PGHIMC - Pittsburgh Independent Media Center

PNC Bank, Which Funds Payday Lenders, Wants to Buy Money-Laundering Riggs Bank: Protest
by Fair Finance Watch Saturday, Aug. 21, 2004 at 2:31 PM
pnc-watch [at] fairfinancewatch.org

Pittsburgh-based PNC Bank, which supports high-cost predatory payday lenders, now wants to buy Riggs Bank, which is embroiled in a money laundering scandal involving, among others, Pinochet of Chile, the oil dictator of Equatorial Guinea, and the Saudi Arabian embassy. Inner City Press / Fair Finance Watch has filed opposition to PNC's application for regulatory approval, covered (begrudgingly) in the Pittsburgh Post-Gazette <www.post-gazette.com/pg/04230/362781.stm> and in greater depth on www.innercitypress.org/finwatch.html

Inner City Press / Fair Finance Watch Files Challenges to PNC's Applications to Acquire Scandal-Plagued Riggs National Corporation, to the Federal Reserve and OCC, Based on Unresolved Riggs Issues, PNC's Lending Disparities and PNC’s Funding of Predatory Payday Lenders

August 2004 -- The consumers' and community organization Inner City Press / Fair Finance Watch (ICP) has filed two 21-page challenges to applications by the PNC Financial Services Group to acquire the scandal-plagued Riggs National Corporation. The proposed acquisition, for $779 million, was announced on July 16; now an application for regulatory is pending at the Federal Reserve Board, the approval of the Office of the Comptroller of the Currency will also be required. ICP's comments, filed with the FRB and OCC, include evidence that PNC funds payday lenders such as Check n’ Go of Washington DC, Inc. and elsewhere; ICP contrasts this with PNC’s peer SunTrust’s July 12, 2004 response to ICP’s comments, that SunTrust will no longer fund payday lenders. See, e.g., "SunTrust pledges to drop ties to payday & title lenders," http://www.investors.com/breakingnews.asp?journalid=22274151&brk=1

ICP’s comments use recently-released 2003 mortgage lending data to demonstrate that PNC disproportionately excludes African American and Latino applicants from its lending. ICP's comments analyze PNC's recently-released 2003 Home Mortgage Disclosure Act (HMDA) data, and demonstrate for example that in the Newark, NJ Metropolitan Statistical Area (MSA), for conventional home purchase loans, PNC Bank N.A. in 2003 denied loan applications from Latinos 4.71 times more frequently than applications from whites. PNC’s disparity for African Americans was incalculable in 2003: PNC made no conventional home purchase loans to African Americans in 2003 in the MSA of Newark, NJ.

PNC claims to make up for its lack of home purchase lending to people of color with its home improvement lending. But in the Newark MSA in 2003 for this type of loan, PNC Bank N.A. denied the applications of Latinos 3.16 times more frequently than whites, and denied African Americans 2.84 times more frequently than whites.

In its home MSA of Pittsburgh, PNC Bank NA in 2003 denied the conventional home purchase applications of African Americans 4.62 times more frequently than those of whites. Again, PNC’s lack of home purchase lending to people of color was not made up for its home improvement lending: in the Pittsburgh MSA in 2003 for this type of loan, PNC Bank N.A. denied the applications of Latinos 2.11 times more frequently than whites, and denied African Americans 2.43 times more frequently than whites.

PNC Bank N.A. has 100% denial rates for African Americans’ applications for home improvement loans in the Jersey City NJ and Newburg, New York MSAs in 2003. It was scarcely better in its home state of Pennsylvania. In the state capital, the Harrisburg MSA, PNC Bank N.A. for home improvement loans denied the applications of Latinos 3.28 times more frequently than whites, and denied the applications of African Americans 2.93 times more frequently than whites. In the Philadelphia MSA, for refinance loans, PNC Bank N.A. denied the applications of Latinos 2.45 times more frequently than whites, and denied the applications of African Americans 2.64 times more frequently than whites. In this Philadelphia MSA for home improvement loans, PNC Bank N.A. denied the applications of Latinos 2.72 times more frequently than whites, and denied the applications of African Americans 3.06 times more frequently than whites.

