HomeMy WebLinkAboutCOM 0344.001 2018-2020 PICOU1161
CfllI'ITY CLERK COMM. 344
COU QTY OF HAA All
Testimony in STRONG SUPPORT of Hawaii County Council
Resolution 209 1019 JUL —S AM 9, 07
Tuesday, July 9, 2019
9:00 A.M.
My name is Carmen Hulu Lindsey, and I am a Trustee for the Office of Hawaiian Affairs for the
island of Maui, testifying in my personal capacity. Mahalo for the chance to submit testimony in
STRONG SUPPORT of Resolution 209, backing Governor Ige's efforts in advising Bank of
America to return to Hawaii to meet with Na Po`e Kokua and the Hawaii Fair Lending Coalition
("HFLC") regarding a $150,000,000 loan commitment for Native Hawaiians on Hawaiian
Homelands.
Two of the most urgent challenges facing our residents are the lack of affordable housing
opportunities and the increasing numbers of houseless individuals in our state. Additionally,
Native Hawaiians have historically faced significant obstacles in finding suitable housing, ,
including discriminatory lending practices. Bank of America should be held fully accountable for
their entire commitment to the State of Hawaii as ordered by the Federal Reserve.
I. BANK OF AMERICA ENGAGED IN REDLINING, EXACERBATING SYSTEMIC RACISM
AGAINST NATIVE HAWAIIANS.
Bank of America fails in its promise to commit $150 million in Federal Housing Administration
section 247 ("FHA 247") mortgages available on Hawaiian Home Lands. FHA 247 loans were
specifically meant for low- and moderate-income Native Hawaiians to purchase homes on
Hawaiian Home Lands.
In 1993,HFLC discovered that Bank of America was conducting discriminatory lending practices
in the form of redlining. Redlining denied services to residents of certain areas based on racial or
ethnic composition of those areas by not providing mortgages on Hawaiian Home Lands. These
discriminatory lending practices have helped produce generations of inequity in Hawaii,
especially among the Native Hawaiian populations. Property values have exponentially increased
across Hawaii. However, the types of discriminatory lending practices of Bank of America have
left Native Hawaiians out of the accumulation of wealth that was available to everyone else. It is
this type of systemic racism which has contributed to Native Hawaiians having the highest rates
of poverty, ill health,houselessness, and incarceration in the state.
11. BANK OF AMERICA FAILS TO MEET ITS OBLIGATION IN PROVIDING LOW-COST
MORTGAGE LOANS STATEWIDE, DESPITE BEING ORDERED TO DO SO BY THE
FEDERAL RESERVE.
Bank of America has failed to meet its obligation in providing low cost mortgage loans statewide,
despite being ordered to do so by the Federal Reserve. In May 1994, because of HFLC's efforts
and as a condition of Bank of America's acquisition of Liberty Bank,the Federal Reserve System
ordered Bank of America to make $150 million in FHA 247 mortgages available on Hawaiian
Home Lands by 1998.
In 1998, Bank of America recommitted to meet the $150 million loan to Native Hawaiians and to
1 Comm. No. W
Ref. To:_Q Uhl
Ref. Date JUL 0,1. 2019
pay a $4.5 million late fee based on the opportunity cost of its failure to fulfill it required
commitment.Fromthe data provided by the U.S.Department of Housing and Urban Development
("HUD"), Bank of America originated only 106 residential mortgage loans since 1994 for a total
of$13,092,314 and has made no FHA 247 loans since then. This is less than 10% of Bank of
America's previous commitment.
In 2012, the Hawaiian Homes Commission simultaneously confirmed that Bank of America's
commitment remained unfulfilled and expressed support for HFLC's consistent and ongoing
efforts to hold Bank of America accountable. By Bank of America's own concession, the Bank
admitted that it failed to make $80.6 million of the statewide loans under an agreement reached
with the Department of Hawaiian Homelands. Today, when late fees are computed and lending
amounts still due are conservatively calculated, loan obligations statewide total $227.8 million
statewide. HUD also calculated the lost opportunities for building equity, lost opportunities that
would have come via the benefits of a booming housing market,and payment affordable mortgages
rather than skyrocketing rents over the last twenty years for 890 Native Hawaiian families who
should have received Bank of America mortgages and for families who received loans up to 13
years after the deadline. Preliminary estimates for Bank of America's late fees come out to
approximately $360.6 million.
