Rhinebeck Bank’s indirect auto lending policy violates New York’s fair lending law, the State Department of Financial Services said Thursday. The bank agreed to a settlement that included a $950,000 fine and refunds to affected customers.
The New York State Department of Financial Services said the bank’s “certain policies and practices allowed auto dealers to raise interest rates for consumers … resulting in varying effects based on race and national origin.” ‘ said. Consent Order Outlining Settlement.
During the period in question, black borrowers were charged 31 to 39 basis points more markup than non-Hispanic white borrowers, according to the consent orders. Hispanic borrowers paid him 21 to 33 basis points more, while Asian borrowers paid about 15 basis points more.
Regulators said they found no evidence of willful discrimination by Rhinebeck or its employees.
Headquartered in New York’s Hudson Valley, Rhinebeck reported assets of approximately $1.3 billion at the end of the second quarter. The bank said it disagrees with the authorities’ findings.
Rhinebeck CEO Michael J. Quinn said in a statement: “Banks do not know the racial or ethnic characteristics of the borrower before the loan is initiated.”
In addition to fines, Rhinebeck has agreed to provide refunds to affected borrowers. Eligible borrowers must live in New York at the time of vehicle purchase, identify as Black, Hispanic, or Asian, and be non-Hispanic white between January 1, 2017 and March 31, 2022. Those who paid more than the average markup paid by borrowers. Quinn said he reimbursed the customer $133.
The bank has fully reserved the costs of the settlement and does not expect any further earnings impact.
The New York State Department of Financial Services, under Superintendent Adrian Harris, promised to focus more on the kitchen table problem influence consumers. Earlier this year, the bureau fined life insurance companies $10 million for failing to pay benefits to legitimate beneficiaries.
“DFS continues to work to ensure transparent and fair access to financial products for New Yorkers to combat the historic inequalities faced by people of color today,” Harris said in a statement Thursday. .