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Lawsuit Claims National City Bank Denies Loans to Black Businesses
by Bankole Thompson
Special to the NNPA from the Michigan Citizen
DETROIT (NNPA) — National City Bank denies loans to Black churches and small businesses in the city of Detroit.
That is the claim of a federal lawsuit filed against the bank and its parent company, National City Corp, in the U.S. District Court for the Eastern District of Michigan.
The plaintiffs in the suit include New Galilee Missionary Baptist Church, Pleasant Hill Baptist Church, Turner Tours and Charters and Phillip Peake, a former loan officer with the bank.
“National City Bank’s discriminatory practices, particularly in the area of real estate lending have considerable negative economic impact on a community and its ability to remain viable,” said Dave Rose, a Washington D.C lawyer representing the plaintiffs.
“We are asking that the court direct National City Bank to craft Community Reinvestment Act programs to encourage valid business loans in the formerly redlined areas and to provide restitution to all injured parties.”
The suit alleges that National City Bank practices, “racial redlining,” and does not accept small business and other loans in areas of Detroit with high African American populations.
Redlining is a violation of the Fair Housing Amendments Act and the Equal Credit Opportunity Act.
“These laws exists to ensure banks make loans based on legitimate business reasons not on an applicant’s skin color or whether an applicant chooses to live or operate a business in a predominantly African-American community,” Rose said.
According to the suit, Peake, who was the bank’s Detroit branch loan officer for small businesses, processed 12 loan applications for more than $7.7 million in 2004 and 2005 that were denied by his bosses.
The suit claimed that other lending institutions subsequently accepted each of those applications.
“I was in charge of small business lending in the city of Detroit from 2003-2005. I can tell you there are prominent African-American businesses in the city that were discriminated against,” Peake said declining to name the businesses. “There are other Detroit based businesses [that] were denied loans.”
Rose the attorney said no dollar amount has been attached to the suit yet.
“The practice of my law firm is not to set a number,” Rose said. “We don’t know enough what the damage is. The judge has great authority under the Equal Credit Opportunity Act to prevent further discrimination.”
Turner Tours and Charters was denied a $950,000 loan by the bank but was given an almost equal amount by Bank One, Rose said.
New Galilee and Pleasant Hill Baptist churches were denied $80,000 and $734,000 respectively, according to Rose.
“The allegations made in the lawsuit are false. That is simply not the way we do business,” said Kristen Baird Adams, spokesperson for the bank’s head office in Cleveland. “National City is committed to serving the needs of our customers and communities in Detroit, where we’ve loaned more than $1 billion over the last five years. We have a strong history of fair lending and outstanding performance in small business lending and community development – a record that refutes any allegation to the contrary.”
Adams said the bank has a vested interest in Detroit’s economy and has supported “local programs and initiatives in the very neighborhoods where the plaintiffs claims that we don’t do business.”
One of the bank’s senior vice president offered some explanation in a memo about some of the loans that were turned down.
In the memo, the bank official referring to Peake as “Phil” said, “Targeting doctors’ offices, professional firms, all-star customers with high deposit dollars are all examples of ways Phil could target better opportunities. And in order to support Phil and the Detroit districts, I look at the majority of the declined loans in question to see if they had merit that would warrant further underwriting.”
The memo further went on to say, “These types of businesses are not desirable based on National City criteria. Phil and I have had several conversations regarding targeting the right types of businesses.”
During the phone interview, Adams corroborated the contents of the memo but said it is part of a larger opinion the official was making about the bank’s loan applications.
“What is important to know is that the information presented in the context of an allegation,” Adams said.
The bank has sixty days to respond to the suit filed in federal court.
DISCLOSURE: National City denied the owners of the Michigan Citizen a business loan in 2003.
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