Peoples Bank Tulsa must pay a $20,000 fine to the Federal Deposit Insurance Corporation for discriminatory lending practices.
Regulators say the bank charged Hispanic borrowers higher rates on car loans than similar non-Hispanic borrowers. The filing, made public earlier this week, didn't specify how much higher those rates were.
The FDIC would not comment on the case specifically, saying in an email that enforcement orders "speak for themselves."
Kate Richey, an analyst with the Oklahoma Policy Institute, has seen cases like this before. She said they are commonly discovered through required regulatory filings and are rarely intentional, but the bank should still take this seriously.
"It's a little odd given the mission and the service of that particular bank, so I would imagine that the folks over there at the bank are just as concerned about it as any advocates for responsible lending are," said Richey.
Financial institutions are increasingly using data mining rather than individual borrowers' credit profiles, to guide their underwriting practices. When the data are location-based, such as a set of risk factors for loan default in a certain ZIP code, lenders can use them to set different rates for borrowers based on where they live.
"We have residents of the city clustered in ZIP codes much more uniformly by race and ethnicity than many other places," said Richey. "We have such stringent residential segregation patterns, so something like ZIP code, or address or a variety of other geographic factors that relate to the location of the borrower could — if you're not vigilant about it or you're not aware that could happen — that could definitely lead to a discriminatory outcome."
Eduardo Martinez Jr., a business owner and board member of the Greater Tulsa Hispanic Chamber of Commerce, doesn't see it that way. He says these sorts of practices will continue in the absence of immigration reform, because legal status would give the undocumented the same ability as citizens to build a credit history.
"When people have legal status, they'll be able to obtain a Social Security number," said Martinez. "With that Social Security number, they're going to be able to get a drivers license. They're going to be able to get bank accounts.
"A lot of these kids can't transact business with banks, so they do everything in cash."
Under the FDIC enforcement action, Peoples Bank will pay the fine without admitting or denying any laws or regulations were broken. The bank must pay the fine itself; it cannot get another entity to pay on its behalf.
Executives for Peoples Bank have not responded to requests for comment.