The Justice Department's attack on lending bias is expected to accelerate despite the departure of the civil rights division's top officials.

High on the agenda: brokerage fees, pricing discrimination, and redlining.

"The fair-lending enforcement program will continue unabated," said Andrew Sandler, a partner at the Washington office of the Skadden, Arps, Slate, Meagher & Flom law firm. "We are likely to see a focus beyond just mortgage lending."

The renewed push would be surprising because Assistant Attorney General Deval Patrick and Associate Attorney General Kerry A. Scanlon both have left Justice during the past two months. Also Paul Hancock, now acting associate attorney general, has announced he will leave this summer for a post at the Florida attorney general's office.

Lawyers at Justice and in the private sector, however, said they expect prosecutions to actually increase during the next six months, rather than fall during the transition.

"We are moving ahead here," Mr. Hancock said. "Attorney General Janet Reno is the primary sponsor of the program, and that won't change."

Banking lawyers said the departure of the two political appointees gives Mr. Hancock greater control over whether to sue banks because he now runs the entire division.

"The industry should view Mr. Hancock as the policymaker with a direct line to Janet Reno," one industry lawyer said.

While he has announced plans to leave, industry lawyers said they expect Mr. Hancock will delay his departure until after President Clinton's new civil rights team takes over. That could take until late fall or winter because no one has been nominated yet.

Mr. Hancock's position is further strengthened because he has close ties to Joan Magagna, his former assistant who has become acting housing chief. She manages fair-lending cases on a day-to-day basis.

Turnover outside of the civil rights division also could benefit Mr. Hancock. Deputy Attorney General Jamie Gorelick, Justice's No. 2 official, has resigned. As the primary political appointee responsible for reviewing lending-bias cases, she was widely credited with keeping the civil rights division from pushing the envelope too far on fair-lending. She will be succeeded by Eric Holder, the former U.S. attorney for Washington, who has little experience with lending-bias cases.

"Jamie Gorelick was Washington-savvy," one banking lawyer said. "She could evaluate if the President would be embarrassed by a case. Eric Holder is not as savvy."

With the political overseers gone, banking lawyers expect the Justice Department staff will proceed with new types of cases that they may have been unable or unwilling to bring under the old regime.

Highest on the list are brokerage-fee cases. Several lawyers said department lawyers want to weigh in on the Real Estate Settlement Practices Act class actions now piling up in court. Unlike private litigants who charge that brokerage fees are outright illegal, Justice would allege that minorities disproportionately pay higher fees.

Lawyers also said they expect Justice will expand upon its success fighting pricing discrimination. Instead of naming individuals who were charged higher prices, the department is expected to pursue instances where a policy that appears racially neutral actually ends up requiring minorities to pay more for loans. Justice has yet to bring one of these so- called disparate impact cases.

Redlining cases also may return to the forefront. Several lawyers noted that Justice's recent settlement with Nationwide Insurance Co. requires the company to open 15 offices to encourage sales in urban, minority communities. This is similar to the Chevy Chase Federal Savings Bank case, where the department required the Maryland thrift to open branches in minority areas.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.