Magazine article American Banker

Hamilton Accuses OCC of Racial Bias

Magazine article American Banker

Hamilton Accuses OCC of Racial Bias

Article excerpt

A Miami bank that has been at odds with the Office of the Comptroller of the Currency over its dealings in Latin America claims in a lawsuit that the regulator used "racial profiling" to impose enforcement orders on the bank.

In the suit, filed Wednesday in the U.S. District Court for the Southern District of Florida in Miami, $1.5 billion-asset Hamilton Bank said that the regulator had "abused its statutory authority and acted arbitrarily and capriciously" when it ordered the bank to raise capital ratios, increase loss reserves on loans to Ecuador, and stop doing business with certain Hispanic companies and individuals.

Hamilton, a subsidiary of Hamilton Bancorp, is asking the court to invalidate the OCC's examinations since early last year.

This is the second suit filed in the last two years in which the OCC has been accused of racism. The first one, involving Sinclair Bank in Arkansas, argues that OCC is biased against blacks, Hispanics, and other minorities.

Robert Garsson, a spokesman for the OCC, said that Hamilton's claims are untrue, and that the agency is currently reviewing the suit to decide how to respond.

"It is deeply offensive for a bank to say we engage in racial profiling," Mr. Garsson said. "We value diversity and supervise based on the merits of each individual bank."

In the suit, Hamilton says that it had good relations with the OCC until April 1997, when a new examiner-in-charge was assigned to the bank.

The bank alleges that the OCC's "discriminatory" views came from its "notion" that banks owned by minorities who deal with Central and South America "are likely to be involved in drug dealing and money laundering." The majority of Hamilton's staff, directors, and customers are Hispanic, and the bank conducts international trade financing with several Latin American countries.

Hamilton also claims that the OCC's representatives made derogatory comments to the bank's officers and employees and referred to South Florida's small, Hispanic-owned banks as "cowboys. …

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