PNC's other bank, PNC Bank Delaware, in 2003 in the Wilmington DE MSA for conventional home purchase loans denied 100% of the loan applications it received from Latinos. For refinance loans in this MSA, PNC Bank Delaware denied the applications of Latinos 2.93 times more frequently than whites, and denied the applications of African Americans 2.02 times more frequently than whites. For home improvement loans in this MSA, PNC Bank Delaware denied the applications of Latinos 2.73 times more frequently than whites, and denied the applications of African Americans 2.22 times more frequently than whites.

ICP's comments state that, given these lending disparities, on this ground alone the public would be ill-served by allowing PNC to acquire Riggs and its branches. Also to be considered, including at the requested hearing, is the question of reductions in service, which occurred, including via branch closings, after PNC - United. The Washington Post of July 26, 2004, reported: "Brian Goerke, a spokesman for PNC, said the company will initially operate all 51 Riggs branches. Long-term decisions about historic structures such as the Corcoran branch... have not been made, he said." The American Banker newspaper of July 19, 2004, reported that "executives indicated that about 50% of Riggs' 1,400 employees would be cut." Staff cuts of 50% would be inconsistent with consumer service, and make a troubling contrast to the windfall expected by those responsible for Riggs' practices. The Washington Post of August 13, 2004 reports that ""Robert L. Allbritton is slated to received $850,000... Nine other executive officers will receive a total of $4 million." ICP has requesting public hearings on this ground and especially on PNC's funding of problematic payday lenders. As documented by the Uniform Commercial Code filings ICP has obtained and submitted, PNC funds and enables for example:

Check n’ Go of Washington D.C., Inc. (proved by a UCC filing from the District of Columbia Department of Finance and Revenue); Check-N-Go of Illinois; Check n’ Go of Ohio; Check n’ Go of Washington (State); Check n’ Go of Wisconsin; “The 409 Group” care of Check n’ Go’s parent CNG Financial Corp. in Mason, Ohio, etc..

Check n’ Go is not only one of the largest, but one of the most troubled and troubling of the payday lenders. See, e.g., Ashville Times of August 1, 2004, “Consumers file class action lawsuits;” "Two payday lenders agree to settlements; Forms were mailed mid-month to eligible Check Into Cash and Check 'N Go customers," by Chris O'Malley, The Indianapolis Star of February 28, 2002, etc..



PNC has presumptively been on notice of predatory lending issues surrounding Check n’ Go, including because Check n’ Go has been under fire in PNC’s headquarters city, Pittsburgh. See, e.g., Pittsburgh Post-Gazette of May 14, 2004, “Zoning for ‘Payday” Loan Shops Opposed” --
“Several community groups are fighting to keep payday loan outlets out of commercial districts on the North Side and in East Liberty, claiming the businesses will have a negative impact on redevelopment efforts and exploit people who can least afford to pay the loans back... The businesses are being proposed by Check 'n Go, an Ohio-based company that currently operates 25 outlets in Pennsylvania. Check 'n Go offers short-term loans, typically in the form of paycheck advances, to customers... [The] director of real estate development for East Liberty Development Inc., decried the ‘exploitative nature’ of the businesses, saying they... tarnish ‘people's financial behavior.’”

This is in PNC's headquarters city, one that it claims to serve under the Community Reinvestment Act. See, e.g., Bergen Record of October 15, 2003, "Group seeks to block PNC deal for N.J. bank," reporting that "Brian Goerke, spokesman for PNC, declined to respond to specific allegations. He said the company is proud of an 'ongoing commitment to improving all the communities in which we do business.' The company 'will respond appropriately with any matters raised' during the acquisition approval process, he added."

PNC's funding and enabling payday lenders is hardly indicative of an "ongoing commitment to improving all the communities in which we do business." Banks larger than PNC, such as SunTrust, have committed to the Board to not lend to payday lenders, in light of consumer harm and reputational harm. See, e.g., SunTrust's July 12, 2004, response to ICP's comments. ICP has formally requested hearings. Pittsburgh residents, and PNC customers, may wish to ask the bank, at its branches and elsewhere, why it continues to fund payday lenders. ICP will be filing further comments, once it receives PNC's, Riggs' and the agencies' response(s) and other requested information, and is posting updates on these issues. at <http://www.innercitypress.org/finwatch.html>.

www.innercitypress.org/finwatch.html

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