Study: Bank of America underserves black and Latino neighborhoods

By Tiffany A. Bolden,
BlackAmericaWeb.com
(November 5, 2007) A study released by the Service Employees International Union (SEIU) found that Bank of America has few bank branches in minority neighborhoods and offers more mortgage loans to whites than African Americans or Latinos.

The study, issued last week, examined Bank of America’s pattern of bank branches against its top two competitors in Buffalo, Chicago, Detroit, New York, Philadelphia, and St. Louis—cities ranked by the U.S. Census Bureau among the top-ten most-racially segregated in the country.

Two key findings of the study, "Shut Out of The American Dream: How Bank of America is Systematically Underserving Communities of Color and Harming Low-Income Families with Questionable Practices," revealed Bank of America fails to locate bank branches in majority minority neighborhoods regardless of the proportion of area residents who are minority and Bank of America is more likely to be the mortgage lender for a white borrower than for a black American in all the cities examined.

In four of the six cities, Bank of America ranked last in locating bank branches in majority minority neighborhoods and was twice as likely to lend to white mortgage applicants than to black mortgage applicants in Detroit and Chicago, the study also shows.

 "It’s simply unacceptable that Bank of America—the biggest bank in the country—is failing to ensure access to banking services and fair mortgage loans for entire communities of color," William McNary, Co-Director of Citizen Action Illinois said in a statement. "If the bank with the most branches won’t do the right thing for our neighborhoods, who will?"

Despite having more than double the number of bank branches of its nearest competitor nationally—with more than 5,700 bank branches, Bank of America has five times as many branches as Citibank and two times as many branches as JPMorgan Chase—Bank of America performed worst overall in locating branches in majority minority communities in the cities analyzed in the report.

 "The more we look at the practices of the biggest banks, the worse things we uncover," Stephen Lerner, Assistant to the President, SEIU, said in a statement. "Here’s a bank that is already using its size and market dominance to drive up fees and interest rates on working people—and now it’s trying to grow even bigger. If a bank is going to be this big and this powerful it should have responsibilities to the communities in which it operates."

Albert Higgins, an SEIU local member in Chicago told Blackamericaweb.com, "I am surprised. It makes me feel disrespected. If Bank of America is the largest bank, why are there no branches in our communities? It makes me upset that I can’t get a loan in my community, but others that live in my community can get a loan and open up businesses in my community. It’s just not fair," says the four-year resident of Chicago’s16th ward.

"Respect the diversification of the city. We need Bank of America for everybody not just a select few," says Higgins. "The main reason I am not a Bank of America customer is because there are no branches in my community."

Study findings indicate that in Chicago, Bank of America has 12 times more bank branches in neighborhoods with the fewest minority residents than in neighborhoods with the most minority residents. In fact, in neighborhoods with the highest number of white residents, the ratio of residents to bank branches averages only 11,204 residents per bank branch compared to 138,930 residents per branch in the neighborhoods with the highest percentage of African Americans.

Those not living in the cities pinpointed in the study—Buffalo, Chicago, Detroit, New York, Philadelphia and St. Louis—were disappointed, but not taken aback by the findings.

Darlene Reed-Burks, a Bank of America customer for more than two years and a resident of the Washington, D.C. metropolitan area told Blackamerica.com that although she has had a pleasant experience with the bank and has never applied for any loans with them, the news from the study does not shock her.

"I don’t find it surprising that Bank of America doesn’t have [sufficient amounts of] branches in Black communities," Reed-Burks said. "I feel most banks, not just Bank of America, have most of their branches in non-black communities because they feel that there is more money to be made in those areas, that the areas are safer and that the credit scores are better. [Overall] they feel it will be more beneficial to be in non-black communities."

Bank of America is the largest bank in the United States, controlling one in five credit cards and ten percent of all bank deposits—the maximum amount permitted by the Federal Reserve. Nationally, Bank of America has recently come under fire for its record of charging consumers some of the highest fees and interest rates in the nation—the bank collected more than $22.4 billion from penalty and service fees in 2006 alone.

In Chicago, Bank of America’s acquisition in September of LaSalle Bank has raised concerns among community organizations and elected leaders at the local, state, and national levels, including a loss of 10,500 jobs and more than $780 million in tax and other revenue from the area projected by the Anderson Economic Group.




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