The Department of Justice has announced a $335 million settlement with Countrywide, the former subprime mortgage giant now subsumed into Bank of America, on claims of housing discrimination.
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 had 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. It also steered more than 10,000 minority borrowers into costly subprime mortgages when white borrowers with similar credit profiles received prime loans, the department said.
The pattern and practice covered the years 2004 to 2008, before Countrywide was acquired by Bank of America.
“The department’s actions against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation’s largest, for discrimination,” Attorney General Eric H. Holder Jr. said. “These institutions should make judgments based on applicants’ creditworthiness, not on the color of their skin.”
I’m waiting for someone to hold financial institutions accountable for discrimination against every one of its customers, by defrauding them and destroying the residential home mortgage market. That’s obviously not going to happen here.
As the report states, this is a significant settlement on fair lending claims, the largest on record. But compared to the crimes being perpetrated in the home mortgage market over the past several years, it’s a drop in the bucket. DoJ’s silence on other financial fraud issue resonates larger, in a way, in the face of this settlement on other charges. And we’re still talking about civil settlements here rather than criminal prosecutions. [cont’d.]
One such prosecution available to DoJ is a complete slam-dunk. Today, Rep. Brad Miller (D-NC), along with bipartisan support from his Republican North Carolina colleague Rep. Walter Jones, urged DoJ to prosecute violations of the Servicemembers Civil Relief Act, which led to wrongful foreclosures on active duty military members while they served in war zones. We know this happened; the Office of the Comptroller of the Currency is currently reviewing 5,000 such foreclosures. Most major banks have admitted to the violations and made restitution to the military members involved. Yet violations of the SCRA are extremely clear – they carry prison sentences of up to one year. Miller said in a statement:
The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings […]
The continued failure to pursue criminal charges in the face of flagrant violations of the criminal law is destroying Americans’ faith in their government and democracy. In a democracy, no one is too big to prosecute.
The whole letter is here. Criminal prosecutions for SCRA violations are really not optional. That DoJ makes them optional, while settling left and right on other crimes, tells you most of what you need to know about the seriousness of their push on financial fraud.
UPDATE: Here’s the settlement agreement, and once again you see that Countrywide doesn’t have to admit wrongdoing for their crimes.