FOR IMMEDIATE RELEASE                                          CR
WEDNESDAY, OCTOBER 18, 1995                        (202) 616-2765
                                               TDD (202) 514-1888

    TEXAS BANK TO PAY $500,000 FOR CHARGING HISPANIC BORROWERS
    HIGHER INTEREST RATES THAN EQUALLY QUALIFIED NON-HISPANICS


     WASHINGTON, D.C. -- A Texas bank that allegedly charged
Hispanic borrowers higher interest rates for consumer loans than
equally qualified non-Hispanics will pay more than $500,000 in
damages and penalties under an agreement reached today with the
Justice Department.   
     In a complaint, filed today together with the settlement, the
Justice Department alleged that the Security State Bank of Pecos,
situated in Pecos, engaged in a pattern of discrimination on the
basis of national origin in violation of the Equal Credit
Opportunity Act.  
     Assistant Attorney General for Civil Rights, Deval L. Patrick
said the disparities in rates could not be explained by differences
in the borrowers' loan qualifications or other factors unrelated to
national origin.
     The Federal Reserve Board examined the bank's lending
practices in October 1993, and then referred the matter to the 
Justice Department the following February.   
     Patrick claimed the bank charged Hispanic borrowers on average
higher annual percentage rates for general consumer, non-mortgage
related installment and single-payment loans than similarly
situated non-Hispanic borrowers.
     The settlement, which must be approved by the U.S. District
Court in San Antonio, requires the bank to end its discriminatory
practices, pay $10,000 in civil penalties, and create a $500,000
compensation fund for Hispanics who were charged the higher
interest rates.  In addition, the bank will set up a bilingual
customer assistance program to provide information on its consumer
loans.
     Patrick said the Department believes the bank overcharged
Hispanics in over 300 incidents.
     "Today's action underscores the Department's commitment to
guaranteeing all Americans an equal opportunity to obtain credit," 
Patrick said.  "We are pleased by the continuing cooperation
between the Justice Department and regulatory agencies such as the
Federal Reserve Board.  Such joint efforts will result in greater
compliance with fair lending laws in the future."  
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