Fifth Third Bank Accused of Bias in Lending

     CINCINNATI (CN) – Fifth Third Bank allowed auto dealers to hike interest rates on car loans to black and Hispanic buyers, the Justice Department claims in a lawsuit.
     According to a complaint filed in Federal Court on Monday, the bank’s policy was done “in a hidden manner not based on the borrower’s creditworthiness or other objective criteria related to borrower risk.”
     The lawsuit says the bank’s policy was done “in a hidden manner not based on the borrower’s creditworthiness or other objective criteria related to borrower risk.”
     An investigation by the Consumer Financial Protection Bureau revealed the policy has been in effect as far back as 2010.
     The agency says Fifth Third’s “lack of compliance monitoring” meant “the average African-American victim was obligated to pay over $200 more during the term of the loan because of discrimination, and the average Hispanic victim was obligated to pay over $200 more during the term of the loan because of discrimination.”
     The Bureau analyzed auto loans made by Fifth Third between 2010 and 2014, and discovered that “on average, African-American borrowers were charged approximately thirty-five basis points more in dealer markup than similarly-situated non-Hispanic whites for retail installment contracts.”
     Additionally, “on average, Hispanic borrowers were charged approximately thirty-six basis points more in dealer markup than similarly-situated non-Hispanic whites for retail installment contracts.
     The complaint says Fifth Third took steps to “provide relief to approximately 23,000 affected consumers,” but that it “has not required dealers to document reasons for charging markups, has not at all times monitored whether discrimination occurred across its portfolio of loans through charging markups, and has not at all times provided detailed fair lending training to its dealers.”
     Federal prosecutors are seeking a judgment that Fifth Third Bank’s actions violate the Equal Credit Opportunity Act, as well as damages for victims of the bank’s discrimination.
     Fifth Third Bank is the “ninth largest depository auto loan lender in the United States,” with assets of over $139 billion.
     The government is represented by Matthew Horwitz, the Justice Department’s deputy civil chief for the Southern District of Ohio.

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