From 2004 to 2008, Countrywide mortgage – now owned by Bank of America – discriminated against over 210,000 minority borrowers on account of their race. The Wall Street Journal reports that blacks in Chicago borrowing $2,000 paid an average of $1,235 more than whites. Hispanics paid $1,100 more than their white counterparts. Additionally, fees were $545 higher for Hispanics and $415 for blacks. But wait, there’s more! For three years, Countrywide pushed minority borrowers towards risky subprime loans when they were perfectly qualified for less risky prime loans.
Bank of America will pay $335 million to settle their dispute with DOJ. The settlement will directly benefit those damaged by Countrywide’s actions. Click here for the official settlement announcement.
Is this justice? Hardly. Blatant, institutionalized racism and greed must be punished with more than a slap on the wrist.
I blogged recently about Judge Rakoff’s bold willingness to take a stand when the SEC failed to reach an acceptable settlement with Citigroup. Will this settlement be subject to the same level of scrutiny? No doubt stronger sanctions are suggested by the facts. Without stronger penalties, big time lenders simply conduct business as they please, without care or consequence. This settlement is good for the cheated borrowers of the past, but it does nothing to help protect future victims from the unscrupulous and boundless greed of Wall Street. For that reason, it is not just, it is not adequate, and it is not acceptable.
A settlement must be a deterrent to all similarly situated banks and lending institutions. Change will only come and institutional racism will only be checked if the courts take a stand. The spirit of Brown v. Board of Education must be rekindled.
Assisted by Zachary A. Kady