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Race Discrimination in the Banking Industry

The American Banking Industry one of the oldest, largest and most important of our industries is plagued with race-based business practices

Banks, more broadly defined as “financial institutions” provides two important economic functions. First, they operate a payments system, which ensures the efficient delivery and receipt of payments adding financial stability to society. Secondly, they lend or invest the money customers deposit with them or create credit products designed to assist with financing governmental needs, business development and even consumers with the purchases of automobiles or homes.

Victims of race-based business practices may be employees, consumers or even businesses. A recent comprehensive study confirms that the financial industry is largely an “old boys’” club. Although financial institutions in the New York area have increased their minority recruitment and retention  rates, Caucasian males still receive the largest paychecks concludes the City University of New York’s Center for Urban Research.

On December 12, 2011, the United States Department of Justice settled its largest residential fair lending lawsuit to resolve allegations that Countrywide Financial Corporation and its subsidiaries engaged in a widespread pattern or practice of discrimination against qualified African-American and Hispanic borrowers in their mortgage lending from 2004 through 2008.

The settlement provides $335 million in compensation for victims of Countrywide’s discrimination during a period when Countrywide originated millions of residential mortgage loans as one of the nation’s largest single-family mortgage lenders. The lawsuit accused Countrywide engaged in discriminatory practices by charging more than 200,000 African-American and Hispanic borrowers higher fees and interest rates than non-Hispanic white borrowers in both its retail and wholesale lending. The complaint alleges that these borrowers were charged higher fees and interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk.

On July 12, 2012, the United States Department of Justice announced that Wells Fargo & Company will pay $125 million to resolve lending discrimination complaints. The complaints alleged that some Wells Fargo mortgages may have had a disparate impact on some African-American and Hispanic borrowers. The complaints were based on a statistical survey of Wells Fargo Home Mortgage loans between 2004 and 2009, and the claims primarily relate to mortgages priced and sold to consumers by independent mortgage brokers.

On August 28, 2012, the United States Department of Justice announced that GFI Mortgage Bankers Inc., a large independent home mortgage firm that concentrates on the New York, New Jersey, and Florida markets, will pay $3.555 million to resolve a lending discrimination lawsuit filed by the Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.   The lawsuit alleges that GFI engaged in a pattern or practice of discrimination by pricing residential mortgage loans for qualified African-American and Hispanic borrowers higher than for similarly-qualified non-Hispanic white borrowers between 2005 and 2009.

If you feel that you’ve been the victim of race, color or national origin discrimination or would like to have an attorney review your documents to ensure that your rights are protected, contact the New York Race Discrimination Lawyer at The Sanders Firm, P.C., today.