The Justice Department has recently announced a major civil rights settlement involving discriminatory practices in the lending industry. Please read below.

Bonnie

Bonnie B. Roswig
Senior Staff Attorney
Medical/Legal Partnership Project Center for Children's Advocacy
(860) 545-8581
From: U.S. Department of Justice [[log in to unmask]]
Sent: Friday, December 20, 2013 3:58 PM
To: Roswig, Bonnie
Subject: U.S. DOJ Civil Rights Division News

JUSTICE DEPARTMENT AND CONSUMER FINANCIAL PROTECTION BUREAU REACH $98 MILLION SETTLEMENT

TO RESOLVE ALLEGATIONS OF AUTO LENDING DISCRIMINATION BY ALLY 

Settlement is Department’s Third Largest Fair Lending Agreement Ever and Largest Ever Auto Lending Agreement 

WASHINGTON – The Department of Justice and the Consumer Financial Protection Bureau (CFPB) today announced the federal government’s largest auto loan discrimination settlement in history to resolve allegations that Detroit-based Ally Financial Inc. and Ally Bank have engaged in an ongoing nationwide pattern or practice of discrimination against African-American, Hispanic and Asian/Pacific Islander borrowers in their auto lending since April 1, 2011.  The agreement is the first joint fair lending enforcement action by the department and CFPB.  With this agreement, eight of the top 10 largest fair lending settlements in the department’s history have been under Attorney General Eric Holder’s leadership.

The settlement provides $80 million in compensation for victims of past discrimination by one of the nation’s largest auto lenders and requires Ally to pay $18 million to the CFPB’s Civil Penalty Fund.  Ally also must refund discriminatory overcharges to borrowers for the next three years unless it significantly reduces disparities in unjustified interest rate markups.  This system will create a strong financial incentive to eliminate discriminatory overcharges.

“With this largest-ever settlement in an auto loan discrimination case, we are taking a firm stand against discrimination in a critical lending market,” said Attorney General Eric Holder.  “By requiring Ally to provide refunds to those who are overcharged because of their race or national origin, this agreement will ensure relief for Americans who are victimized. It will enable the Justice Department and the CFPB to work closely with Ally and others to prevent discriminatory practices in the future. And it will reinforce our determination to respond aggressively to discrimination in America’s lending markets – wherever it is found.”

To read more, click here.