JPMorgan hit with pair of bias claims in Obama's final hours
The Obama administration took two last-minute swipes at JPMorgan Chase, accusing the lender in separate lawsuits of discriminating against minorities in home lending and against its own female employees by paying them less than their male counterparts.
The nation's biggest bank has confronted claims of bias since at least 2009. In one of the cases filed Wednesday, the government said the lender's practices cost at least 53,000 black and Hispanic borrowers tens of millions of dollars between 2006 and 2009. In the other, the U.S. said JPMorgan paid at least 93 women less than men in the same position.
The bank disputed both sets of claims and pledged to fight the gender lawsuit, while agreeing to pay $55 million to settle the race case, according to a person familiar with the matter. JPMorgan said in a statement it's committed to diversity in the workplace. After being honored by two groups for its efforts at inclusion, Chief Executive Officer Jamie Dimon remarked in April that a diverse workplace "is not only the smart thing to do — it's the right thing to do."
In the mortgage case, the U.S. said a black borrower with the same credit and risk profile as a white borrower paid higher loan rates and larger fees for the same type of Chase wholesale mortgages. Hispanic borrowers allegedly received similar treatment.
The U.S. says mortgage brokers had wide discretion in adjusting fees and rates. The government did a regression analysis to determine how much more minorities paid, the U.S. said, explaining that was necessary because the bank didn't keep data.
Black borrowers paid an average of 0.12 percentage point higher rates on loans, while Hispanics paid 0.06 percentage point more, the complaint said. Blacks were charged an average $1,126 in higher fees, while Hispanics were changed an average of $968 more, according to the complaint.
The lender also created a financial incentive for mortgage brokers to charge interest rates above those JPMorgan had set based on credit risk, the U.S. said.
In a response filed with the court before it announced the settlement, the bank said the U.S. claims were at least partially, if not completely, barred by the terms of a 2010 settlement of a Los Angeles federal court case filed on behalf of black and Hispanic borrowers. The bank also challenged the underlying basis of the Justice Department complaint, contending the government failed to meet U.S. Supreme Court requirements for establishing a "requisite causal link" between the bank's policies and purported price disparities.
"We deny any wrongdoing and remain committed to providing equal access to credit," the bank said in a statement.
Separately, the Labor Department claimed the bank "systematically discriminated" against 93 women technology workers in its investment bank by paying them lower wages since at least 2012. The Labor Department asked an internal administrative judge to cancel all government contracts and prevent JPMorgan from entering future federal contract if it fails to provide relief.
"The company continues to fall short of its obligations" to provide equal employment, the Labor Department alleged.
As in the mortgage case, the U.S. claimed in its 7-page complaint that JPMorgan failed to maintain adequate data to determine whether it was discriminating.
"We tried to work with the OFCCP regarding this matter and resolve any concerns," the bank said in a statement, referring to Office of Federal Contract Compliance Programs, a unit of the Labor Department. "We are disappointed that the OFCCP chose to file a complaint but look forward to presenting our evidence to a neutral decision maker."
JPMorgan has battled such allegations before. In 2014, the city of Miami claimed that the bank was among several that engaged in a "pattern of discriminatory" lending that led to foreclosures. The case is pending.
In 2009, the U.S. Equal Employment Opportunity Commission claimed the bank discriminated against women at an office in Columbus, Ohio. The case settled in 2014 after JPMorgan agreed to pay a group of female mortgage bankers $1.45 million to resolve the allegations.