Kucinich Sends Letter To OCC, Requests Huntington Bank/Sky Bank Merger Be Denied
Presents Evidence That Merger Will Contribute to Foreclosure Problems Which Plague Cuyahoga County
Washington,
Jun 15, 2007 -
WASHINGTON, D.C. — Congressman Dennis Kucinich (D-OH), sent a letter to the Office of the Comptroller of the Currency (OCC) asking that the Huntington Bank/Sky Bank Merger be denied or delayed, pending an additional comment period. The additional 90-day extended time for comment would allow the OCC to delve further into the foreclosure crisis and get positive assurances from the banks, as are necessary to enforce the Community Reinvestment Act.
“I am presenting evidence to the OCC that branch closures in African American neighborhoods resulting from this bank merger will contribute to the foreclosure problems that plague Cuyahoga County. Depository institutions have all but disappeared and replacing them has been a flood of predatory lending and payday lending institutions,” Kucinich said.
Kucinich submitted a series of color maps of Cuyahoga County, Ohio to illustrate the connection between the loss of depository bank branches and the resulting growth of home foreclosures. He is the Chairman of the Domestic Policy Subcommittee of the Oversight and Government Reform Committee, with oversight over the Federal Reserve System. He has already held two Subcommittee hearings on this topic: one in Washington, D.C. and one in Cleveland, Ohio.
“Closing branches will contribute to the existing problem of insufficient numbers of depository institutions in low and moderate income neighborhoods, especially African American neighborhoods, and it will ultimately add to the foreclosure problem for which Cuyahoga County has become so well-known,” Kucinich said.
“Foreclosure rates are highest where the people have the least access to depository banks. Depository banks not only provide mortgages at affordable rates, but also enable customers to open savings accounts and build wealth.”
The text of the letter is below:
June 14, 2007
Mr. David Rogers U.S. Department of the Treasury Office of the Comptroller of the Currency 440 South La Salle Street, Suite 2700 Chicago, Illinois 60605-5027
Dear Mr. Rogers:
I am writing to state my objection to the proposed merger of Huntington and Sky Banks pending satisfactory assurances that these banks are meeting the objectives of the Community Reinvestment Act of 1977 (CRA) (12 U.S.C. § 2901 et seq.).
Upon learning of the merger in the Federal Register of February 9, 2007, I wrote to the Federal Reserve Bank to express my concerns. I represent Ohio’s 10th Congressional District, a diverse district made up of inner-city urban, inner-ring suburban, and fast-growing exurban communities. Upon the approval of this proposed merger, Huntington Bank will begin to dismantle bank branches for reasons of economic efficiencies or antitrust compliance. The result of recent similar mergers has been a crisis of foreclosures, facilitated in large part by the predatory mortgage and payday lending that rush to fill the void in neighborhoods which lack depository banks. The legal notice published June 7, 2007, confirms that this trend will be continued with “an as yet undetermined number of branches [to] cease operating.”
Cleveland is at the epicenter of the national crisis of foreclosure. The Center for Responsible Lending projects that one out of five subprime mortgages originated during the past two years will end in foreclosure. These foreclosures will cost homeowners as much as $164 billion—the exact cost they will have on urban America is unknown.
I have enclosed with this letter a series of color maps of Cuyahoga County, Ohio, to illustrate the connection between the loss of depository bank branches and the resulting growth of home foreclosures. This is especially true among minorities. The first map, entitled “Where the Depositories Made Loans 2005,” shows a sideways V highlighted in light green. That geographical area represents the areas in the county where depository banks made very few prime loans. The next map, entitled “Subprime Loans 2005,” shows the same sideways V, this time in reds and oranges, which shows where the most subprime mortgage loans were made during that same year. The third map, entitled “Foreclosure Filings, Cuyahoga County First Ten Months of 2006,” shows the same sideways V represented by red dots indicating the number of foreclosures.
These first 3 maps tell us that there is a clear and self-reinforcing correlation between the low number of prime loans from depository banks, the high number of subprime loans where access to depository bank loans is limited, and the high number of foreclosures. The 4th map shows the sideways V along the same neighborhoods and census tracts. But here the foreclosures, indicated by blue dots, indicate predominately African-American neighborhoods.
Lack of access to prime loans at local depository bank branches, a high frequency of subprime loans, and a high rate of foreclosures are by no means specific to any racial group. Yet, the pattern certainly carries a whiff of America’s dark past.
The CRA was enacted by Congress to ensure that depository banks such as Huntington and Sky, regulated by the Office of the Comptroller of the Currency (OCC), “serve the convenience and needs of the communities in which they are chartered to do business.” See 12 U.S.C. § 2901(a). This means that the OCC is required to use its authority “to encourage such institutions to help meet the credit needs of the local communities in which they are chartered.” See 12 U.S.C. § 2901(c). In particular, the OCC must “assess the [banks’] record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods” and “take such record into account in its evaluation of an application for a deposit facility by such institution. See 12 U.S.C. § 2903(a).
The state of banking in Cuyahoga County and elsewhere is such that credit needs in low- and moderate-income neighborhoods are not being met. Banks under the regulatory authority of the OCC are not adequately serving the convenience and needs of communities in Cuyahoga County where the affects of the proposed merger will be felt. This situation must be reversed, not exacerbated, for the OCC to show that it is truly enforcing the CRA. But approval of the merger will exacerbate the situation and further deny access to credit in these neighborhoods.
The OCC would be remiss if it approved the merger without making further affirmative assurances on behalf of the affected communities. Therefore, I ask that the OCC deny approval or delay any approval pending an additional 90 day extended comment period and a public hearing in which the OCC could delve further into this crisis and get such affirmative assurances from the banks as are necessary to enforce the CRA.
Sincerely, /S/ Dennis J. Kucinich Member of Congress
