Senior Editor James R. Sanders covers the largest redlining settlement in Los Angeles history with the press conference taking place at the historical Second Baptist Church.
Stefanie Dazio/AP
Thursday, at the Second Baptist Church in Los Angeles where over 50 years ago, Malcolm X and Dr. Martin Luther King Jr. both spoke, an American financial institution was being accused of redlining — once again, adversely affecting the Black community.
The Justice Department is requiring the Los Angeles-based City National Bank to pay more than $31 million in what is the largest redlining settlement in department history.
According to The Justice Department, between 2017 and 2020, City National strategically avoided marketing and underwriting mortgages in majority Black and brown neighborhoods in Los Angeles County.
City National isn’t the first bank in recent years to be accused of redlining, but they are the largest, regionally, to be accused and investigated. The city’s investigation into City National is part of Los Angeles’ Redlining Initiative that has secured $75 million prior to their findings which were announced on Thursday.
“The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and work to ensure that financial institutions provide equal opportunity for every American to obtain credit.” Per press release from the city of Los Angeles.
Redlining is the discriminatory practice of excluding or prohibiting minorities from obtaining credit (and mortgages) for real estate. City National is accused of omitting marketing to Black and brown people.
According to NPR, “The Justice Department alleges City National, a bank with roughly $95 billion in assets, was so reluctant to operate in neighborhoods where most of the residents are people of color, the bank only opened one branch in those neighborhoods in the past 20 years. In comparison, the bank opened or acquired 11 branches in that time period.”
In that one bank, specifically, there was no person dedicated to underwriting mortgages — this is compared to other branches where workers were motivated and encouraged to do so.
The gap in homeownership rates between white and Black families is larger today than it was in 1960, before the Fair Housing Act passed in 1968.
The Biden task force is packaged with the Justice Department and bank regulators such as Comptroller of the Currency and the Consumer Financial Protector Bureau. Their focus goes beyond inherent redlining and seeks to further look into cases where algorithms may play a biased part in aiding banks in discriminating against minorities.
The Baldwin’s investigative team is looking into how those algorithms function, what banks have them, and what effect they have from a systematic perfective that goes beyond redlining and could potentially involve health and academics.
“It is unacceptable that redlining persists into the 21st century, and this case demonstrates our commitment to combat redlining and hold banks and others accountable when they engage in unlawful discrimination. Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending, and meeting the credit needs in Los Angeles,” said U.S. Attorney Martin Estrada for the Central District of California.
City National did release a statement after Thursday’s announcement saying that while they disagree with the Department of Justice’s findings, they “nonetheless support the DOJ in its efforts to ensure equal access to credit for all