the terms of its dealings with the subprime lenders it now publicly admits it does business with, including: Ameriquest Mortgage Corporation (including “whole loan trading”); Option One, Centex, New Century, Saxon, Metris (the subprime card lender HSBC is trying to acquire), Delta Financial, First Franklin, WMC (subprime lender now owned by GE), Fremont Investment & Loan (rogue subprime lender which claimed it would only give its HMDA data if one signed a confidentiality agreement), Capital One, CIT, WFS -- and Ownit, regarding which BofA black-out the column labeled “ABS/MBS Underwriting,” after elsewhere publicly admitting it performs those functions for Ownit’s loans. ICP is challenging these continued withholdings, and raising the deposit-reduction scam described in the American Banker newspaper of November 3...

When Inner City Press / Fair Finance Watch first expressed opposition to Toronto Dominion Banknorth’s proposal to buy Hudson United Bank, TD Banknorth’s Bill “Ryan told the Star he did not expect the Inner City Press objection to be a problem.” Now in a response to ICP’s October 18 comment, TD Banknorth’s general counsel writes, among other things, that “TD Banknorth recognizes that the number of applications from African Americans and Latinos is low and this is of concern to us.” Well that’s a start. But TD Banknorth goes on: “However, since the markets questioned by ICP are fairly new markets that TD Banknorth entered through acquisition, it will take some time for us to further penetrate them effectively.” Why then should TD Banknorth be allowed to acquire another bank, particularly one that not only has a recent history of money laundering, but which, as reflected by 2004 HMDA data, is essentially a subprime lender? Over 50% of Hudson United 2004 origination to African Americans and Latinos were over the rate spread (of 3% over Treasuries on a first lien, 5% on a subordinate lien). That is to say, Hudson United is, or has become, a subprime lender. In a previous proceeding, Hudson United told ICP and the FRB) that it had a program for offering some subprime loans and selling them to unnamed investors. But the 2004 data, laden with rate spread loans, does not list any purchasers. Overall, what is most striking about TD Banknorth’s response is the degree to which it ignores and sidesteps the issues raised about the ultimate applicant here, Toronto Dominion. The purported response does not even mention, much less address, such issues: not only TD’s settlement for its enabling of Enron, but also the October 5, 2005, article ICP put into the record, “TD Bank being sued in Illinois for US$250M.” ICP has submitted a second comment and reply; developing.

Subject: Chase Horror story
From: [Name withheld]
To: JPMChase-Watch [at] innercitypress.org
Sent: Fri, 28 Oct 2005 14:40:27 -0500

I have found your site and find it interesting that Chase Manhattan Mortgage Company (CMMC) has treated other customers with such disdain. Our story starts in the fall of 2002 after my retirement from the Air Force (the house was purchased in 1999) I was having a hard time finding a new job, and my income had been cut by 2/3rd''s. We contacted Chase to let them know what was going on in October, and to find out what we would need to do for assistance - we were told that until we were 60 days late on payments they could not assist - this was a situation we were trying to avoid for obvious reasons.

             In December 02 I found work in Oklahoma City, and put our house in San Antonio up for sale or rent - we were able to make both payments through April 03 even though the house was sitting vacant. I the mean time we contacted Chase on several occasions letting them know we had moved and that finances were getting worse and unless we sold or rented the house we would have problems soon. After the April payment we could not continue the dual rent/mortgage and let Chase know and again we were told that until the 60 day point we could not receive help, what we were trying to do was save our credit and either refinance or restructure the note, or pay just interest on the house for a few months placing the payments at the end of the note.
             In May the house was rented for $800 per month, but due to work that had to be done we did not receive any monies until July and then it was only a partial payment - we told Chase what had transpired and that if they would work with us we would put all of the rent monies toward the mortgage (it was $100 a month less than the mortgage) and pay the difference if we could work out something with the missed payments. We put this in a written request as directed by Chase; we were turned down the first time because they did not include my current salary it only took a few days.
             We re-requested as we were told since the first request had been closed and a new process had to be opened; they told us to collect the monies from the rent and save it until the request was approved and we did just that - placed the monies back to pay Chase when the request was answered. The second request took from June until August to be denied - it was denied due to us being behind in the mortgage more than 60 days.

             When we contacted them we were told that we needed to re-submit again and continue to save the monies from the rent - again we complied.
             In August we asked the renter is they would like to buy the house - and we would let them take over payments of our VA note (they had VA eligibility). We contacted Chase and told them what we were trying to do - Chase in turn called the renters and told them they would have to pay the past due payments as well as penalties before they could assume the note (almost $10K - 4 months @ $900) - Chase had not told us that would be required nor had they asked us for the past payments since we had a request in with them for assistance. The sale fell through after Chase contacted the renters.
             In September/October we went to the realtor and we had brokered a deal to have the house sold outright for the payoff of the note ($69K on a $79K house). This time Chase called the buyers and told them we were filling bankruptcy and the house would be tied up for years - you might wonder how we know this: When Chase called in October to let us know that our request had been denied for the third time they told my wife they had called the buyers and informed them we were filling bankruptcy (this is not a he said she said - we were by that time recording all our calls from Chase and have the tape to back it up). This caused the sale to fall through and this was the second sale Chase purposefully caused to fall through.

We continued to try working with them until January 2004 - at that time the renters moved out due to the harassment from Chase (they had gone out to inspect the property and force their way in telling the occupants that the police would be called if they were not allowed in at that time) they had called them for payments - this is hearsay because our realtor told us what happened; just a note we at no time saw or spoke to the renters all communication was through the realtor.
With the loss of the renters and with Chase's determination to prevent a sale of the house we filled for bankruptcy on January 12, 2004 - Chase continued to try to collect from us through June 2004 even though the bankruptcy was finalized on 4 April 2004. We would receive certified letters from Chase which we would turn copies over to our attorney for future use. Our lawyer would not file against Chase as he was too small and the house was in Texas not Oklahoma.
In the end we lost the house and had to file bankruptcy over just a few months worth of mortgage payments - even the VA was in disbelief of how Chase was operating but they did not have the authority to force co-operation. The VA approved our request for reworking the loan and Chase would not work with us at all. Yes I can believe any of the items I read about Chase...And this story does not include their credit card, I have on tape where they admit calling me ten minutes apart and disclosing my account information to my brother.

In Washington last week, a vote confirming ambassadors did not, as it turned out, include Ameriquest’s Roland Arnall. His written submissions to the Senate have stated, of the investigations by thirty or more state attorneys general: "The precise timetable is difficult to predict, but we anticipate a final resolution by the end of this year.” We repeat: the mere payment of a fine is not resolution. There’s a need for binding (and monitored) injunctive relief...

Last week Inner City Press / Fair Finance Watch filed timely comments opposing Toronto Dominion / Banknorth’s applications to acquire Hudson United, a bank recent subject to a money laundering cease-and-desist order. See, e.g., “TD Banknorth plan protested; Inner City tries to block acquisition, criticizes treatment of minorities, poor,” by Jerry Harkavy, Associated Press / Canadian Press October 18-19, 2005 and, e.g., Boston Globe, Ottawa Citizen, Montreal Gazette, etc

ICP reviewed TD Banknorth’s data on FFIEC.gov and found, for example, that in the New Haven MSA, for conventional home purchase loans, TD Banknorth denied the applications of African Americans over 13 times more frequently than those of whites, and denied the applications of Latinos five times more frequently than whites. This represents a deterioration from Banknorth’s 2003 record (in New Haven in 2003, Banknorth denied the conventional home purchase loan applications of African Americans 3.76 times more frequently then whites).

In the Boston MSA in 2004, for conventional home purchase loans, TD Banknorth denied the applications of African Americans 6.73 times more frequently than whites. In the Springfield, Massachusetts MSA in 2004, for conventional home purchase loans, TD Banknorth denied the applications of African Americans 3.55 times more frequently than those of whites, and denied the applications of Latinos 1.89 times more frequently than whites.

