Consumer Finance Insights
December 30, 2016

DOJ Settles with Ohio Banks Over Alleged Lending Discrimination

On December 28, the U.S. Department of Justice (DOJ) announced that it filed a complaint against, and entered a consent order with, two Ohio-based banks, resolving allegations that the banks had violated the Fair Housing Act and Equal Credit Opportunity Act by engaging in discriminatory lending.

The DOJ alleged that, from at least 2010 through 2014, the banks structured their business to avoid the residential lending needs of African American-majority neighborhoods in Cincinnati, Dayton, Columbus, and Indianapolis, discouraging applicants in those neighborhoods from applying for credit.  According to the complaint, the banks located their branches to avoid serving majority-African American neighborhoods, trained and incentivized their loan officers to focus on predominantly white neighborhoods, failed to effectively market their mortgage products in minority neighborhoods, and failed to address the disparities in their lending.

As part of the consent order, the banks agreed to prepare an assessment of the credit needs of majority-African American census tracts within their lending areas and to develop proposals on how to address those needs.  One of the banks also agreed to open two full-service branches in minority neighborhoods, and the other bank agreed to open a loan production office in a minority neighborhood.  The banks also agreed to spend at least $625,000 on advertising and outreach activities, $625,000 on consumer financial education and credit repair, and $7 million on a program for loan subsidies to residents of minority neighborhoods.