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Inside Washington (07/13/2012)
  • WASHINGTON (7/16/12)--The Department of Justice on Thursday reached a $175 million settlement with Wells Fargo Bank to resolve the government's allegations that the bank discriminated against qualified African-American and Hispanic borrowers between 2004 and 2009 in violation of the Equal Credit Opportunity Act and the Fair Housing Act. As part of the settlement--which is subject to the U.S. District Court's approval--Wells Fargo will provide $125 million in compensation to borrowers who were victimized by its widespread practice of charging higher fees and rates to non-white borrowers. The bank will provide another $50 million in direct payments for down payment assistance to residents within eight metropolitan areas where the bank's discriminatory practices had a significant impact. Wells Fargo also has agreed to injunctive relief, monitoring, and an internal review of its retail mortgage lending practices--with additional compensation for minority borrowers who received subprime loans from its retail division while white borrowers with similar credit profiles were offered prime loans. "The department's action makes clear that we will hold financial institutions accountable, including some of the nation's largest, for lending discrimination," said Deputy Attorney General James M. Cole at a press conference announcing the settlement. "An applicant's creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for" …
  • WASHINGTON (7/16/12)--The Federal Deposit Insurance Corp. (FDIC) sent a letter to insured financial institutions last week discouraging them from charging specific customer fees for deposit insurance or from stating or implying that the FDIC is charging such fees. While FDIC-insured depository institutions (IDI) are not prohibited from passing the costs of deposit insurance on to customers, "institutions that characterize fees in this manner may (1) reveal information that could be used to determine an institution's confidential supervisory ratings, (2) mislead customers into believing that the FDIC charges IDI customers or requires IDIs to charge customers for deposit insurance, or both," the regulator said in the letter. In the past, the FDIC has advised banks in published advisory opinions that it does not prohibit them from passing deposit insurance costs to depositors with notice that the cost is for that purpose, but those opinions pre-date risk-based pricing and are obsolete, the regulator said …


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