A new report from the Center for American Progress (CAP) in Washington, D.C., shows 14 ‘systemically significant banks’ and their current subsidiaries were responsible for originating more than one of every three higher-priced mortgages in the nation at the height of the housing bubble in 2006.
The report, ‘Unequal Opportunity Lenders? Analyzing Racial Disparities in Lending by Big Banks,’ analyzes lending patterns by bank and race and indicates that significant disparities exist in the prevalence of higher-priced lending between minorities and whites. These differences persist even when focusing solely on high-income borrowers.
Overall, 17.8% of white borrowers paid high prices when borrowing from large banks in 2006, while 30.9% of Hispanics and 41.5% of African Americans paid high prices, CAP says. Only 11.5% of Asians paid high prices.
Among high-income borrowers, African Americans and Hispanics were still almost three times as likely as whites to pay high prices for mortgages. More than 32% of high-income African Americans paid higher prices in 2006, compared to 10.5% of whites and 11.5% of Asians. Similarly, 29.1% of high-income Hispanics were given higher-priced mortgages.
As the banks studied by CAP received TARP funding last year, the center recommends that TARP's special inspector general be required to further examine each institution's lending practices. CAP also endorses President Obama's call for a consumer protection agency.
SOURCE: Center for American Progress