Posted on 04/12/2011 2:52:28 PM PDT by Piranha
(Crain's) — Federal regulators hit an Oak Park community bank for failing to comply with the federal Community Reinvestment Act, a highly unusual censure.
Community Bank of Oak Park River Forest, drew a rating of “substantial non-compliance” with the law that requires banks to lend and invest in low- and moderate-income neighborhoods. That's the worst CRA rating possible and very rare.
Over the past 12 months, the Federal Deposit Insurance Corp. has rated only two other banks nationwide so harshly, agency records show. Over the past ten years, just 14 of more than 7,500 banks nationwide have been rated substantially non-compliant with the CRA by the four federal bank regulatory agencies, according to Chicago-based National People's Action, a non-profit fair lending advocacy group.
Community Bank of Oak Park River Forest's transgression is particularly surprising in light of its home community. The 15-year-old bank, with $352 million in assets, is located in near west suburban Oak Park, known for racial diversity and left-leaning politics.
“We are profoundly disappointed in this result, and we believe it is an anomaly,” CEO Martin Noll said in a statement. “We are committed unconditionally to improving our rating, and have backed up that commitment with actions.”
He noted that the rating, made public April 5, was based on a 2008 regulatory exam that focused on loans made in 2006, 2007 and 2008. Regulators criticized the bank for failing to lend enough in low-to-moderate-income census tracts, Mr. Noll said.
During that time, the bank defined its “CRA assessment area” as the villages of Oak Park, River Forest and Forest Park, none of which held census tracts that could be defined as low-to-moderate-income.
In 2009, the bank reacted to informal criticism from regulators by broadening its lending area to 202 census tracts from 17, including Chicago's Austin neighborhood on the West Side, a large, lower-income neighborhood neighboring Oak Park. It hired a community lending specialist, launched a special program to lend to first-time homebuyers and started a financial literacy program.
“While there is more to do, our efforts have been well received by leaders and individuals in these communities,” Mr. Noll said in the statement. “We feel we are making solid progress.”
In an interview, Mr. Noll added it's not easy finding borrowers that meet the CRA's criteria and also are safe bets for the bank. “We are finding opportunities very difficult to come by,” he said.
National People's Action policy director Liz Ryan Murray doesn't buy that argument. “I don't think that excuse holds water,” she said. “Oak Park is right next to Austin.”
National People's Action was founded by the late Chicago activist Gale Cincotta, who was instrumental in the CRA's enactment.
CRA compliance isn't Community Bank of Oak Park River Forest's only regulatory problem. It also was the subject of a March 25 consent order with state and federal banking regulators to beef up compliance with the federal Bank Secrecy Act, which requires banks to know the customers with whom they're doing business and ensure transactions aren't violating anti-money-laundering and similar laws.
In a statement, Mr. Noll said the bank's Secrecy Act compliance issues centered on a single customer for whom it was providing non-account cash services. The bank exited that business, and ended that client relationship, before regulators moved to clamp down, he said. He declined to identify the customer.
As a result, “We are confident that our BSA compliance program is strong and we have in place all of the elements needed to maintain a strong program,” he said.
Like many other community lenders, Community Bank of Oak Park River Forest suffered a spate of loan losses when real estate markets collapsed. As a result, it's operating under a regulatory order that requires it to maintain higher capital levels. Mr. Noll said the bank's capital is high enough to comply with that order.
This seems like another effort by the Federal government to redistribute money, by forcing banks, at the risk of their own solvency, to make loans to people they don't believe will be able to repay. Just like Fannie and Freddie.
If this story actually received the reporting it deserves, the American people would see first-hand the source and cause of the 2008 financial meltdown - government required home mortgages forced on banks and facilitated by rent-an-activist groups like National People’s Action.
I agree with you 100%. That’s why I thought that this local story is nationally significant.
Sounds like some ACORN activists got stuck with some inner-city properties that they won’t be able to flip at a profit unless some bank gets stuck with the mortgage.
low-to-moderate-income cannot afford to live in oak park. Here they go, starting the merry-go-round up again
I'm not following this (per capita is not the same as median). Is this saying that to qualify for a home you must make at least $74,000+, but that the average is only $36,000+? If so, how can houses cost so much if the people who live there (the "per capita income"" people) can't afford them. And if the people who can afford them move in, doesn't that drive up the "per capita" income rating?
You gotta pay to play in America these days, just like Zimbabwe.
Oak Park is a Midwest Berkley, Ca., full of liberals, leftists, pinkos and commies. They love telling others how they should live and act, but like all libs they don't want to actually live near 'those people'.
Oak Park likes to brag about its 'diversity' while its nose is up in the air. Yet their minorities are all professors and doctors. Not any 'working class' people. So they're just getting a dose of their own - pompous - medicine here.
Ergo, whatever they're fined or rated ... this Oak Park Bank deserves it -- in spades!
The bank deserves it? As far as I can see, it has adhered to a meaningful discipline in making its mortgage loans. Just because the city of Oak Park is filled with socialists and communists, you want to take away the right of a local bank to make sound financial lending decisions? Where is the logic in that? By the way, the city of River Forest, next door, is fairly conservative and the River Forest bank went into bankruptcy because of its mortgage portfolio.
The bank deserves it? As far as I can see, it has adhered to a meaningful discipline in making its mortgage loans. Just because the city of Oak Park is filled with socialists and communists, you want to take away the right of a local bank to make sound financial lending decisions? Where is the logic in that? By the way, the city of River Forest, next door, is fairly conservative and the River Forest bank went into bankruptcy because of its mortgage portfolio.
The bank deserves it? As far as I can see, it has adhered to a meaningful discipline in making its mortgage loans. Just because the city of Oak Park is filled with socialists and communists, you want to take away the right of a local bank to make sound financial lending decisions? Where is the logic in that? By the way, the city of River Forest, next door, is fairly conservative and the River Forest bank went into bankruptcy because of its mortgage portfolio.
It’s a crappy measurement but it’s my understanding that per capita is income divided by population. population of 4, income 100k, per capita is 25k.
1 bedroom basement apartment $950 a month with limited parking and depending where in oak park you live, no on street parking (add another 75 bucks a month to park in a city garage).
Oak Park is a pricey place to live.
census bureau ..income statsare from 1999 http://quickfacts.census.gov/qfd/states/17/1754885.html
http://chicago.condo.com/ForRent/United-States/Illinois/Oak-Park-Condos
I'll bet the bank was profitable, even during the downturn. Now watch the bank incur losses.
As far as I'm concerned -- Yes.
The bank is a local bank and reflects its community's *standards* -- uppity limo libs, socialists and outright commies. It's Chickens, as they say, Have Come Home To Roost.
Oak Park can go to hades.
(And River Forest is irrelevant. This article isn't about it)
As far as I'm concerned -- Yes.
The bank is a local bank and reflects its community's *standards* -- uppity limo libs, socialists and outright commies. It's Chickens, as they say, Have Come Home To Roost.
Oak Park can go to hades.
(And River Forest is irrelevant. This article isn't about it)
The root of our meltdown.
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