In the days leading up to Martin Luther King Jr. Day on Monday and Dr. King’s birthday on Sunday, the Department of Justice has proposed a new resolution in a potentially landmark fair housing case in the Central District of California.
Officials described the settlement as the largest ever secured by the DOJ against a bank for illicit redlining.
Attorney General Merrick Garland and other officials celebrated by invoking the radical legacy of Dr. Martin Luther King Jr.”
“This settlement embodies Dr. Martin Luther King Jr.’s commitment to fighting economic injustice and ensuring that Black Americans and all communities of color are able to access the American dream and freely access the credit needed to purchase a home,” Assistant Attorney General Kristen Clarke 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.”
“In advance of what would have been Dr. Martin Luther King Jr.’s 94th birthday, it is a fitting time to reaffirm our commitment to that work, and to the pursuit of justice for all Americans,” Garland said.
Prosecutors described a pattern or practice of unlawful redlining by City National Bank, detailing how the company avoided providing home loans and mortgage services in majority Black and Hispanic neighborhoods in the Los Angeles County area between, at least, 2017 and 2020.
City National Bank’s internal processes and oversight allegedly failed to ensure fair lending standards and equal access to Black and Hispanic people. Beyond that, the complaint alleges that City National ignored internal reports that warned of redlining risks.
City National Bank maintains that it was compliant, but the consent order filed Thursday requires a number of changes to address inequity:
- The company must invest at least $29.5 million in a fund to subsidize loans for residents of Los Angeles County majority-Black and Hispanic neighborhoods;
- City National Bank must open at least one new branch in an impacted neighborhood with at least one full-time community lending manager and four mortgage loan officers dedicated explicitly to serving majority-Black and Hispanic neighborhoods; and,
- The company must conduct a ‘community credit needs assessment’ to identify financial services needs for residents in majority-Black and Hispanic census tracts.
The agreement is part of the Combatting Redlining Initiative that was launched in 2021 to target criminal redlining across the country.
“Fifteen months after I vowed that the Justice Department would be aggressively stepping up our efforts to combat discriminatory practices in the housing market, we have today secured the largest redlining settlement in Department history,” Garland said. “So far, the Combating Redlining Initiative has secured over $75 million dollars in relief for communities that have suffered from lending discrimination.
The consent order is subject to court approval.