City National Bank to shell out $31M in historic settlement of redlining charges!
City National Bank (CNB) has agreed to pay out a record $31 million to settle allegations of redlining practices in Los Angeles, California. Redlining is a form of discrimination in which banks deny or limit financial services to certain areas, often low-income and minority neighborhoods. The settlement is the largest of its kind to date and follows a two-year investigation by the Department of Housing and Urban Development (HUD).
Background on the Investigation
The investigation was launched in 2017 after HUD received complaints from residents of South Los Angeles, alleging that CNB was refusing to do business with them. HUD found that CNB had been refusing to open branches, offer services, and make loans in the area, in violation of the Fair Housing Act. HUD also noted that CNB had not done enough to address the problem, despite being made aware of it.
Details of the Settlement
Under the terms of the settlement, CNB will pay out a total of $31 million. Of this amount, $2.6 million will go to the people who filed the original complaint against the bank. Another $2.1 million will be used to fund grants for programs that support economic development in the affected neighborhoods.
The remaining $26.3 million will be used to open three new branches in South Los Angeles and provide housing counseling, credit repair services, and other resources to the community. CNB will also create a $5 million loan program to provide financing to low-income and minority borrowers.
Implications of the Settlement
The settlement is being seen as a major victory for the fight against redlining. It sends a strong message to banks that discriminatory lending practices will not be tolerated. In addition, the funds allocated to the affected neighborhoods will help spur economic development in the area.
The settlement also serves as a reminder that discrimination is still an issue in the banking industry. Despite the progress that has been made in recent years, there is still a need for greater oversight and enforcement of fair lending laws.
Conclusion
The settlement between HUD and City National Bank is a historic victory in the fight against redlining. It sends a strong message to banks that discriminatory lending practices will not be tolerated, and that there must be greater oversight and enforcement of fair lending laws. The funds allocated to the affected neighborhoods will help spur economic development and provide much-needed resources to the community.