As the state of Pennsylvania and the city of Philadelphia begin probes into racist lending practices, Pennsylvania state Senator Vincent Hughes urges constituents to pull their money from banks denying home loans to people of color. This comes after a recent investigation by Reveal found African American mortgage applicants in Philly are almost three times as likely to be denied a conventional mortgage as white applicants.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Juan González. Our guests are Aaron Glantz, with this remarkable piece called “Kept out,” massive data crunching to look at millions of cases around the country of redlining — Aaron is senior reporter at Reveal. And Vincent Hughes is Democratic state senator of Pennsylvania. Juan?
Don’t miss a beat
Get the latest news and thought-provoking analysis from Truthout.
JUAN GONZÁLEZ: Yes, Senator Hughes, I wanted to ask you about what can be done, especially with some of these lending institutions. Some of the ones mentioned in the series are PNB, Santander Bank. What can local legislatures — in the face of apparently not that much interest at the federal level to deal with this issue, what can you do at the state and municipal level to make these lending institutions more accountable?
SEN. VINCENT HUGHES: Well, once we became aware of the information — and you’re right, it’s an incredible amount of research done by Aaron and Emmanuel. Once we became aware of this, we — as you saw in your clips, we asked the attorney general to initiate an investigation. We asked the state treasurer. We specifically asked the state treasurer, “Well, like where is the state depositing its moneys? What banks is the state using?” And quite frankly, if there’s a bank that’s participating in this discriminatory behavior, they don’t need to be in the business of holding state tax dollars. So, he’s pulling together research on that level. We worked directly with Councilman Kenyatta Johnson to initiate local hearings in Philadelphia.
And because of the federal government walking away from its oversight responsibilities, it really is going to require cities, local communities, states to initiate their own action to try to address this racist, discriminatory behavior. And that’s what we’re urging folks to do, not just in Pennsylvania, but all across the country. You know, and this is — you know, when you have small towns across — in states across the country that don’t have the size of a city of Philadelphia, who depend upon homeownership to keep their communities going, but they can’t — the local neighborhoods can’t get a loan, they can’t get a mortgage, they can’t create the wealth in their families, in their communities, as I said before, it has a tremendous ripple effect across the board in every other aspect of a person’s reality and a community’s reality.
AMY GOODMAN: Let’s go to a clip from a PBS NewsHour report accompanying Aaron Glantz and Emmanuel Martinez’s investigation.
AARON GLANTZ: Adrienne Stokes has owned her Point Breeze home for decades. She lives here with her pit bull, Boots.
ADRIENNE STOKES: Good boy!
AARON GLANTZ: There is a lot of new investment in the area, and property values have skyrocketed. But normal wear and tear has taken a toll on her house.
ADRIENNE STOKES: See how this window is off-track? They’re off-track.
AARON GLANTZ: So she went to a local bank, First Trust, the only one with a branch in the neighborhood.
ADRIENNE STOKES: I went there to get a home equity loan, OK, because I wanted to fix up my home.
AARON GLANTZ: She was looking for $30,000 and, because of rising property values, had $200,000 of equity in her house. She was current on her mortgage, and she has a steady income.
ADRIENNE STOKES: Never, you know, did no refinancing the home. I just wanted a home equity loan to fix up my house. And I couldn’t believe they denied me.
AARON GLANTZ: She was told her credit score wasn’t good enough. Without the loan, she’s afraid the condition of her house will only get worse.
AMY GOODMAN: So, Aaron Glantz, tell us more about Adrienne Stokes and people like her. What is being done? What was done during the Obama years, the number of lawsuits brought? Have any been brought under the Trump administration, when you’re talking about this pervasive problem?
AARON GLANTZ: Well, I mean, I think that when we hear a story like Adrienne Stokes’, the reason that we wanted to bring her story to a national audience was because she lives in this neighborhood in Philadelphia called Point Breeze, which is a historically African-American neighborhood, which is seeing a tremendous influx of wealthy white newcomers — so, gentrification. And I wanted to know: Why is it that when communities gentrify, when new money comes in, when blighted and vacant properties are occupied, that the existing residents there don’t feel lifted up, that they don’t feel personally improved, that instead they feel pushed out?