In the Hartford MSA in 2004, for refinance loans, TD Banknorth denied the applications of African Americans 2.47 times more frequently than those of whites, and denied the applications of Latinos 3.09 times more frequently than whites. TD has stated that it wants to grow in Connecticut -- but its disparate record does not merit it, under the CRA and fair lending laws.

Overall, TD Banknorth denied the applications of Latinos fully 2.35 times more frequently than those of whites -- higher than industry aggregate disparities, in TD Banknorth’s footprint. Additionally, in the conference call announcing this proposal, reference was made to six to eight branches “overlapping” -- hearings are needed on possible branch closings as well as TD Banknorth’s worsening lending disparities.

As noted above, Hudson United has a recent history of money laundering, militating for public evidentiary hearings in this proceeding. Hearings are also needed on adverse issues at Toronto Dominion, including managerial issues. There’s Toronto Dominion’s enabling of Enron’s fraud, regarding which TD has paid a major settlement, impacting its earnings. See, e.g., The Toronto Star of August 26, 2005, “Enron effect takes toll on TD earnings,” by Stuart Laidlaw: “TD blamed a commitment to set aside $300 million to cover potential lawsuits by Enron Corp. shareholders for its third quarter profit falling 27 per cent to $411 million, or 58 cents a share, from $565 million, or 86 cents, a year ago.” See, previously, the Houston Chronicle of December 03, 2003, “THE FALL OF ENRON: Banks added to shareholder suit;” note that evidence submitted to the Senate Permanent Subcommittee on Investigations’ hearings identified Toronto Dominion as actively engaged in illegitimate trades with Enron to disguise loans received by the company, allowing Enron to hide this debt from credit rating agencies and investors, inflating profits substantially.

Inquiry (following FRB precedents) and hearings are also needed on TD Banknorth’s enabling of fringe financiers such as pawn shops -- see, attached, UCC filing between Banknorth and LEWISTON PAWN SHOP, Inc., as simply one example. The FRB should ask its now-standard questions, should make the responses public (in light with ICP v. FRB, 380 F. Supp. 2d 211, including last week’s denial of the FRB’s motion for reconsideration), should hold public hearings and should, on the current record, deny TD Banknorth’s applications.

As reported by the LA Times, at last week’s hearing on the nomination of Roland Arnall to be the United States ambassador to the Netherlands, “Arnall attributed the delays in concluding the settlement to the difficulties of dealing with so many regulators and to the many details involved. But he said ‘the most important aspect’ had been resolved with Ameriquest's decision to set aside $325 million.” We disagree -- the most important aspect would be binding injunctive relief, to cease and desist from what have been Ameriquest’s practices (interestingly described here. Also, reported in last week’s Cleveland Scene: “The FBI began investigating predatory-lending cases involving Argent, according to Dennis Ginty of the Ohio Department of Commerce.” Will this put Arnall on ice?

My daughter has just experienced a repossession of her car by Citibank. Lo and behold, she wasn’t really in default for her car payments, but because of Creditor placed insurance. She had a collision policy in place, but for some reason, Citi decided she didn’t and placed CPI, without notifying her. They admitted that they (oops!) made a mistake, but they still want the balance of the loan (which is now $2000.00 more than the original loan). We went today to retrieve the personal possessions (Citibank sent a letter stating that the repo company would hold the personal items for 30 days after Sept. 19, 2005) only to discover, “they’re gone”…”we donated them”. After badgering the repo man, he gave me a fictitious church charity’s name. I, of course, notified the mission board of that denomination that the repo company was taking their name in vain…. I guess the big question is, when, ooh when will the feds squash these predators??? Or will they??? It just goes on and on…it shifts shape from one type of loan to another and continues…What will it take? I’ve followed the stories on your site, got a few questions answered…like why we never got any response to a request for a statement of account showing how payments were applied… How could they if we requested it in July, and they lost their account records in June??!! At any rate, thanks for being a forum for sharing the info so that other victims of Citi realize that they’re not alone.

This week, some quotes from last week’s decision in the Southern District of New York, denying the Federal Reserve’s request that the FOIA decision (about Wachovia's engagements with subprime lenders) in Inner City Press v. FRB, 380 F. Supp. 2d 211, be reconsidered:

“The Board made absolutely no showing in its summary judgment submissions, however, that the disclosure of data regarding Wachovia’s aggregate exposure and loan outstandings to the [subprime lending] clients listed in Exhibit 3 would cause competitive harm to Wachovia or that the public disclosure of this information would make it difficult for the Board to elicit similar information in the future... The Board points to portions of a document entitled ‘Subprime Lending and Related Activities’ that Wachovia submitted in the public portion of the Merger Application as a ‘glimpse into the conclusory statements [regarding due diligence practices] defendant can expect in future filings’ if merger applicants know such information is to be released to the public. This argument was not made in the Board’s original submission. In any event, without more specific testimony from Wachovia’s representative regarding why Wachovia would not wish its due diligence practices with regard to its subprime lending clients to be made public, it cannot be said that this document represents the limits of what Wachovia would willingly reveal at the Board’s request.”

The scam here is that the Fed is arguing that unless it gets the FOIA decision reconsidered or reversed, it will not be able to get banks to submit information about their practices with regard to subprime lending -- even when banks are applying for mergers that can only be consummated with Federal Reserve approval. Here’s a hint for the Fed: if a bank doesn’t answer your questions, don’t approve their merger application. How about that?

Even more troublingly, the Fed argues that even if subprime connections are public in SEC filings, since a member of the public would have to perform repeated searches of the Edgar system, or have access to for-pay databases, the Fed should be able to withholding information that is elsewhere public. For shame...

We must of course note the U.S. District Court’s decisions in the cases by the OCC and the Clearing House banks -- including Citi and Wells and JPM Chase and HSBC --against the NY Attorney General, to avoid providing the credit score information they say would justify the racial disparities in their lending. Why should the public believe a defense that they go to court to conceal? Whether or not an appeal is taken, and whether or not it’s successful, the public must demand that the OCC bring enforcement action(s) on the disparities, and must separately pursue them, far and wide and ceaseless...

We'll say it again: as predatory lenders go global, so too must advocates. In the past week, Inner City Press / Fair Finance Watch has filed comments with regulators in Turkey and the Philippines opposing bank acquisition proposals by General Electric Consumer Finance. This stealth player, which owns subprime lender WMC in the United States, confines its highest-rate lending to overseas (and to protected classes, particularly Latinos, here in the Americas).

In Manila, ICP has commented GE’s proposal to acquire a controlling stake in Keppel Bank Philippines, reported in the Washington Post of October 3, 2005: “GE Consumer Finance, based in Stamford, will acquire a majority interest in Keppel Bank Philippines for $25.8 million.”

Beyond environmental and other matters, ICP cites the 2004 U.S. mortgage lending data of GE’s subprime / high cost mortgage lender, WMC. The National Mortgage News of April 26, 2004, reported that GE “has agreed to buy WMC Mortgage... the nation's 12th largest subprime funder... According to figures compiled by NMN, WMC originated $8.1 billion last year.” In 2004 to borrowers identified as Hispanic and African-American, over 65% of GE’s WMC’s loans were high cost / “rate spread,” defined by the U.S. Federal Reserve Board as over three percentage points over comparable Treasury Securities on first liens, 5% on subordinate liens. To non-Hispanic whites, the percentage was below 53%. This compares unfavorably with GE WMC’s peers, and is indicative of GE Consumer Finance’s targeting of protected classes for higher than normal interest rate credit.

GE’s predatory lending is not limited to the United States. See, e.g., “Office of Fair Trading Delivers Damning Verdict on Store Cards,” Cards International, April 2, 2004. These are the type of predatory practices that GE has exported to various markets, and now seeks to export to the Philippines and soon China - more on that anon.

