Goldman as Al Capone, the Credit Union Which Fled the Bronx and the CRA

We have reported on the banks which left The Bronx, snooping for example around old Chase Manhattan branches turned into churches. But it's time to mention Melrose Credit Union, which runs radio advertisements during Yankee games. Perhaps you've seen their sign, if you drive to or from JFK airport. The institution says, right on its website, that

"since 1922. Melrose was initially established to provide financial resources for individuals and small business owners from the Bronx, NY. Through the Credit Union, community residents were afforded the means to pursue their American Dreams. The success of Melrose Credit Union has not diminished its original mission statement: Empower the community by offering affordable financial products and services. Today that community commitment has helped transform Melrose into an over $1 billion credit union with over 20,000 members residing across the country and around the world."

Melrose is a neighborhood in the South Bronx, which this "successful" credit union left behind. It has no branch in The Bronx; it left the borough but speaks about empowerment of (presumably other) neighborhoods. What was that again, about there being no need for a Community Reinvestment Act on credit unions?\

Footnote on high finance: In the wider world, Goldman Sachs has finally been accused by the SEC -- not for enabling predatory lending, for which it should be charged, but for setting up for John Paulson to short a pool of dubious subprime securities and then selling it to others as a legitimate and objective investment. Well, just like Al Capone's Achilles Heel was tax evasion, perhaps misrepresentation is Goldman's. But we doubt the SEC's stomach to follow this fight through. We'll see.

As Congress Dithers for Payday Lenders, CRA Activists Raise Stakes in St. Louis and Philadelphia

As Congress Dithers for Payday Lenders, CRA Activists Raise Stakes in St. Louis and Philadelphia

By Matthew R. Lee

WASHINGTON, March 10 -- As legislators from both political parties dally on Capitol Hill, considering handing consumer protection to the Federal Reserve like Democratic Senator Chris Dodd or leaving enforcement over payday lenders off to the side like Republican Bob Corker, the real work of protecting consumers is done by grassroots groups.

Inner City Press learned on Wednesday of an all too rare Community Reinvestment Act challenge filed recent in Missouri, which has delayed the recalcitrant bank's application for regulatory approval for several months. The Metropolitan St. Louis Equal Housing Opportunity Council, which filed the protest, says that CRA has been largely moribund in St. Louis for the last 20 to 30 years.

Now, in the face of the economic meltdown, it is back. On the sidelines of the NCRC conference, three EHOC staffers spoke of pouring over list of regulatory approvals, commenting on CRA performance evaluation, reaching out for allies to Kansas and Jefferson City. Meanwhile a former NCRC staffer is starting work at the Federal Reserve Bank of Philadelphia. Progress can be slow -- but it is still faster than Congress.

Fifth Third, from foreclosures to horse loans, scrutiny is needed

Fifth Third Bank is not only involved in foreclosing on families’ homes – it is also seeking to find a horse that it lent against, or actually 203 horses. From the Thoroughbred Times:

“Fifth Third Bancorp claims Ahmed Zayat concealed a mortality insurance claim for multiple Grade 1 winner Thorn Song last summer in order to hide $2,750,000 in proceeds that he should have paid to the bank. Zayat Stables owned Thorn Song, who was pulled up in the Eddie Read Handicap (G1) on July 25 at Del Mar after bolting to the outside rail in the first turn… Fifth Third said it made multiple inquiries into the whereabouts and well-being of the Unbridled’s Song horse… Fifth Third said the concealed insurance payment is evidence that a receiver should be appointed to oversee Zayat Stables' 203 horses, which are collateral for $34,265,970 in loans that he owes the bank.”

So Fifth Third, still fueled with TARP bail out funds, has been lending tens of millions of dollars secured by horses. We first ran into Fifth Third when they bought Old Kent, coming into the Detroit market. Click here for a scan of a newspaper article about the Community Reinvestment Act challenge, complete with St. Patrick’s Day karaoke and happy hour ads, courtesy of Google.

After the Federal Reserve approved the Fifth Third’s Old Kent acquisition, in the Detroit MSA “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.”

And now, horses. Fifth Third deserves more scrutiny….

What did and does Hank Paulson think of the Community Reinvestment Act?

So what did and does Hammering Hank Paulson think of the Community Reinvestment Act? He was Secretary of the Treasury, in charge of the Office of the Comptroller of the Currency and Office of Thrift Supervision, which regulate national banks and saving banks, respectively, including for CRA.

But on February 2 on the Larry Kudlow show, when Kudlow included CRA among the causes of the economic crash, Paulson said nothing, then agreed, "That's right... you had all of this going on."

From the transcript:

Mr. PAULSON: Well, what you need to understand is what had happened before even the middle of '07, which is you'd had these excesses had been building up for some times. You'd had a--we had been overstimulating housing. So if you look at the combined weight of all of our policies in the US government...
KUDLOW: Wait. It's HUD-backed, unaffordable mortgage loans, Fannie and Freddie?
Mr. PAULSON: What you have--yeah, yeah, Fannie and Freddie, the FHA, various state programs.
KUDLOW: Community Reinvestment Act.
Mr. PAULSON: You know, mortgage interest deduction. I'm not saying of them were...KUDLOW: Zero capital gains tax on home sales.
Mr. PAULSON: That's right. And so you had--so you had all of this going on

Meanwhile, click HERE for an InnerCityPress.com article last week about Paulson's book.