The United States Department of Justice recently announced that Ohio-based Park National Bank has agreed to a $9 million settlement over allegations of redlining lending discrimination. According to the DOJ, Park National has cooperated with the department to correct its discriminatory behavior.
The DOJ’s allegations against the bank were made as part of the department’s Combating Redlining Initiative. That effort to combat illegal redlining practices was launched in 2021 by Attorney General Merrick Garland, and has been a major priority for the DOJ throughout his tenure.
Redlining is an illegal and discriminatory practice that lenders have sometimes used to deny credit products to minority communities, using criteria such as race or national origin. The DOJ has alleged that Park National provided no mortgage lending to majority black and Hispanic areas in Columbus between 2015 and 2021. In addition, the DOJ alleged that the bank’s branches were all “concentrated in majority-white neighborhoods.”
Southern District of OHIO U.S. Attorney Kenneth L. Parker said that the agreement serves notice on banks engaged in similar conduct:
“Let today’s settlement send a very clear message to banks: we will not tolerate discriminatory lending practices and we will hold you accountable. We are committed to enforcing fair lending laws, which require financial institutions to provide equal opportunity for every American to obtain home loans and credit. We take very seriously our duty and honor to uphold those laws.”
Penalties attached to the redlining settlement
A judge still needs to sign off on the proposed consent order filed by the DOJ. If the court approves the agreement, Park National will be required to create a $7.75 million loan fund for mortgages and other home loans for black and Hispanic neighborhoods. In addition, the bank will spend $750,000 in outreach to educate consumers in those communities, and invest $500,000 to develop “community partnerships.”
Other terms of the redlining settlement will require Park National to launch at least one branch office in majority-minority neighborhoods in Columbus, as well as a new mortgage loan office. The bank is also agreeing to assessing those communities financial service needs by conducting a Credit Needs Assessment.
