Assistant Attorney General Kristen Clarke for Civil Rights on the City National Bank Redlining Announcement

Remarks as Delivered

Good morning. I am Kristen Clarke, Assistant Attorney General for the Civil Rights Division of the U.S. Department of Justice. It is my honor to be joined today with U.S. Attorney Martin Estrada for the Central District of California on the occasion of announcing a historic settlement in a matter that involves unlawful redlining. It is especially meaningful to be here at the historic Second Baptist Church in Los Angeles, California, just days before the federal holiday acknowledging the life and legacy of the Rev. Dr. Martin Luther King. It is in this same church that Dr. King in March 1968 preached one of his final sermons before his tragic assassination just a few days later on April 4, 1968.

Dr. King was a fierce and tireless advocate for a more just and equal society. And advancing fair housing was a critical aspect of Dr. King’s work. He fought for the rights of Black Americans who were openly excluded from living in certain areas. For example, he was a leader in the Chicago Freedom Movement and called for open housing to let Black people purchase homes wherever they could afford. Dr. King recognized the need for fair housing laws all over the country, recognizing that if the unfair and unjust barriers that prevented Black individuals and families from purchasing homes in any area they could financially afford were removed, they would gain access not only to improved housing, but also to better schools and greater job opportunities. He extensively lobbied for the passage of the federal Fair Housing Act, and when the legislation failed to pass Congress in 1967, Dr. King observed that “a bit of democracy” and “a bit of our commitment to justice died.” As such, it was only fitting that Congress finally did enact the Fair Housing Act immediately following Dr. King’s untimely death.

The Fair Housing Act, and its close analog, the Equal Credit Opportunity Act, are critically important tools that the Justice Department uses to  protect the civil rights of all people in this country. These two landmark laws outlaw discrimination in housing and in lending, including the practice of redlining communities of color. While housing and lending discrimination are less overt today than in 1968, they continue to exist. Today, we still find that some lenders intentionally avoid providing mortgage lending services to certain neighborhoods because of the race and/or national origin of the residents of those neighborhoods. Ending redlining is a critical step in our work to close the widening gaps in wealth between communities of color and others.

I am pleased to announce that we have secured a $31.25 million settlement with City National Bank to resolve allegations that City National redlined — or avoided providing mortgage lending services to — predominantly Black and Hispanic neighborhoods in the Los Angeles metropolitan area. Our complaint, filed in federal court today, alleges that City National’s actions violated the Fair Housing Act and the Equal Credit Opportunity Act. As set forth in the complaint, for many years City National has operated only one branch in majority-Black and Hispanic communities, has failed to employ any personnel responsible for generating mortgage loans in that one branch, and has significantly lagged behind its peer banks in terms of mortgage lending in majority-Black and Hispanic communities. This settlement is historic, marking the largest settlement ever secured by the Justice Department against a bank engaged in unlawful redlining. This settlement demonstrates our commitment to combating modern-day redlining and holding banks and other lenders accountable when they deny people of color equal access to lending opportunities. Under the terms of this agreement, City National will provide millions of dollars in relief to impacted communities in the Los Angeles metropolitan area, including through a nearly $30 million loan subsidy fund, which will provide loan assistance to residents of redlined neighborhoods. Through this agreement, we are sending a strong message to the financial industry that we will not stand for unlawful barriers in residential mortgage lending. We will not stand for unlawful modern-day redlining. We will not stand for economic injustice that denies Black and Hispanic communities access to the American dream of owning a home and strips them of the ability to generate wealth that might benefit future generations. U.S. Attorney Estrada, our partner in this matter, will discuss our complaint and the settlement in greater detail shortly.

Today’s announcement is part of the Justice Department’s Combating Redlining Initiative, which was announced by Attorney General Merrick B. Garland in October 2021.

The initiative represents the Justice Department’s most aggressive and coordinated effort to address redlining. We know that bold action must be taken to identify and eradicate redlining, and move closer to the goal of equal opportunity in our country. Since August 2021, the Civil Rights Division has resolved five redlining cases. Collectively, these settlements provide over $75 million in relief to borrowers, including $67 million in loan subsidy funds, in Houston, Memphis, Philadelphia, Newark, and today, Los Angeles. Never before has the department resolved five redlining cases in this timeframe, and with the extent of this financial relief for borrowers.

Through our redlining compliance work, we have observed that the provisions in our consent orders yield substantial benefits not just for impacted borrowers, but also for broader communities and for lenders. First, we are creating homeownership opportunities for borrowers, and especially borrowers of color. One of the biggest hurdles to buying a home is saving sufficient funds for the down payment. This is especially true as potential borrowers face the challenges of inflation. Another challenge is the impact of rising interest rates. The down payment and interest rate reduction provided through the subsidy funds in our settlements literally opens the doors of homeownership to qualified borrowers and puts them on a path to generate wealth.

Second, we are strengthening and developing partnerships between lenders and community organizations. Partnerships with community groups are often significant to both help lenders gain credibility in communities where they have not had a presence and to connect them with homeownership ready borrowers. Often times, these groups are essential in helping lenders assess the credit needs of a community and focus their efforts on increasing access to credit in underserved communities.

Third, we are increasing business opportunities for lenders. When lenders commit to serving underserved markets, they increase the number of profitable loans that can be made to qualified borrowers. They often go from trailing their peers to leading their peers in generating applications and originating loans in communities of color. Through strengthening their compliance management systems, they also are less likely to be investigated or sued for fair lending concerns.

I also want to acknowledge City National for working constructively with the Justice Department in reaching today’s settlement. Yesterday, City National announced the launch of national lending initiatives designed to support potential homebuyers and entrepreneurs in underserved communities. These Special Purpose Credit Programs, which will be offered in markets served by City National across the country, including California, Georgia, New York, Nevada, Tennessee, and Washington, D.C., will open doors of opportunity for individuals and communities that have often faced historic barriers and obstacles to lending opportunities. The Justice Department has encouraged lenders to consider developing special purpose credit programs to advance fair lending, and we strongly encourage other lenders to explore similar programs.

This settlement embodies Dr. Martin Luther King Jr.’s commitment to fighting economic injustice and ensuring that Black Americans and all communities of color are able to access the American dream and freely access the credit needed to purchase a home. Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice and has no place in our economy today. This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so. We encourage all lenders to be more proactive in how they offer lending services and focus on providing greater access to credit in Black and Hispanic neighborhoods, and other communities of color, throughout the United States. The Justice Department will remain vigilant in the road ahead.

I will now turn it over to U.S. Attorney Estrada to provide more information about our resolution with City National Bank.

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