BancorpSouth to settle U.S. charges of racial bias against home buyers
Source: Reuters
BancorpSouth to settle U.S. charges of racial bias against home buyers
By Lisa Lambert
June 29, 2016
WASHINGTON (Reuters) - BancorpSouth Inc has agreed to pay $10.6 million to settle civil charges that it discriminated against African-American prospective home buyers in the Memphis area as well as in parts of neighboring Mississippi and Arkansas, the U.S. government said on Wednesday.
The U.S. Justice Department and Consumer Financial Protection Bureau said in a court filing that the Mississippi-based bank turned down black home buyers applying for mortgages more often than similar white applicants, or charged them higher rates to borrow under a policy the government described as "explicitly discriminatory."
The bank also allegedly engaged in redlining in Memphis, a practice to deny service because of an area's racial demographics, by placing its branches outside of minority neighborhoods, the agencies said.
BancorpSouths discrimination throughout the mortgage lending process harmed the people who were overcharged or denied their dream of homeownership based on their race, and it harmed the Memphis minority neighborhoods that were redlined and denied equal access to affordable credit, CFPB Director Richard Cordray said in a statement.
Read more: https://www.yahoo.com/news/bancorpsouth-settle-u-charges-racial-discrimination-203147455--sector.html?nhp=1
Ex Lurker
(3,811 posts)Bancorp South will see this as a big win, especially since this case has been holding up regulatory approval for some mergers they've been wanting to do.
Response to Judi Lynn (Original post)
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KeepItReal
(7,769 posts)The type of crime where it doesn't have to show on your record if you are find guilty.
These government negotiators are unbelievable.
Igel
(35,270 posts)The corporation might have said that it's cheaper to settle than to fight. Even if you're really innocent and would be found not guilty, it can be cheaper to settle.
If the state government decided to sue me for something and I could settle for $10k, I'd likely to do. The risk of random bad guilty verdicts might push me in that direction (remind me how juries are always fair, impartial and correct--how many innocent people are found on death row, how many convictions are overturned on appeal?). More likely the threat of $50k or $100k in legal fees would be enough, however. They have deep pockets, a legal staff, and they can wait for years without racking up legal fees. Even if the state pays legal fees for me after they lose, I might not survive the bankruptcy that they'd cause, and with bankruptcy would probably go the lawyer.
The other reason for settling might be that the other party isn't sure it could win. It would take a while, tie up resources, and if there's a loss, that's nasty. So this suit seems to redefine redlining a bit. It used to be simply not granting mortgages for properties in certain neighorhoods. I'm not sure that not putting branches in a specific neighborhood counts as something that would be illegal. I mean, think about it--if you're a Latino-oriented store like Fiesta in TX, you're not going to make a killing in a large Jewish or anglo neighborhood. If you're whitebread Texan like HEB (another Texan chain) you're not going to put your stores in low-SES neighborhoods. We'd think HEB is racist and Fiesta isn't, but one looks at income and profit (the usual business-like things) while the other has a business model that might explicitly include ethnicity, and if not explicitly then certainly implicitly. If that's discriminatory, then Fiesta and HEB must open stores that they know would lose money, or redefine their business plan all go for all markets. It's like saying BET has to have most of its programming not oriented to the "B" in BET, and Univision has to have most of its programming oriented to the anglo market. Silly, really.
As for the bit with granting mortgages and applying interest rates by race, that might be an easier win. On the other hand, the negotiators know more than we do; they are smarter than we are on this issue and to not recognize this is just plain stupid. What we see might not be all there is, so some of the instances involved are clearly racial, but others aren't so clearly racial and others, from the bank's perspective, have nothing to do with race. It's standard practice that geography and SES can be used as a proxy for race--and this is what California did with Prop 109, the anti-affirmative action ban, when it wanted to ignore the results of the referendum. It's what Texas does with its top 10% admission policy for state schools to get around court decisions. If the practice is an okay way for government to get around claims of improper use of racial information, one that many think is a great thing, I have trouble considering it bad when not-the-government plays the same underhanded game.