Defendant.
______________________________
COMPLAINT
The United States of America alleges:
- This action is brought by the United States to enforce
the provisions of Title VIII of the Civil Rights Act of 1968 (the
Fair Housing Act), as amended by the Fair Housing Amendments Act
of 1988, 42 U.S.C. §§3601-3619, and the Equal Credit Opportunity
Act, 15 U.S.C. §§1691-1691f.
- This Court has jurisdiction of this action pursuant to
28 U.S.C. §1345, 42 U.S.C. §3614, and 15 U.S.C. §1691(h).
- Defendant, First National Bank of Vicksburg (hereinafter
"First National"), is a national bank doing business in the State
of Mississippi. First National is a subsidiary of First National
Corporation incorporated in the State of Mississippi. Its
principal place of business is at 1301 Washington Street,
Vicksburg, Mississippi 39180. Its business includes engaging in
residential real estate-related transactions and regularly
extending credit to persons.
- As of June 1993, First National had approximately
$238,514,000 in deposits, assets of $276,652,000, equity capital
of $28,958,000, and 8 branch offices.
- As a national bank, First National is subject to the
regulatory authority of the Office of the Comptroller of the
Currency. As a federally regulated lending institution, First
National is subject to federal laws governing fair lending,
including the Fair Housing Act and the Equal Credit Opportunity
Act.
- Since at least 1985, First National has offered and
extended unsecured loans to individuals for the purpose of
"improving, repairing or maintaining a dwelling" as defined by 42
U.S.C. §§ 3602(b) and 3605(b)(1)(A). (Hereinafter referred to as
"unsecured, home improvement loans.") The unsecured home
improvement loans offered by First National were either single
payment loans, which are to be paid in full at maturity with no
monthly payments, or amortized with monthly payments due during
the loan term. The interest on single payment loans is
calculated by the simple interest method.
- Until July 1993, the interest on amortized loans was
calculated either as simple interest or add-on interest. The
add-on interest method resulted in a significantly higher annual
percentage rate than simple interest. Based on the bank's 1992
rates sheets, borrowers with add-on interest were assessed rates
as high as 21.5% depending on the loan amount, and those rates
were the highest permitted under the usury laws of the State of
Mississippi. The interest rate on simple interest loans
generally ranged from 9.5% to 10%. In July 1993, the bank
discontinued using the add-on interest method for these loans in
response to a fair lending investigation by the Comptroller of
the Currency referred to in paragraph 8.
- In June 1993, the Comptroller of the Currency conducted
an investigation of the lending practices of First National to
evaluate its compliance with the Fair Housing Act and the Equal
Credit Opportunity Act. Based on information gathered in its
investigation, the Comptroller determined that he had reason to
believe that First National had engaged in a pattern or practice
of discrimination on the basis of race in the terms and interest
rates charged to black borrowers for unsecured home improvement
loans. Thereafter, the Comptroller referred this matter to the
United States Department of Justice pursuant to the referral
provisions of the Equal Credit Opportunity Act, 15 U.S.C.
§1691e(g).
- During calendar year 1992, 97% (59 of 61) of First
National's black customers for unsecured home improvement loans
received amortized loans, while 49% (62 of 126) of the bank's
white customers who received unsecured home improvement loans
were given the more favorable and less expensive single payment
loans. All but two of the black customers who received amortized
loans were assessed add-on interest.
- First National offered certain customers who received
amortized unsecured home improvement loans the opportunity to pay
off their loans with simple interest rather than the more
expensive add-on rate. Black borrowers who received amortized
unsecured home improvement loans were rarely given the
opportunity for simple interest loans. During calendar year
1992, 22.2% (14 of 63) of the bank's white customers but only
3.4% (2 of 56) of its black customers who received unsecured
amortized home improvement loans were granted simple interest.
- The disparities in the rates at which First National's
black customers received single payment unsecured home
improvement loans, as described in paragraph 9, and the rates at
which its black customers who received unsecured amortized home
improvement loans received simple interest, as described in
paragraph 10, are statistically significant, could not have
occurred by chance, and cannot be explained by differences in the
borrowers' loan qualifications or other, non-racial factors.
- Defendant First National has subjected its black
customers to terms and conditions for unsecured home improvement
loans that resulted in their paying more for their loans than
similarly situated white customers.
- Defendant First National's policies and practices, as
described in paragraphs 6 through 12, constitute:
- discrimination on the basis of race in the terms or
conditions of residential real estate-related
transactions in violation of Section 805 of the Fair
Housing Act, 42 U.S.C. §3605(a); and
- discrimination against applicants with
respect to credit transactions, on the basis
of race, in violation of the Equal Credit
Opportunity Act, 15 U.S.C. §1691(a)(1).
- Defendant's policies and practices, as described in
paragraphs 6 through 12, constitute:
- A pattern or practice of resistance to the full
enjoyment of rights secured by the Equal Credit
Opportunity Act, as amended, 15 U.S.C. §§1691-1691f;
- A pattern or practice of resistance to the full
enjoyment of rights secured by the Title VIII of the
Civil Rights Act of 1968, as amended by the Fair
Housing Amendments Act of 1988, 42 U.S.C. §§3601-3619;
and
- A denial to a group of persons of rights granted
by Title VIII of the Civil Rights Act of 1968, as
amended by the Fair Housing Amendments Act of
1988, 42 U.S.C. §§3601-3619, that raises an issue
of general public importance.
- Persons who have been victims of Defendant's discriminatory
policies and practices as described above are
aggrieved applicants or persons as referenced or defined under
the Equal credit Opportunity Act and the Fair Housing Act. As a
consequence of Defendant's policies and practices, these persons
have been denied their rights to equal opportunity in credit and
residential real estate-related transactions, and have suffered
injury and damages as a result of Defendant's conduct.
- The racially discriminatory policies and practices of Defendant
as described herein were, and are, intentional and willful, and have been
implemented with reckless disregard for the rights of black persons.
WHEREFORE, the United States prays that the Court enter an
ORDER that:
- Declares that the policies and practices of Defendant
constitute a violation of Title VIII of the Civil Rights Act of
1968, as amended by the Fair Housing Amendments Act of 1988, 42
U.S.C. §§3601-3619, and the Equal Credit Opportunity Act, 15
U.S.C. §§1691-1691f;
- Enjoins Defendant, its agents, employees and successors, and all other
persons in active concert or participation
with it, from discriminating on account of race in any aspect of
their residential real estate-related transactions;
- Requires Defendant to develop and submit to the Court
for its approval a detailed plan that: (a) remedies the vestiges
of Defendant's discriminatory policies and practices; and (b)
ensures that future black applicants are treated in a nondiscriminatory
manner that does not differ from the treatment
afforded to white applicants for credit.
- Awards such damages as would fully compensate the
victims of Defendant's discriminatory policies and practices for
the injuries caused by the Defendant;
- Awards punitive damages to the victims of Defendant's
discriminatory policies and practices; and
- Assesses a civil penalty against Defendant, in order to
vindicate the public interest.
The United States further prays for such additional relief
as the interests of justice may require.
JANET RENO
Attorney General
JAMES P. TURNER
Acting Assistant Attorney General
Civil Rights Division
PAUL F. HANCOCK
Chief, Housing and Civil Enforcement Section
RICHARD J. RITTER
THOMAS J. KEARY
Attorneys
U.S. Department of Justice
Civil Rights Division
Housing and Civil Enforcement Section
P.O. Box 65998
Washington, D.C. 20035-5998
(202)-514-4752
GEORGE L. PHILLIPS
United States Attorney
