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Consumer Group Seek to Halt NHSB
Claims lending bias in opposing conversion
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Business New Haven
10/27/2003
By: BNH
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NEW HAVEN - A New York consumer watchdog group is seeking to halt New Haven Savings Bank's (NHSB) plan to convert to public ownership.
Inner City Press/Fair Finance Watch on October 20 requested that federal and state regulators turn down the bank's application to buy the Savings Bank of Manchester and Tolland Bank and, to finance those deals, convert from a mutual savings bank to a stockholder-owned holding company.
The Federal Deposit Insurance Corp.'s public comment period on the $677 million proposal, which was announced in July, ends on October 30.
According to Matthew Lee, executive director of the nonprofit group, data reported by NHSB to federal regulators under the 2002 Home Mortgage Disclosure Act shows that the bank disproportionately denies loans to minorities.
Bank officials have denied race plays any part in lending decisions.
The Community Reinvestment Act (CRA) requires banks to lend fairly in low-income communities and those with a high proportion of minority residents. Banks are "graded" under the CRA every 18 months.
"To acquire banks, a company must be fairly serving its existing community," Lee told the New Haven Register. "But New Haven Savings Bank has been excluding African-Americans and Latinos from its lending, and now seeks to sell stock as a precursor to selling its whole operation. It would benefit a handful of people, while harming many more."
Lee urged regulators to deny the bank's applications. He also said that NHSB should be made to disclose planned branch closings and take a vote of its depositors, as well as hold a public hearing.
According to published reports, the group's filing asserts that federal mortgage data shows that NHSB turned down the applications of Latinos for home mortgages 3.67 times more frequently than those of whites in 2002.
For home improvement loans, the bank denied Latinos 2.52 times more frequently than whites, and denied the applications of African Americans 3.15 times more frequently than whites, the group said.
An NHSB spokesperson said the bank received an "outstanding" rating in a 2002 FDIC performance evaluation under the Community Reinvestment Act.
Other area advocacy groups have made similar claims in opposing the conversion, including the Connecticut Center for a New Economy in New Haven.
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