Texas Bank to Pay Back Nearly $1 Million to Latino Customers After Discrimination Allegations

Texas Champion Bank of Alice has reached a settlement to pay beck thousands of Latino customers after it was discovered they were charging people higher interest on loans based on race.

The Texas Champion Bank of Alice, Texas, and the Justice Department have reached a settlement stemming from a lawsuit filed in 2010 which alleged the Texas bank was charging “higher prices on unsecured loans to Latino borrowers.” FOX News Latino reports that the Justice Department announced last Tuesday that Texas Champion Bank will pay $700,000 to almost 2,000 of their Latino customers for “loan disparities based on national origin.” The practice of charging higher rates based on national origin violates the Equal Credit Opportunity Act (ECOA) and Kenneth Magidson, the US Attorney for the Southern District of Texas said, “The consent order filed today should serve as a reminder that discrimination in lending will not be tolerated.”

Along with being required to pay back any customer who was effected by these discriminatory practices, Texas Champion will also have to, “Establish uniform pricing policing and provide equal opportunity training to its employees.” The Assistant Attorney General for the Justice Department’s Civil Rights Division Thomas E. Perez said, “The complaint filed today demonstrates that the Civil Rights Division is committed to fair lending enforcement across the entire spectrum of credit markets.”

The settlement came only a week after President Obama implemented the Fair Housing Act’s “Discriminatory Effects Standard,” which forbids any and all practices by a financial institution that results in discrimination regardless of the intent. The Justice Department has asserted that “disproportionate harm” was done to the Latino community during the housing bubble of the early 2000s by “predatory mortgage lenders.” The Discriminatory Effects Standard was designed specifically to “hold banks accountable for their actions in the foreclosure crisis that hit Latinos especially hard.”

Photo: Cooperweb/Flickr

About Kathryn DeHoyos

Kathryn DeHoyos currently resides on the outskirts of Austin, TX. She has 2 beautiful children, and is very happily un-married to her life partner DJ.

Speak Your Mind