However, Bank of America maintains that DHHL freed them from its obligation years ago. While
Bank of America continues to assert that they have fulfilled their commitment as evidenced by a
2007 letter from the Deputy Director of the Hawaiian Homelands, the Hawaiian Homes
Commission reached the conclusion that the Deputy to the Chair signed off on the commitment
without approval of the Hawaiian Homes Commission. Additionally, the expansion of the scope
of the commitment which allowed Bank of America to claim a credit of$3 and$4 for every dollar
they invested in infrastructure, thereby reducing their balance at a faster rate, was not brought
before the commission. Therefore, it is crucial
In September 2018, I sent a letter to Cathy Bessant, Chief Operations and Technology Officer of
Bank of America, in support of Governor Ige's invitation to Ms. Bessant urging her to return to
Hawaii to meet with Na Po`e Kokua to reach a "fair and final settlement" of Bank of America's
unfulfilled $150 million commitment for the betterment of the Native Hawaiian people (See
Appendix A: Lindsey Letter to Bessant). '
On October 18, 2018, Andrew Plepler, Global Environmental, Social, and Governance Executive
of Bank of America replied to my letter on behalf of Ms. Bessant, claiming that Bank of America
had fulfilled the commitment and further claiming that Bank of America had "recently spen[t]
considerable time reviewing once again the history and records..." (See Appendix B: Plepler
Letter to Lindsey)
On October 23, 2018, I wrote back to Mr. Plepler, noting that his claim that the $150 million
commitment had been fulfilled is contradicted by HUD records (See Appendix C: Lindsey Letter
to Plepler).1 1 also explained to Mr. Plepler that I could not find Bank of America's review of the
1 A letter written in May 2012 by former chair of the Department of Hawaiian Home Lands,Alapaki Nahalea
contended that the correspondence produced in 2007,where a deputy chairman acknowledged fulfillment of the
lending commitment,had been unauthorized. See Allan Parachini,Hawaii Pushes Bank ofAmerica to Resolve
2
documents he referenced meaningful unless he made the documents available to me. I requested
verification of his claims by October 31, 2018. Since then, I have received no further
communication from Mr. Plepler or Ms. Bessant.
IH. BANK OF AMERICA SHOULD ASSIST DHHL IN FULFILLING ITS TRUST OBLIGATIONS
TO NATIVE HAWAIIANS FACING AN INTRACTABLE AFFORDABLE HOUSING CRISIS.
Hawaii faces as obstinate affordable housing crisis, including the challenges of homelessness.
Unfortunately, Native Hawaiians represent a significant proportion of our state's houseless and
underhoused populations, with 42% of 7,921 homeless individuals identifying as Native
Hawaiian.2 One important part of the solution for native Hawaiian families is a home on Hawaiian
Homelands However, because of the unique characteristics of these trust lands, access to capital
for these families is a real, ongoing, and insurmountable challenge. Fulfilling Bank of America's
commitment would be an important part of assisting DHHL in fulfilling its trust obligations to
Native Hawaiian beneficiaries.
Additionally, the State of Hawaii formally assumes the duties of a trustee for Native Hawaiian
homestead beneficiaries through its oversight of Hawaiian Home Lands. The Department oversees
2303,337 acres statewide and is responsible for helping native Hawaiian homesteaders obtain lots,
loans, and multifamily and single family rentals. The State is held to the highest order toward
Hawaiian Home Lands beneficiaries and is judged in according to the same strict standards as
those set for a trustee for a private trust. The State's trust duties include (1) the obligation to
administer the trust solely in the interest of the beneficiary, and (2)the use of reasonable skill and
care to make trust property productive.3 In 2016, according to DHHL, approximately 8,000
households resided on the Hawaiian home lands, but nearly three times as many (22,000)were on
the waiting list for a residential lease.4
In Bank of America's 1994 commitment to the Federal Reserve to lend to Native Hawaiians and
Filipinos,Bank of America explicitly made FHA 247 loans open to Native Hawaiian beneficiaries
of the Hawaiian Homes Lands trust to help "DHHL to meets its trust obligations to Native
Hawaiians." Bank of America's assumption of a"leadership role in this area" demonstrates their
knowledge and abandonment of their role of assisting the DHHL to meet its statutory trust
responsibilities. Therefore, it is in Bank of America's interest to accept the State's invitation to
ensure that the State is efficiently meeting its fiduciary duties in allowing traditionally underserved
Native Hawaiian communities to get loans.
