A frequent target of lawsuits over its corporate misbehavior, JP Morgan Chase, the largest bank in the country in assets, announced in January that it had agreed to pay $55 million to settle a federal mortgage discrimination lawsuit. If corporations or their executives were capable of embarrassment, this case would have made them blush. The megabank had been working with mortgage brokers who discriminated against black and Hispanic borrowers for years by charging them $1,000 more than white customers.
Manhattan U.S. Attorney Preet Bharara, who has made a national reputation as an anti-corruption crusader, filed the lawsuit. It claimed that between 2006 and 2009 JPMorgan charged at least 53,000 black and Hispanic borrowers more than white borrowers with the same credit and risk profiles, reported the Washington Post.
The federal lawsuit said JPMorgan’s nationwide network of mortgage brokers were allowed to set the interest rates and fees they charged customers. When they secured higher interest rates, the brokers were rewarded with a bonus. JP Morgan asked for no explanation of why the brokers were charging some customers more than others, but, according to the lawsuit, the bank should have known that minority borrowers were routinely being discriminated against.
JPMorgan’s pattern “of discrimination has been intentional and willful, and has been implemented with reckless disregard of the rights of African-American and Hispanic borrowers,” the lawsuit said. In its response, the bank said it had a “robust monitoring program” and was not responsible “for acts of independent, third party brokers.” One reader commented, “In other words, they claim they did nothing wrong but are unwilling to prove it, and would rather pay out millions of dollars than defend themselves.”
The settlement amount is relatively small, Carl Tobias, a professor at University of Richmond School of Law, told the New York Times. “JP Morgan and the U.S. government may have wanted to settle this matter before the new administration comes in because of uncertainty about what might happen,” he said. “One question is whether the case and the settlement will [deter] other instances of alleged mortgage discrimination.”
On the same day as the bank’s announcement of the settlement, the Department of Labor filed an administrative complaint accusing JP Morgan of paying some female employees less than their male counterparts. The complaint stated that JPMorgan had discriminated against 93 female employees who held various technology-related positions.