Low Investor Confidence Not Helping Bank of America
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Bank of America (NYSE: BAC) has settled a lawsuit relating to the allegations that it discriminated against a woman on the basis that she was on maternity leave.
The history of the case is as follows: A woman in Irvine went to her Bank of America branch with a request to receive refinancing for her mortgage. The branch turned her down based on the fact that she was on maternity leave. The woman filed a complaint with the U.S. Department of Housing and Urban Development (HUD), which in turn reached an agreement with Bank of America.
This is something that simply cannot be done in the modern world, as it is a blatant example of discrimination. Under the Fair Housing Act, it is specifically stated that you cannot discriminate against someone who is applying for housing assistance based on: race, color, national origin, religion, sex, family status, or disability. Denying a woman financing because she is on maternity leave is in direct violation of this law, as it is a form of discrimination based on her family situation, as well as on her sex. As a result, Bank of America has been made to pay an amount of $161,180 to settle the allegations.
According to the reports that we have on the event, Bank of America told the woman that she would only be able to apply for refinancing once she had returned to work on a full-time basis. This decision was made despite the fact that she was receiving the same rate of pay and benefits while on maternity leave as she would have had she been working full-time. Part of the amount that the bank must pay is intended to go towards compensating women whose loans have been denied or delayed based on their maternity status. In addition to these explicit costs, the bank will also have to devote resources to training its agents in fair lending across the country.
Bank of America has shown a suitable amount of remorse regarding the situation and vows to put measures in place to avoid it occurring again in the future. Still, the news story was covered by the national press and will only serve as another example to be used by those who claim the bank is not working in the interest of the average citizen.
Meanwhile, competitor JPMorgan Chase (NYSE: JPM) is under fire due to the huge losses that the bank recently experienced, and the situation has resulted in a full blown investigation and court case. In recent news, we heard that the bank's CEO is due once again to testify in court regarding the losses. Quite a few commentators on the topic are confused about how the situation escalated into such a fiasco. Generally speaking, this is seen as a mild misstep on the part of the company, at best an error that will be remedied over time. I feel that the company will be able to recover from this relatively easily.
The JPMorgan affair has already affected public and investor opinion, however. Consequently, I feel that confidence in Bank of America may decrease, demonstrating that there are a number of other issues affecting the banking industry that should concern the company more than a case of discrimination.
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