Another global move: ICP/Fair Finance Watch has filed comments with the Central Bank of Iraq on HSBC’s proposal to acquire a 70% stake in Dar Es Salaam Investment Bank there. The proposal was commented on publicly by HSBC last week: “’We are very close to concluding an agreement,’ David Hodgkinson, the chief executive officer of HSBC Bank Middle East, told a news conference.. Hodgkinson later told Reuters that HSBC was looking to buy 70%, not just the 51% previously mentioned... the Iraqi central bank said it has received a request to approve HSBC's purchase of a 51% stake from the Khudairy family.” Beyond predatory lending, HSBC’s lack of anti-money laundering standards, which even though noted by the U.S. Senate, HSBC has refused to explain, to the United Nations or other elsewhere, seem particularly relevant. We’ll see.

As ICP predicted, the Federal Reserve’s spin of the 2004 HMDA data is providing comfort to predatory lenders. At a recent industry conference, Ameriquest’s new vice president for regulatory affairs Rodrigo Alba bragged that the Federal Reserve's findings that only 2% of the 8,853 HMDA reporting lenders need further scrutiny will go a long way toward blunting criticism that the industry is biased towards minorities. "I honestly believe that the language in the report will serve to neutralize the heated rhetoric," Alba predicted. "It has already caused consumer groups to back off," he said. This from a company admittedly under investigation for predatory lending in thirty states...

Major subprime lender HSBC makes the same hair-splitting arguments to defend its lending disparities and involvement in money laundering. Finally, an answer from HSBC, and a telling one. ICP/Fair Finance Watch has filed comments opposing HSBC’s application to acquire the subprime lender Metris, as reported in the UK press (Observer). Last week HSBC purported to respond, but dodged most of the issues raised. HSBC resists any review of its consolidated mortgage lending. Rather, HSBC argues that each of its subsidiaries “has a distinct distribution network, product offering, and customer base.” Tellingly, HSBC states that “HSBC Consumer Lending, Decision One and HSBC Mortgage have each extensively analyzed their 2004 HMDA data” -- each separately, it’s clear. HSBC Mortgage is a national bank subsidiary. The OCC has sued the New York Attorney General to block review of HSBC’s national banks and their subsidiaries, including HSBC Mortgage -- making fair lending review and action nearly impossible, IF the OCC accepts HSBC’s arguments that Decision One, HFC and Beneficial are “irrelevant” to the OCC.

HSBC characterizes its December 2002 Consent Decrees /Orders with state attorneys general for predatory lending as “establish[ing] HSBC Finance Corporation as the industry leader.” No -- it was a predatory lending enforcement action. And it did not cover Decision One, of which HSBC writes: “While Decision One makes the final credit decision on these loans, the mortgages are sourced by a network of independent brokers, rather than retail branches open to consumers.” HSBC goes on to make a final distinction: “The lending model of HSBC Mortgage follows a substantially different business model, and offers a different product mix, than HSBC Consumer Lending or Decision One.” Yes -- unlike HSBC Consumer Lending, HSBC Mortgage offers normal / prime interest rate loans. Which is why the racial disparities between the two (or three) channels is so troubling, and unaddressed by HSBC.

Similarly, under the heading “International Operations and Ethical Business Practices,” HSBC spouts generalities that dodge the issues raised in ICP’s comment. HSBC writes that “HSBC Group members are expected to follow all relevant local, international and industry standards in addition to our internal standards.” But in the only example given, HSBC used local (Luxembourg) “standards” to refuse to provide information about its wiring of money related to Riggs Bank / Equatorial Guinea’s dictator. HSBC writes:

“ICP references an investigation into certain wire transfers made through Riggs National Bank... HBUS did receive from Riggs a request under section 314(b) of the USA Patriot Act, which authorizes financial institutions in the United States to exchange account information that may be related to money-laundering offenses or terrorist financing. Such information-sharing authority is in stark contrast to federal and state privacy protections provided in the United States that generally prohibit banks from publicly releasing account-level information, except under limited circumstances. Upon receiving the request for Riggs, HBUS confirmed that the account in question had been opened by an HSBC Group affiliate in Luxembourg, and that HBUS had forwarded the funds to a United States correspondent account in the United States for its Luxembourg affiliate. HBUS also informed Riggs, pursuant to the 314(b) request, that HBUS had sent funds for another mentioned company to an HSBC Group affiliate in Cyprus. Like the United States and many other sovereign countries where HSBC Group companies operate, both Luxembourg and Cyprus maintain privacy laws that prohibit the sharing of account information with other companies, even between companies related by ownership. In this case, HSBC affiliates in Luxembourg and Cyprus -- and are neither branches nor subsidiaries of a US institution (i.e., they are not branches or subsidiaries of HBUS but share a common, foreign parent), operate under laws which forbid such sharing of customer information. Thus, if those institutions had provided information to HBUS, to any other US bank, or directly to the US Government, they would have been in violation of the laws of Luxembourg and Cyprus respectively and could have been subject to criminal and/or civil sanctions in their host countries. Section 314(b) [of] the USA Patriot Act does not override these local laws applicable to banks operating in Luxembourg and Cyprus.”

The irony is, HSBC lobbies for laws to override local anti-predatory lending protections -- but to further its private banking, cites local laws as trumping anti-money laundering prohibitions. A global rogue is HSBC...

And Citigroup as well. CitiFinancial is the highest cost lender in Ireland, as well. The Irish Times of September 28 reports: “Consumers can save EUR 80-EUR 1,200 by shopping around for personal loans, the Irish Financial Services Regulatory Authority said yesterday. The financial regulator repeated its warnings about payment protection insurance, which it stressed was an optional and expensive type of insurance sold in conjunction with personal loans. The survey shows that the best value personal loans are available to members of EBS Building Society, who are charged an annual percentage rate of interest (APR) of 7.45 per cent. The total cost of credit for an EBS member on a loan of EUR 7,000 repaid over three years is EUR 805, compared to EUR 1,180 for someone who arranges a fixed-rate personal loan through a Bank of Ireland branch. The cost of credit at CitiFinancial... was a massive EUR 2,799.” That’s 2.4 times higher than at the Bank of Ireland, and 3.5 times higher than the building society. And this is how Citigroup builds up its profits, without standards, outside of the U.S....

And now, because we can, here is a annotated / hyperlinked version of Inner City Press’ op-ed in the American Banker newspaper of September 23:

Last week the Federal Reserve released aggregate 2004 Home Mortgage Disclosure Act data and used a 51-page report to put its spin on the fact that minorities are much more likely than white borrowers to end up with a high-priced loan. Here's an indicative conclusion that the Fed staffers reach at the end of their report:

"On the one hand, this pattern may be benign and reflect a sorting of individuals into different market segments by their credit characteristics. On the other hand, it may be symptomatic of a more serious issue."

What the Fed doesn't say in this is that these disparities are most stark among some of the largest conglomerates in the country, including in their headquarters cities (where they have Community Reinvestment Act duties):

--In the New York City metropolitan statistical area, Citigroup confined African-Americans seven times more frequently than whites to higher-cost rate-spread loans in 2004.

--Nationwide, Washington Mutual, the largest savings bank in the country, confined African-American couples to high-cost loans 4.5 times more frequently than white couples.

--In the New Orleans metropolitan statistical area, the industry confined African-Americans over four times as frequently as whites to high-cost loans for conventional home-purchase loans.

How could such patterns be plausibly described as "benign" or as reflecting "a sorting of individuals into different market segments"? Where the rubber will meet the road will be in how the Federal Reserve and other agencies act on specific disparities at specific lenders.The Sept. 19 American Banker article "200 Facing Scrutiny on HMDA Data" reported that the Fed has contacted 25 state member banks, or one eighth of the targeted institutions. The Fed also regulates holding companies and ought not limit its review to parts of these conglomerates.

Since many of the worst disparities are found with bank holding company conglomerates like Citigroup (Citibank NA, CitiMortgage, and CitiFinancial), Wells Fargo, and HSBC, such a limited approach would let the sources of many of the aggregate disparities off the hook. The article quotes an HSBC spokeswoman as saying that "the OCC had not sought to follow up on its HMDA filing." That's not surprising, not least because that conglomerates' higher-cost loans are by the ex-Household International units - HFC, Beneficial, and Decision One - which are regulated by the Fed, not by the OCC.

