Aug. 1, 2011
BOSTON — A new report finds the wealth gap between whites and blacks and Latinos in America is the widest it’s been in 25 years. The National Urban League Conference, which took place last week in Boston, discussed how to recapture the financial gains made by African Americans.
Roxbury's One United Bank. (via Google Maps)
Marc Morial, the President of the National Urban League, said the Pew Center report points to a growing crisis in America.
"What it does is push people who had economic security, it pushes them down further on the economic ladder and it affects the people that they support. So in real terms, does it mean we are back where we were thirty years ago when it comes to the economy? We have a responsibility to tackle it, to try to confront it and to try to build a plan to restore wealth," Morial said.
Minority-owned banks have traditionally played important roles in propping up the black middle class, lending when others would not. But one such institution in Roxbury has come under fire for its alleged hands-off approach to the community surrounding it.
One United, with branches in Massachusetts, California and Florida, grew by gobbling up other black-owned banks in those states, including the Boston Bank of Commerce in the mid-1990’s. That institution was led by Ron Homer, who at a Roxbury press conference in December 1989 announced what was called the Home Ownership Loan Pool, to encourage homeownership loans for qualified residents of minority neighborhoods.
"We had actually publicly been against concessionary-rate lending over the long haul. It’s not sustainable. It doesn’t benefit everyone. It’s a cutoff. They’ll be a first-come-first-serve by the very nature and we don’t think that’s the way to service the community over the long haul," Homer said.
Over the short haul, the bank believed that by reducing interest it would encourage home buying, stabilize minority communities and improve housing stock in the Roxbury-Dorchester-Mattapan neighborhoods. But a decade later, Homer was ousted as Boston Bank of Commerce chief executive by a businessman named Kevin Cohee. The takeover was part of a strategy to grow One United, which describes itself as “the premier bank for urban communities."
Yet, many in Roxbury, Dorchester and Mattapan are asking if the bank truly invested in those communities.
Bruce Bickerstaff sits on the Roxbury neighborhood Council. Previously, he was a board member of the Roxbury Trust, a neighborhood investment group charged with improving conditions in Roxbury. He says he has long been concerned about One United’s lending history.
"I cannot find anyone in my circles who have a home mortgage, their kids going to school on an educational loan, a car loan. I know people who have savings accounts there. I know people who have savings accounts there. But I don’t know any who have gone to that same institution to broaden their own capital," Bickerstaff said.
According to a 2009 Boston Globe report, One United loaned money only to a handful of wealthy individuals in black communities around Boston, including for the construction of a 7,000-square-foot home near the Brookline Country Club and $1.1 million in 2006 for a condo across the road from the Public Garden.
One United has also been plagued by allegations of self-dealing by its executives, specifically the questionable use of a house in Malibu, California. Bickerstaff says before these issues came to light, the Roxbury Trust tried to channel neighborhood re-investment funds through One United.
"We had $1.6 million. We approached One United. It was over 30 days before we got a call back. It was another 25 days before we got notice that they could not manage the trust because they do not have the financial tools in place in the bank. So they were going to farm that service out and that was too tenuous," Bickerstaff said.
Boston-based One United has also had difficulty paying back money it borrowed from the government — a loan arrangement that has led to an investigation of one of Congress’s most senior members, California Representative Maxine Waters. The bank was facing major financial difficulties when the Troubled Assets Relief Program was being put in place, and Representative Waters came to the rescue.
Waters, a civil-rights stalwart, said she was merely trying to help a minority owned institution that had fallen on hard times. The problem, in the view of ethics investigators, was that her husband, a former One United executive, owned stock in the bank and would have suffered huge losses if it failed.
Representative Waters was concerned about what might seem to be a significant conflict of interest if she intervened. So she reportedly sought advice from Representative Barney Frank, who at the time chaired the House Financial Services Committee. Frank says he advised Waters against intervening on behalf of the bank and suggested that his staff would work on making One United eligible for $12 million in TARP assistance.
The ethics committee, four Republicans and four Democrats, thoroughly studied that and found nothing negative to say about my role.
Congressman Barney Frank told WGBH that he tried to help a minority owned bank in his district, but says he tried to help other institutions as well.
"I tried to help Fidelity, I tried to help Putnam, State Street bank, and I tried to help Bank of America. Tried to help Liberty Mutual. And I did find it interesting that after I helped some of the largest financial institutions in Massachusetts in a legitimate way none of that was controversial," Frank said.
It’s a double-standard, says Frank, who was attacked by conservatives for coming to One United’s aid. WGBH made several phone calls to the bank, but they explicitly declined to comment for this report. However, One United is on record as saying “We are actively engaged in raising capital to develop new programs to serve urban communities, and to repay TARP funds."