City National Bank reached a $31 million settlement—the largest deal of its kind—with the Department of Justice, ending a lawsuit over redlining, alleging the bank racially discriminated against borrowers in Los Angeles County, the DOJ announced Thursday.
“Redlining” is the illegal practice wherein lenders avoid providing credit services to people living in communities of color.
The DOJ said in a statement that between 2017 and 2020, City National avoided marketing and underwriting mortgages in majority Black and Latino neighborhoods in L.A. County. Other banks operating in those neighborhoods received six times the number of mortgage applications that City National did, according to the DOJ.
City National reportedly has about $95 billion in assets. The DOJ alleges the bank only opened one branch over the past 20 years in neighborhoods where the majority population were people of color, even as it acquired or opened 11 branches during those same two decades.
As part of the bank’s settlement with the DOJ, City National agreed to invest at least $29.5 million in a loan subsidy fund for residents of majority-Black and Hispanic neighborhoods in Los Angeles County.
The bank also agreed to invest $1.75 million in community outreach, a consumer financial education program and community partnerships that increase access to residential mortgage credit, among other measures.
City National is the latest bank in the past few years to be found systematically avoiding lending to racial and ethnic minorities, a practice that the Biden Administration has set up its own task force to combat.
The “Combating Redlining Initiative” was launched in October 2021. So far, it has secured more than $75 million dollars in settlements, including loan subsidy funds in Houston; Memphis, TN; Philadelphia; Newark, DE; and Los Angeles.
