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62 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT DOJ Agrees to $31M Redlining Settlement With City National Bank Through this latest agreement, the Justice Department's Combating Redlining Initiative has secured more than $75 million in relief for communities that have suffered from lending discrimination. T he U.S. Justice Depart- ment (DOJ) has reached an agreement to resolve allegations that City National Bank engaged in a pattern or practice of lending discrimination by "redlining" in Los Angeles County. City Na- tional is headquartered in Los Angeles and is among the 50 largest banks in the nation. This resolution will include more than $31 million in relief to impacted individuals and com- munities. The agreement, which is part of the DOJ's nationwide Combating Redlining Initiative that Attorney General Merrick B. Garland launched in October 2021, represents the largest redlining settlement in its history. "Fifteen months after I vowed that the Justice Department would be aggressively stepping up our efforts to combat discrimi- natory practices in the housing market, we have today secured the largest redlining settlement in Department history," U.S. Attorney General Garland said. "So far, the Combating Redlining Initiative has secured over $75 million in relief for communities that have suffered from lend- ing discrimination. The Justice Department will continue to build on our efforts to vigorously en- force federal fair lending laws and work to ensure that financial in- stitutions provide equal opportu- nity for every American to obtain credit. 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." The complaint alleges that from 2017 through at least 2020, City National avoided provid- ing mortgage lending services to majority-Black and Hispanic neighborhoods in Los Angeles County and discouraged residents in these neighborhoods from ob- taining mortgage loans. The com- plaint also alleges that during that time period 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. In addition, City National only opened one branch in a majority- Black and Hispanic neighborhood in the past 20 years, despite having opened or acquired 11 branches during that period. And unlike at its branches in majority-white areas, City National did not assign any employee to generate mortgage loan applications at that branch. "This settlement is historic, marking the largest settlement ever secured by the Justice Department against a bank engaged in unlawful redlin- ing," said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division. "This settlement embod- ies 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 ac- cess the credit needed to purchase a home. 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. This settlement should send a strong message to the financial industry that we ex- pect lenders to serve all members of the community and that they will be held accountable when they fail to do so." Under the proposed consent order, which is subject to court approval, City National Bank has agreed to do the following: • Invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County; at least $500,000 for advertising and outreach targeted toward the residents of these neighborhoods; at least $500,000 for a consumer finan- cial education program to help increase access to credit for residents; and at least $750,000 for development of community partnerships to provide services that increase access to residen- tial mortgage credit. • Open one new branch in a majority-Black and Hispanic neighborhood and evalu- ate future opportunities for expansion within Los Angeles County; ensure at least four mortgage loan officers are dedi- cated to serving majority-Black and Hispanic neighbor- hoods; and employ a full-time Community Lending Manager who will oversee the contin- ued development of lending in majority-Black and Hispanic neighborhoods. • Conduct a Community Credit Needs Assessment, a research- based market study, to help identify the needs for financial services for majority-Black and Hispanic census tracts within Los Angeles County. "I am pleased that the U.S. Department of Justice has taken swift and aggressive action against City National Bank for its egregious pattern of redlin- ing in majority Black and Latinx neighborhoods in Los Angeles County," Congresswoman Maxine Waters said. "This marks the largest redlining settlement that the Justice Department has ever secured, and I commend the Department on its initiative to combat redlining in communi- ties across the country, including those in my district. Redlining refers to when a lender de- nies loans or refuses to extend credit on equal terms based on the characteristics, such as race or ethnicity, of an applicant's neighborhood. The practice dates back to when Federal govern- ment agencies, beginning in the 1930s, drew red lines around Black communities and other commu- nities of color and labeled them as 'hazardous' as part of legally sanctioned residential segregation. With that said, I am outraged by City National Bank's clear and deliberate violations of the Fair Housing Act and Equal Credit Opportunity Act by discouraging borrowers in Black and Latinx