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CFPB, DOJ Crack Down On Bank For ‘Redlining’ Consumers

CFPB regulation

In a joint effort announced by the Consumer Financial Protection Bureau and the U.S. Department of Justice, redlining is getting more scrutiny and the two agencies brought a complaint against BancorpSouth. 

As noted in a release Thursday, redlining refers to credit disparity, and denial of credit outright to people even though they are right there in the same room, or in the stands at an event.  The letter of the law states that there should be no difference in credit access, yet redlining means that racism can be subtle and not subtle.

The DOJ and CFPB said that BancorpSouth denied access to credit products and also discriminated on the basis of race. In one example, undercover activity yielded evidence of disparity where minorities were turned away from almost all attempts to apply. 

The CFPB said that the firm must pay $4 million to subsidize mortgage loans still struggling. In addition, according to the release, the CFPB has to open new branches in lower income backdrops.

In addition, BancorpSouth must invest half a million dollars for educational and other assistance.  There’s also the mandate to invest half a million dollars to bolster local and community programs. That would include spending $100,000 per year to boost ads for minority loans.

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