Thursday, July 12, 2012

Bankers group critiques probe into Wells Fargo discrimination

The American Bankers Association put out a statement Thursday criticizing the U.S. Justice Department's investigation into whether banks discriminated against black and Hispanic borrowers, saying it could cause banks to scale back lending.

The Justice Department settled claims with Wells Fargo on Thursday that the bank steered minority homebuyers into costlier mortgages than white buyers, based on race instead of creditworthiness. Wells will pay $175 million.

While not specifically naming Wells Fargo, the ABA statement says "This approach can have unintended consequences, such as causing financial institutions to shrink their operations rather than risk litigation," according to the statement, attributed to ABA President Frank Keating. 

"Overly aggressive regimes can make a bank reluctant to lend, hurting the very groups they intend to help. The banking industry is committed to a color-blind, discrimination-free lending environment."