Wells Fargo—In 2006, Wells Fargo was the second largest subprime loan originator. African-American borrowers were particularly likely to pay higher prices—47.3 percent compared to 16.7 percent of white borrowers.
And mortgage pricing disparities are very distinct among blacks making very good money. “Twenty-six percent of high-income African-American borrowers received higher-priced mortgages from Wells Fargo, a rate more than four times that of high-income whites."
JP Morgan Chase—In 2006, JP Morgan Chase was also more frequently charging higher prices to African-American and Hispanic borrowers than whites and Asians. Moreover, in 2008, it acquired federally seized Washington Mutual, whose lending practices in 2006 showed the largest racial/ethnic gap. "Fully 56.9 percent of African Americans and 42.3 percent of Hispanics paid higher prices, compared to 16.9 percent of whites. The gap was even wider among high-income borrowers, with African Americans paying high prices 55.2 percent of the time and Hispanics 46.1 percent of time, compared to 13.2 percent of white borrowers," according to the report.
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This is a shameful and blatant example of institutionalized racism, plain and simple. Why should people with identical credit ratings, incomes, savings, etc. pay different mortgage rates? For what purpose? Maybe it corresponds to the fact that people with more "ethnic sounding" names like "Taneisha Washington" and "Rasheed Jenkins" are less likely to get an interview or a job than someone with an identical resume, whose names is "William Smith" or "Lisa Thomas." Perhaps it correlates to the allegation that certain employers check applicants' zip codes to determine in which part of town they live—which can give them a better idea of a person's race. Auto insurance providers have a similar practice of determining insurance rates by zip code and education level. As you might suspect, people who live in areas more highly populated by black people tend to pay more for auto insurance than non-blacks. Some will tell you that businesses, schools and government agencies can determine your race by your social security number—that all black people have an even number as the fifth digit in their social security number—others will tell you that is an urban legend. Do your own research, ask people around you. It is most objective if you compare that fifth digit with other people born in the same area and year that you were.
Add it all up, and what I see is the continuation of methods prescribed to keep blacks from accumulating and passing on any real wealth. As we all know, knowledge + wealth = power. It would seem that the only power that the powers-that-be want African Americans to have, is spending power. If that is the case, then we have two action items we need to address directly:
- We need to demand equal treatment and protection from predatory lending and discrimination
- We need to make informed and educated decisions about with whom we choose to spend our money.
In America, now and more than ever throughout the world, Method Man's words ring true:
"Cash, Rules, Everything, Around, Me/ C.R.E.A.M./ Get the money/ Dollar, dollar bill y'all."
It's not enough to get it, we need to hold on to it, grow it and use it to improve our communities and our lives.