The board members from the Federal Home Loan Banks — the nation’s 11 Federal Home Loan Banks which have been called the “best-kept secret in the U.S. financial system” — held a national meeting in the District that few knew about.
It’s been a trademark of the board to fly well-below the radar of those outside of the housing and banking worlds with not many knowing that the system was created by an act of Congress in 1932 to help kickstart home lending in the midst of the Great Depression.
Today, with over a trillion dollars in collective assets, these cooperatively-owned regional banks have expanded their activities beyond home loans to include funding for small businesses, community development and revitalization and even some elements of Rep. Alexandria Ocasio-Cortez’s highly publicized “Green New Deal.”
However, allegations persist that of a myriad of racial inequalities within the system, such as minority hiring; the lack of diversity within the ranks of upper management; the selection of decision-makers, CEOs, chairmen & vice chairmen of the boards who are not individuals of color; and the fact that only a minuscule amount of the of billions of dollars for investment is allocated to communities of color.
In October, racism and discrimination at one of the institutions within the system, the Federal Home Loan Bank of San Francisco, was brought to light and a resultant complaint was filed.
The bank reached a $3.6 million lawsuit with Lawrence Parks and Timothy Simons, two Washington, D.C. executives who claimed they were the victims of racial discrimination.
However, seven months after the settlement, the Bank has refused to honor the settlement and the matter might require re-litigation.
“Parks and Simons were subject to practices that had a disparate impact on black employees,” the attorney for both men, Carla Brown, wrote in court papers.
“The bank closed its DC office and fired them after they complained about racial discrimination,” the attorney states in the filings.
Parks, who worked for the bank as senior vice president for external, legislative and regulatory affairs; and Simon, who held the position of vice president for legislative and regulatory outreach and compliance; did not respond to request for comment.
Because the case hasn’t been resolved,
Brown also declined to comment.
Bank officials refused to comment.
A spokesperson for Parks and Simons said the suit isn’t simply about the specifics found in their legal filings. The two executives are suing for breach of contract and breach of covenant of good faith and fair dealing related to the bank’s alleged failure to fulfill the terms in its mediation agreement.
Brown argues on behalf of her clients in court documents that “The plaintiffs argue that the mediation — which they did not request — was in good faith and that both parties agreed in advance that any settlement they reached would resolve the dispute.”
“More importantly, the mediator’s proposal stated that any such agreement ‘is enforceable in the same manner as any other written contract.’”
Parks and Simons said they did not initially file a suit against the bank, or the employees named in this suit, because they agreed to wait until after mediation, according to Brown’s court filings.
They said a settlement was reached on Oct. 8, 2018, providing a signed, handwritten copy of that document in the appendix to their filing.
Mediators proposals are typically short, but the problem appears that the parties cannot reach a long-form version of that settlement.
Parks and Simons claim the bank and its co-defendants have attempted to add terms that would “materially alter (and effectively nullify) the agreement struck at mediation.”
They claim the bank was trying to stretch the payout over 10 years and include claw-back provisions and non-compete clauses that would dramatically change the value of the settlement.
The Bank is part of the Federal Home Loan Bank System which was chartered by Congress in 1932. Federal Home Loan Banks are 11 U.S. government-sponsored banks that provide reliable liquidity to
member financial institutions to support housing finance and community investment.
With their members, the FHL Banks represent the largest collective source of home mortgage and community credit in the United States.
In the fourth quarter of 2018, the Federal Home Loan Bank of San Francisco announced that its net income for the fourth quarter of 2018 was $73 million, compared with a net income of $67 million for the fourth quarter of 2017, a $6 million increase.
The total net income for the 2018 operating year was $360 million. Total assets as of December 31, 2018 totaled $109.3 billion. The Bank paid an annualized dividend for 2018 of 8.51 percent.
According to Brown, the Bank’s LRA division in Washington “Was established in 1997 to serve as a liaison with regulators and raise the awareness of the Bank’s mission with key influencers and
In recent years, the Washington office had been the source of innovation and brand building for the Bank and had numerous legislative and regulatory successes for the Bank and had established initiatives that were of “significant benefit to potential minority homeowners and to lower and moderate-income communities,” according to filings.
“As a direct and proximate result of the breach by Defendants, Mr. Parks and Mr. Simons have suffered and continue to suffer damages including the specific amounts due as set forth (in the complaint), loss of use of income; loss of opportunities and benefits; and other past and future pecuniary losses,” Brown wrote.