But not only the Fed and the OCC are to blame. The article reports that Washington Mutual "said it had not been contacted by its primary regulator, the OTS." As a thrift holding company, WaMu and its subprime unit Long Beach are both under OTS jurisdiction. Given the high percentage of the OTS budget that comes from WaMu, a hands-off approach to WaMu by the OTS, while inappropriate given the disparities, is not unexpected.

Okay, now some annotations: Inner City Press / Fair Finance Watch has reviewed the mortgage records, in the New Orleans Metropolitan Statistical Area, of Citigroup, including not only denial rates but also the new information concerning which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) --

Whites: 1461 applications, leading to 484 denials (33.13% denied) and 605 originations; 179 [or 29.59%] exceeded rate spread.

African Americans: 1492 applications, leading to 747 denials (50.07% denied, 1.51 times higher than whites) and 406 originations; 285 [or 70.2 percent] exceeded rate spread [2.37 times higher / more likely to be over rate spread than whites].

Latinos: 129 applications, leading to 59 denials (45.74% denied, 1.38 times higher than whites) and 35 originations; 22 [or 62.86 percent] exceeded rate spread [2.12 times higher / more likely to be over rate spread than whites].

ICP has also reviewed the mortgage records in this New Orleans MSA of Washington Mutual:

Whites: 992 applications, leading to 189 denials (19.05% denied) and 669 originations; 84 [or 12.56%] exceeded rate spread.

African Americans: 476 applications, leading to 155 denials (32.56% denied, 1.71 times higher than whites) and 243 originations; 81 [or 33.33 percent] exceeded rate spread [2.65 times higher / more likely to be over rate spread than whites].

Latinos: 121 applications, leading to 25 denials (20.66% denied, 1.08 times higher than whites) and 81 originations; 14 [or 17.28 percent] exceeded rate spread [1.38 times higher / more likely to be over rate spread than whites].

Note that over 70% of Citigroup’s loans to African Americans in the New Orleans area were higher cost, rate spread loans... We’ve looked closer at Wells Fargo's 2004 lending record, this time in the Nashville MSA, considering which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) -- Wells Fargo in the Nashville Metropolitan Statistical Area in 2004

Whites: 2009 originations, 187 over the rate spread (11.81% of loans over the rate spread)

African Americans: 198 origination, 59 (38.02%) over the rate spread -- 3.20 times higher than for whites...

Meanwhile, HUD last week announced a $48,000 settlement with Prudential Locations, LLC for violations of the Real Estate Settlement Procedures Act. HUD found that Prudential's Honolulu real estate brokerage office leased a luxury car, offered vacations and provided other gifts to reward sales agents that referred business to an affiliated mortgage company. Prudential is affiliated with and has a financial interest in Wells Fargo Home Mortgage Hawaii, LLC. HUD's investigation found that Prudential hosted a ‘First Annual Wells Fargo Friends Party’ and invited only those sales agents that referred over $1 million in business to Wells Fargo. Great...

Payday lenders in the news: Advance America Cash Advance suspended operations in North Carolina (better late than never). In Henderson, Nevada, the city council last week denounced Fastbucks Holding Corp., applying to for a payday lending location there. Meanwhile FastBucks trumpeted its matching donations for the victims of Hurricane Katrina -- but made no mention of forbearance on any loans. Dollar Financial Corp. announced on September 16 that the hurricane will reduce first quarter income before taxes by $500,000 to $700,000, citing higher loan losses and reduced revenues from its five New Orleans stores, two of which were severely damaged.

Last week, the Federal Reserve finally released aggregate mortgage lending data for 2004, including for the New Orleans metro area. The picture is not pretty, considering percentages of conventional home purchase and refinance first-lien loans over the federally-defined rate spread (3% over comparable Treasury securities on first lien loans) --

Conventional Home Purchase Loans Secured by First Liens in the New Orleans Metropolitan Statistical Area in 2004

African Americans: 37.48% of loans over the rate spread -- 4.09 times higher than for whites

Hispanics: 16.4% of loans over the rate spread -- 1.79 times higher than for whites

Conventional Refinance Loans Secured by First Liens in the New Orleans Metropolitan Statistical Area in 2004

African Americans: 48.68% of loans over the rate spread -- 2.67 times higher than for whites

Hispanics: 27.1% of loans over the rate spread -- 1.48 times higher than for whites.

This compares unfavorably to the nationwide aggregate... Also in Katrina’s wake we’re compelled to note the Congressional testimony on September 14 of a problematic thee-fer: ex-OCC examiner (of HSBC) David Gibbons, now at HSBC / Household, speaking for the trade association American Financial Services Association, which has sued to block local anti-predatory lending laws all over the country. The mind reels; the stomach turns. Click here for ICP's ongoing Gulf Coast Watch report.

In the run-up to the Federal Reserve’s release and spin of the aggregate 2004 Home Mortgage Disclosure Act data, Lehman Brothers’ subprime lender BNC was challenged for discrimination. Not (yet) in lending, but rather in employment. And not only by race, but by gender. The female complainants allege retaliation for raising questions about what they described as falsified bank statements and inflated pay stubs used to secure loan approvals. Coleen Colombo said she was offered money to keep quiet about what she said were questionable lending practices. What’s the connection, you ask? Well, Lehman Brothers is one of the lenders which refused to provide its 2004 mortgage data in analyzable form (after first trying to require a confidentiality agreement in order to see the data in any form). This white shoe firm is a rogue....

From the Ameriquest files, another complaint (naming names) -- “I responded to a pop-up ad on the Internet. John Van Der Graf then called and we discussed a cash-out refinance to reduce our debt. Mr. Van Der Graf suggested a 9.25% adjustable rate mortgage. Our current mortgage was at 7.5% so we hesitated to do this. The supervisor, Terrell Richard I believe, got on and we talked. He assured me that if we refinanced the home with this loan, we could, in 12 months, refinance back to the mid-5’s if we were not late on any payments... We did refinance, paying numerous fees (loan discount fee $3450.49; appraisal fee $350; tax-related service fee $70, flood search fee $16, lender’s processing fee $629, Admin to Ameriquest Mortgage $239, application fee $360) and when we called back to refinance [a year later], Ameriquest told me neither employee remained with their company and they did not know of any program where we could do what their employee had said. Leaving me stuck with a 9.35% ARM that is 4% points over the current market.”

That’s how they do it... Heard in The Loop: the origins of Illinois’ predatory lending database law are tellingly concrete. The district of House Speaker Madigan, father of the state attorney general, consist of two zip codes, which in a single year saw 900 foreclosure cases filed. And so, in another episode of all-politics-is-local, he passed the database law. Now the question is: can researchers get access to the credit scores that are part of the reports? Developing...

On August 29, 2005, Hurricane Katrina hit the Gulf Coast. Damage caused by the hurricane itself is one thing; disparate treatment by government and corporations is something else. The Gulf Coast region is for example one of the most redlined by banks. The nation's largest bank, Citigroup, virtually withholds its normally-priced mortgages from the region. In 2004, over 70% of Citigroup's mortgages in Mississippi were over the Federal high-cost rate spread (3% over Treasury securities on a first lien, 5% on subordinate liens). Meanwhile, less than 10% of Citigroup's 2004 mortgage in Massachusetts were higher-cost. By race, over 75% of Citigroup's loans to African Americans in Louisiana were higher-cost, compared to under 40% of Citigroup's loans to whites.

Beyond banking, an insurance problem looms. Of those who were insured, the policies that many have are flood damage, with an exclusion for hurricane damage. If the past is any guide, some insurers were argue the damage was due to winds, not water. Other insurers will offer fast but under-valued payouts in exchange for release of claims. And home repair scams are sure to follow, accompanied with predatory loans, if the past is any guide. We’ll be watching...

Earlier in 2005, the sell-out of New Orleans-headquartered Hibernia National Bank to Capital One was challenged by Inner City Press / Fair Finance Watch. ICP had found that in the New Orleans area in 2003 for conventional home purchase loans, Hibernia National Bank denied African Americans 3.75 times more frequently than whites (higher than the industry's 2.3 denial rate disparity), while Hibernia made 10 loans to whites for every loan to an African American (versus the industry's 5-to-1 ratio).

