Magazine article American Banker

FDIC to Settle Race-Bias Lawsuit for $15 Million

Magazine article American Banker

FDIC to Settle Race-Bias Lawsuit for $15 Million

Article excerpt

The Federal Deposit Insurance Corp. has agreed to pay more than $15 million to settle a racial discrimination lawsuit brought against the agency eight years ago by current and former employees.

The agreement was reached last month, a spokesman said Friday, but a federal judge must approve it before funds may be distributed.

The parties have earmarked $14 million to cover lost earnings, compensatory damages, and lawyer fees for about 3,100 current and former employees. Another roughly $1.5 million was set aside for a fund to be used for purposes such as hiring an expert to recommend changes in the agency's personnel policies and an official to monitor the agreement.

Though small compared with the agency's nearly $1.2 billion budget for fiscal year 2000, the settlement amount is more than the agency budgeted for its research and statistics division.

The FDIC is funded primarily by premiums paid by the banking industry and interest it earns on that money.

The class action was filed in 1992 by Chris Conanan, a counsel in the agency's legal division, who accused it of passing him over for promotion because he is black. Other African-American employees later joined the suit, alleging similar mistreatment.

Mr. Conanan, who still works for the agency, could not be reached to comment Friday, but lawyers for the plaintiffs said they hope the agreement will be completed and approved by spring.

Joseph M. Sellers, head of the civil rights practice at the law firm of Cohen, Milstein, Hausfeld, & Toll, said the plaintiffs actively involved in the negotiations "are pleased with the arrangement as it now stands but they recognize that it isn't final. …

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