MrUniteUs
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Registered: 12/14/03
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| | 12/02/11 at 08:43 AM | Reply with quote | #1 |
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http://thinkprogress.org/economy/2011/12/01/379332/former-banker-subprime-pushed/
One of the most pernicious practices in which the nation’ biggest banks engaged during the lead up to the financial crisis was pushing minority borrowers into subprime loans, even when many of them qualified for prime loans. Wells Fargo had perhaps the most horrifying practices in this department, calling the subprime loans that they pushed in poor, black neighborhoods “ghetto loans.”
This rampant predatory lending helped inflate the housing bubble; a Center for American Progress investigation actually found huge racial disparities in lending at the big banks that wound up getting bailed out, with minority borrowers far more likely to receive high-priced loans.
One former banker for Chase — James Theckston — told the New York Times’ Nick Kristof that not only did his bank push minority borrowers into higher-priced loans, but senior executives then tried to cover up the racial disparity in their banks’ lending:
One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.
These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.
“The bigwigs of the corporations knew this, but they figured we’re going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas,” Theckston explained.
In 2006, Chase made high-price loans to 16.4 percent of white borrowers, while nearly half of black borrowers and more than one-third of Hispanic borrowers received high-price loans. These disparities help explain why, according to a new report from the Center on Responsible Lending, Latinos and blacks are twice as likely to have been impacted by the housing crisis as whites. In fact, “approximately one quarter of all Latino and African-American borrowers have lost their home to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers.”
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MrUniteUs
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| | 12/02/11 at 08:53 AM | Reply with quote | #2 |
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I believe those involved in the sub prime market deceived,
borrowers and investors.
I know the president of two Black owned banks.
Broadway Federal Savings and One United Bank.
They refused to offer these subprime loans, and
as a result had very few foreclosures. Less than
ten when I spoke them. They have demonstrated a
responsibility to the community, and I recommend them
both.
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Magic
Registered: 10/23/06
Posts: 355
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| | 12/03/11 at 04:36 PM | Reply with quote | #3 |
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The real insidious truth to this is that we as Black people still allow our money to sit inside Chase, Wells Fargo and Bank of America.
We could punish banks severely by removing "All" Black deposits.
I was finished with Wells Fargo over 7 yrs. ago.
Use a Credit Union, you will get better rates and your money is much safer!
Unfortunately, the majority of us historically end up begging for white owned banks to please take our money, and if they treat us bad in the process we beg them to please stop it!
Could you imagine what would happen, if Jewish or Japanese people found out a bank had done this to them?
When will we ever learn?
Magic
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MrUniteUs
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| | 12/19/11 at 07:06 AM | Reply with quote | #4 |
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Strong point Magic,
Plus the banks you mentioned charge higher fees,
and our less likely to make loans in our neighborhoods.
Broadway Savings Bank and One United Bsnk, provide
faster service, lower fees, and they are more likely
to make loans in our neighborhood.
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