JPMorgan Chase agrees to pay $55 million to settle racial discrimination charges

Company - Himanshu Gill - Jan 19,2017

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jpmorgan chase agrees to pay 55 million to settle racial discrimination charges

USA’s biggest bank, JPMorgan Chase, has agreed to pay a $55 million fine to settle a lawsuit that accused it for racially discriminating against 53,000 mortgage borrowers.

The US Justice Department filed a complaint in the Manhattan Federal Court accusing the bank of willfully violating the US Fair Housing Act and the Equal Credit Opportunity Act between 2006 and 2009 and displaying "reckless disregard" for the rights of at least 53,000 African-American and Hispanic borrowers.

JPMorgan Chase has denied all the allegations but has agreed to settle the charges anyway. A spokesperson from the bank confirmed that they have agreed to settle the legacy allegations that relate to pricing set by independent borrowers.

The alleged discrimination involved the so-called wholesale loans that were cleared by mortgage brokers whom the bank acquired to help originate loans. According to the complaint, Chase allowed these brokers to change rates for loans on their own, even though the rates were set to be based on objective credit-related factors.

An African-American taking out a loan of $191,100 on average paid $1,126 more as compared to a white borrower for the first five years of the loan. A Hispanic borrower with a loan of $236,800 paid on average $968 more than a white borrower, the complaint said.

The Justice Department has been charging a number of banks over alleged discrimination. According to an official report, from 2010 to 2014, the agency's Civil Rights Division collected over $1.4 billion in relief under fair housing laws.

Meanwhile, Swiss bank Credit Suisse has also agreed to pay $5.3 billion for settlement of accusations by the US authorities that it had misled investors in residential mortgage-backed securities which it sold post the 2008 financial crisis. The US Justice Department said that the Swiss bank would pay $2.5 billion in cash and a further $2.8 billion as compensation to the affected customers.