City National Bank to pay $31 million in largest discriminatory lending settlement in DOJ history

A Los Angeles bank has agreed to pay $31 million to settle redlining accusations, the largest such assessment in U.S. Justice Department history.

City National Bank, among the country’s 50 largest banks, allegedly used discriminatory lending practices in Los Angeles County from 2017 through at least 2020. The Justice Department said the bank “avoided providing mortgage lending services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged residents in these neighborhoods from obtaining mortgage loans.”

Other banks received more than six times as many mortgage applications in predominately Black and Latino neighborhoods between the years of 2017 and 2010. On top of that, City National, the largest bank based in Los Angeles, opened only one branch in a majority Black and Latino neighborhood over a span of two decades. Furthermore, that branch did not employ a dedicated mortgage underwriter, unlike the bank’s branches in majority-white neighborhoods.

At least $29.5 million of the settlement will go into a loan subsidy fund for residents of Black and Latino neighborhoods in the county, with $500,000 going toward advertising and outreach to residents, $500,000 to consumer financial education and $750,000 to develop community partnerships that open up residents’ access to mortgage credit.

The bank will open one new branch in a neighborhood where Black and Latino residents are the majority and will assign at least four mortgage loan officers to those neighborhoods. City National will also work to enable opportunities for home ownership in underserved communities around the country.

U.S. Attorney General Merrick Garland hailed the settlement as a victory for the Combatting Redlining Initiative, a task force launched in October 2021. The initiative targets computer algorithms that could cause banks to discriminate, in addition to flat-out redlining. To date those efforts have garnered $75 million in relief, Garland said.

“Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice, and has no place in our economy today,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “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.”

With News Wire Services