Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

Washington Trust to pay $9 million over discriminatory lending

Published 09/27/2023, 10:58 AM
Updated 09/27/2023, 12:26 PM
© Reuters. The seal of the United States Department of Justice is seen on the building exterior of the United States Attorney's Office of the Southern District of New York in Manhattan, New York City, U.S., August 17, 2020. REUTERS/Andrew Kelly
WASH
-

By Sarah N. Lynch

(Reuters) -Washington Trust Bank, the largest community bank in the country, will pay $9 million to settle civil rights charges that it discriminated against primarily Black and Hispanic mortgage applicants in Rhode Island, the U.S. Justice Department announced on Wednesday.

The department's complaint against the bank alleges that from 2016 through 2021, it engaged in a practice known as redlining by failing to provide lending services to residents in primarily Black and Hispanic neighborhoods in Rhode Island.

Top department officials said that despite expanding across the state, it never opened a branch in a Black or Hispanic neighborhood, and that it relied on mortgage loan officers working out of majority-white areas as the primary source for generating new lending applications.

"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 Kristen Clarke, the Assistant Attorney General of the Justice Department's Civil Rights Division, at a press conference on Wednesday.

A Washington Trust official said Rhode Island has been home to the bank for 223 years. "We believe we have been fully compliant with the letter and spirit of fair lending laws, and the agreement will further strengthen our focus on an area that has always been important to us," Edward O. Handy, Washington Trust's chairman and chief executive, said in a release.

Redlining refers to racial discrimination in lending practices by banks and other financial institutions, a practice that has harmed Black and Hispanic communities for decades.

In September 2021, research from the Federal Reserve bank of St. Louis concluded that residents in redlined neighborhoods across the country could not afford to buy homes or pay for their upkeep and as a result could not accumulate wealth at the rates other groups did.

A month later, the Justice Department launched a coordinated enforcement effort to crack down on redlining. Since then, it has brought nine redlining cases and secured $98 million in relief.

Under the terms of the settlement with Washington Trust, which must still be approved by a federal court, the bank has agreed to take certain steps.

© Reuters. The seal of the United States Department of Justice is seen on the building exterior of the United States Attorney's Office of the Southern District of New York in Manhattan, New York City, U.S., August 17, 2020. REUTERS/Andrew Kelly

These include a plan to invest at least $7 million in a loan subsidy fund to increase access to home mortgages, home improvements, home refinance and home equity loans and lines of credit for residents who live in majority-Black and Hispanic neighborhoods in Rhode Island.

The bank will also spend an additional $2 million on community partnerships and for advertising and consumer outreach in Black and Hispanic communities.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.