Officials Forum: Why Hempstead Village Chose to Divest $12.5 Million from Chase Bank
Wayne J. Hall Sr.The Honorable Wayne J. Hall, Sr. is mayor of the Village of Hempstead, the largest minority community on Long Island and the largest municipality in New York State.
This past spring, before protesters occupying the financial capital of the world captured all our imaginations, the Village of Hempstead made a decision to stand with the 99 percent in our community when we voted to close our account with JP Morgan Chase.
We made this decision because our village, whose residents are overwhelmingly people of color – hardworking families and homeowners – is among the hardest hit by the bank-driven foreclosure crisis. In fact, Hempstead’s foreclosure rate is six times the state rate and four-times higher than the county average. Our underwater rate is also six times the rate of the state.
Our families, like families throughout our nation, bought into the American dream. A principal part of that dream is homeownership and the ability to amass savings through property and to pass it on to our children. Little did our families know, that the banks they’d counted on to help them achieve that dream would be the very folks responsible for driving them from their homes and refusing to help them save their properties.
Before we made the decision to close our Chase account, I took a hard look at our village’s foreclosure rates and at the families being impacted daily by predatory and unfair bank practices. Many of our families are so far underwater that in order to hold on to their homes they are being forced to choose between purchasing food/utilities and paying their mortgages; sending their children to college or mailing in their mortgage check. And this all too frequently for homes that no longer meet the value of what they’d agreed to pay for them.
I also met with members of New York Communities for Change (NYCC), a progressive nonprofit fighting for the rights of tenants and homeowners across the state. They shared with me their struggles to get mortgage modifications from Chase.
One woman’s story stands out. Maribel Toure bought her home in Hempstead in 2004 and made her mortgage payments like clockwork until her husband – an architect – was laid off due to the recession. An x-ray technician, to make ends meet she picked up extra shifts, often working 16-hour days.
Times were hard, but like the majority of families in these circumstances they forged on. In 2008, Maribel was hit by a cab. After several months of no income, having depleted their savings, they fell behind on their mortgage. The Toures reached out to Chase for help, but the bank – who would ultimately get nearly $95 billion in the government bailout – refused to modify their loan. Their battle with Chase would continue for nearly two years.
Hearing stories from folks like Maribel – folks who’d played by the rules and still weren’t being helped by the banks – and knowing that this was happening on a large scale in our village, moved me to divest the $12.5 million. That divestment will be complete by the end of this year.
It is common knowledge that the Big Banks are the ones who gambled with the livelihoods of American families. Instead of being made to pay the price for wreaking havoc on our communities, they successfully beseeched the government for bailout dollars – a recent Bloomberg report puts the emergency loans from the Federal Reserve at $669 billion, plus an additional $160 billion in public bailouts. They then gave themselves record-breaking bonuses while refusing to work to help modify homeowners’ loans.
It is neither right, nor fair, that families like Maribel’s should be made to suffer while the Big Banks continue to be more profitable than ever; and it’s unconscionable that Maribel’s tax dollars helped to create those profits.
That’s why I, with the support of our village trustees, decided to close our account with JP Morgan Chase. We refused to allow one more village tax dollar to support Chase’s predatory and hostile homeowner policies.
Oddly enough, shortly after we initiated this action, after nearly two years of refusing to work with Maribel Toure, Chase finally modified her loan.
Chase is certainly not alone in its bad behavior and unfair policies. To be sure, all of the big banks should be held accountable. But in New York, Chase was the leader in predatory lending. In 2006 and 2007, no bank issued more subprime loans in Hempstead and neighboring Uniondale, according to the Federal Financial Institutions Examination Council. And, while the exact numbers for Hempstead are hard to come by, at the time that we initiated divestment, Chase’s permanent mortgage modification rate in neighboring New York City was 6%. Since then they claim that it has risen significantly.
The $12.5 million that Chase lost when Hempstead closed our account may only amount to a drop in the bucket of Chase’s overall holdings, but the principle is important. Public money should not be in the hands of companies working against the best interests of the community. Since closing our account this past April, a number of other municipalities have divested or stopped bonding with Chase. I support NYCC’s work to get other towns to do likewise.
Watching the 99 percent continue to rise up across New York and our nation convinces me that Hempstead did the right thing in taking a stand for homeowners in our community.
The banks and other companies got bailed out to the tune of $1.2 trillion while some six million plus Americans, who are either underwater or have been foreclosed on, got left out. That is a recipe for economic failure. It is a foundation upon which a strong nation cannot stand.
I am proud of Hempstead’s actions as a leader in the movement to hold the banks accountable. We have given voice to the powerless. We have sent a message to the Big Banks that predatory lending practices and a reluctance to aid the very folks whose monies fuel their growth, will not stand.