By Ken Sweet —
The Associated Press
The Justice Department on Thursday charged Los Angeles-based City National Bank with discrimination
by refusing to provide mortgages in predominantly Black and Latino communities
, requiring the bank to pay more than $31 million in the largest settlement ever. of this kind in history.
The Justice Department alleges that between 2017 and 2020, City National avoided marketing and underwriting mortgages in majority Black and Latino neighborhoods in Los Angeles County.
Other banks operating in those neighborhoods accepted six times as many mortgage applications as City National, according to the government.
The Justice Department alleges that City National, a bank with approximately $95 billion in assets, was so reluctant to operate in neighborhoods where most residents are people of color that
it opened only one branch in the last 20 years there
.
By comparison, it opened or acquired 11 branches elsewhere.
In addition, no employee was dedicated to underwriting mortgages at that branch, unlike others in white neighborhoods.
“This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so,” Deputy Attorney General Kristen Clarke, who heads the Division of Financial Services, said in a statement. Human Rights Department of Justice.
Attorney General Merrick Garland has prioritized investigations into civil rights issues since he took over the Justice Department in 2021.
The task force promoted by the president, Joe Biden, to end these practices includes the Department of Justice, as well as bank regulators such as the Comptroller of the Currency and the Office of Consumer Financial Protection, and focuses not only on discrimination by neighborhoods, but also on algorithms that can cause banks to discriminate against blacks and Latinos.
Despite half a century of laws designed to combat this type of neighborhood discrimination, this racist practice continues to plague the entire country, and the long-term effects are still being felt.
Median home equity for a black family is a fraction of a typical white home, and homes in historically marked neighborhoods (due to having a majority black population) are still worth less than homes in unmarked communities.
As part of the agreement, City National will create
a $29.5 million loan subsidy fund
for Black and Latino borrowers
, and spend $1.75 million on advertising, community outreach and financial education programs to reach minority borrowers.
In a statement, City National said it disagreed with the Justice Department's allegations, but would "stand by its efforts to ensure equal access to credit for all consumers, regardless of race."
The Justice Department said City National cooperated as part of the investigation and is also working to resolve its issues in other markets.
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Clarke announced the deal Thursday morning at a historic black Baptist church in South Los Angeles that was a major force in the civil rights movement and has hosted speeches by the Rev. Martin Luther King Jr. and Malcolm X.
The settlement with City National is the largest ever reached by the Justice Department with a bank on a lending discrimination issue.
A deal with the Department of Housing and Urban Development with Associated Bank in 2015 involved the bank committing to $200 million in increased lending in minority neighborhoods, along with a $10 million grant fund similar to the one agreed to by City National .
