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JP Morgan Chase accused of racial discrimination JP Morgan Chase pays $55m over racial discrimination
(about 1 hour later)
US banking giant JP Morgan Chase has been accused by the US government of racial discrimination against thousands of mortgage borrowers. The biggest bank in the US, JP Morgan Chase, has agreed to pay $55m (£44.6m) to settle claims against it that it racially discriminated against 53,000 mortgage borrowers.
The accusation, denied by JP Morgan, is in a document submitted to a federal court in Manhattan, New York. The accusation by the US Justice Department is denied by JP Morgan.
It alleges the bank charged higher fees and interest rates to African-American or Hispanic borrowers for years. But the bank has agreed to settle the charges anyway.
Court filings said the offences took place between 2006 and 2009 and broke two US laws. JP Morgan was accused of allowing mortgage brokers to charge higher fees and interest rates to African-American or Hispanic borrowers.
Those laws were the Fair Housing Act and the Equal Credit Opportunity Act. Court documents said the offences took place between 2006 and 2009 and broke two US laws, the Fair Housing Act and the Equal Credit Opportunity Act.
The US government alleges that the higher charges and fees were applied to ethnic minority mortgage borrowers who had the same credit scores as white home-buyers. The US government alleged that the higher charges and fees were applied to ethnic minority mortgage borrowers who had the same credit scores as white home-buyers.
The lawsuit said the "discrimination has been intentional and wilful, and has been implemented with reckless disregard of the rights of African-American and Hispanic borrowers". "We've agreed to settle these legacy allegations that relate to pricing set by independent brokers," said JP Morgan spokeswoman Elizabeth Seymour said.
As a result, minority borrowers paid about $1,000 more for a loan than white borrowers, it is claimed. "We deny any wrongdoing and remain committed to providing equal access to credit."
According to CNBC, one of several US news outlets to report the lawsuit, the mortgages were arranged by independent brokers. The government lawsuit said the "discrimination has been intentional and wilful, and has been implemented with reckless disregard of the rights of African-American and Hispanic borrowers".
A bank spokesman told CNBC: "We deny any wrongdoing and remain committed to providing equal access to credit." As a result, in some cases minority borrowers paid more than $1,000 extra during the first five years of a loan than white borrowers did, it is claimed.
JP Morgan argued that the mortgage brokers were independent and working under a contract for the bank.
But the Justice Department disagreed, saying that the bank had been "directly and extensively involved" in setting up the sale of the mortgage loans.
"Chase could have, but failed, to better monitor its wholesale brokers to discourage discrimination against borrowers based on race or national origin,'' the government lawsuit said.