Two subsidiaries of American International Group Inc. have agreed to pay $7.1 million to settle?discrimination allegations of charging higher fees to African American borrowers, the Justice Department announced Thursday.
A total of $6.1 million will go to 2,500 African American borrowers of subprime loans who were charged higher broker fees, and the AIG?subsidiaries will invest at least $1 million in consumer education.
The action “is a warning shot” to lenders who fail to monitor brokers’ conduct, said Thomas E. Perez, the assistant attorney general in charge of the Justice Department’s civil rights division. AIG is at the center of many of the nation’s economic woes.
The case marks the first time a lender has been held responsible for failing to ensure brokers do not charge higher fees because of race, Perez said in a briefing for reporters.
Previously, the government has not gone after lenders for higher broker fees, which meant “it was the wild, wild west” for borrowers being targeted with bigger fees, he said.
The settlement resolves allegations that AIG Federal Savings Bank and Wilmington Finance Inc. engaged in a pattern or practice of discrimination under the federal Fair Housing and Equal Credit Opportunity Acts.
Source: The Associated Press.