Do Philly-area banks discriminate against black and poor people who want to borrow money to buy homes?
Customers Bancorp Inc. faces a Justice Department review of possible violations of the Fair Housing Act and other mortgage discrimination rules after an initial Federal Reserve Bank of Philadelphia review found potential violations of loan discrimination laws.
That means former Sovereign Bank boss Jay Sidhu's fast-growing, Wyomissing-based lender will run up "higher legal costs" and will "spend more time addressing the issue" instead of "growing the bank;" also "Customers' pending acquisition of CMS Bancorp Inc., (White Plains, N.Y.) is in jeopardy of not receiving regulatory approval, and falling through," warns analyst Matthew Schultheis, of Boenning & Scattergood, West Conshohocken, in a report to clients.
Customers last week announced a loan office in largely African American North Philly, as if to prove it will lend to anyone with good credit. Sidhu previously pledged to target working-class neighborhoods -- West Philly, Germantown, Northeast Philly -- which he says have been left behind by American banks' rush to finance wealthy people's projects.
Beneficial Bank, the largest bank still based in Phlladelphia, faces a similar review that may have the effect of preventing the bank from being acquired and giving it time to prepare for renewed growth, as it works out its damaged loans.