In the first of its two articles on ICP's filing, BizNewOrleans.com reported that

"Neither Capital One CEO Richard Fairbank nor Hibernia CEO Herb Boydstun could be immediately reached for comment on ICP’s filing. A Hibernia spokesman said that Boydstun was out of town and had not yet seen or been advised of ICP’s challenge... A Hibernia official responded today to allegations made by ICP in regard to the company's home mortgage lending practices. Hibernia Executive Vice President Willie Spears, who was out of town this morning, said in a telephone interview that the company has conducted “aggressive outreach” programs aimed at boosting Hibernia’s home purchase financing among minority and low- and moderate-income buyers.

"Spears said Hibernia has conducted workshops to educate first-time home buyers and worked to get home ownership grants for families of moderate means. He said the bank’s community development corporation 'has developed a number of houses and in some cases subdivisions' for such buyers. 'Not only do we provide financing and grants, but in a lot of cases we go out and build the homes,' he said."

We'll see. In Alabama, AmSouth Bank's weak record on anti-money laundering and fair lending have plagued the bank (and the area). AmSouth refused to provide ICP its 2004 mortgage data in analyzable form. Over 54% of Washington Mutual's loans to African Americans in Alabama in 2004 were higher-cost, compared to 20.5% of WaMu's loans to whites: a disparity of 2.63.

In Mississippi -- a state which Washington Mutual Finance Group abandoned, after losing a $73 million predatory lending verdict -- impacted counties include Hancock, Harrison and Jackson (in which BancorpSouth closed all its branches). Over 85% of Citigroup's loans to African Americans in Mississippi in 2004 were higher-cost.

On the environmental justice front, are, or were, 140 petrochemical plants along the 80 miles of the Mississippi river between New Orleans and Baton Rouge. Post-Katrina, with rainbows on the river, the damage has yet to be assessed. Beyond hydrocarbons, the run-off of pesticides and fertilizers starves the water of oxygen and creates the world's largest "dead zone" off the Louisiana coast. This year, even prior to Katrina, it expanded to an estimated 8,000 square miles.... Click here for more of ICP’s Gulf Coast Watch Reporter.

Elsewhere, on August 30 Wells Fargo announced what it called improvements to its lending practices. Many of the reforms are less meaningful than claimed. For example, any fanfare about dropping mandatory arbitration now that anti-consumer class action reforms have been passed, and the GSEs no longer buy loans with arbitration clauses, is misplaced. From last week’s Charlotte Observer:

Bank of America in 2003 acquired a stake in a California-based high-rate lender now known as OwnIt Mortgage. The bank is an investor in a private equity fund that bought out the company, previously known as Oakmont Mortgage. In 2004, OwnIt made about 56 percent of its 1,640 loans to African Americans at a high rate, according to an analysis by New York-based consumer advocate group Inner City Press/Fair Finance Watch. Bank spokeswoman Julie Davis said the company has an investment in OwnIt, but doesn't run the business. Bank of America packages high-rate loans for sale to investors. In the first quarter, the company was No. 18 among issuers of these securities, according to Inside Mortgage Finance. "We do feel there is a place for subprime lenders," Davis, the bank spokeswoman, said. "They help provide credit to those who otherwise would not have access to credit." Bank of America, however, does not condone "discriminatory, predatory or illegal practices" by mortgage lenders and has procedures to ensure mortgage loans with these characteristics are not securitized, she said.

Then why does BofA continue to securitize for Ameriquest, which has stated its under investigation by over 30 states’ attorneys general for predatory lending?

Finally, for this week, a recent book we at Inner City Press must review is "Frames of Protest: Social Movements and the Framing Perspective," edited by Hank Johnston and John A. Nokes (Rowman & Littlefield, 2005). We note it because of its discussion of the Young Lords and other groups in the Mott Haven neighborhood of the South Bronx - and an entire chapter on the exploits of Superbarrio in Mexico City, by Jorge Candena-Roa. Of Mott Haven, Cathy Schneider, author previously of "Shantytown Protest in Pinochet's Chile" (Temple University Press, 1995), writes:

"in the 1950s Mott Haven became predominantly Puerto Rican and black. It also became one of the poorest communities in the country. In 1969, the Young Lords challenged the machine, using an antisystem frame. On July 14, 1970, for instance, the Young Lords occupied Lincoln Hospital by driving a truck up an emergency ramp. For twenty-four hours they occupied the hospital, demanding a new hospital, a raise in the minimum wage of health care workers, and working control.. But this radical coality of activists in hospitals, drug clinics, and the local church was unable to pose a viable alternative."

This last is not well-enough explained. Schneider jumps to 1992, writing that at an Episcopal church (which she leaves unnamed, but is clearly St. Ann's) a "gang leader was show by another gang member and buried at the church he had served. Shortly after, the diocese removed the priest and despite weeks of parishioner protest, the priest and his supporters were unable to win the support of established social service agencies or politicians."
Schneider concludes with the "sentiment of cynicism and distrust, during the focus group [she] conducted: 'Everyone sells out here.'"

The FDIC has, following ICP/Fair Finance Watch’s comment and request, provided a copy of Wal-Mart’s application. Therein, Wal-Mart states:

“Subject to regulatory approval, the Bank will be a special purpose bank... Consequently, the Bank is exempt from CRA regulations, and a CRA Plan is not included with this application. A copy of a letter to the FDIC requesting designation for the Bank as a special purpose bank under CRA regulations is included with the Business Plan as Attachment 14.”

While much of Wal-Mart's application has been withheld, this letter (from the law firm of Ballard Spahr) argues that “Wal-Mart Bank’s proposed activities are limited and do not include granting credit to the general public.” Then it refers to confidential attachments.

ICP/Fair Finance Watch has also filed a timely supplemental comment on B of A - MBNA, expressing support for other protests filed requesting an extension of the comment period, and putting into the record further adverse issues. ICP submitted its first comment on July 11, 2005, and more than three weeks later, Bank of America submitted a vague and evasive response. Since then, ICP has awaited both the Delaware-focused CRA plan that BofA said it would be releasing, and the clearly-necessary details on how BofA would comply with the 10% deposit cap. Neither has been forthcoming, and ICP has now written to demand that the comment period be extended, and, on this record, that BofA’s application be dismissed or denied.

BofA’s vague claim to have standards are not credible. As shown, BofA is the main lender to payday lender Advance America Cash Advance, which is being sued by the North Carolina Banking Commissioner, and B of A's role as securitizer of subprime mortgage backed securities including those of Ameriquest, under investigation by its own admission in 30 states for predatory lending. Even since ICP’s first comment, BofA has been named as a lead underwriter on yet another Ameriquest issuance (under the name “Park Place,” see Reuters of August 18, 2005). BofA is clearly on notice, and must explain how this is consistent with its claims of standards, and with necessary due diligence and safeguards.

BofA’s arrogant Response claims, at 4-5, that BofA “does not condone... predatory... practices” and has written guidelines (not provided) to this effect. But how then can BofA be continuing to underwrite for Ameriquest, right after Ameriquest said it is setting aside $325 million to settle predatory lending investigations by at least 30 state attorneys general?

