Bank of America's acquisition in 2008 of Countrywide Financial, the largest mortgage lender, has turned out to be one of the worst business deals in history. It has resulted in tens of billions of dollars in losses for Bank of America. In addition, Countrywide has become a symbol of the housing boom and collapse. "Countrywide's actions contributed to the housing crisis, hurt entire communities, and denied families access to the American dream," said Thomas E. Perez , Assistant Attorney General for the Civil Rights Division. The Justice Department announced the largest residential fair-lending settlement in history on December 21, 2011. Bank of America will pay $335 million in compensation for victims to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers in their mortgage lending from 2004 through 2008. This was before Bank of America purchased Countrywide. The Justice Department determined that from 2004 to 2008, Countrywide did not have a system to comply with fair-lending rules. Countrywide's policy gave loan officers and brokers the discretion to alter the terms for which a particular applicant qualified. Lending data showed that Countrywide charged Hispanics and African-Americans more, on average, than white applicants with similar credit histories. Furthermore, brokers and employees "steered" applicants who qualified for regular mortgages into riskier, more expensive subprime loans. Bundling and reselling subprime loans as securities was one cause of the 2007 financial crisis. Attorney General Eric Holder said, "The department's action against Countrywide makes clear that we will not hesitate to hold financial institutions accountable, including one of the nation's largest, for lending discrimination. These institutions should make judgments based on applicants' creditworthiness, not on the color of their skin. With today's settlement, the federal government will ensure that the more than 200,000 African-American and Hispanic borrowers who were discriminated against by Countrywide will be entitled to compensation." Federal civil rights laws, including the Fair Housing Act and Equal Credit Opportunity Act , make a lending practice illegal if it has a disparate impact on minority borrowers. What is disparate impact ? What can a manager do to discourage disparate impact in lending practices?