Santander Bank has faced a number of issues in recent years, from an investigation into its auto loan business to receiving a $10 million fine over alleged illegal overdraft practices. More recently, the company received a failing grade from regulators when it came to its community lending business, prompting lawmakers to condemn the bank’s alleged discrimination and urge federal banking regulators to review the financial institution’s practices.
The group of 11 Senators, led by New Jersey lawmakers Bob Menendez and Cory Booker, sent a letter [PDF] Friday to the Comptroller of the Currency, asking the regulator to review the finding of a recent Committee for Better Banks report that found widespread discriminatory lending practices by Santander Bank.
The letter claims that it is imperative for Comptroller Thomas Curry to consider this report’s findings when considering the bank’s Community Reinvestment Act (CRA) rating under the Community Reinvestment Act, a law intended to encourage banks to help meet the credit needs of the communities in which they operate and prevent “redlining.”
“Redlining” is the act of denying services, either directly or through selectively raising prices, to residents of a certain area based on race or ethnicity.
“Santander has failed to match its increased mortgage lending and resulting profits with a commitment to the communities in which it operates,” the senators wrote, noting the bank’s recent growth, including 675 branches in the Northeast and mid-Atlantic regions.
“With significant disparities in lending to Latinos, African Americans, women, and low-income borrowers, we are concerned that Santander is creating barriers to economic opportunity for those who need it most,” the senators wrote.
The Comptroller of the Currency recently downgraded Santander Bank’s CRA rating based on enforcement actions and investigations into the unlawful repossession of cars from military servicemembers.
The senators, however, raise concerns that Santander is not doing enough to prevent this discrimination, citing the recent CBB report.
“As we approach the 40th anniversary of the passage of the CRA, far too many low-income and minority borrowers continue to be denied access to credit for discriminatory reasons,” the senators write, adding that OCC should “carefully review” the report in future determinations of whether the bank is in compliance with CRA.
The report [PDF], which was compiled by examining Santander’s mortgage lending in 15 metropolitan areas in 2014 and 2015, found disparities in loan origination, denial, and application rates for minority and low-income borrowers.
In 2014, Santander denied more than 26% of borrowers of color a mortgage loan, compared to an aggregate 17% denial rate by other banks in the same locations, the report found.
Additionally, in 2014, Santander denied nearly 30% of low-income borrowers a mortgage loan, compared to the 18% denial rate of other banks in the same area.
The denial rates continued to outpace those of other banks in 2015, when 21% of African American borrowers and 20% of low-income borrowers were denied mortgages.
The disparities were evident at the local level, according to the report. For example, in Camden, NJ, Santander originated 20% fewer loans for African Americans than its counterparts. In Worcester, MA, minority borrowers were denied loans at a rate 6.5 times higher than white borrowers.
In addition to Menendez and Booker, the letter was signed by Senators Robert Casey (PA), Kirsten Gillibrand (NY), Christopher Murphy (CT), Richard Blumenthal (CT), Jack Reed (RI), Elizabeth Warren (MA), Edward Markey (MA), Catherine Cortez Masto (NV), and Chris Van Hollen (MD).