The insufficiency of BofA’s response is exemplified also by the treatment of 100 branch closings. Beyond generalities, BofA says “with respect to Washington state closings, the data cited by ICP is incorrect: only two of the banking centers will be closing, and these closings were made only after taking into consideration the community impact as required by our branch closing policy.” While BofA calls ICP’s “data” incorrect, here is what ICP said, of Washington State:

While Bank of America claims its closing cause no consumer harm, see for the record the Seattle Times of June 17, 2005, “Bad news from ‘down below’: Town's only bank will close” --

“Bank of America plans to shut low-volume branches in several Washington towns. Darrington wonders how its business will go on if the nearest bank is 30 miles away. Can a community exist without a bank? That's what the residents of Darrington, an old logging and mill community of roughly 3,000, are wondering in light of the news that their only bank, a Bank of America branch, is closing Sept. 9. The next-closest bank of any kind is in Arlington, a 30-mile drive...Though a Bank of America spokeswoman wouldn't say how many accounts there were at the local branch, business owners, from looking at the checks they receive, estimate about half the community's residents have personal accounts in town... The Washington towns of Okanogan, Republic, Sumas and Sultan will also lose their Bank of America branches, said Diane Wagner, a company spokeswoman based in Chicago... Republic also will be hit hard - the next-closest branch is nearly 40 miles away in Colville, Stevens County... "I think they're very concerned with how they're going to bank with us," Wagner said, suggesting that Darrington residents could bank over the Internet or by mail. "People choose how they want to bank with us." But residents say that after the branch is gone, most won't want to use Bank of America at all. "We didn't hear much of anything until they announced they were leaving," said Jones, who is upset with the lack of warning given by the bank (letters to customers dated June 10 were sent out over the past week).”

So -- is BofA saying that this newspaper article was wrong? Did BofA write to this newspaper to correct the public record? And regardless, of what significance of BofA’s branch closing policy and “consideration” if the above, publicly reported, is the result? It is not enough, just to allude to standards.

For now, on BofA’s 2004 mortgage lending record, ICP has now analyzed BofA’s first lien loans. Since BofA has publicly claimed not to understand the methodology, it’s simple: ICP has cumulated the three LARs that BofA provided in response to ICP’s request for BofA’s 2004 LARS: BofA, NA, Fleet and OwnIt, the subprime lender that BofA controlled in 2004 (notwithstanding BofA’s obtuse footnote 3 in its purported Response). For first liens in 2004, within this BofA, African Americans were 2.27 times more likely than whites to be confined to higher cost, rate spread loans. African Americans were denied by BofA 1.91 times more frequently than whites. Latinos were 1.93 times more likely than whites to be confined to higher cost, rate spread loans. Latinos were denied by BofA 1.87 times more frequently than whites.

BofA’s lack of standards is pervasive. Also, the US Senate’s report in March 2005 on Pinochet’s funds stated that

“from 1993 until 2004, Bank of America maintained 3 U.S. accounts and as many as 6 CDs at a time for Mr. Pinochet’s daughter, Ines Lucia Pinochet. At least three of these CDs, in the amount of $100,000 or more, were purchased in 2002; the other CDs, which ranged in value from $10,000 to $125,000, were purchased between 1996 and 2002, and some were held in trust for one or more of her sons. The maximum amount of funds in Ms. Pinochet’s Bank of America accounts at one time totaled about $420,000, in December 2002. One source for the funds in the accounts was a $300,000 Riggs cashiers check issued in September 2002, which withdrew funds from Ms. Pinochet’s account at Riggs in London. The cashiers check was deposited into Ms. Pinochet’s Bank of America account on September 30, 2002. Nine days later, on October 9, Ms. Pinochet purchased three $35,000 Bank of America cashiers checks and later deposited two of them into an account she held at PineBank in Miami.... On January 3, 2001, BankBoston cashed a Riggs cashiers check dated August 18, 2000, for $50,000, made payable to ‘Augusto Pinochet.’”

So much for “know your customer.” What sets BofA apart from most other of the banks exposed in the Pinochet reports is BofA’s arrogance. The cavalier approach to the 10% deposit cap is only one example. Continuing, without explanation, underwriting for Ameriquest, and lending to the payday lender Advance America Cash Advance, are two examples, that particularly injure low and moderate income communities. Bank of America's applications should be denied. [For more on Pinochet, and banks' money laundering, see ICP's Finance Watch Report.]

On August 16 -- right on schedule, to allow a September 1 consummation -- the Federal Reserve issued a 16-page order approval Capital One’s application to acquire Hibernia. In the Order, the Fed says some extraordinary things. For example, in footnote 10 on page 5, the Fed recites that ICP

“criticized Capital One’s and Hibernia’s relationships with unaffiliated subprime lenders, payday lenders, car-title lending companies, and other nontraditional providers of financial services. As a general matter, these businesses are licensed by the states where they operate and are subject to applicable state law. Capital One stated that its business relationships with such providers are limited to business credit-card loans or loans extended under Small Business Administration (‘SBA’) programs. Any such extensions of credit would be in the ordinary course of Capital One’s small business credit-card lending activities or in accordance with SBA requirements.”

So let’s get this straight -- the U.S. Small Business Administration is providing guarantees for payday lenders and car-title lenders? In its next footnote, the Fed says that ICP

“also opposed the proposal based on news reports of lawsuits and investigations undertaken by the Attorneys General of Minnesota and West Virginia in their respective states relating to Capital One’s marketing of its credit cards. These investigations and lawsuits are pending and have not yet reached conclusion, and there has been no determination of liability, damage, or wrongdoing in these cases. The Board has consulted with the relevant state authorities about these matters and will continue to monitor these matters in the supervisory process. Board action under the BHC Act would not interfere with the ability of the courts to resolve any litigation pertaining to these matters.”

But is that the standard? If so, the Fed could approve applications by BCCI, the Bank of Credit and Commerce International. Oh, we forgot -- the Fed did approve BCCI’s applications... Showing the Fed’s lack of interest in using the freshest facts, it again refuses to consider 2004 HMDA data (even though in previous years it has requested and considered non-final HMDA data). The result is an order in the second half of 2005 that relies on 2003 data. Or, in the case of Hibernia, on 2002 data. The order says of Hibernia’s “most recent” CRA exam that the “evaluation period was from October 18, 1999, through January 12, 2004, except for the lending test, which was evaluated from January 1, 2000, through December 31, 2002.” So it’s a CRA exam labeled 2004, which didn’t even use 2003 HMDA data?

Meanwhile, an email last week to the FFIEC (asking when the “final” 2004 HMDA data will be available) resulted in two “out-of-office” email replies from the Federal Reserve. We always knew who ran the FFIEC. But how can it be that no one at the FFIEC (or Federal Reserve) can answer a simply question, in an entire week, even in August? We’ll see.

As Robert Rubin defends -- without fixing -- Citigroup's predatory lending, now ex-Clintonista Lanny Davis serves as outside counsel to subprimer Fog Cutter Capital Management, defending in a letter in the August 20 N.Y. Times Fog's board's decision to pay ex-CEO Andrew Wiederhorn while he was in jail. For shame...

How much longer will it be, before American General Finance Company is put to a stop on predatory lending? This has been my nightmare with them.

My husband and I are victims of predatory lending. American General Finance Company encouraged us to refinance our home through them. They assured us that this was the right thing for us to do, and the best thing that we could do. They promised us that our interest rate would remain about the same, about 9-10% at the most, and the payments would stay around the same, around $450-500 at the most. They did not tell us that the loan was a revolving credit loan, like a credit card, so that we’d never pay the house off. Everything happened so fast, at the closing. After signing the papers, we found out that we had singed to a 14.50% interest rate and almost $750 monthly payment. They also did not inform us that we had three days to look at the contract. This loan has caused us to almost lose our home of 25 years. They foreclosed on us and I immediately filed for bankruptcy. The original loan amount was $56,000. With all the interests, fines, fees, and costs for their lawyer fees and whatever else they charged us for, we now owe them $72,000 for our home! So even though we have filed for bankruptcy, we are still threatened by the possibility of being foreclosed on again. From month to month, it’s almost impossible for us to make our house payment, now being $750 and if we’re late almost $800. I know for a fact that they are just waiting on us to default so that they could take our home away from us! In the last three years we have paid them over $35,000, and we now owe them $72,000, there’s a serious problem with this! This is robbery!!! I personally know someone else who has experienced a similar problem with them, and they too were forced to file for bankruptcy. On the day my house went up for sale at the courthouse, there were two other families that AG foreclosed on. One day, while I was making a payment at the office, another customer was there making a mortgage payment too. They were there to make a payment so that they could get ahead on a payment. They told him that was impossible for him to do, because the computer would not allow them to do that. Well, I had the same experience with them. I made two payments in one month, thinking that I was going to be a payment ahead. The next month it was as though I had never made an extra payment, it went towards the interests. You can imagine how I felt, furious!!! Several times they tried to get me to redo the loan with them so that they could catch me up, but I refused. Instead I tried to redo the loan with other finance companies, and when I did, they made it hard for me to accomplish that. I then found out that there was a prepayment fine or penalty fee of $4,000, along with other fines and fees they were charging me, making it impossible for me to get out from underneath them. They have me trapped!!! If it continues like this, sooner or later they will have my home. And they know it too!!! And others too!!! American General Finance Company preys on minorities and the low- income people. They must be put to a STOP!!! PLEASE DO AN INVESTIAGATION ON THEM.

