WASHINGTON - 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." They "are optimistic this can come to a good conclusion," he added.
The case stayed in legal limbo during most of the 1990s after early attempts at a negotiated settlement broke down. The agency contested the suit, and the case was sent to the Equal Employment Opportunity Commission, which did not clear the complaint to move forward until 1998.
Settlement negotiations started again in February. Mr. Sellers credited the FDIC's senior management for moving toward an agreement. "I think there was a genuine intent on the part of senior management to settle this," he said.
An FDIC spokesman said the agency is satisfied with the agreement. "Senior management is pleased with the progress of the mediation," he said. "They wanted to deal with this suit in a fair and equitable manner that benefits all employees."
Industry analysts were not alarmed at the news, and they said the industry is unlikely to react harshly.
"I don't think you will hear much outrage over this," said Bert Ely, a financial services industry consultant in Alexandria, Va. "Now, if you look at the $750 million" that the failure of First National Bank of Keystone in West Virginia "cost the industry, that was something to get upset about."
