By: Ken Chase
Estimated reading time: 2 minutes
A recent announcement by the U.S. Department of Justice confirmed that City National Bank will -pay more than $31 million to settle DOJ accusations that it unlawfully discriminated against black and Latino borrowers in its mortgage decisions. The settlement is the largest of its kind in the history of the DOJ.
The discriminatory mortgage lending practice is known as “redlining” and is just one of many civil rights concerns that the Merrick Garland Justice Department has emphasized since 2021. The DOJ has partnered with financial regulators like the Consumer Financial Protection Bureau and the Comptroller of the Currency to crack down on both overt redlining and inadvertent discrimination in mortgage lending.
City National Bank is based in Los Angeles and maintains assets worth an estimated $95 billion. According to the DOJ complaint, the bank operated only one of its branches in a majority-minority neighborhood, and never bothered to assign a mortgage underwriter to serve potential borrowers in that location.
Moreover, the DOJ alleges that City National Bank even avoided marketing mortgages to neighborhoods where black and Latinos made up a majority of the population. The bank’s competitors reportedly received six times the number of mortgage applications as City National did in the years between 2017 and 2020.
For its part, City National has denied the accusations but has vowed to work with the DOJ to address its concerns about ensuring “equal access to credit for all consumers, regardless of race.” As part of its agreement to settle the issue, the bank has committed to the creation of a $29.5 million subsidy fund dedicated to black an Latino borrowers. City National will also spend at least $1.75 million to advertise its services and provide financial education assistance to potential minority borrowers.
