Surrounded by strips of red tape placed on sidewalks and sign posts, community and civil rights leaders stood in front of the New Haven Savings Bank’s main office on Church and Elm streets Thursday for the release of a report that criticizes the bank’s lending practices.
The report, “A Very Red Line,” claims the bank discriminates against minorities, particularly blacks and Latinos, by lending disproportionately to whites and rejecting minority applications at much higher rates.
“Today is a very sad day in this community. This red line represents something that is not good,” Lynden Pitter, principal of Highville Mustardseed Academy in Hamden, said before presenting an in-depth explanation to a crowd of about 20.
The Connecticut Center for a New Economy, an organization affiliated wih Yale’s labor unions, compiled the 20-page report, which states that in 2002 the bank received 374 mortgage applications from whites, and only 16 from African Americans and seven from Latinos. Additionally, low-income whites were denied loans at a rate of 21.9 percent, whereas the rate for upper-income African-Americans was higher, at 25 percent.
“The fact that they have such low numbers for blacks and Latinos is sinful,” said Ward 7 Alderwoman Dolores Colon.
The report further explains that while the majority of the bank’s deposits come from the New Haven area, a disproportionate amount of capital leaves the city for mortgage loans to wealthier Connecticut communities.
“To know that their money is used to provide lending to communities outside New Haven is something that our Hispanic leaders cannot tolerate,” said Abraham Hernandez, a Latino community leader who runs Radio Amor.
The report also details the July 2003 conversion of the New Haven Savings Bank from a mutual savings bank to a publicly-traded stockholding company. Community leaders expressed worry that as a large public bank owned by shareholders, the 165-year-old local institution will no longer be able to meet the needs of the community. The New Haven Savings Bank, holding 18 percent of all New Haven deposits — more than any other bank in the city — is the only remaining mutual bank in New Haven.
“This conversion is not about working families, or low income families. It is about those who have wealth needing to accumulate more wealth,” said Pitter, who is a member of Elm City Congregations Organized.
Representatives of the New Haven Savings Bank defend the conversion by emphasizing the need to remain competitive in today’s market.
“We feel that we have an outstanding community record, validated by five outstanding Community Reinvestment Act reviews,” Paul McCraven, senior vice president and spokesman of the bank, said.
The Community Reinvestment Act monitors banks by studying investment, lending, charitable giving and service practices. The conversion, McCraven said, will not result in a loss of funds for the area. Rather, the bank plans to put $30 million from its stock proceeds to support local community activities.
“The lion’s share will stay right here in New Haven,” he said.
Many community leaders oppose the bank’s conversion.
“NHSB is accountable to this community,” said Yale Law School lecturer Peggy Hamilton, who is assisting Mayor John DeStefano Jr. in disputing the conversion. “They simply can’t make decisions without at least having dialogue with those who have invested in it all these years.”
At the end of the meeting, the spokespersons gathered around a line of red tape as Pastor Betty Marks, of New Growth Outreach Ministries, cut through the middle.
“I think that if we all stick together, we can make a big difference,” Colon said.