The Washington Trust Bank will be paying $9 million in charges from a civil rights suit that found it discriminated against Black and Hispanic mortgage applicants.
As part of the settlement, the bank will now have to invest a minimum of $7 million in loan funds to improve the access of residents in Black and Hispanic neighborhoods to home mortgages and loans. Washington Trust Bank will also have to spend another $2 million to increase outreach programs and advertising in Black and Hispanic neighborhoods.
Announced by the U.S. Justice Department on Wednesday, the charge brought forth by the department itself alleges that the bank discriminated against residents living in Black and Hispanic neighborhoods in Rhode Island.
Considered one of the biggest community banks in the country, the Washington Trust Bank participated in redlining over the course of five years by avoiding opening up branches in Black and Hispanic neighborhoods while opening up multiple locations in majority-white neighborhoods. As part of their lending process, the bank then had mortgage loan officers in these white neighborhoods decide which applicants would receive funds.
“Through this agreement, we are sending a strong message to the financial industry that we will not stand for discriminatory and unlawful barriers in residential mortgage lending,” said the Assistant Attorney General of the Justice Department’s Civil Rights Division, Kristen Clarke, at the official press conference on Wednesday per Reuters.
As the sixth redlining settlement case under their new Combatting Redlining Initiative, the DOJ has been involved in holding banks accountable for discriminatory practices. Announced nearly two years ago, through the initiative, the department has raised over $75 million in funds for communities that are victims of redlining.
Starting with their first case against the Trustmark National Bank resulting in a $5 million settlement, the department’s latest case ended successfully with a $31 million settlement against the Los Angeles-based City National Bank.
Overall, racial bias has contributed to disparities across the U.S. as most applicants that are denied mortgage loans are Black Americans. According to the latest data by the Urban Institute, approximately 16% of applicants were denied mortgages in 2020; of this 16%, Black mortgage applicants made up a disproportionate amount of those denied, making up approximately 27% of those refused aid.
This week, Assistant Attorney General Kristen Clarke reiterated the Justice Department’s dedication to combat modern-day redlining in the wake of securing a $9 million agreement with Washington Trust Company to resolve redlining claims in Rhode Island. pic.twitter.com/AiV6N8WaPs
— DOJ Civil Rights (@CivilRights) September 29, 2023
While they are denied funds to purchase homes, Black Americans are also being neglected when it comes to funding to improve the homes they already live in.
Black Americans are also disproportionately denied home improvement loan applications as 63% of Black applicants were denied monetary help with fixing their homes.
“Ending redlining is a critical step in closing the widening gaps in wealth between communities of color and others,” said Assistant Attorney General Kristen Clarke in a statement. “Persisting racial inequality and widening wealth gaps makes clear that simply staying the course is not enough. We must take bold, new action if we are ever going to eradicate redlining, and achieve the goal of equal opportunity in our country.”
