A Texas bank has reached a settlement to pay back thousands of Latino customers after allegations of discrimination practices based on race.
The Justice Department made the announcement on Tuesday that the Texas Champion Bank of Alice, Texas will pay $700,000 to close to 2,000 Latino customers for loan disparities based on the national origin.
The lawsuit, filed in 2010, stemmed from complaints that the bank charged higher prices on unsecured consumer loans to Latino borrowers, thus violating the Equal Credit Opportunity Act (ECOA).
“The complaint filed today demonstrates that the Civil Rights Division is committed to fair lending enforcement across the entire spectrum of credit markets,” Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division, said in a press release following the announcement.
“We commend Texas Champion for working cooperatively with the Justice Department in reaching an appropriate resolution of this case.”
Aside from paying back its customers, Texas Champion will also have to establish uniform pricing policing and provide equal opportunity training to its employees.
The agreement will also prohibit the bank from using basis of national origin as a form of discrimination in any aspect of a credit transaction.
“The consent order filed today should serve as a reminder that discrimination in lending will not be tolerated,” said U.S. Attorney for the Southern District of Texas Kenneth Magidson.
“The complaint filed today demonstrates that the Civil Rights Division is committed to fair lending enforcement across the entire spectrum of credit markets,” added Perez.
Just last week 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 that hit Latinos especially hard.
The new standard prohibits any practices that result in discrimination “regardless of whether there was intent to discriminate."
The Department of Justice has argued that disproportionate harm was put on the Latino community by predatory mortgage lenders during the housing bubble.