Friday, September 25, 2015

This Week in Bank Failures

Hudson City Savings Bank got caught redlining — going out of its way to avoid nonwhite borrowers and low-income neighborhoods. The bank studiously avoided opening branches in minority neighborhoods, and it refused to receive mortgage applications in branches located near low-income neighborhoods. When customers applied for mortgages for houses in low-income neighborhoods, the bank often simply ignored them, Justice Department investigators say. The bank has agreed to pay $5.5 million in penalties and spend at least $27 million in mending its lending practices.

Turning Vatican Bank into an honest, transparent operation has also made it profitable. The bank has gone from barely breaking even to earning $75 million in profit last year, and much of the improvement can be credited to a reform process that largely eliminated the bank’s money laundering practices and ties to the drug trade.

Investigators in Germany searched at least 30 buildings in a tax-evasion probe of Maple Bank, which has its headquarters in Frankfurt but is owned by a holding company in Toronto. Investigators believe the bank was involved in a stock-trading scheme designed to avoid paying taxes on dividend income.

A credit union failed yesterday. The NCUA liquidated SWC Credit Union, with 300 members in Tampa, Florida. Members were employees of or otherwise connected to the Sears retail chain.