Fed Study Confirms Racial Lending Disparities
Attorney General Spitzer today said that a nationwide lending survey released yesterday confirms the stark racial disparities in mortgage lending that his office has been investigating for six months. The study, conducted by the Federal Reserve Board, shows that African-Americans were far more likely than whites to receive high-cost loans, even after controlling for factors such as the borrowers income.
Since April of this year, Spitzers office has been investigating whether the identified disparities reflect discrimination on the basis of race by banks in their mortgage lending practices. Although the banks initially cooperated in Spitzers investigation, they have since filed a lawsuit to halt Spitzers investigation. They were joined by their federal regulator, the Office of the Comptroller of the Currency, in asserting that only federal authorities can review whether banks have violated state statutes that protect consumers from racial discrimination in mortgage lending.
Attorney General Spitzer said: "The Feds analysis confirms the troubling disparities that my office identified. It is time for these banks, regardless of their charter, to step up as good corporate citizens and give the public the facts. It is shameful for these banks to hide behind their federal regulator who, despite having data showing racial disparities for six months, still has taken no enforcement action."
Spitzers analysis of March data showed wide disparities in lending practices among major lenders, including the following banks who have joined the lawsuit to stop Spitzers investigation:
- At Wells Fargo, African-American borrowers were 3 times more likely to receive high-cost loans than white borrowers;
- At JP Morgan Chase and Citigroup, African-American borrowers were nearly twice as likely to receive high-cost loans; and
- At HSBC, African-American borrowers were about 1.5 times as likely to receive such loans.