Times Free Press: First Tennessee boosts lending to low- and moderate-income Chattanooga residents

Times Free Press, April 22, 2018: First Tennessee boosts lending to low- and moderate-income Chattanooga residents

Decades of banking bias have left many unfairly cut out of home ownership, local and national reports show, but one national organization is partnering with a Chattanooga grassroots nonprofit organization to combat the inequity one bank at a time.

After months of conversations with the Washington, D.C.-based National Community Reinvestment Coalition and community-based organizations across the South, Memphis-based First Tennessee bank has signed a “community benefits agreement,” which commits nearly $4 billion over a five-year period to benefit local residents traditionally cut out of lending.

Community-based organizations such as Chattanooga Organized for Action, which are members of NCRC, have watched affordable housing options in their cities dry up and believe not enough is being done to help low- and moderate- income individuals who can afford a modest mortgage. In 2016, NCRC helped Chattanooga Organized for Action analyze local bank data for their report, “Whose Reinvestment? The Failures of Equitable Home Lending in Chattanooga.”

The study found that in Chattanooga, predominantly black neighborhoods are lending deserts. It also found a significant disparity in home loan origination between black and white Chattanoogans.

“The reality of bank practices has constantly involved struggle between profitability on the banks’ end and public purpose as defined by residents,” the report read. “Banks have, in numerous cases, chosen to lend only toward what are assumed the most profitable investments, often speculatory ventures, at the same time limiting resources for less profitable community needs.”

So NCRC’s member organizations in the First Tennessee footprint wanted to know the bank’s plans for fulfilling its affirmative obligation, outlined in the Community Reinvestment Act, to meet community credit needs by expanding access to capital and banking services, said Jesse Van Tol, CEO of NCRC.

NCRC already had a relationship with First Tennessee because, years back, the national group had raised concern about the bank’s lending practices.

“They got out of the mortgage business. Their levels of lending to minorities and low- and moderate-income people were low. They were using a third party to originate loans. We began a conversation about that,” Van Tol said. “Along the way they became progressively engaged and stepped up in terms of doing more.”

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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