* Some folks out there have been trying to convince Americans that institutional racism is a thing of the distant past. Well, tell that to the folks who got mortgages through Countrywide…
The Justice Department on Wednesday announced the largest residential fair-lending settlement in history, saying that Bank of America had agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the housing boom.
A department investigation concluded that Countrywide loan officers and brokers charged higher fees and rates to more than 200,000 minority borrowers across the country than to white borrowers who posed the same credit risk. Countrywide also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received regular loans, it found.
* Illinois Attorney General Lisa Madigan deserves lots of credit for this settlement. Madigan filed suit last year against Bank of America, which had earlier bought Countrywide. Her suit was settled as part of the record-breaking deal…
The Illinois lawsuit followed years of investigation into Countrywide’s lending practices.
Madigan issued a subpoena to Countrywide in March 2008. That followed a 2007 study by the Chicago Reporter of federally collected mortgage-lending data for the Chicago area. The study found that in 2006, Countrywide Financial Corp. sold higher-cost loans to 50.9 percent of its African-American borrowers and 33.8 percent of its Latino borrowers, while 19.5 percent of the company’s white borrowers received high-cost loans.
* The result for Illinoisans who were essentially robbed of their money…
Either the borrowers were charged higher fees associated with obtaining a mortgage or they were steered into costlier, riskier subprime mortgages when they would have qualified for lower-cost, prime mortgages, Madigan said.
In the first case, Illinois borrowers could be eligible for a settlement ranging from several hundred dollars to more than $1,000, she said. In the second, borrowers qualifying for a settlement could receive about $10,000, she said.
Money can compensate, but shouldn’t somebody go to jail over this? I mean, you rob a bank and you’ll spend years in prison. But when a financial conglomerate robs you it throws money around and walks away.
Most banks, like the one I use, are actually doing what they’re supposed to be doing and following the law and helping build the economy. But some of these crooked banksters should be forced to do more than write a big check and deny they did anything wrong…
The settlement agreement was filed in U.S. District Court for the Central District of California. It calls for no punitive damages, Madigan said. In the agreement, the defendants deny claims of discrimination.
* Other business-related news…
* Illinois: The land of leavin’?
* Editorial: Illinois needs new tack on biz breaks
* Jerry Roper: Illinois deserves an A for economic-development assistance
* Lawsuit seeks to block Children’s heliport
* Chicago-based investment group purchases Sun-Times Media
* New Sun-Times will ramp up specialized content online
LIVE session coverage...
- Yellow Dog Democrat - Thursday, Dec 22, 11 @ 12:37 pm:
Hats off to the Sun-Times editorial board for raising a red flag about the recent spat of taxpayer-funded handouts to corporations.
I think that they missed one very big and important point though.
When CME processes an electronic trade from a customer in California, they don’t pay any taxes on that sale in California.
Until now, they paid taxes on that trade in Illinois because they are an Illinois-based company and the servers that process the transaction are located in Illinois as well.
Its the very same reason that Amazon.com doesn’t collect and remit sales taxes for sales to Illinois customers.
I’d agree with the Sun-Times that it could be considered unfair for CME to pay taxes in California AND Illinois…but not pay taxes anywhere?? How is that fair???
Moreover, this new policy goes directly against the trend to close the loopholes that allow internet-based companies to avoid paying their fair share of taxes, to the detriment of brick-and-mortar businesses of all sizes.
Dig deeper, my friends. Dig deeper.
- Cook County Commoner - Thursday, Dec 22, 11 @ 12:43 pm:
And how much is each injured minority loan applicant receiving in relation to the damage suffered? Simply because it’s a record settlement doesn’t mean it’s fair.
- Rich Miller - Thursday, Dec 22, 11 @ 12:47 pm:
CCC, from what I can gather, if they got hit with extra fees, they’d get all that cash back plus some. If they got hit with a higher rate, they’d get up to $10K back.
- John Bambenek - Thursday, Dec 22, 11 @ 1:02 pm:
If that’s the case, this is one of the few class actions where the victim actually gets made whole and a welcome change.
- Small Town Liberal - Thursday, Dec 22, 11 @ 1:06 pm:
- If that’s the case, this is one of the few class actions where the victim actually gets made whole and a welcome change. -
Whoa, you’re a fan of class actions? Or is this a kind of backhanded compliment? Just curious.
- wordlslinger - Thursday, Dec 22, 11 @ 1:10 pm:
–Money can compensate, but shouldn’t somebody go to jail over this?–
No, only Bernie Madoff goes to jail for recklessly crashing the world economy. He was the Lone Gunman.
Goldman Sachs robs billions from investors and pays a $550 million fine — but doesn’t admit wrongdoing and no one is prosecuted.
