Department of Justice Fair-Lending Enforcement Efforts

An October 8, 1993 memorandum to President Clinton on “Credit Availability and other Banking Policy Matters” listed the elimination of non-economic barriers including in particular discrimination” as an “overarching theme for the Clinton Administration with respect to insured depository institutions.” On April 15, 1994, the Clinton Administration’s Interagency Task Force on Fair Lending released a first of a kind Joint Policy Statement on Discrimination in Lending, offering clarification on fair-lending enforcement.

A shifting role in fair-lending enforcement was first evident when a DOJ investigation uncovered a “pattern-and practice” of lending discrimination by Decatur Federal Savings and Loan Association in Decatur, Georgia. This led to a September 17, 1992 one million dollar settlement agreement with Decatur. In a second noteworthy case, after conducting a six-year review of Chevy Chase Savings and Loans’ mortgage records, the DOJ found evidence of “policies and practices” of mortgage discrimination based on the bank’s apparent failure to market its services in African American neighborhoods. As part of an $11 million dollar consent decree, the bank agreed to take “reasonable steps” to ensure that home mortgages were available to African American communities to a similar extent as in white communities. By the end of the year 2000, the Clinton Justice Department reached settlement agreements with over a dozen financial institutions for fair-lending violations resulting in over 40 million dollars in compensation to individuals and civil penalties.

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