Analysis of Hawai`i home loan refinancing data from 2005 recently released by the Federal Financial Institutions Examination Council (FFIEC) reveal that applications for mortgage loan refinancing submitted to Hawai`i's banks from native Hawaiians and other Pacific Islanders (NHOPI) continue to be denied at a significantly higher rate than applications submitted by Asians and Caucasians.
In fact, Asians in the lowest income bracket (less than 50% of median income) had lower denial rates than Hawaiians and other Pacific Islanders in the highest income bracket (120% of median income).
It is important to remember that those who are applying to refinance their homes are already homeowners who are currently paying their mortgages and are simply trying to refinance at a lower interest rate.
These findings are drawn from FFIEC data aggregated from all Hawai`i banks, and the discrepancy is across the board. The lending record of specific Hawai`i banks varies considerably. For example, First Hawaiian Bank denied refinancing applications from native Hawaiians and other Pacific Islanders at a rate 4.5 times greater than applications from Caucasians and 3 times the denial rate for Asians.
This data is particularly interesting given First Hawaiian's report of record profits this week and the announcement that one of its key officers in charge of community reinvestment is one of the three finalists for Trustee of the Kamehameha Schools.
Along with demonstrating the need for banks to be more responsive to Hawaiians' needs, this data also highlights the importance of establishing a bank specifically to serve the Hawaiian and pacific island community, using existing Hawaiian assets, which is owned and controlled by the Hawaiian people.
The banking needs of the Asian community in Hawai`i are being served well in part because they started banks years ago that are tailored to fit with their culture and needs.
With the Office of Hawaiian Affairs and other Hawaiian institutions, the Hawaiian community has far more collective financial assets than the Asian community did when they started their banks.
Through stock ownership by the Hawaiian people, the bank would be structured to give Hawaiians democratic control over their collective financial assets.
All that is lacking is the political will.
Like the banks that serve the Asian population, a Hawaiian bank would serve everyone else as well, but it would focus on reaching out to the Hawaiian people in a culturally responsive way and providing financial products and services tailored to fit with their needs. It could also serve other Pacific Islanders who have similar cultures and needs as well.
In general, a Hawaiian bank would reinvest in Hawai`i and incorporate Hawaiian values like ohana, malama aina, and laulima into its banking practices in a way that will benefit everyone in the islands.
The Nation of Hawai`i was instrumental in establishing Bank of America's commitment to supporting a Hawaiian bank, and also the federal regulations which require Native Hawaiian statistics to be generated for lending data which makes this analysis possible. But this data shows other banks also have as much difficultly lending to Native Hawaiians. Bank of America is still obligated under a longstanding commitment to support the establishment of a Hawaiian bank, and we would like other banks to support it as well, and not resist it.
E Komo mai,
Dennis "Bumpy" Kanahele
Nation of Hawai`i, Head of State
Malama First LLC, Managing Member
Aloha First, CEO
2006 Candidate at Large, for the Office of Hawaiian Affairs