When Bank of America Corp. executives decided to buy the nation’s largest subprime lender, Countrywide Financial Corp., in 2008, they probably did not foresee having to fork over $335 million dollars three years later to African-American and Hispanic borrowers due to Countrywide’s discriminatory practices; however, that is exactly what they will have to do following the North Carolina based bank’s recent settlement with the U.S. Justice Department.
The settlement was filed with the Central District court of California after the DOJ complained that Countrywide was aware that the fees and interest rates that its loan officers were charging discriminated against African-American and Hispanic borrowers. According to the DOJ, over 200,000 minority customers were charged higher fees and rates than non-Hispanic white borrowers with similar credit by what was the nation’s largest single-family mortgage lender. “Countrywide’s actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream,” said Assistant Attorney General Thomas E. Perez. This is said to be the largest settlement regarding residential fair lending practices in history.
What does this case demonstrate about the prevalence and institutionalization of racism in modern America? How, if at all, is this settlement connected to the Occupy movement? What more can be done to stop discriminatory practices by U.S. corporations?
Dean Baker, co-director of the Center for Economic and Policy Research