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The Logic Behind Treating Armenian Americans as Criminals
According to the Consumer Financial Protection Bureau (CFPB), Citibank “treated Armenian Americans as criminals who were likely to commit fraud.” It alleged that Citibank targeted and routinely denied credit to applicants who appeared to be of Armenian descent, based on their name and residence.
Between 2015 to 2021, the bank’s secret statewide policy resulted in the rejection of credit card applications, rejection of requests for increased credit lines, and outright cancellation of accounts in good standing. Applicants with last names ending in “-ian” or “-yan” or applicants living in Glendale, California were targeted.
I decided to do some research on Armenian last names. I found around 123 ending in “-ian” and 847 ending in “-yan.” I’m pretty sure many of those aren’t even Armenian. O’Brian, O’Ryan, Lilyan – I mean, evidently the CFPB doesn’t have Google or they could have saved Citi millions in ill-gotten fines.
Here’s where the hypocrisy comes in. Every single FDIC insured bank employee has to go through extensive anti-money laundering training. We’re instructed to watch out for suspicious activity and make sure our bank isn’t being used for money laundering.
If you Google “Armenian money laundering” you won’t even need to finish spelling it – the auto-complete is very telling. Here’s my point: What possible reason could Citi have for discriminating against Armenians? Where’s the memo, board minutes, emails about this policy? They don’t exist.
This fine against Citi is a result of “disparate impact” policies. Disparate impact refers to unintentional discrimination, whereas disparate treatment is intentional discrimination.
Here’s an example: Fannie Mae and Freddie Mac loan level price adjustments are based on credit scores. The Census Bureau tells us different ethnic groups have different average credit scores. This means lenders have no choice but to give higher rates to groups with lower scores. To do anything else would require giving preferential treatment to one group over another – which is illegal.
In other words, following lending guidelines to the letter of the law inevitably leads to legally-defined discrimination. That seems like an impossible standard. Instead of fining banks over disparate impact, maybe we should use this opportunity to overhaul some of these policies that lead to no-win situations. It’s not only more intellectually consistent, but it’s the right thing to do.
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