Rhinebeck Bank in Rhinebeck, N.Y., agreed to pay a $950,000 fine to address claims by the New York State Department of Financial Services that it violated the state’s fair lending law.
The $1.3 billion-asset bank also agreed to provide restitution to affected customers, the regulator said in a press release.
Rhinebeck’s “specific policies and practices allowed automobile dealers to markup a consumer’s interest rate above the bank’s established buy rate, which resulted in a disparate impact on the basis of race and national origin,” according to a consent order tied to the financial penalty.
The regulator said its investigation found that Rhinebeck failed to effectively monitor automobile dealers that sold loans to the bank. That allowed the dealers to charge certain minorities more in discretionary markups that were not based on creditworthiness.
The regulator said it found no evidence of intentional discrimination by Rhinebeck or its employees.