The Smart Compliance Blog

The Consumer Advisory Board to the Consumer Financial Protection Bureau is responsible for identifying the “impact of emerging products, practices or services on consumers and other market participants.”  At the February board meeting, Richard Cordray, Director of the CFPB, presented the Bureau’s areas of focus for the future. 

On February 19^th, 2013, the Justice Department announced that Texas Champion Bank of Alice, Texas, will establish uniform pricing policies, conduct employee training and pay $700,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin. According to the complaint, "the bank’s policy or practice of giving its employees broad subjective discretion in handling every aspect of the unsecured consumer loan transaction has had a detrimental impact on Hispanic borrowers compared to similarly situated non-Hispanic borrowers and is not justified by business necessity or legitimate business interests."

One of the most passionate debates that currently exists within regulatory compliance involves Disparate Impact theory.  Before reviewing Luther Burbank Savings settlement with the Department of Justice, allow us to provide a little background on the subject:  

It was announced on Tuesday that a federal lawsuit (filed back in April) against GFI Mortgage Bankers (GFI) for alledged violations of the Fair Housing Act and the Equal Credit Opportunity Act was settled for $3.5m and included $55,000 civil money penalty.  The suit was the result of a referral from the Department of Housing and Urban Development to the Department of Justice.  The lawsuit alleged African-Americans and Hispanics were charged more for loans than similarly qualified white non-Hispanic white borrowers between 2005 and 2009.  The government says the $3.5m settlement will be used to reimburse the 600 minority borrowers who overpaid.  The GFI case comes after settlements with BOA (Countrywide), SunTrust, and Wells Fargo.  In addition to industry publications, the story was reported on by the The Wall Street Journal, New York Times, and Businessweek to name a few.   

IN PURSUIT OF THE SIMPLE, FAIR LENDING LITMUS TEST

Like many things in life, joint ownership can be messy for all parties involved. It gets even stickier when the parties include two government agencies trying to determine how to divide and conquer fair-lending cases.