Banking

Rhinebeck Bank reaches vehicle-loaning settlement with New York regulators

Rhinebeck Bank’s indirect auto lending policies broke New York State’s reasonable loaning law, the state department of monetary services stated Thursday. The bank accepted a settlement that consists of a $950,000 fine and restitution to impacted consumers.

The bank’s “specific policies and practices allowed automobile dealers to markup a consumer’s interest rate … which resulted in a disparate impact on the basis of race and national origin,” the New York State Department of Financial Services stated in a authorization order detailing the settlement.

During the durations in concern, Black customers were charged 31-39 basis points more in markups than non-Hispanic white customers, according to the authorization order. Hispanic customers paid 21-33 basis points more, and Asian customers paid roughly 15 basis points more.

Superintendent Adrienne Harris stated in a declaration that the Department of Financial Services “continues working to ensure that New Yorkers have transparent and fair access to financial products, combatting the historical inequities faced by individuals of color today.”

Christopher Goodney/Bloomberg

The regulator stated it discovered no proof of deliberate discrimination by Rhinebeck or its workers.

Rhinebeck, headquartered in New York’s Hudson Valley, counted nearly $1.3 billion of possessions at the end of the 2nd quarter. The bank stated it does not concur with the department’s findings.

“Dealers, not banks, determine how much markup to charge customers,” Rhinebeck CEO Michael J. Quinn stated in a declaration. “Banks do not know the racial or ethnic characteristics of borrowers before a loan is originated.”

In addition to the financial charge, Rhinebeck accepted supply affected customers with restitution. Eligible customers are those who resided in New York at the time of their auto purchase, recognize as Black, Hispanic or Asian and paid above the typical markup paid by non-Hispanic white customers in between January 1, 2017 and March 31, 2022. The typical consumer refund is $133, Quinn stated. 

The bank has actually completely scheduled for the settlement expense, which it anticipates to have no additional influence on incomes. 

Under Superintendent Adrienne Harris, the New York State Department of Financial Services has guaranteed to focus more on kitchen-table concerns that effect customers. Earlier this year, the department fined a life insurance coverage business $10 million for stopping working to pay advantages to the rightful recipients. 

“DFS continues working to ensure that New Yorkers have transparent and fair access to financial products, combatting the historical inequities faced by individuals of color today,” Harris stated Thursday in a declaration.

Gabriel

A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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