Assistant Attorney General Kristen Clarke Delivers Remarks on Combating Modern-Day Redlining at Seton Hall Law School

Remarks as Delivered

Thank you. Thank you so much. Good afternoon. It is great to be here. Professor Borgen, thank you so much for that most gracious introduction. It’s a real honor and pleasure to be in the city of Newark. I just want to take a brief moment to acknowledge Seton Hall for opening up its doors. I want to thank Provost Passerini and Interim Dean Cornwall for hosting so graciously. I also want to extend my gratitude to my law enforcement partners: U.S. Attorney Sellinger, Director Chopra and General Platkin. We stand before you today as a united front, a united front in our efforts to advance the cause of justice here in New Jersey and across our country. We also have a number of staff from the Civil Rights Division of the Justice Department, the U.S. Attorney’s Office, the Consumer Financial Protection Bureau and the New Jersey Attorney General’s office today. I want to ask the staff who are with us if you’d raise your hand. Thank you for your leadership. But I also point them out because we are here to listen and to get to work. We know that we have problems that need to be solved, and so for the folks who are here with issues and concerns, as soon as this program ends, I want you to turn to one of the staff here today. We are here to serve you. We are here to serve you.

Every April we celebrate Fair Housing Month to mark a milestone in our nation’s civil rights movement – the passage of the Fair Housing Act of 1968. We often invoke Dr. King when discussing our nation’s civil rights history. Dr. King was of course a principal architect of many of the hard-fought victories of the 1950s and 60s. By the 1960s, Dr. King and others – including his contemporaries from right here in Newark, such as the late Rev. Gilbert Caldwell and Honorable William Payne, and his brother, the late Congressman Donald Payne – had secured passage of the Civil Rights Acts of 1957 and 1964, and the Voting Rights Act of 1965. But despite all of those substantial victories, Dr. King and his colleagues knew that there was more work that needed to be done. And so, