Recently the Chicago City Council has taken to task the larger banks providing banking services for their lack of support for community lending in Chicago – especially for home mortgages. The efforts of the City Council were well detailed in a recent report by WBEZ, the Chicago public radio station. Whilst banks tend to be very liquid at the moment, the amount of money on deposit from the City of Chicago is still meaningful as it is around $500 million. In addition the city uses the banks for operational services for which it is likely that fees are also paid. But from the article it would appear that that banks prefer not to discuss the issue as they refused to attend the council hearings relative to their track record. They also did not provide comments to WBEZ for their report.
The action of the City Council was driven by a comprehensive report also developed by WBEZ in cooperation with the non-profit City News Bureau and released in June 2020. This report includes a particularly good graphic showing that the lending for home mortgages is highly concentrated in the wealthier neighbourhoods, which coincidentally (or not) are primarily White. Black and Latino neighbourhoods showed considerable lower levels of lending. In fact four primarily White neighbourhoods received more lending that all the Black and Latino neighbourhoods on a combined basis. Even if adjusted for housing price differentials, the actual number of loans tells a similar story by a ratio of 4 to 1.
For many in the US the path to basic wealth accumulation has gone through the route of home ownership. If there is no mortgage funding for acquiring homes, there can not be an effective growth of wealth for Black and Latin families. And so the wealth gap in the US based on ethnic background continues to be driven by choices made by banks. Perhaps the efforts of the Corporate Social Responsibility departments of these very large banks should focus their efforts on improving the lending approach of their banks instead of producing polished reports on all the good work their banks do. That change would lead to results that count in improving the lives and wealth of people of all backgrounds.
