Ben Bernanke wants banks to make more loans in low-and-moderate income neighborhoods.
Bernanke offered that opinion during his speech today in Washington. When asked to comment about how lending could stimulate more business activity, he said "We at the
Federal Reserve will remain closely attuned to the economic health of all communities, including low- and moderate-income communities."
The same information was documented in a report issued yesterday by seven different advocacy groups. The report, "Paying More for the American Dream," said the minority communities were finding it very difficult to qualify for refinance loans. The report contrasted 2008 with 2009. The population sample did not include any lending associated with loan modifications.
The report is the fifth in an annual series of studies that have looked at inequality in access to capital.
Key findings in the report include:
· From 2008 to 2009 in the seven cities examined, applications for conventional refinance loans increased 76 percent in predominantly white neighborhoods, while the number of loans made in these neighborhoods increased 125 percent.
· Over this same period in communities of color, conventional refinance applications
declined by 36 percent and originations declined by 17 percent.
· In Chicago, conventional refinance originations in predominantly white neighborhoods increased by 102 percent from 2008 to 2009, but over the same period declined by 41 percent in communities of color.
· In the seven cities, lenders were more than twice as likely to deny conventional refinance loans to homeowners in communities of color as they were to homeowners in majority white neighborhoods in 2009.
· Denial rates in communities of color ranged from 28.9 percent in Los Angeles to 60
percent in Cleveland, whereas in predominantly white communities, denial rates ranged from a low of 11.7 percent in Boston to a high of 24.4 percent in New York.