Earlier this month, the small business lending and Community Reinvestment Act data for 2004 was released. For the first time, this was done separately from year’s the Home Mortgage Disclosure Act data (the aggregate of which, for 2004, is now slated to come out in September). The regulators, through the Federal Financial Institutions Examination Council, bragged that the “total number of reported community development loans is higher than in 2003.” But when one focuses on “intermediate small banks” -- those with assets between $250 million and $1 billion, which the regulators “freed” from the duty to report this data from September 1, 2005, onward -- one finds that community development lending decreased from 2003 to 2004, both by number of loans and by amount. So why are institutions of this size being exempted from reporting this data? It sure isn’t because their performance was improving, from 2003 to 2004...

After months of Ameriquest-caused delay, Inner City Press / Fair Finance Watch has received a four-page ruling from the Texas AG’s Open Records Division, stating among other things that

“the OAG states that the Consumer Protection and Public Health Division is currently investigating Ameriquest... for potential violations of the Texas Deceptive Practices - Consumer Protection Act... Generally, however, once information has been obtained by all parties to the litigation through discovery or otherwise, not section 552.103(a) interest exists with respect to that information. Thus, information that has either been obtained from or provided to the opposing parties in the anticipated litigation is not excepted from disclosure under section 552.103(a) and it must be disclosed.”

We’ll see... This, we hadn’t seen until last week -- the publication Euromoney of July 2005 reported that ICP

“has a question. How come the firm, which undertook in January 2003 on its corporate citizenship website to stop making so-called HOEPA loans, has, according to its own home mortgage data for 2004, made a further 837 such loans? The reference is to high-cost loans charging 800 basis points or more above treasuries that are usually extended to borrowers with poor credit histories in poor neighborhoods and now covered by the Home Ownership and Equity Protection Act. Into the breach steps Robert Willumstad, president and chief operating officer of Citigroup. He tells Lee that the bank doesn't make such loans and that Lee must have misinterpreted the data. That's odd, Lee replies, as he is looking at a spreadsheet of loan figures provided by Citigroup that has a HOEPA status column with 837 loans marked yes. Home Mortgage Disclosure Act data is as familiar ground to Lee as negative operating leverage ratios are to the average bank analyst. Citigroup later pleads that although it instituted the policy of not originating Hoepa loans in January 2003, various divisions that it had acquired through the purchases of Associates and parts of Washington Mutual only phased in this new approach to lending over time. It's a messy fudge of an explanation.”

Emphasis on “fudge”.... Meanwhile, ICP on August 13 filed timely comments opposing the application to the FDIC by BNP Paribas / Bank of the West to acquire Commercial Federal -- click here to view.

Here’s a new one -- in its second response to Inner City Press / Fair Finance Watch’s comments, Washington Mutual has this to say: “since minorities make up a larger percentage of the subprime lending pool, it is statistically inevitable that combining the threshold loan rates of a prime lender and a subprime lender will result in a higher threshold loan rate for minorities than for white borrowers. While this is a socially troubling result that Applicant continues to attempt to address through innovative lending programs, the OTS should not allow ICP to use the pending application as a forum for protesting broader social issues.”

But the disparities ICP has identified (see last week's report, below) are not “societal,” but at Washington Mutual and its subprime unit Long Beach. And if regulators were to agree with WaMu’s argument, that each affiliates’ lending must be considered separately, conglomerates could run rings around the fair lending laws by simply confining most people of color into separate subsidiaries (not unlike what happens at Washington Mutual / Long Beach)...

Washington Mutual last week submitted to the Office of Thrift Supervision a purported response to Inner City Press / Fair Finance Watch’s two timely comments opposing WaMu’s applications to acquire Providian. Washington Mutual’s response tries to obscure the striking disparities in its lending -- in which African Americans and Latinos are subjected to higher cost “rate spread” loans significantly more than whites, and more than at WaMu’s peers -- by arguing that the OTS should only consider the records of WaMu’s thrift(s) and “Bank Affiliates.” But this is a ludicrous argument. Simply as one example, even the Federal Reserve considers (and has fined) Citigroup’s non-bank subprime lending units, because they are bank holding company subsidiaries, just as WaMu’s subprime unit Long Beach is a thrift holding company subsidiary.

WaMu also chides ICP for “aggregat[ing] loans with 1^st and 2^nd lien reportable spreads” -- that is, for not separately considering First Liens and Subordinated Liens. Well, ICP has reviewed WaMu’s 2004 data, and for the important category of first liens finds WaMu’s record is even more disparate:

Whites: 399,515 originations; 14,459 [or 3.62 percent] exceeded rate spread (of 3% on a first lien, 5% on a subordinate lien)

African Americans: 36,375 originations; 5,795 [or 15.93 percent] exceeded rate spread, fully 4.4 times higher / more likely to be over rate spread than whites.

Latinos: 74,371 originations; 4,079 [or 5.48 percent] exceeded rate spread [1.51 times higher / more likely to be over rate spread than whites]

Rather than substantively respond to what ICP has raised, WaMu seeks to evade the issues by calling the 2004 data it provided to ICP “preliminary.” WaMu sent ICP (and presumably others) a correction, restating the number of HOEPA loans, and said that was the only correction. So why call the data “preliminary”? Why not respond in some fashion to the consumer complaints ICP has submitted including a detailed complaint from a deeply dissatisfied WaMu customer over 85 years old? ICP has now submitted additional sample complaints, including for example one that begins “I am writing this letter concerning a fraud I believe is being perpetrated by Washington Mutual Bank against my family,” and a letter from the Kentucky Attorney General’s Office telling a consumer that “this office has contacted Washington Mutual on several occasions in an attempt to resolve your complaint. As of this date, they have sent correspondence indicating their intent to respond, but no response has been received” -- rather like in this proposed merger proceeding. ICP has reiterated its request for public hearings and denial of WaMu’s applications. Meanwhile--

On the afternoon of July 28, Ameriquest disclosed that it is setting aside $325 million, saying this is “is based on extensive discussions with the states and represents the company's best estimate of its maximum financial liability for a comprehensive resolution of this matter."

The immediate question was: why did Ameriquest jump the gun and announce a settlement before the AGs did? A cynic inferred that Ameriquest was still negotiating, making this figure public to put pressure on (some) AGs to accept it. But from Des Moines, the Iowa Attorney General issued this statement: "We understand that Ameriquest has announced that related to our discussions it has recorded a provision of $325 million in its financial statements. The states do not disagree with Ameriquest's actions in this regard."

Ameriquest claims it was required to make the disclosure, even though it is not a publicly-traded company, in connection with a bond prospectus. Perhaps. Another cynic noted that on the same afternoon, the White House formally nominated Ameriquest’s owner to become U.S. ambassador to The Netherlands. Low lands indeed... Meanwhile, also on this same afternoon, the Texas Attorney General’s Office’s letter extending its time to rule on the Freedom of Information / Public Information Act request for the 41 boxes of documents about Ameriquest being withheld by that office was received by the requested, Inner City Press. (No cynics here -- just stoics).

The more substantive question is how meaningful the reforms / consent decree might be, and how they would be enforced. Also, it’s worth nothing that while this figure is below the $484 million paid by Household International, Ameriquest’s volume of subprime mortgage loans is higher (highest, in 2004). There are doubts and questions about this settlement, that will be answered and/or addressed (even, attacked) once despite this lurching process it become public.

