Banks Paid $568 Million To Resolve Claims of Lending Discrimination But No Cases Went To Trial
On Tuesday, the Justice Department reached a settlement with Texas Champion Bank to resolve allegations of lending discrimination. The settlement provides $700,000 in compensation to Hispanic borrowers of unsecured consumer loans in Texas. Texas Champion is not alone. TIR’s research last year found that many banks that were top Romney supporters had settled similar lawsuits with the Justice Department.
Three large banks paid over $520 million dollars to resolve allegations of lending discrimination.
Morgan Stanely paid $16 million.
Bank of America – Countrywide paid $335 million. This settlement is described in the video above.
Wells Fargo paid $175 million.
Smaller banks also paid out to resolve allegations of lending discrimination.
Luther Burbank Savings paid $2 million
Suntrust paid $21 million.
C&F Mortgage Corporation paid $140,000.
Prime Lending paid $2 million.
National Mortgage Lender paid $2 million.
AIG Federal Savings, Wilmington Finance Inc. paid $6 million.
Midwest BankCentre paid $1.45 Million.
GFI Mortgage Bankers Inc paid $3.555 million.
First United Security Bank of Thomasville, Alabama invested $600,000 as part of an alleged lending discrimination settlement.
Community State Bank agreed to make a $165,000 investment in African-American neighborhoods.
Lawsuits against Citizens Republic Bankcorp and of Citizens Bank of Flint, Michigan were settled for $3.6 million.
First National Bank of Doña Ana County paid $585,000 to resolve allegations of discrimination on the basis of national origin and was required to set up a fund of $750,000 for low-income home owners.
Additional race bias lawsuits are pending. CityGroup has been similarly charged. Last year, a Latino man was arrested while banking. Government research suggests that smaller banks are continuing to discriminate.
Senator Elizabeth Warren recently criticized the Justice Department for settling allegations of financial fraud out of court. without taking any of the banks to trial. All of the discrimination cases were also settled out of court.
However, the total payouts add up to over $569 million dollars. The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 24 lending matters under the Fair Housing Act, ECOA, and the Servicemembers Civil Relief Act. The settlements in these matters provide for a minimum of $660 million in monetary relief for impacted communities and more than 300,000 individual borrowers. The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available here.
Banks that funded Mitt Romney’s campaign paid millions to resolve claims of alleged lending discrimination. This may be additional reason why minority voters have steered away from candidates whose campaigns are funded by banks.
The Justice Department announced that Texas Champion Bank of Alice, Texas, will establish uniform pricing policies, conduct employee training and pay $700,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin.
The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Southern District of Texas. The complaint alleges that Texas Champion charged higher prices on unsecured consumer loans made to Hispanic borrowers through its branch offices in violation of the Equal Credit Opportunity Act (ECOA).
The lawsuit originated from a 2010 referral by the Federal Deposit Insurance Corporation (FDIC) to the Justice Department’s Civil Rights Division. Texas Champion is a member of the FDIC.
According to the Justice Department, under the settlement, Texas Champion will pay $700,000 to approximately 2,000 Hispanic victims of discrimination, monitor its loans for potential disparities based on national origin, and provide equal credit opportunity training to its employees. Texas Champion will also revise its pricing policies to ensure that the price charged for its loans is set in a non-discriminatory manner consistent with the requirements of ECOA. The agreement also prohibits the bank from discriminating on the basis of national origin in any aspect of a credit transaction.
“The Southern District of Texas is committed to ensuring banks and other lending institutions do not discriminate against borrowers on the basis of race or national origin,”
said U.S. Attorney for the Southern District of Texas Kenneth Magidson.
“The consent order filed today should serve as a reminder that discrimination in lending will not be tolerated.”
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing .
The Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Texas, and the FDIC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task. For more information on the task force, visit www.StopFraud.gov .
by Todd Miller
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