A lawsuit claiming Latino borrowers at Texas Champion bank were charged higher interest rates on loans compared to the rates charged to similarly situated non-Hispanic white borrowers has ended in a settlement after the bank agreed to establish uniform pricing policies, conduct employee training and pay $700,000 to resolve the allegations.
“The complaint filed today demonstrates that the Civil Rights Division is committed to fair lending enforcement across the entire spectrum of credit markets,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “We commend Texas Champion for working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”
The Justice Department filed the 2010 complaint in the U.S. District Court for the Southern District of Texas claiming the pattern of discrimination against Hispanics through its branch offices was in violation of the Equal Credit Opportunity Act (ECOA).
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, according to the Justice Department.
The bank 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, adding that the case should serve as a reminder that discrimination in lending will not be tolerated. Calls made to Texas Champion Bank by NBC Latino were not returned by publishing time.
Recently, the Obama administration formalized the implementation of the Fair Housing Act’s “Discriminatory Effects Standard” which hold banks accountable for their actions in the foreclosure crisis, which hit Latinos especially hard.
The president established the interagency Financial Fraud Enforcement Task Force in a coordinated effort to investigate and prosecute financial crimes.