Consumer Finance Insights
June 17, 2019

DOJ Settles with Indiana Bank for Alleged Lending Discrimination

On June 13, 2019, the Department of Justice (DOJ) announced​ that it filed a complaint​ and settlement agreement ​in the U.S. District Court for the Southern District of Indiana resolving allegations against a Midwestern​ bank based in Indiana.  The DOJ alleged that the bank engaged in lending discrimination through “redlining,” or intentionally avoiding providing services in predominantly African-American neighborhoods in Indianapolis, in violation of the Fair Housing Act (FHA), 42 U.S.C. §§ 3601-3619, and the Equal Credit Opportunity Act (ECOA)​​, 15 U.S.C. §§ 1691-1691f​. ​ The DOJ also alleged that the Bank’s residential mortgage lending policy denied residents in African-American neighborhoods equal access to credit.

Under the terms of the settlement​, the bank will cease any discriminatory practices and work with an independent third-party consultant to ​conduct a detailed assessment of its fair lending program.  The bank will also invest $1.12 million in a loan subsidy fund to increase credit opportunities for African American residents, and an additional $500,000 into marketing efforts, community outreach, and other programs geared towards minority residents. The Bank will also open a new branch and loan production office specifically designed to provide banking and credit opportunities to residents in predominantly African-American neighborhoods in Indianapolis.​