Financial Strip Mining Here in Memphis

A couple days ago there was an article in the New York Times about sub-prime mortgages and their disproportional rates in minority neighborhoods. The article brought up issues that were applicable to Memphis. One of which was access to traditional banking outlets. But first here is some baseline information.
-In 2006, blacks were 2.3 times more likely, and Hispanics twice as likely, to get high-cost loans as whites after adjusting for loan amounts and the income of the borrowers, according to an analysis of loans reported under the federal Home Mortgage Disclosure Act.

In the article two neighborhoods in Michigan were compared

“Consider two neighborhoods in the Detroit area. One, located in the working-class suburb of Plymouth, is 97 percent white with a median income of $51,000 in 2000. To the east, a census tract in Detroit just inside Eight Mile Road has a very similar median income, $49,000, but the population there is 97 percent black.

Last year, about 70 percent of the loans made in the Detroit neighborhood carried a high interest rate — defined as 3 percentage points more than the yield on a comparable Treasury note — while in Plymouth just 17 percent did.”

Now why is this phenomenon? Here are a couple ideas presented by researchers.

“Researchers and industry officials agree that there is probably no single explanation for the lending patterns, though the history of banks’ avoiding minority neighborhoods, the practice known as “redlining,” is a good place to start.”

Check out these maps of the Memphis area-



“It may be that these borrowers do not have access to traditional banks, because there are no branches near them. The Community Reinvestment Act, enacted 30 years ago, was intended to address redlining by forcing banks to make loans in lower-income areas. But the law’s provisions do not apply to banks in neighborhoods where they have no branches.”

““You could go into a middle-class area in Queens County that is white and there will be lots of banks on the shopping street,” said Alfred A. DelliBovi, president of the Federal Home Loan Bank of New York and a deputy secretary of the Department of Housing and Urban Development in the first Bush administration. “If you go to an area that is equal income and that is black, you won’t see many.””

It seems the experiences in other parts of the country are common to Memphis too. But this isn’t the only reason foreclosures are so high in areas of Memphis, especially Frayser. http://polardonkey.blogspot.com/2007/09/forclosures-grow-like-daisies-in.html

Also, check out these posts on check cashing locations and deliberate targeting of hispanics.http://polardonkey.blogspot.com/search?q=check+cashing

“A bigger reason may be that in recent years many subprime loans were not sought out by borrowers but actively sold to them by brokers and telemarketers, said Calvin Bradford, a housing researcher and consultant. A majority of the loans were refinance transactions allowing homeowners to take cash out of their appreciating property or pay off credit card and other debt.”

As you can see, companies outside our community have been deliberately targeting minority populations and mining equity. These destructive tactics have left a trail of economic destruction in communities which were already economically fragile. How are we supposed to improve economic opportunities and development of our city when neighborhoods are being financially strip mined? Where have our local politicians and policy makers been?