While Ameriquest seeks to settle on the cheap with state attorneys general, Inner City Press received last week additional complaints against Ameriquest, including by consumers who had purportedly been made whole by Ameriquest. The consumer wrote to Ameriquest’s Lori A. Maimone on Town & Country Road: “Please note that I am totally dissatisfied with the settlement...I really had no choice but to accept your offer as my attorney wanted most of the loan proceeds as retainer to pursue this... We will be looking to refinance as soon as possible again as we do not want to do business with Ameriquest for any length of time. Had I known this would turn into such a mess, I would have pursued any of several other offers I had received.”

Ameriquest responds with respect to this “purported dissatisfaction with the settlement, Ameriquest has no comment.” Proud sponsor of the American Dream...

On July 25, Inner City Press / Fair Finance Watch filed comments with the FDIC and Utah regulators opposing the applications to form Wal-Mart Bank. Back in 1999, ICP blocked Wal-Mart’s attempt to by a one-branch savings bank in Oklahoma. Now they’re back. From ICP’s comments:

This application represents the stealth attempted entry of this country’s largest and most destabilizing and dis-investing retailer into banking. While cynically styled as no more than a proposal to “enable it to recapture fees that it pays third-party institutions to process the 140 million debit, credit and electronic check transactions at its stores each month,” Wal-Mart’s financial services director answered the Chicago Tribune’s question, whether shoppers could someday shop for mortgages at Wal-Mart, with this phrase: "We continue to look for what makes sense to the customer." (Chicago Tribune, July 2, 2005, “Wal-Mart Seeks Permission to Operate a Bank”). We at ICP continue to look at what make sense to consumers and the public interest, and for this reason request hearings on, and the denial of, Wal-Mart’s applications.

On an application to charter and insure a bank, including an industrial loan company, the Federal Deposit Insurance Corporation must consider a range of factors, including managerial integrity, compliance with law and regulation, such as anti-discrimination provisions, including as a predictor of Community Reinvestment Act performance. Wal-Mart has a history of violating the law, and of destabilizing and disinvesting in communities, as set forth below.

Wal-Mart is subject to the largest anti-discrimination in employment class action lawsuit in U.S. history. “The lawsuit, Dukes v. Wal-Mart, alleges that the world's biggest retailer discriminates against its female employees in terms of pay and promotion. Six female employees filed the suit in California in 2001, claiming they were passed over for promotion by men. In June 2004, a California federal judge ruled that the suit could be certified as a class action.” Arkansas Democrat-Gazette, June 22, 2005, “Hearing set in suit against Wal-Mart.” This is “the largest class-action suit in American history, consisting of 1.6 million current and former Wal-Mart employees. Between 1996 and 2001, women working at Wal-Mart made approximately five per cent less than men doing similar jobs.” Canadian Dimension, May 1, 2005. Documents made public in this lawsuit reflect not only discrimination but also other managerial issues that must be considered by the FDIC. See, e.g., “Wal-Mart Ignored Own Report,” by Karen Gullo, Bloomberg News, July 16, 2005: “Wal-Mart Stores Inc. took no action on internal warnings seven years ago that it was falling short in promoting women, documents in a federal sex-discrimination lawsuit show. The world's largest retailer didn't carry out the 1998 recommendations of a diversity task force and disbanded the panel, according to company memos, reports and depositions filed in the case. Two years later, Wal-Mart had a reduced percentage of female managers.”

Wal-Mart has been charged with discrimination not only by gender, but also by race. See, e.g., New York Times of July 14, 2005: “Two black truck drivers have filed federal lawsuits against Wal-Mart Stores in Arkansas, arguing that the company discriminated against them by denying them jobs because of their race. Lawyers who filed the suits are seeking class-action status.” The asserted discrimination is not only against employees, but also consumers. See, e.g., Boston Globe of July 13, 2005: “Customers Sue Wal-Mart Over Alleged Bias, Suit Claims Cases of Racial Profiling” -- “In a lawsuit filed in US District Court in Boston yesterday, the consumers alleged they were followed, searched, humiliated, and in some cases, detained by greeters at the store after entering the retail center in 2002 or 2003.... The lawsuit, brought by one white consumer and nine minorities, including three African-Americans, several West Indians, and a Mexican shopper, alleges that Wal-Mart employees illegally detained the minorities until police arrived and searched bags or stopped them as they were leaving.”

Beyond that, as further examples of Wal-Mart’s substantive violations, Wal-Mart “reached an out-of-court settlement in a child labor case in which teen clerks in three states were allowed to use heavy equipment in violation of safety laws. The company's vice chairman was fired a few months before his scheduled retirement after an accounting scandal became the subject of a criminal investigation.” St. Petersburg Times, June 4, 2005.

This pattern of law-violation has given rise to shareholder resolutions, including by elected officials in New York. As reported in the N.Y. Post of June 2, 2005, “Wal-Mart Blasted for Rule-Breaking,” the “shareholder group, co-headed by New York City Comptroller William Thompson Jr., called on Wal-Mart's board to set up a special committee to monitor Wal-Mart's future compliance with laws and regulations. The shareholders said they also were concerned about Wal-Mart's 24 violations of child labor laws in three states. Thompson said the board's laxity on compliance ‘could be indicative of inadequate internal controls and a lack of board oversight and accountability.’" This is a standard that the FDIC must consider on this application, including at the public hearings ICP is hereby timely requesting.

While Wal-Mart is segmenting its actual proposal into pieces, seeking to charter this institution and then later expand it, the FDIC must consider in this proceeding all of the dangers raised by allowing this large, destabilizing, disinvesting and, ICP contends, presumptively disqualified company from entering the business of banking. ICP contends that this pattern of export of capital is relevant to, and must be considered on, Wal-Mart’s application to get into banking, as a Community Reinvestment Act matter and otherwise. ICP also formally contends that several of Wal-Mart’s documented business practices -- including predatory pricing, mislabeling of products, sale of merchandise made with child labor, etc. -- are adverse factors under the FDIC’s regulations and under the CRA.

The record should reflect that this is by no means Wal-Mart’s first attempt to slip into the banking industry. In 1999, ICP opposed the applications of Wal-Mart Stores, Inc., Walton Enterprises, L.P., Broadleaf Investments, Inc., et al. (collectively hereinbelow, “Wal-Mart”) to become savings & loan holding companies by acquiring Federal BankCentre, a one-branch thrift in Oklahoma. See, e.g., Reuters, “Group Tries to Block Wal-Mart Bank Effort, Advocates for Low-Income Groups Filed a Protest against the Retailer’s Applications to Buy a Savings and Loan,” e.g. in the Orlando Sentinel of July 24, 1999, and the Associated Press, “Wal-Mart plan to open thrift draws fire,” (e.g. in Boston Globe of July 24, 1999). That application was filed by Wal-Mart in an attempt to beat the Gramm-Leach-Bliley Act deadline. After that application failed, Wal-Mart tried to partner with Toronto Dominion Bank, and to buy an industrial loan company in California. Both forays failed. Now Wal-Mart tries the FDIC -- ICP urges the FDIC to hold hearings, and to deny, Wal-Mart’s applications, including on CRA grounds.

Below in this comment, ICP presents for the record on this application a thumb-nail sketch of Wal-Mart’s track record of destabilizing communities, including driving locally-controlled merchants out of business by predatory pricing, then siphoning off the assets and insured deposits that these local businesses used to deposit in local banks, and shifting the assets to Bentonville, Arkansas and the various Walton heirs’ stock portfolios. This pattern has resulted in increasing opposition to Wal-Mart’s proposals. See, as four examples just last month, the Denver Post of The Denver Post of June 28, 2005, “Wal-Mart foes pack hearing;” Charlotte (NC) Observer of June 5, 2005, “Wal-Mart battle goes to public;” Philadelphia Inquirer of June 3, 2005, “Wal-Mart plan brings out challengers;” the Madison, Wisc. Capital Times of June 2, 2005, “Rally Rips Wal-Mart on Health Care.” See also, NBC Dateline of June 17, 2005, linking Wal-Mart to sweatshops in Bangladesh. Click here for more of ICP’s comments.