Martin Estrada, U.S. Attorney for the Central District of California, said in a statement it is “unacceptable” that redlining persists in the 21st century. He said ending redlining is a “critical step to closing the widening gaps in homeownership and wealth, especially in a city as large and diverse as Los Angeles.”
The federal complaint alleges that, from 2017 through at least 2020, other banks received more than six times as many applications in majority-Black and Hispanic neighborhoods in Los Angeles County than City National each year.
City National “only opened one branch” in a majority-Black and Hispanic neighborhood in the past two decades, despite having opened or acquired 11 branches during that time period, according to the complaint.
“And unlike at its branches in majority-white areas, City National did not assign any employee to generate mortgage loan applications at that branch,” the Justice Department said.
In a statement, City National said: “We disagree with the allegations, but nonetheless support the DOJ in its efforts to ensure equal access to credit for all consumers, regardless of race.”
What happens now?
As part of the bank’s settlement with the Justice Department, City National agreed to invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County.
The bank also agreed to invest $1.75 million in community outreach, a consumer financial education program and community partnerships that increase access to residential mortgage credit, among other measures.
Settlement part of larger DOJ initiative to combat redlining
The agreement Thursday is part of the Justice Department’s nationwide “Combating Redlining Initiative,” launched in October 2021.
So far, the initiative has secured more than $75 million dollars in settlements, including a $20 million settlement with Trident Mortgage Company and a $13 million settlement with Lakeland Bank.
Collectively, the settlements have included $67 million for loan subsidy funds in Houston; Memphis, Tennessee; Philadelphia; Newark, Delaware; and Los Angeles.
Housing, lending discrimination are ‘less overt’ today
Kristen Clarke, U.S. Assistant Attorney General for Civil Rights, announced the settlement Thursday at the historic Second Baptist Church in Los Angeles. She noted the agreement comes days before Martin Luther King Jr. Day.
“While housing and lending discrimination are less overt today than in 1968, they continue to exist,” Clarke said.
Clarke said the settlement “embodies” King’s commitment to fighting economic injustice and ensuring that Black Americans and all communities of color are able to access the credit needed to purchase a home.