An Ohio bank that was accused of concentrating branches in predominately white neighborhoods agreed to settle a multibillion-dollar suit after an investigation by the U.S. Department of Justice (DOJ) found the institution engaged in lending discrimination.
Park National Bank, based in Newark, Ohio, has opened 36 branches in metro areas throughout the state, offering lending services to prospective homebuyers, but excluding majority Black and Hispanic communities from 2015 to 2021, the complaint outlined.
“Let today’s settlement send a very clear message to banks: we will not tolerate discriminatory lending practices and we will hold you accountable,” said U.S. Attorney Kenneth L. Parker for the Southern District of Ohio, following the court’s ruling on Feb. 28.
The settlement also ordered the bank to open a branch and lending office in Franklin County where the majority of Black and Latino Americans reside, in addition to creating a $7.75 million loan subsidy fund, increasing marketing for mortgage lending targeting marginalized communities, and providing programs to financial education.
“When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern-day redlining and exacerbate the racial wealth gap in our country,” said Kristen Clarke, the Assistant Attorney General at the DOJ, as reported by USA Today. “Unfortunately, redlining has not yet been relegated to the dustbin of history.”
What is Redlining?
Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those communities, according to justice.gov.
In October 2021, the DOJ announced the Combatting Redlining Initiative that would operate as a coordinated enforcement effort to hold banks and lenders accountable for engaging in discriminatory lending practices. The program was formed to denounce lending firms and financial institutions that have a track record of denying Black and Hispanic Americans from accessing residential mortgage credit, home refinancing loans, and other lines of credit.
“Lending discrimination runs counter to fundamental promises of our economic system,” said Attorney General Merrick B. Garland. “When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated.
The significant deficit in Black homeownership is a byproduct of housing discrimination and racial segregation that has exacerbated the racial wealth gap, according to a study published. Divestment in Black and brown neighborhoods has led to slumping market values for homes and fewer banking options, leaving underresourced communities susceptible to predatory lenders.
Since the Initiative was launched, the DOJ has announced six redlining cases and settlements. The department has secured $84 million in relief for communities of color that have been victims of lending discrimination across the country.
