JPMorgan Chase announced (USA Today, 1/18/2017) that it has reached an agreement with the U.S. government to pay $55 million to settle allegations that the firm violated Fair Lending laws. According to the lawsuit, the government alleged that, from 2006 through 2009, the bank’s wholesale mortgage brokers charged African American and Hispanic borrowers higher interest rates than white, non-Hispanic borrowers. These patterns were linked to the bank giving its brokers discretion on pricing factors that were not related to the credit risk of the borrowers. In its investigation, the government determined that JPMorgan Chase did not have sufficient controls to monitor pricing disparities among its independent brokers:
“Even when Chase had reason to know there were disparities, however, Chase did not act to determine the full scope of these wholesale pricing disparities, nor did it take prompt and effective action to eliminate those disparities, nor did it engage in adequate efforts to remedy the impact of those disparities upon the borrowers,” the plaintiffs charged in the lawsuit.
The bank is not expected to admit liability in its settlement, which includes damages to borrowers, civil penalties and an order against future discrimination.