And so, you know, in Adrienne’s case, her house was suddenly worth a lot more. And she said, “You know what? Now I want to fix it up. Now I want to fix that broken sump pump. I want to fix my circuit breaker. I want to fix my windows.” And she goes to her local bank, the only one in the neighborhood. They say no. Her local bank, First Trust, which is a local Pennsylvania institution, helped more than 500 people in Philadelphia buy homes over the last five years, and only a small fraction of them, less than two dozen, were African-American. We see that with many institutions. And many institutions, nearly all of them, 99 percent, under President Obama, got a satisfactory or outstanding grade under the Community Reinvestment Act, which is a landmark law signed in 1977 by Jimmy Carter to try to get banks to lend in low-income communities. And what we found was that these institutions were exploiting, in a loophole in the law that did not anticipate a gentrification. And so, nearly every one of them was getting a passing grade.
Then, let’s fast-forward. So, all that data, all those inspections, all the mortgage records we reviewed, all related to the Obama administration. Now we have, to your question, President Trump in office. The person who has the position now as comptroller of the currency, basically the nation’s top bank cop, Joseph Otting, who is charged with enforcing the Community Reinvestment Act, he ran a bank called OneWest with Steve Mnuchin, who is now Trump’s treasury secretary. And for the five years that he was in charge of OneWest, which was one of the largest banks headquartered in Southern California, they helped exactly three African Americans buy homes, and just 11 Latinos. And he is now in charge of enforcing these laws designed to get banks to serve low-income people across the country.
JUAN GONZÁLEZ: Aaron, I wanted to ask you — one of the rebuttals of some of the banks to your series is that your crunching of the numbers leaves out certain factors, like credit histories or credit scores of the applicants. Could you talk about that rebuttal and why even the issue of credit scores is suspect in terms of racial bias?
AARON GLANTZ: Well, we looked at all the data that is publicly available under the Home Mortgage Disclosure Act, which included how much money people made, the neighborhood they wanted to buy in and the amount of loan, the amount of house they wanted to buy, the amount of debt they wanted to take on. And we included a lot of other factors, too, like the demographics of the neighborhood, and the regulating agency over the financial institution where they were trying to the loan, and everything we could.
There were some things that we couldn’t include, because the banks have been fighting to keep them secret. And one of them was credit score. Another really important metric that we couldn’t use was debt-to-income ratio, like the amount of debt total that a person has, including their student loans, their car payments, etc., in addition to the loan they’re trying to take on, in relationship to their income. And the reason that we couldn’t include that information, that we wanted to include, was because the banks, since the Dodd-Frank Act was passed in 2010, have been fighting to keep that information secret. So, global economy crashed because of bad loans. Congress and President Obama said, “Banks, you have to start giving the public and the government information about borrowers’ credit scores, their overall debt burden and other factors.” And the banks have been kicking and screaming for seven years now, and we still don’t have it.
So, here we come, at The Center for Investigative Reporting. We go through all the records that’s publicly available. And then the banks say our analysis, that shows people of color can’t get a loan even when they make the same amount of money as whites, is no good because we don’t include the very information that they’re trying to keep secret, and that they have successfully kept secret up until this point.
AMY GOODMAN: I want to go back to someone we spoke to a few weeks ago on Democracy Now!, Rachelle Faroul, the 33-year-old African-American woman who manages a million-dollar grant in her job at the University of Pennsylvania. Two lenders turned her down when she tried to buy a home. Rachelle described what happened next.
RACHELLE FAROUL: And it really wasn’t until my partner, Hanako — who identifies as Asian, not half-white — stepped in and offered to be my co-borrower that it was pretty much smooth sailing, to the extent that our application was approved. But as soon as she came on, I was largely ignored, and really all that mattered was my money.
That is, unfortunately, not the experience of a large number of black people who try to buy homes in America. Most of us are routinely denied, our applications are rejected, and we are forced to continue to rent from people who don’t care about us, don’t care about our well-being and don’t really consider or value the ways in which we help them accrue wealth.
