LIHUE — Kauai County Council on Wednesday adopted a resolution that could reopen a controversy that originally dates to 1993 over whether Bank of America reneged on a deal to provide a total of $180 million in mortgage loans to Native Hawaiians and Filipinos. The vote was 6-0, with Councilmember Kipukai Kuali‘i absent.
Of that, an additional $30 million for Kauai was to be added to $150 million in new low-cost mortgage loans statewide, with an emphasis on the needs of Native Hawaiians who reside in Hawaiian Homelands areas as well Filipinos. Despite its commitments, Bank of America has to date only given a few million in loans despite being ordered to do so by the Federal Reserve Bank Board of Governors.
Consideration of the resolution, introduced by councilmembers Luke Evslin, Mason Chock and Kuali‘i, is the latest step in a quickly evolving process that began last summer. The controversy had lain dormant for more than two decades before last April, when Gov. David Ige wrote Bank of America’s Chief Operations and Technology Officer, Catherine Bessant, urging the bank to resolve the controversy and make the loans it originally agreed to 26 years ago.
Other steps in this process include:
• The Maui County Council passed a resolution last November similar to the one approved on Kauai Wednesday.
• In July 2018, Ige filed a freedom of information request with the Federal Reserve seeking documents pertaining to the original order by the Fed that Bank of America make the loans and records of what happened subsequently. Three weeks ago, Ige’s office received more than 600 pages of documents, which are still under review.
• The Hawaii Senate, just last week, passed a resolution formally demanding that Bank of America send a delegation to Hawaii to renegotiate the loan situation and perpetuate the process of finally putting the mortgage money in circulation.
In today’s dollars, according to Shay and Ian Chan Hodges, Maui residents who have pushed the loan dispute forward almost since its inception, accounting for inflation, the lending amounts actually owed may be $227.8 million statewide and $81.5 million for Kauai.
Some estimates are even higher. Maui County’s resolution, for example, put the amount of statewide money at as much as $360.5 million and asserted that Kauai could also be owed as much as $72.7 million in “lost opportunity costs.”
Wednesday’s Kauai County Council resolution included similar amounts of alleged loan obligation by Bank of America.
None of these resolutions can legally compel Bank of America to make any loans. Rather, sponsors hope that bringing public attention to the problem will pressure the bank to negotiate a resolution.
The controversy began when Bank of America attempted to purchase Liberty Bank in Honolulu in the 1990s. In May 1994, the Fed approved the merger, but required Bank of America to make $180 million in loans in response to allegations that the bank had engaged in redlining and refused to loan money to Native Hawaiians. Despite extensive media coverage of the controversy at the time, little had been written in news media about it since the 1990s until a few months ago, when the Ige letter demanding Bank of America reopen negotiations was sent.
After the Liberty Bank episode, Bank of America closed all its branches in Hawaii. It has no retail banking presence in the state today.
Evslin defended the plan to move ahead on Kauai, however quixotic the effort may appear.
“By their nature, resolutions are largely symbolic,” Evslin said. “By passing the resolution, we are simply supporting Governor Ige’s efforts in working with Bank of America to recover the lost funds.”
Evslin said the hope is the resolution will result in meaningful action on the part of the state and Bank of America.
“Discriminatory lending practices have helped produce generations of inequity in Hawaii, especially among the Native Hawaiian population,” Evslin said. “Property values have exploded all across Hawaii in the last 30 years, yet through the types of discriminatory lending practices of Bank of America and others, Native Hawaiians have been left out of the accumulation of wealth that was available to everyone else.
“It’s this type of systemic racism which has contributed to Native Hawaiians having the highest rates of poverty, homelessness, ill-health, and incarceration in the state. We need to do everything possible to undo generations of injustice.”
The bank was not responsive to media inquiries about the situation. However, a lawyer representing Bank of America did testify at a hearing on the Senate resolution. The attorney, Ivan M. Lui-Kwan, of a Honolulu law firm, contended the bank had met with Ige in January to explain its position and to argue that the commitment had been met.
However, the bank also conceded, that by its own accounting, it failed to make $80.6 million of the statewide loans under an agreement reached with the Department of Hawaiian Homelands. The governor’s office and activists seeking to hold Bank of America accountable dispute the amounts and say accounting tricks were used.
In his testimony, Lui-Kwan asserted the bank has “provided full cooperation to the governor to enable him to perform his undertaking.”
The sponsor of the resolution, Sen. Kaialii Kahele (D-Hilo) contended in a statement that “from the data provided by the U.S. Department of Housing and Urban Development, we know that Bank of America originated only 106 mortgage loans since 1994, for a total amount of $13.1 million.”
The resolution, he said, “is intended to convey the Hawaii Legislature’s resolve to Bank of America that … it return to Hawaii to meet with Hawaii Fair Lending Coalition to reach a fair and final settlement of all of its Hawaiian Homeland commitments.”
In a prepared statement, Ige said: “My office is reviewing the hundreds of pages provided by the Federal Reserve in response to my request for information. We’ll make a decision about a possible appeal once the review is complete.”
Longtime news reporter and communications executive Allan Parachini lives and makes furniture in Kilauea.