by Jeremy Leaming
The Department of Justice’s handing of foreclosure abuses, which disproportionately affected African Americans and Latinos, came under intense, if not overblown, scrutiny during a Senate hearing today.
As The Blog of Legal Times reports, Sen. Charles Grassley (R-Iowa) “led a wave of criticism of the Justice Department’s response to home loan discrimination and foreclosure abuses,” during the Senate Judiciary Committee hearing.
Grassley groused about the DOJ’s settlement with Countrywide Financial Corporation, which the Assistant Attorney General for the Civil Rights Division Thomas Perez (pictured) described in written testimony before the committee as “the largest lending discrimination case ever brought by the U.S. Department of Justice ….”
In a prepared statement, Grassley said the Countrywide settlement was inadequate. “Although the complaint asked for the victims to be put in the same position they would have been absent the discrimination, for civil penalties, and for consequential damages, the consent decree provides only $1700 per victim,” he said.
During the hearing, and his testimony, Grassley claimed that Countrywide and other financial institutions involved in the discriminatory lending practices should have faced investigations for criminal wrongdoing. “We do not know what individuals took the unlawful actions. They face no punishment. And they can keep their jobs. Countrywide admits nothing. The government has proven nothing in court.”
Democratic Sens. Al Franken (Minn.) and Sheldon Whitehouse (R.I.) joined Grassley in criticizing the DOJ for alledgedly not taking stronger action against the financial institutions. As Todd Ruger reported The Blog of Legal Times, toward the end of the hearing, Perez conceded, albeit not before defending his Division’s work, that more could be done to address the financial industry’s practices.
Several of the senators and witnesses sharply focused on the fact that banks and other financial institutions discriminated against African Americans and Latinos during the mortgage crisis. (As James H. Carr noted in this ACSblog post, research has revealed “that in 2004 African Americans were more likely to receive subprime loans than white borrowers, even when risk factors such as credit scores were taken into consideration. Not only did that excessive peddling of reckless mortgage products to blacks result in their having experience foreclosures at a disproportionately higher rate than white borrowers, but also, blacks are over-represented in the ranks of the long-term unemployed which has also grown as a result of the financial crisis.”)