Academic journal article ABA Banking Journal

Washington Post Slams Fair Lending Record

Academic journal article ABA Banking Journal

Washington Post Slams Fair Lending Record

Article excerpt

In June The Washington Post published the results of a six-month investigation of mortgage lending practices of Washington, D.C.-based banks and thrifts. The series was entitled, "Separate and Unequal." In the words of a Post editorial that followed the series:

"[Our reporters] found that ... residents in black neighborhoods across the region have been effectively relegated to the ranks of second-class citizens--courtesy of their banks and thrifts. ... And the disparity, it was shown, was based on prejudice, outmoded banking culture an customs and ignorance."

The Post's reporters found that mortgage loans are made in white neighborhoods at twice the rate they are in lack areas with equivalent income levels. Banks were charged with even being reluctant to lend in the wealthiest of black neighborhoods. Using computerized analysis, the paper claimed that race, rather than income or housing characteristics, drove lenders' loan decisions.

The series also charged area lenders with providing fewer branches, and poorer ones at that, in minority neighborhoods. And it pointed out that blacks were rarely represented on the boards of the area's largest lenders.

A notable point about the Post's study on mortgage patterns is that it did not rely on Home Mortgage Disclosure Act data. Instead, the Post crossmatched data from more than 130,000 real estate deeds with census data. Neighborhoods were classified by race and income using census information. The data were also run through a computer model which the Post used to determine the relationship between race and credit. …

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