Bank to pay record $31M in LA redlining settlement

(12 Jan 2023)

FOR CLEAN VERSION SEE STORY NUMBER: 4414704

RESTRICTION SUMMARY:
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ASSOCIATED PRESS
Los Angeles – 12 January 2023
1. Exterior, neighborhood where news conference was held
2. SOUNDBITE (English) Martin Estrada, United States Attorney for the Central Division of California:
"Our lawsuit alleges that City National Bank, the largest bank based in Los Angeles, engaged in a pattern and practice of discrimination, or redlining. Specifically, City National Bank avoided providing home loans and mortgage lending services to majority black and Latino neighborhoods throughout Los Angeles. The illegal conduct that we allege the complaint took place between 2017 and 2020."
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3. SOUNDBITE (English) Martin Estrada, United States Attorney for the Central Division of California:
"City National has agreed to resolve the government's lawsuit by entering into the agreement known as a consent order. This requires City National Bank make numerous investments and take significant actions that will have a positive impact on Black and Latino neighborhoods City National, as Assistant Attorney General Clarke already mentioned, has agreed to spend more than $31 million to address these inequities."
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4. SOUNDBITE (English) Kristen Clarke, Assistant Attorney General, Civil Rights Division:
"This is historic in terms of this marking the largest redlining settlement that the Justice Department has ever secured with respect to a bank or lender."
STORYLINE:
The Justice Department accused Los Angeles-based City National Bank on Thursday of discrimination by refusing to underwrite mortgages in predominately Black and Latino communities, requiring the bank to pay more than $31 million in the largest redlining settlement in department history.
City National is the latest bank in the past several 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 Justice Department says that between 2017 and 2020, City National avoided marketing and underwriting mortgages in majority Black and Latino neighborhoods in Los Angeles County. Other banks operating in those neighborhoods received six times the number of mortgage applications that City National did, according to federal officials.
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 addition, no employee was dedicated to underwriting mortgages at that one branch, unlike branches in majority white neighborhoods.
"This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so," Assistant Attorney General Kristen Clarke, who leads the Justice Department's civil rights division, said in a statement.
Attorney General Merrick Garland has prioritized civil rights prosecutions since taking the helm at the Justice Department in 2021 and the department, in the Biden administration, has put a higher priority on redlining cases than under previous administrations.
The Justice Department said City National cooperated as part of their redlining investigation and is working to resolve its issues in other markets, as well.
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