Question & Answer

Question: Our bank has a customer who maintains several large accounts with us. He has asked for a rate on a CD that is .126% higher than our posted rate. Are we discriminating if we give him the higher rate?

Answer: Yes you are discriminating, but there is no law on the deposit side that makes this practice clearly illegal. The discrimination laws with which we work so actively today all relate to lending.

It is worthwhile to remember that there is one very old civil rights law, the Civil Rights Act of 1866, which guarantees to all persons the same rights as white citizens to make contracts. A deposit is based on a contractual relationship between the bank and the depositor. Deposit relationships thus are subject to the 1866 act. The key determination here would be whether any person making the same request under the same circumstances, would have received the same contract.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 6, 4/96