AMY GOODMAN: You only got it when Hanako signed on with you?
RACHELLE FAROUL: Yes. And it’s kind of ridiculous. I mean, it’s something that we still laugh about. So, Hanako’s co-borrower application was approved at a time when her credit score was in the 700s. And that is what mattered most, for whatever reason. What didn’t matter at all was the fact that Hanako was working part-time at a grocery store. Her most recent pay stub was like $115. I was helping her pay her health insurance, because, you know, she had such little cash.
AMY GOODMAN: The broker who turned down Rachelle Faroul’s first loan application, Angela Tobin, said race played no role in the rejection. Philadelphia Mortgage Advisors chief operating officer Jill Quinn sent a statement to Reveal that read, in part, “We treat every applicant equally and promote homeownership throughout our entire lending area.”
Meanwhile, Rachelle’s loan officer at Santander, Dennis McNichol, referred Reveal to his company’s public affairs department. The bank issued a statement that read, in part, “While we are sympathetic with her situation, we are confident that the loan application was managed fairly.”
If you, state Senator Vincent Hughes, can talk about what in what you’re calling for now will remedy a situation like this? And also, address the issue of the Trump administration weakening the standards banks must meet to pass a Community Reinvestment Act, and what you, as a state senator, can do around the issue of racial discrimination in lending practices.
SEN. VINCENT HUGHES: Well, I want to go back — as I answer that one, I want to go back to something that Aaron was speaking to earlier, about accessing credit score information and what have you and what makes the practices of the banks really suspect. You know, most of us do a lot of our banking online now. We’re facile enough to move around online to do our banking. But it is interesting, if that is a reality, that three-quarters of all of the bank branches that still are in existence in the city of Philadelphia are in majority-white neighborhoods, even though most folks are doing their banking online now. So, they’re discriminating in the mortgages that they’re approving, and they’re discriminating in where they’re locating their local branches, and they’re not placing local branches in minority — in majority-African-American and -Latino neighborhoods. So, that’s one thing, which causes the banks’ behavior to be really suspect here.
In terms of what we can do as — at the state level, we’ve got to figure out what power that we have that we can put on these federal — federally chartered institutions. Most of the banks that we’re talking about are federally chartered. I think, you know, for example, the city of Philadelphia has filed a lawsuit against Wells Fargo for steering — Wells Fargo for steering folks, minority communities, African-American and Latino communities and individuals, to higher-interest, higher-risk mortgages. So, it’s my understanding that Wells Fargo, while dealing with this lawsuit, has put aside maybe $3.2 billion, $3.25 billion, anticipating what potentially could happen if the courts rule against them. You know, driving dollars — if we’re successful on the legal front, if we’re successful in terms of public pressure, if we’re successful in saying, “You know what? State tax dollars should not go to banks that are racially discriminating. They should go to banks that are supporting and engaged in diverse communities, in African-American and Latino communities. Let’s move our state dollars into those institutions. Then maybe we can drive more activity, more mortgage lending, more favorable mortgage lending, into African-American and Latino communities, and the banks have got to pay.”
Again, the ripple effect of this kind of behavior is far-reaching, far-reaching. Ninety percent of the homes in the city of Philadelphia are older than 1978. And that’s important because 1978 was the year that lead paint was outlawed, was ruled you cannot use lead paint in terms of — because of the lead content. Well, we’ve got communities — we’ve got communities, especially black and brown communities, African-American and Latino communities, who are living in lead-filled homes. And so, they’re living in toxic households. If you can’t get a mortgage or you can’t get a second on your home to make home improvements to get rid of that lead, then you’re living in, if you will, houses of hell, OK? Because of the toxicity rate is so high.
Folks need to be criminally gone after. We need to move our money out of those institutions into institutions that are more favorable to these communities, who are not — who are not involved in discriminatory and racist behavior. And they need to be sent a message. We cannot depend upon Washington, D.C., at the federal level, given what they’re doing. We’ve got to take this within our own hands. Legislators around the country need to go after this. Local councilpeople and mayors around the country need to go after this and demand the justice that these communities deserve. It’s right morally, but it’s also good investment policy for these local communities.
