JP Morgan Chase pays $55m over racial discrimination

July 19, 2017
Source: BBC
JP Morgan Chase pays $55m over racial discrimination

The biggest bank in the US, JP Morgan Chase, has agreed to pay $55m (£44.6m) to settle claims against it that it racially discriminated against 53,000 mortgage borrowers.

The accusation by the US Justice Department is denied by JP Morgan.

But the bank has agreed to settle the charges anyway.

JP Morgan was accused of allowing mortgage brokers to charge higher fees and interest rates to African-American or Hispanic borrowers.

Court documents said the offences took place between 2006 and 2009 and broke two US laws, the Fair Housing Act and the Equal Credit Opportunity Act.

The US government alleged that the higher charges and fees were applied to ethnic minority mortgage borrowers who had the same credit scores as white home-buyers.

Wrongdoing denied

"We've agreed to settle these legacy allegations that relate to pricing set by independent brokers," said JP Morgan spokeswoman Elizabeth Seymour said.

"We deny any wrongdoing and remain committed to providing equal access to credit."

The government lawsuit said the "discrimination has been intentional and wilful, and has been implemented with reckless disregard of the rights of African-American and Hispanic borrowers".

As a result, in some cases minority borrowers paid more than $1,000 extra during the first five years of a loan than white borrowers did, it is claimed.

JP Morgan argued that the mortgage brokers were independent and working under a contract for the bank.

But the Justice Department disagreed, saying that the bank had been "directly and extensively involved" in setting up the sale of the mortgage loans.

"Chase could have, but failed, to better monitor its wholesale brokers to discourage discrimination against borrowers based on race or national origin,'' the government lawsuit said.

Credit Suisse

Meanwhile, Swiss bank Credit Suisse has agreed to pay $5.3bn to settle accusations by the US authorities that it had misled the investors in residential mortgage-backed securities which it sold in the lead-up to the 2008 financial crisis.

The US Justice Department said the Swiss bank would pay $2.5bn in cash and pay a further $2.8bn in compensation to its customers.