Magazine article American Banker

Justice Dept. Vows Pursuit of Bias in Home Loans

Magazine article American Banker

Justice Dept. Vows Pursuit of Bias in Home Loans

Article excerpt

WASHINGTON -- Lending bias is the top civil rights issue facing the country, a senior Justice Department official said Tuesday.

Paul F. Hancock, chief of the department's housing and civil enforcement office, vowed that the government will vigorously pursue banks that discriminate against minority groups.

"Mortgage lending discrimination is probably the most serious problem in race discrimination and civil rights enforcement we face today," he told those at the annual conference of the National Fair Housing Alliance, a network of housing activists.

"We are continuing our program to address mortgage discrimination," he said, adding, "We need to do a lot more. We need to bring a lot more lawsuits in this area."

A Shortage of Funding

The banking regulators recently backed off from formal cooperation with the Justice Department in investigating banks suspected of biased lending. But that does not appear to have slowed down the Justice Department's efforts in this area.

In fact, the most significant barrier to the agency's investigations of lenders appears to be money.

The Justice Department spent several million dollars over tthree years on the only lending discrimination settlement it has reached -- $1 million in a case involving Decatur Federal Savings and Loan in Atlanta. Decatur has since been acquired by First Union Corp.

Justice officials say they have refined their strategy and now can complete an investigation in six to nine months, spending $300,000 to $500,000.

But they still say they don't have enough funding to pursue more than a few lenders at a time.

"We just have a very limited amount of resources," Mr. Hancock said. "If we do two of these at the same time, we are really taxed."

Some say the limited funding is what motivated the Justice Department to ask bank regulators to participate in joint investigations. …

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