Loan discrimination costs US bank
(8 March 2010 – USA) AIG’s Federal Savings Bank and Wilmington Finance Incorporated has settled charges brought against them over discriminating against black people when providing home loans and has agreed to pay at least US$7.1 million (A$) in restitution and education efforts.
The charges were brought against AIG’s financial institutions after an examination by the Office of Thrift Supervision, which then referred its concerns to the Justice Department for enforcement action.
The result of the matter was charges for engaging in a pattern or practice of discrimination on the basis of race or colour, by allowing wholesale mortgage brokers to charge higher direct broker fees to African-American borrowers than to white borrowers for loans.
The settlement sees AIG pay US$6.1 million to borrowers who were affected by the alleged discrimination and around US$1 million to organisations providing credit counselling and financial literacy.
AIG said in a statement that it denied the government's allegations and that they did not condone discriminatory conduct.
AIG is pleased to have reached an agreement with the government to resolve the issues in the complaint, as well as to avoid the distractions and burdens of protracted litigation over contentious issues, the company said.
The result of the matter was charges for engaging in a pattern or practice of discrimination on the basis of race or colour, by allowing wholesale mortgage brokers to charge higher direct broker fees to African-American borrowers than to white borrowers for loans.
The settlement sees AIG pay US$6.1 million to borrowers who were affected by the alleged discrimination and around US$1 million to organisations providing credit counselling and financial literacy.
AIG said in a statement that it denied the government's allegations and that they did not condone discriminatory conduct.
AIG is pleased to have reached an agreement with the government to resolve the issues in the complaint, as well as to avoid the distractions and burdens of protracted litigation over contentious issues, the company said.
Subscribe