The Banks: Yes He Did/ No He Won’t
JP Morgan Chase just settled with Obama’s Justice Department for charging African American and Latino borrowers higher interest rates on mortgages than white customers. The bank will pay $55 million.
In 2012, under pressure from Obama’s Justice Department, Wells Fargo paid $175 million to settle accusations that its independent brokers discriminated against African Americans and Latino borrowers. On average, an African American borrower with a wholesale mortgage was charged by Wells Fargo $1,126 more in fees and interest on a loan of $191,100 over the first five years.
On January 13, 2017, Obama’s Justice Department sued KleinBank for racial discrimination. The bank is located in Minnesota and has 21 branches. From 2010 to at least 2015, the lawsuit claims that KleinBank structured its home mortgage lending business to avoid serving neighborhoods where a majority of residents were racial and ethnic minorities.
In 2013, Obama’s Department of Labor fined Bank of America $2.2million in back wages and interest for discriminating against more than 1,000 African Americans who unsuccessfully sought employment with the bank in North Carolina.
In 2015, Obama’s Justice Department found that Bank of America discriminated against Black homebuyers through its Countrywide subsidiary. The Justice Department announced that the bank “had charged 200,000 minority homeowners higher interest rates and fees than white borrowers who were similarly qualified, with similar credit ratings.” Bank of America was also accused of failing to offer Black and Latino homeowners the same conventional mortgages that White homeowners with similar profiles were offered. Bank of America was fined $2 million.
In September 2015, M&T Bank, the 17th largest commercial bank in the country, settled a racial discrimination lawsuit filed by Obama’s Department of Housing and Urban Development for $485,000. From 2012 to 2014, the Fair Housing Justice Center sent actors of different racial backgrounds to the bank to see if they would qualify for a mortgage. Black, Latino and Asian homebuyers were frequently denied for mortgages although they presented better incomes and credit scores than the white actors. Some of the interactions were secretly taped. The lawsuit also claimed that the bank was caught encouraging homebuyers to move to certain neighborhoods based on their race and, in many instances, urging Black homebuyers to avoid moving into neighborhoods that were predominantly White.
In 2014, Citigroup Inc. faced lawsuits after it was revealed that it gave Black homeowners loans with higher rates and fees that eventually forced them into foreclosure and resulted in massive defaults.
In 2013, Obama’s Justice Department and Obama’s Consumer Financial Protection Bureau filed a joint complaint against National City Bank for charging Black and Latino homebuyers higher prices on mortgage loans from 2002 to 2008. They have demanded that the bank pay at least $35 million in restitution to those borrowers.
In September 2015, New Jersey’s largest savings bank, Hudson City Savings Bank, settled a racial discrimination lawsuit brought by Obama’s Justice Department and Obama’s Consumer Financial Protection Bureau. The bank agreed to pay nearly $33 million to settle the lawsuit. In 2014, Hudson approved 1,886 mortgages, but only 25 of those loans went to Black borrowers.
In June 2016, Obama’s Justice Department secured an agreement from BancorpSouth to pay a $10.6 million settlement for racial discrimination. The Mississippi-based bank used discriminatory mortgage lending practices that harmed African Americans and Latinos.
After January 20, 2017, the Justice Department, the Department of Housing and Urban Development, the Department of Labor, and the Consumer Financial Protection Bureau— departments and agencies that aggressively investigated, sued, and secured settlements against banks that flagrantly targeted people of color with discriminatory practices, will have new leaders. Not surprisingly, but alarmingly, each is opposed to the mission of his respective department.
The Justice Department under Trump will now be headed by Jeff Sessions who has said, “I’m not happy about what’s happened to my Department of Justice.” At his confirmation hearing, Sessions argued that there was no need for the federal government to become involved in prosecuting crimes against women or gay people. He said, “I am not sure women or people with different sexual orientations face that kind of discrimination. I just don’t see it.”
The mission of the Department of Housing and Urban Development is, in part, to “build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.” Trump’s HUD will be run by Ben Carson who, at his confirmation hearing, said not one word about the legacy of discrimination against African Americans and Latinos. Indeed, he refuses to challenge institutional racism.
Trump’s pick to head the Department of Labor is Andrew Puzder, a staunch and vocal opponent of minimum-wage hikes, and whose company, Carl’s Jr., has had to pay out millions of dollars to settle overtime claims.
And the Consumer Financial Protection Bureau, the powerful five-year old agency that President Obama established to regulate businesses on behalf of consumers, is likely be gutted.
In the Trump era, banks will not be forced to abide by anti-discrimination laws; the interests of Blacks and Latinos who seek mortgage services will no longer be safeguarded; and the federal government will no longer serve as the banks’ watchdogs.
It is up to us, The People, to “make necessary trouble” by (1) insisting that Democrats do all that they can to ensure that the Consumer Financial Protection Bureau is not dismantled, (2) donating to organizations like the ACLU who will not hesitate to take Trump’s cronies to court to enforce laws against banks that discriminate, (3) boycotting Carl’s Jr. restaurants, (4) withdrawing your money from these banks and putting it in credit unions (I did and I’m very happy.); and (5) by demanding that our own state’s Attorney General hold the banks accountable.
If we become complacent, discriminatory banking practices will resurface. You can bank on it!