The Department of Justice has announced a $31 million settlement with City National Bank for lending discrimination via redlining, the largest such settlement in history. In addition to the funds City National has pledged to aid majority-Black and Hispanic neighborhoods in Los Angeles County, they have promised to open branches in these underserved neighborhoods and work to better serve the needs of said communities.
The announcement comes in the wake of other cases yielding a total of $75 million in aid for communities victimized by lending discrimination. Part of an effort since October 2021 by the DoJ to address modern-day redlining.
According to the complaint filed alongside the release, from at least 2017 through 2020, City National maintained only three of its 37 branches in majority-Black and Hispanic neighborhoods despite these neighborhoods making up more than 50% of LA County census tracts. The DOJ alleges that City National neglected to grow, or to even attempt to grow, their business in these areas. They further offer no affordable loan products, and rested on their laurels serving high-net-worth customers.
As such, the DOJ argues City National engaged in modern-day redlining and brought this case under the Fair Housing Act and the Equal Credit Opportunity Act. According to the statement, they were able to secure $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in LA County; at least $500,000 each for marketing in these communities and for a consumer financial education program for residents; and at least $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit.
City National further agreed to open a single new branch in a majority-Black and Hispanic neighborhood and evaluate future opportunities for expansion within Los Angeles County; to ensure at least four mortgage loan officers are dedicated to serving the aforementioned neighborhoods; and to employ a full-time Community Lending Manager who will oversee the development and growth of the bank in serving low-income communities.
The bank has committed to conduct a Community Credit Needs Assessment, a research-based market study, to help identify the needs for financial services for the majority-Black and Hispanic communities that are the subject of this case.