I am gratified to see that the Hawaii County Council work with other county governments, the
State Legislature, and the Governor in holding Bank of America accountable to the people of
Hawaii. I applaud the County's initiative in taking a look at every option to help our most
vulnerable populations and assisting our residence to afford living in Hawai'i. These collective
actions can accelerate Hawai`i's affordable housing solutions in a significant way. Given the lack
Multimillion-Dollar Dispute,HONOLULU CIVIL.BEAT,(Mar.21,2019),https://www.civilbeat.org/2019/03/hawaii-
pushes-bank-of-america-to-resolve-multimillion-dollar-dispute/.
2 Kristen Corey,et al.,Housing Needs of Native Hawaiians,U.S.DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT,(May 2017),https://www.huduser.gov/portal/pdredge/pdr-edge-research-072417.html.
3 Ahuna v. Department of Hawaiian Home Lands,64 HAW.327,340,640 P.2d 1161, 1169(1982).
4 Corey,supra note 2.
3
of substantive communication from Bank of America, I strongly encourage Ms. Bessant to restart
negotiations in fulfilling their $180 million in mortgages to Native Hawaiians and Filipinos and
respond to questions that are being raised throughout Hawaii about this unfulfilled commitment
towards our other underrepresented populations.
Sincerely,
Carmen Hulu Lindsey
Maui Trustee for the Office of Hawaiian Affairs
4
Appendix A: Lindsey Letter to Bessant
September 27,2018
Pei$}P7@[908)S94•t8e6 "•gY: PARC(am)594*ieea
STATh?OF HAWAN
QFFR;F.OF HAWMAN AFFAms
791 KAFI'QLAN1 SOUL9VAr4D.2UidE.99a
MOWDI,ULU,W AVIAI't 96eta
560 N.Nirhitz Hwy.,Suite 200
klrsnoiulm Hawaii 96817
September 27,2018
Catherine P,Bessant
Chief Operations and Technology Officer
Bank of America
100 North Trym Street
Charlotte,NC 28255
Dear Ms.Bessant;
I am writing to you in Support of Governor Gravid Y.lee's Invitation to you to come to Hawal`i t4
meet with N5 We Kiftua(NPK)"in order to reach a fair and final settlement of Bank of
America`s outstanding$150 million commitment to the Hawaiian people aro their homelands,'
In 1994,as a condition of Bank of America's acquisition of Liberty Bank,the Federal Reserve
ordered WA to provide$150 million In FHA-247 mortgages—loans on Hawaiian Home Lands—
within four years.Because Bank of America only provided$3,109,502 by the deadline,BafA
recommitted to meeting the$150 million In FHA-247 loans and to pay a$4.5 million late fee(in
the farm of support for a Native Hawaiian Bank)in 1998 based on the opportunity cost of its
failure to fulfill its commitment.
I understand that you are the key executive who made that recommitment In person to our
people and our kopuna in 1998.
Sadly,the 20'anniversary of the deadline for this commitment has come and gone and
hundreds of Hawaiian families have missed out on the opportunity to build equity,reap the
benefits of a booming housing market,and to pay an affordable mortgage rather than
skyrocketing rents over the last twenty years.
Along with the Governor and many others who are charged with the responsibility for serving
the people in ourcommunity,I agree that it Is time for you to sit down with Na Po'e Kokun and
reach a fair and final settlement that honors the commitments that Bank of America made to
federal banking regulators for the benefit of the Hawaiian people.
5
Carmen Hulu Lindsey,Maui Trustee,Office of Hawaiian Affairs
September 27,2018
Page 2
I would also be interested in seeing any documentation that you have regarding FHA-247 loans
originated by Bank of America since 1994.
€look forward to hearing your response,
Aloha,
l�
Carmen Hulu Lindsey
Maul Trustee
6
Appendix B: Plepler Letter to Lindsey
October 18,2018
Mr.Andrew Kepler
Global Environmental,Social and Governance Executive
Bank of America
100 North Tryon Street
Charlotte,1'✓C 28255
October 18,2018
Trustee Carmen Hulu Lindsey
Maui Trustee
SSG W Nimits Highway Suite 200
Honolulu,Hawaii 95817
Dear Trustee Lindsey,
I am in receipt of your letter dated Septem her 27,2018 addressed to Catherine Bessant,a copy of
which is attached.