Same with AIG. They rob and pay a $750 million fine — but admit no wrongdoing and no one is prosecuted.
Finally, Judge Rakoff in Manhattan has had enough. He rejected the SECs proposed “boys will be boys” settlement with Citigroup for robbing its investors.
–It is harder to discern from the limited information before the Court what the S.E.C. is getting from this settlement other than a quick headline. By the S.E.C.’s own account, Citigroup is a recidivist, and yet, in terms of deterrence, the $95 million civil penalty that the Consent Judgment proposes is pocket change to any entity as large as Citigroup. While the S.E.C. claims that it is devoted, not just to the protection of investors but also to helping them recover their losses, the proposed Consent Judgment, in the form submitted to the Court, does not commit the S.E.C. to returning any of the total of $285 million obtained from Citigroup to the defrauded investors but only suggests that the S.E.C. “may” do so. In any event, this still leaves the defrauded investors substantially short-changed. . .–
http://www.forbes.com/sites/billsinger/2011/11/29/judge-rakoff-rejects-secs-contrivances-in-citigroup-settlement/
- John Bambenek - Thursday, Dec 22, 11 @ 1:11 pm:
Some times class actions are justified. I’m not against the type of litigation, I’m against spurious cases (class action or not). What I’m against is what is a common practice in class actions of attorneys mopping up the cash reward and the actual “victim” getting coupons.
- Small Town Liberal - Thursday, Dec 22, 11 @ 1:13 pm:
- actual “victim” getting coupons. -
Hey, I’m going to get probably a dollar or two knocked off my next ticketmaster purchase…
- John Bambenek - Thursday, Dec 22, 11 @ 1:16 pm:
Well, I guess it’s the little things in life. :)
- Aldyth - Thursday, Dec 22, 11 @ 2:18 pm:
White collar crime simply isn’t taken as seriously as the guy who robs the convenience store with a BB gun. Yet, the damage can be much broader. The financial security of an entire generation of Americans has been undermined because of the actions of Big Finance. Tell the people who have lost their jobs or their homes due to the economic downturn triggered by the subprime mortgage crisis that they haven’t been harmed by white collar crime. Every time I look at my 401K and question whether or not I will ever be able to retire, I pretty much feels like I’ve been robbed.
Until these white collar criminals do serious time for their crimes, nothing will change. Banks keep being allowed to pay fines, which they factor into the cost of doing business. Their bonuses still arrive and they get nothing more than a shame on you from the SEC. Why should they change their behavior?
- soccermom - Thursday, Dec 22, 11 @ 2:33 pm:
Thank God for the Chicago Reporter. But how many of these people have lost their houses by now because they were steered into subprime? How do you make somebody whole for cold-bloodedly taking away their shot at the American dream?
- Hickory - Thursday, Dec 22, 11 @ 3:30 pm:
The Chicago Reporter should get most of the credit.
- Judgment Day - Thursday, Dec 22, 11 @ 3:51 pm:
First off, this is Countrywide, which is now (currently) a unit of BOA.
Have real problems with this ’settlement’, as BOA (and for that matter, the entire bankster community) will want to push this same type of ’settlement’ to other parties, which are are far larger issues and far more numerous.
I know, the argument will be “Well this is just a ‘floor’ for future settlements”. Well, IMO this ’settlement’ (more like a ‘cave’) is a pretty poor ‘floor’ to use for going forward.
- Quinn T. Sential - Thursday, Dec 22, 11 @ 4:25 pm:
{AG Madigan efforts prompt record payout by racist bank}
From the Settlement Agreement:
There has been no factual finding or adjudication with respect to any matter alleged by the United States. The parties have entered into this Order to avoid the risks, expense and burdens of litigation and to resolve voluntarily the claims in the United States’ Complaint of the Defendants alleged violation of federal fair lending laws.
You might want to modulate the headline here down a notch to indicate “alleged” racist bank.
I’m just sayin
- Yellow Dog Democrat - Thursday, Dec 22, 11 @ 5:32 pm:
@Quinn T. -
That’s boilerplate language for all settlements. The data from Countrywide is incontrovertible, even by countrywide.
And Rich is absolutely right — just like Rod Blagojevich, cop orate white collar crime is never going to be deterred until the suits start doing real jail time.
- wordslinger - Friday, Dec 23, 11 @ 8:12 am:
–You might want to modulate the headline here down a notch to indicate “alleged” racist bank.
I’m just sayin –
You’re “just sayin” what? They coughed up $335 million because they did nothing wrong?
But that goes to the bigger point that Judge Rakoff is raising. These Big Finance gangsters need to be held accountable. They are guilty of crimes against humanity.
No more cost-of-doing business civil penalties. You knock over a Piggly Wiggly, you do real time. Should be the same when you knock over the world economy.