Trending Topics

Bank of America Ordered to Pay $2.2M for Discriminating Against Black Job Applicants in Charlotte

Bank of America StockFor Bank of America, the hits just keep on coming. In the same week that a federal judge ruled that the bank must pay $2.2 million to over 1,100 black  applicants rejected for jobs in Charlotte, N.C., because of racial discrimination, it will also go on trial in New York for defrauding Fannie Mae and Freddie Mac with defective mortgages.

The bank’s Countrywide unit is accused of approving deficient home loans in a process it called “Hustle,” which government lawyers say Countrywide initiated in 2007 as mortgage delinquency and default rates began to rise and Fannie and Freddie tightened underwriting guidelines. In the program, Countrywide streamlined its loan origination process, eliminating loan quality checkpoints and paying employees based only on the volume of loans they produced.

The result was “rampant instances of fraud and other serious loan defects,” including in the mortgages sold to Fannie and Freddie, according to the Justice Department.

For its part, Bank of America has said the lawsuit’s claims are “simply false” and that it “can’t be expected to compensate every entity that claims losses that actually were caused by the economic downturn.”

It is the government’s first financial crisis case to go to trial against a major bank over defective mortgages. Bank of America has incurred billions in legal liabilities as a result of its 2008 acquisition of Countrywide Financial Corp, which Reuters called the “poster child of the mortgage meltdown.”

In the Charlotte case, the bank had been accused of rejecting qualified black candidates for teller jobs and entry-level clerical and administrative positions in 1993 and again between 2002 and 2005. The bank used “unfair and inconsistent selection criteria” in choosing white applicants over black job-seekers, according to an administrative law judge.

As a result of the ruling, 1,034 applicants rejected by the bank in 1993 will be awarded $964,033 – an average of $932 per person—while an additional 113 people denied a job between 2002 and 2005 will split about $1.2 million, an average of $10,775.

In addition, Bank of America must offer jobs to 10 employees originally turned down, the Labor Department said.

“Wherever doors of opportunity are unfairly closed to workers, we will be there to open them – no matter how long it takes,” said Patricia Shiu, director of the Labor Department’s Office of Federal Contract Compliance Programs, in a statement.

“At Bank of America, diversity and inclusion are part of our culture and core company values,” spokesman Christopher Feeney said in a statement. “We actively promote an environment where all employees have the opportunity to succeed.”

It is the third discrimination case Bank of America has settled in just the past month. In August, the bank agreed to pay $160 million to black financial advisers at Merrill Lynch who said racial discrimination led them to be kept off lucrative assignments and paid less than white counterparts. It was the largest ever discrimination settlement.

Earlier this month, the bank agreed to pay $39 million to women who worked at Bank of America and Merrill Lynch brokerages who claimed they were not given an equal chance to succeed.

What people are saying

Leave a Reply

Back to top