The Manhattan District Attorney's Accusation of Mortgage Fraud: A Lesson in Cultural Context and Implicit Biases

In the wake of the 2008 financial crisis, which resulted in an economic disaster since the Great Depression, many banks were accused of mortgage fraud. However, only one bank was criminally prosecuted - Abacus Federal Savings Bank, a small family-run community bank based in New York City's Chinatown. The story of Abacus Bank is a complex one, filled with controversy and allegations of bias.

In 2015, the Manhattan District Attorney, Cyrus R. Vance, accused Abacus Bank of mortgage fraud related to the 2008 crisis. The bank was indicted on 184 counts, which was an unprecedented move for a small bank like Abacus. The prosecution was aggressive, with Vance pushing the boundaries in his pursuit of the lowest-hanging fruit - a minority bank.

Abacus Bank did not attempt to allege selective prosecution to quash the DA's case, nor did they bring a suit against the government in connection with the aggressive prosecution tactics used by the DA. This raises questions about why Abacus Bank chose not to take these steps and what it reveals about the cultural context and implicit biases of the prosecutors.

A documentary titled 'Abacus: Small Enough to Jail' tells the story of Abacus Federal Savings Bank, a small family-run bank in New York City's Chinatown that has been catering primarily to Chinese immigrants since 2005. The bank never invested in mortgage-backed securities nor originated subprime mortgages, which were at the root of the financial crisis.

Despite being deemed 'small enough to jail' as opposed to 'too big to fail,' Abacus Bank remains the only U.S. bank to be criminally prosecuted for its role in the 2008 financial crisis. This raises questions about why Abacus was targeted while other banks, which were much larger and had similar practices, were not.

The prosecution of Abacus Bank has been widely criticized as a case of selective prosecution. Critics argue that the DA's office was overly aggressive in pursuing Abacus, while giving other banks that engaged in similar practices a free pass. This raises concerns about implicit biases and cultural context in the prosecution.

For example, Abacus Bank is a small family-run community bank based in Chinatown, catering primarily to Chinese immigrants. The bank provides critical services to underbanked populations and supports the economic prosperity of minority communities. In contrast, other banks that were involved in similar practices were larger institutions with more resources and connections.

The prosecution of Abacus Bank also raises questions about the role of cultural context in criminal justice. Prosecutors must remain aware of cultural context and implicit biases when exercising their discretion in targeting businesses that cater to underserved minority communities. The case serves as a lesson for prosecutors to be mindful of these factors and to avoid targeting minority-owned businesses solely because they are vulnerable or perceived as such.

In conclusion, the story of Abacus Federal Savings Bank is a complex one filled with controversy and allegations of bias. The bank's prosecution raises questions about selective prosecution, cultural context, and implicit biases in criminal justice. As the case serves as a lesson for prosecutors to be mindful of these factors, it also highlights the critical role that small community banks like Abacus play in supporting underserved minority communities.

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