The Star-Ledger

Newark: Bank Shuns Poor, Minority Patrons

Council threatens to pull $20 million in deposits from Hudson United over dearth of loans

The Star-Ledger — Thursday, February 5, 2004

By JEFFERY C. MAYS
Star-Ledger Staff

The Newark City Council threatened to withdraw $20 million in deposits from Hudson United Bank yesterday if the institution does not comply with a 1997 agreement to lend $5 million to low-income and minority residents.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, said the bank has delivered only $717,349 in loans and refuses to renew its original lending agreement with Citizen Action to make the mortgage, construction and small-business funds available.

Councilwoman Gayle Chaneyfield Jenkins, chair of the banking committee, said Finance Director Daniel Gonzalez pegged the city's deposits at Hudson United at $20 million.

"We have a bank doing business in Newark that doesn't lend to low- income and minorities," Salowe- Kaye told the council. "You have $20 million sitting in this bank."

Melissa Fisher, a vice president and public relations specialist at the Mahwah-based bank, declined to comment.

Members of the council said they will introduce a resolution at their next meeting to withdraw the city's funds from the bank if the issue isn't settled. The city council approves which banks serve as depository agents for the city's money. Last year, Newark had a $688 million municipal budget.

"Either they will do something affirmatively to help the city of Newark or they will not be a depository," said Councilman Donald Tucker.

Under the federal Community Reinvestment Act, banks are required to lend money to minority and low-income residents of the areas where they take deposits. Citizen Action has pursued a program of getting banks to sign agreements committing to a certain amount of community reinvestment money.

After Hudson United purchased Security National Bank in Newark, the group agreed to commit $75 million statewide and earmarked $5 million for Newark, the first time a bank has specified a set amount for one community, according to Salowe-Kaye. Citizen Action long protested Security National's minority and low-income lending record and hoped the agreement with Hudson United would be a new beginning.

Instead, Salowe-Kaye said, nothing much changed. For example, data from the Federal Home Mortgage Disclosure Act showed that Hudson United made two loans to African-Americans in Newark in 2002, although 54 percent of city residents are African-American. The bank also made three loans to Hispanics, while 30 percent of city residents are Hispanic, said Salowe-Kaye.

Citizen Action says it is planning a protest at the home of the bank's chief executive officer and have enlisted the support of such community groups as La Casa de Don Pedro and the Local Services Initiatives Support Corp.

"The bank has failed to give back its fair share in mortgages and loans to the residents of the city of Newark," said David Weiner, head of CWA Local 1081 and a Citizen Action board member.

"If they are scared to do business with our community, we should be scared to put money in their bank," said Terrance Bankston, program coordinator for community development with the Tri- City People's Corp.

"Hudson Bank should be an example to the rest of the banks," he said. The council said it now wants to examine the community reinvestment lending record of all the banks the city does business with.

"We need to make sure the people we spend our money with are leveraging it back into the community," said Chaneyfield Jenkins.

Top Top | NJCA Homepage | NJCA in the News