Update 12:40pm : Adds Flagstar no comment.
- The spread in N.Y. Community Bancorp's ( NYSE: NYCB ) planned purchase of Flagstar ( NYSE: FBC ) widened slightly amid a report that the Dept. of Justice may be considering a lawsuit against Flagtsar over allegations of racial discrimination.
- The DOJ may be mulling a racial discrimination suit on allegations that the bank's black customers paid more for home loans than others, according to traders, who cited a Capitol Forum report that's circulating.
- The deal spread widened to $1.81. NYCB fell 5% , while FBC dropped 8.1%.
- New York Community ( NYCB ) agreed to purchase Flagstar ( FBC ) last April in a $2.6B stock deal at the time. NYCB CEO Thomas Cangemi said in late July during the Q2 earnings call that both sides are fully committed to completing the transaction a s soon as possible. The termination deadline for the deal is scheduled for Oct. 31.
- Flagstar ( FBC ) declined to comment to Seeking Alpha due to its quiet period.
- The report comes after the DOJ last Wednesday announced an agreement to resolve allegations that Lakeland Bank ( LBAI ) allegedly engaged in a pattern or practice of lending discrimination by “redlining” in the Newark metropolitan area.
For further details see:
Deal spread in Flagstar/New York Community widens on report on potential discrimination lawsuit (update)