Bank's Cafe Must Now Take Deposits
ING Direct will soon have to make more loans to low-income and middle-class borrowers
In December, a large, two-story cafe with bean bag chairs and big screen televisions opened a few blocks from San Francisco's Union Square. It serves up coffee, vegan cupcakes and investment advice to anyone who asks.
The cafe is owned by ING Direct, the Internet banking giant. But it doesn't cash checks or take deposits.
And that, as The Bay Citizen reported, allowed ING Direct to gain a physical foothold in the Bay Area without having to comply with the federal Community Reinvestment Act, which requires banks to offer loans to low-income and middle-class borrowers in metropolitan areas where they have branches that take deposits.
But that is about to change.
The cafe will begin taking deposits under the terms of Capital One Financial's acquisition of ING Direct, approved Tuesday by the Federal Reserve Board.
Consumer groups said the decision will likely have a significant impact.
"They will have to do lending to more low-income people and people of color, they will do more philanthropy and and make more investments," said Alan Fisher, executive director of the California Reinvestment Coalition, a San Francisco-based nonprofit advocacy group.
When contacted by The Bay Citizen, ING Direct referred inquiries on the acquisition to Capital One, which did not respond to multiple requests for comment via email and telephone.
When the deal is finalized later this week, Capital One will become the fifth-largest consumer bank by deposit size, controlling more than $200 billion. The company has said it will maintain the ING Direct brand "for some time."
ING Direct maintains cafes in seven cities besides San Francisco, including New York, Los Angeles, Chicago and Honolulu. According to Federal Reserve Board spokeswoman Barbara Hagenbaugh, the newly merged bank plans to begin accepting deposits and following Community Reinvestment Act rules in each of those cities, but will start with San Francisco and Los Angeles.
Treasury Department records show ING Direct made 705 home loans in the Bay Area in 2010, but provided only three to African-American borrowers and six to Hispanics.
Statewide, the Internet bank made 2 percent of loans to Hispanics and less than 1 percent to African-Americans — in a state where 6 percent of residents are black and 37 percent are Latino.
Data provided under the Home Mortgage Disclosure Act show ING Direct's lending in San Francisco was concentrated in some of the richest and whitest neighborhoods — including Sea Cliff, St. Frances Wood and Corona Heights.
In some low-income neighborhoods with high concentrations of ethnic minorities, the bank did not lend to a single borrower.
The map below shows the number of home loans made by ING Direct in San Francisco over a three-year period from 2008 to 2010.
Lending data was provided by the Federal Financial Institutions Examination Council under the Home Mortgage Disclosure Act. View the data used to create the map here.
Map by Shane Shifflett.
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Said it before when the first article came out. You can't just look at how many people live in a state and say a lender should be loaning to a similar percentage. To correctly see if there is bias, you need to actually dig deeper and look at similar lenders rates as well as the income level of the minority population. Sloppy journalism.