JUAN GONZÁLEZ: Aaron, I wanted to ask you about an SMS service that you have with your story, where people can find out about what’s going on in their particular neighborhood. Could you talk about that and how they might access that kind of information?
AARON GLANTZ: Yeah. I mean, if you — we wanted to make sure that all this government information, which is currently, you know, available to computer geeks, is available to the general public. And so, what we did was created a data app. And so you can go onto our website at RevealNews.org/redlining, and you can type in your address, and you can find, in your neighborhood, whether you live in Wichita, Kansas, or San Francisco, California, or Philadelphia, Pennsylvania, which racial groups are getting loans in your neighborhood, your mother’s neighborhood, your father’s neighborhood, your cousin’s neighborhood, and who aren’t. And also, you can look at the behavior of every single bank or credit union, mortgage broker, in your city and find out what the racial breakdown of their lending is in your city. So, you know, the state senator mentioned that in Philadelphia Wells Fargo is far more likely to deny African Americans than whites — 27 percent denial rate for African Americans in Philadelphia from Wells Fargo, 9 percent from whites. You can type in any bank in any city and get a result like that for your metro.
AMY GOODMAN: Were you surprised by the response, Aaron, to your piece — we ran the first part it a few weeks ago — and the investigations that have opened? And what we should know about all over the country, not only in Pennsylvania?
AARON GLANTZ: I think a key to the success of this investigation is taking something out of the abstract and bringing it home to particular communities, you know, letting people know that it’s happening in their neighborhood, in their city. It’s no question that, you know, we focused our report on Philadelphia, where African Americans are nearly three times as likely to be turned down, even when they make the same amount of money as their white counterparts. And we focused our energies there, and we’ve had the greatest impact there so far. But also we worked with the Associated Press and our partners at the Public Radio Exchange, and there have been stories on the covers of newspapers all around the country — in Gainesville, Florida; Tulsa, Oklahoma; St. Louis; Detroit; etc. — where local media have been turning a lens in their communities. And I think that’s the way it has to go during this era when so many people feel that Washington is fundamentally broken, but they still care about their neighbors, and they still want justice in their community.
AMY GOODMAN: I want to end with Philadelphia City Councilmember Kenyatta Johnson speaking at a hearing last week.
COUNCILMEMBER KENYATTA JOHNSON: This week I have seen a sickening, unacceptable, but most importantly, un-American injustice. When we talk about segregation, we are usually talking about the Jim Crow era — separate schools, separate churches, separate water fountains. And we sometimes give in to the myth that the civil rights movement has relegated racial segregation to the darker days of American history. But here we are on the 50th anniversary of the Fair Housing Act, and deep segregation is alive and kicking. It is a legacy of federally sanctioned redlining policies that designated black neighborhoods as credit risks for home loans. Home ownership, which is commonly considered the cornerstone of the American dream, is, to some, an American nightmare.
But earlier this week we got a powerful proof of modern-day redlining. The Center for Investigative Reporting released an in-depth report that took a year of intensive research, including review of 31 million documents. They found that banks were denying home purchase loans, home improvement loans and home refinancing to applicants of color at far higher rates than to their Caucasian applicants. In Philadelphia, black [home loan] applicants were 2.7 times more likely to be denied than their Caucasian applicants.
AMY GOODMAN: Philadelphia City Councilmember Kenyatta Johnson. And we want to thank our guests today, Aaron Glantz, senior reporter at Reveal, and Vincent Hughes, Democratic state senator of Pennsylvania, who serves as the Democratic chairman of the Senate Appropriations Committee, speaking to us from Harrisburg, Pennsylvania. And that does it for this segment. You can go to democracynow.org. We’ll link to all the pieces and investigations that Reveal and The Center for Investigative Journalism has done.
This is Democracy Now! When we come back, we’ll talk Supreme Court. Stay with us.