By Pinky Khoabane
A lesson for First National Bank….pay-up and if for nothing else, nip the reputational damage in the bud.
J P Morgan will settle for $55 million with the US attorney over allegations that it discriminated against African American and Hispanic borrowers by charging them more in interest rates than it did whites.
The settlement will conclude a federal investigation that started almost seven years ago into whether JP Morgan discriminated against African Americans and Hispanics.
For three years, between 2006 and 2009, brokers working with the bank charged minorities more interest than their white counterparts, in violation of the Fair Housing Act. The Black and Hispanic clients were charged on average $1000 more than their white counterparts.
This is not the first time that a financial institution was fined for charging minorities higher interest rates in the US. Wells Fargo, the largest home mortgage lender, agreed to pay $175 million in 2012 when allegations surfaced that its brokers had charged Blacks and Hispanics higher interest rates.
First National Bank (FNB) is being accused of doing the same with Black low-cost housing clients it took-over from Saambou when it collapsed in 2002. The low cost housing clients were charged more than their counterparts in the high cost housing and the interest charged on their were not given the benefits of a decrease whenever there was an interest rate cut. They were discriminated against in violation of the Constitution of the Republic of South Africa and the Usury Act.
UnCensored has written extensively on the FNB case which is scheduled to go to the Equality Court in March. http://uncensoredopinion.co.za/blacks-robbed-fnb-running-patience/
Both JP Morgan and Wells Fargo denied any wrongdoing. “We’ve agreed to settle these legacy allegations that relate to pricing set by independent brokers. We deny any wrongdoing and remain committed to providing equal access to credit,” a statement from JP Morgan read.
At the time of settling, Wells Fargo statement read: “Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight…”.