In a recent discovery about the practices of financial institutions it has been uncovered that disparities amongst people of color are present. In an article by news source New Republic, it details the inequality for black people in the banking system. Global banking institutions are centered in America and have contributed to the systematic disadvantages between races. Two well known banking institutions, Wells Fargo and Bank of America, have recently been found guilty of unethical practices in lending.
Wells Fargo has been around for many years and have earned the title of the second largest home mortgage lender in the country (Gregory, 2018). In 2012, Wells Fargo found themselves in a heated lawsuit with accusations of bias practices towards people of color as the topic (Gregory, 2018) They were found guilty of pushing black people into higher mortgages with higher rates. While giving white couples with similar credit profiles lower rates and less fees (Gregory, 2018). This is problematic as it shows blatant racism in the banking system institutions.
Bank of America also has been under the spotlight for their discriminatory practices in their hiring and lending procedures. As recent as 2018, they were found guilty of racial discrimination crimes and penalized over 2 million dollars (Gregory, 2018). Bank of America has been involved in numerous lawsuits about their unethical hiring and lending practices for years. One case was in response to, over two decades of racial discrimination in relation to their hiring process. Many of the complaints filed where in relation to the Charlotte, North Carolina location. Where 1,100 African-American potential employees claimed they were discriminated against for unjust reasons (Petroff, 2013). These claims started in 1993 and continued over a span of time until recently when the case was settled (Petroff, 2013). Although, the case ended in a settlement, it does not guarantee that discriminatory practices will vanish. Qualified applicants who applied for entry level positions were denied on the basis of “unfair and inconsistent selection criteria” (Petroff, 2013). In addition to their settlement they were required to offer positions to at least 10 applicants that were discriminated against (Petroff, 2013).
Additionally, in 2009 Bank of America acquired Merrill Lynch a fincial advisory company (Petroff, 2013). This company was on the verge of a financial crisis when saved by BofA. In light of recent discoveries, they too have practiced discrimination in their hiring and lending practices. Merrill Lynch is known to have paid one of the largest settlements in relation to employment discrimination (Petroff, 2013). Their 160 million settlement was order to be paid their African-American brokers.
Many African-American are outraged and fed up of being systemically kept at a disadvantage. One of their initiatives to avoid such bad representation is to invest in black owned banking institutions. Black owned banking institutions have been around for years, helping to improve the livelihoods of qualified candidates. For example, Carver is a black owned bank that continues to offer services to the community such as financial literacy programs (Gregory, 2018). While institutions that were not black owned only lent 1 percent of mortgages to African-Americans (Gregory, 2018). Unfortunately, the number of black owned institutions has decreased drastically.
Number of black-owned banks in the United States
1985: 60
2006: 45
2017: 22
Money they hold
$5.4 billion
Deposits in the nine months after Philando Castile’s death
+$60 million
Sources: Washington Monthly; CityLab; FDIC; Investopedia
The position that the government has taken is to conduct investigations and then pursue the organization legally. Many of these corporations have been found guilty of unorthodox practices and have been subject to fines. In severe situations individuals have served jail time as well. However, the lengths the government have went to ensure African-Americans are treated fairly have not seemed to measure up to much. Most times, victims of discrimination are given compensation for their mistreatment. However, that doesn’t amount to what they have potentially missed out on such as wages, career advancements, and benefits. Although, the government has pursued companies they will need to implement stricter regulations to ensure discrimination is ruled out.
The government seems to react faster to public protest that cause a lot of media coverage and outrage. This is seen when the Montgomery bus boycott took placed catching the attention of media and politicians (Gregory, 2018). The government in turn was forced to respond by banning segregation on public buses making it unconstitutional. This moment signified the importance of media and the access to a platform that can be used to spread accurate information and create change.
Gregory, K. (2018, May 31). Banking Black. Retrieved April 12, 2019, from https://newrepublic.com/article/148300/banking-black-financial-inequality
Petroff, A. (2013, September 24). Bank of America fined $2 million for race discrimination. Retrieved April 12, 2019, from https://money.cnn.com/2013/09/24/news/companies/bofa-racial-discrimination/
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