This hatter dates track to the 2990'sand 4a3 a long history. please know that in 2U07,.wia moaWttl
Confirmation from the Department of Hawaiian Home Lands that we delivered$ISO million in community
development activity in Hawaii. However,as result ofseveral recent inquiries an this tape€,and out of respect
forthose who have questioned this activity,we have recently spent considerable time reviewing once again the
history and records related to our community development lending and investments.
As part of this recent review,we have examined reports and spreadsheets documenting our progress.
We have also reviewed records and:correspondence dating basic to 1993,including correspondence with the
Hawaiian Homes Commission and the Department of Hawaiian Home Lands. Please know that we do
understand there were challenges along the way,but through collaboration with the community,and with
Department of Hawaiian Home Lands,we were able to exceed$150 million in community development lending
and investment.
We remponded in writing to Governor Ige'S letter on May 18,2418: let the Governor`s suggestion,we
have spoken with Mr_Billy Oku Jr.in his office and plan to set a meeting with the Governoes office and with
community leaders_In the meantime,ifyou would like furtherdetali on the findings from the review we
conducted or on ouractivities,we would be happy to discuss and can schedule a phone call.
I can be reached at Andrew.RlenlergDbankofamefica_mm or9BQ.386.9127.
Sincerely,
Andrew Plepler
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Appendix C: Lindsey Letter to Plepler
October 23,2018
PHONE(848)5M.1808 a+w,y FAX(800)SWIM
STATE OF HAWAII
OFFICE of KAWAItAk AFFAIRS
M N.Nit,M WOV.,SUM 200
wwt_tlw,t~I,I 96817
04:tobcr 23,201$
Dear Mr.Pleplcr;
Tbank you for your letter of October'18;2418, 1 am aware of the long history related to the four
year"commitment of$150 trillion to the FKA 217 loan program"that Bank of America made to
fcdeml banking regulators in 1994.1 appreciate that you have reviewed spreadsheets,records,
ami onvsimndence,Howeve,1 ask that you rsspect that as a trustee for the Office of Hawaiian.
Affairs,I cannot find your review of these documettt.5 meaningful unless you make the
documents to which,,you refer available to rue, Since you offered furtherdetnil on the findings
fi-om the review Bank of America conducted,l respectfully ask that you provide me with copies
ofthe reports and sprca&hcets that you ref£r to in your letter by October.3`1,2018.
In addition,I am unclear as to why your letter ignores the fact that the so .
called"confirmation"letter that Bank ofAmerica received in 2007 was"signed off'on without
the approval of the Hawaiian Homes Commission, This fact was made very cleat in a letter front
then awaiian flomes Commission Chair Alapaki Nahale a to Kehau Filimoe'am,which
Governor Ige included in his April letter to Cathy Be arpt,
Additionally,according to reswasive Wormation from,HUD on all FHA447 leading from 1994,
arwaads,Wok of Amorica has originisted just.over 313 million in FHA-2471oans since 1994,for
short of the S 150 million ordered by fetletal Ninking mgulators. On October 9.201'4,Kehau
Filimoe'atuprovided Bank of America CBO Brian Moynihan w th'a rtopy of HUD's
doewat station of historical FHA-247[ending. If you have documentaiiott of additional FHA-.
247 loom that HUD is unaware of please email those documents to me immediately.
In your letter,you also state that you plan to set a muting with the Governor's o#licc and
community Icadors.I understand that]rank ofAmefica did not communicate with the Govemor s
office about a mecting.utttll this month—six mouths after he sent an invitation to lis Bessant,
explicitly"ng that tate Meeting be held by August 10,the date marking the 20th anniversary of
Ms.9essant making the$151)Wilion conuttitment to Native Hawaiians on behalf of Banff:of
America.Furthermore:,Governor Ige specifically asked that Ms.Bessant meet with Kchau
Flim€ 't t 4 President ofNPK, Ms.Bessant personally re-committed to the$150 million in
FHA247loans t4 Na Po'e t OWA and our kWina in 1998.
I took forward to hearing when this meeting has been scheduled,
g
October 23,2018
Letter to Mr,Plepler
Page 2
I am among the many members of our community who are wondering why it has taken six
months for Bank of America to respond to our Governor with a meeting date—after 24 years of
avoidance of this vital obligation to Native Hawaiians in our state.
Sincerely,
l� r
Carmen Hulu Lindsay
Maui Trustee
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