Bank pays off $31M mortgage loan

City National is the latest bank in the past few years to be found guilty of avoiding lending to indigenous and tribal people.

NEW YORK (AP) – The Justice Department accused Los Angeles City National Bank on Thursday of discrimination by refusing to approve mortgages in predominantly Black and Latino communities, requiring the bank to pay more than $31 million in the largest redlining settlement in the department’s history. .

City National is the latest bank in the past few years to find itself avoiding lending to racial and ethnic minorities, a practice the Biden administration has set up its own task force to fight.

The Department of Justice said that between 2017 and 2020, City National avoided marketing and approving mortgages in several Black and Latino neighborhoods in Los Angeles County. Other banks operating in those neighborhoods received six times the number of mortgage applications that City National did, according to federal officials.

Kristen Clarke, assistant attorney general of the Human Rights Division of the US Department of Justice, speaks next to United States Attorney Martin Estrada, of the central district of California, as the decision was announced the City National Bank, the largest case in American history, at a news conference Thursday at Second Baptist Church in Los Angeles. (Photo: Stefanie Dazio/AP)

The Department of Justice has accused City National, a bank with approximately $95 billion in assets, of being so reluctant to operate in neighborhoods where the majority of people live are people of color, that only one branch opened by the bank in those neighborhoods 20 years ago. By comparison, the bank opened or acquired 11 branches during that period. Also, there was no employee dedicated to paying mortgages at that one branch, unlike branches in many western neighborhoods.

“This decision 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 if they fail to do so,” said Assistant Attorney General Kristen Clarke, who heads the Department of Justice. rights group, said in a statement.

Attorney General Merrick Garland has prioritized civil prosecutions since becoming head of the Justice Department in 2021 and the department, under the Biden administration, has made it a top priority to re classification of cases than previous administrations.

Biden’s task force includes the Department of Justice as well as bank regulators such as the Comptroller of the Currency and the Consumer Financial Protection Bureau, and is focused not only on obvious redlining practices but also on issues This may cause banks to discriminate against Black and Latino borrowers.

Despite half a century of laws designed to combat redlining, racism continues throughout the country and the long-term effects are still felt to this day. The average price of a Black family is a fraction of a typical white family, and homes in historic neighborhoods are still worth less than homes in non-red neighborhoods.

As part of the settlement, City National will create a $29.5 million loan assistance program for loans to Black and Latino borrowers, and spend $1.75 million on advertising, public relations and financial education programs to reach small borrowers.

In a statement, City National said it does not agree with the Department of Justice’s allegations, but that it will “feel the DOJ in its efforts to ensure equal access to credit for all consumers, regardless of what kind.”

According to the Ministry of Justice, City National cooperated as part of the investigation and is working to solve its problems in other markets, as well.

Clarke announced the confirmation Thursday morning at the historic Black Baptist church in South Los Angeles that has been a major force in the civil rights movement and has been the site of speeches by Rev. . Martin Luther King Jr., Malcolm X and others.

The settlement with City National is the largest with the Ministry of Justice. A settlement with the Department of Housing and Urban Development and Associated Bank in 2015 involved the bank making a commitment to provide $200 million in loans to small- and medium-sized neighborhoods, with $10 million in grants similar to the one agreed upon by City National.

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