Housing And Civil Enforcement Cases Documents

v.

SECURITY STATE BANK
OF PECOS,

______________________________

The United States of America alleges:

1. This action is brought by the United States to enforce provisions of the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f.
2. This Court has jurisdiction of this action pursuant to 28 U.S.C. § 1345 and 15 U.S.C. § 1691(h).
3. Defendant Security State Bank of Pecos (hereinafter "Security") is a state chartered bank doing business in the State of Texas. Security's place of business is at 115 W. 3rd, Pecos, Texas 79772. Security's business includes regularly extending credit to persons.
4. As of June 1995, Security had approximately $57,187,000 in deposits, total assets of approximately $67,537,000, a loan to deposit ratio of 35.55 percent, and no branch offices.
5. Security is subject to federal laws governing fair lending, including the Equal Credit Opportunity Act and the Community Reinvestment Act of 1977, (12 U.S.C. §§ 2901-2906).
6. Since at least October 1, 1991, Security has offered and extended general consumer, non-mortgage related installment and single-payment loans to its customers.
7. Beginning in October 1993, the Federal Reserve Bank of Dallas conducted an examination of the lending practices of Security to evaluate its compliance with the Equal Credit Opportunity Act. Based on information gathered in its examination, the Board of Governors of the Federal Reserve System (the Board) determined that it had reason to believe that Security had engaged in a pattern or practice of discrimination on the basis of national origin in the interest rates Security charged to Hispanic borrowers for consumer installment and single-payment loans.
8. Pursuant to 15 U.S.C. § 1691e(g), the Board referred the matter to the Attorney General on February 11, 1994 for appropriate enforcement action, following the Board's determination described in Paragraph 7.
9. Beginning at the latest on October 1, 1991, and continuing until at least October 31, 1993, Security charged Hispanic borrowers higher annual percentage rates (APRs) for general consumer, non-mortgage related installment and single-payment loans than similarly situated non-Hispanic borrowers.
10. The difference in APRs between the loans made to Security's Hispanic borrowers and those made to similarly situated non-Hispanic borrowers as described in paragraph 9 did not occur by chance and cannot be explained by differences in the borrowers' loan qualifications or other factors unrelated to national origin.
11. Security has subjected its Hispanic customers to terms and conditions for general consumer, non-mortgage related installment and single-payment loans that resulted in those customers paying more for their loans than similarly situated non-Hispanic customers.
12. Security's policies and practices as alleged herein, constitute discrimination on the basis of national origin against applicants with respect to credit transactions, in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691(a)(1).
13. Security's policies and practices as alleged herein, 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.
14. Persons who have been victims of Security's discriminatory policies and practices as alleged herein, are aggrieved persons or applicants as referenced or defined under the Equal Credit Opportunity Act and have suffered injury and damages as a result of Security's conduct.
15. The discriminatory policies and practices of Security as described herein were, and are, intentional and willful, and have been implemented with reckless disregard for the rights of Hispanic persons.

WHEREFORE, the United States prays that the Court enter an ORDER that:

1. Declares that the policies and practices of Security constitute a violation of the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f;
2. Enjoins Security, its employees, agents, and all other persons in active concert or participation with them, from discriminating on account of national origin in the making of Security's consumer installment and single-payment loans or in any other aspect of Security's lending;
3. Requires Security to develop and submit to the Court for its approval a detailed plan that: (a) remedies the vestiges of Security's discriminatory policies and practices; and (b) ensures that future Hispanic applicants are treated in a nondiscriminatory manner that does not differ from the treatment afforded to non-Hispanic applicants for credit;
4. Awards such damages as would fully compensate the victims of Security's discriminatory policies and practices for the injuries caused by Security;
5. Awards punitive damages to the victims of Security's discriminatory policies and practices; and
6. Assesses a civil penalty against Security, 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

DEVAL L. PATRICK
Assistant Attorney General
Civil Rights Division

PAUL F. HANCOCK
Chief, Housing and Civil Enforcement Section

BRIAN F. HEFFERNAN
S. E. PIETRAFESA
Attorneys, Housing and Civil Enforcement Section
Department of Justice
P.O. Box 65998
Washington, D.C. 20035-5998
(202) 616-2217

JAMES H. DeATLEY
United States Attorney

RAYMOND A. NOWAK
(Texas Bar 1512149)
Assistant U.S Attorney
601 N.W. Loop 410
Suite 600
San Antonio, Texas 78216
(210) 308-3610 > >