Bank of America CEO Ken Lewis, a former chairman of the National Urban League, told the league's annual conference in Chicago on Thursday that banks' efforts to reinvest in underserved neighborhoods had no impact on the country's mortgage crisis.
Commercial banks also have been unfairly blamed for the economic crisis, Lewis said, citing instead the actions of "non-bank lenders" such as hedge funds, mortgage lenders and brokers, investment banks and unregulated financial businesses.
But he did say commercial banks and all lenders must do more to renegotiate mortgages so homeowners can avoid foreclosures.
Some conservatives have argued that the Community Reinvestment Act, enacted in 1977 to encourage banks to invest in inner cities and poor neighborhoods, caused the housing crisis because it promotes lending in low-income areas.
Lewis disputed that claim, saying the crisis had its roots in several misjudgments, including interest rates being held too low worldwide, global investors chasing higher yields on securitized debt, lenders and securitizers abandoning sensible underwriting standards, and rating agencies and appraisers "losing track of risks and imbalances in the markets."
Bank of America, which upset locals when it bought hometown-based LaSalle Bank for $21 billion in 2007, has spent $1.5 trillion in the last 10 years on community development lending and investing, Lewis said.
"Banks are tightly woven into the fabric of our communities. We have been there for our communities in good times and bad," he said, listing Bank of America's contributions to Chicago and to the African-American community:
Saturday, August 08, 2009
Bank CEO Denies That Bank Lending Lead To Urban Housing Crisis
Bank CEO defends inner-city lending 'no factor' in crisis