City National Bank pays $31 million in redlining settlement with DOJ

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The U.S. Department of Justice announced a $31 million settlement with City National Bank over allegations that the Los Angeles-based bank engaged in “redlining” — a pattern of discrimination in lending — in Los Angeles County.

The settlement, which the DOJ says is the largest redlining settlement in the department’s history, will benefit individuals and communities affected by the discriminatory practice, the DOJ announced Thursday.

Redlining, a discriminatory and illegal practice, is when lenders withhold services from customers who live in low-income neighborhoods, disproportionately impacting communities of color.

“We disagree with the allegations, but nevertheless support the DOJ in its efforts to ensure equal access to credit for all consumers, regardless of race,” City National said in a statement to TBEN News. all consumers have equal opportunities to apply for and obtain credit. We are proud of our legacy of integrity, corporate philanthropy and dedication to the communities we serve.”

“The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and ensure that financial institutions provide equal opportunities for every American to obtain credit,” Attorney General Merrick B. Garland said in a statement Thursday. statement. “Ahead of what would have been Dr. Martin Luther King Jr.’s 94th birthday, it is an appropriate time to reaffirm our commitment to that work and to the pursuit of justice for all Americans.”

A City National Bank office in downtown Los Angeles, January 22, 2015.

Lucy Nicholson/Reuters, FILE

Despite 50 years of federal oversight under the groundbreaking Fair Housing Act of 1968, housing segregation persists in America’s largest cities and urban centers.

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An TBEN News exclusive analysis of mortgage lending data, published in February 2022, shows that a pattern of racial isolation remains consistent after decades of failed initiatives.

The analysis shows that 20 of the country’s top 100 metropolitan areas have an “extreme dissimilarity index” of 50 or higher, meaning that at least half of the population would have to move to another neighborhood in the area to live in 2019. achieve full integration.

The complaint against City National Bank, filed in federal court by the DOJ on Thursday, alleges that from 2017 through at least 2020, the bank avoided marketing and underwriting mortgage loans to predominantly black and Latino neighborhoods and the residents of Los Angeles County has discouraged obtaining mortgage loans.

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City National Bank opened only one branch in a predominantly black and Hispanic neighborhood and did not designate an employee to generate loan applications for the branch, as they have done for the past 20 years at branches in predominantly white areas, the complaint said.

According to the DOJ, City National agreed to take a number of measures to address redlining, including investing at least $29.5 million in a loan grant fund for LA County communities of color. They will also open a new branch in a predominantly Black and Hispanic neighborhood and conduct an assessment to determine lending needs in those communities.

PHOTO: Assistant Atty.  General Kristen Clarke, right, and US Atty.  Martin Estrada announces a proposed settlement of the governments filing a discrimination suit against City National Bank at a press conference on January 12, 2023 in Los Angeles.

Assistant Atty. General Kristen Clarke, right, and US Atty. Martin Estrada announces a proposed settlement of the government’s discrimination case against City National Bank at a press conference at Second Baptist Church on January 12, 2023 in Los Angeles.

Irfan Khan/Los Angeles Times via Getty Images

“City National worked with the Department to remedy the redlining allegations,” the DOJ said in the statement Thursday. “In conjunction with this settlement, City National announced that it is taking proactive steps to expand its lending services to other markets across the country to provide greater access to credit in communities of color.”

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City National Bank on Wednesday announced a new lending initiative that will help entrepreneurs and potential homebuyers in underserved communities access capital, a press release said.

“At City National, supporting our communities is at the core of who we are as an organization,” City National CEO Kelly Coffey said in a statement Wednesday. “We take our obligation to ensure that all businesses and consumers have equal opportunities to apply for and receive credit very seriously.”

The settlement comes more than a year after the DOJ announced an initiative to combat redlining — a practice illegal under the Fair Housing Act and the Equal Credit Opportunity Act.

Garland said Thursday that the Combating Redlining Initiative, which launched in October 2021, has provided more than $75 million dollars in aid to communities affected by loan discrimination.

City National is the latest bank identified in recent years as engaging in redlining practices in the US

In October 2021, federal officials and the DOJ announced that Trustmark National Bank agreed to pay a $5 million settlement over allegations that it engaged in discrimination in communities of color in Memphis, Tennessee.

Mark Nichols of TBEN News contributed to this report.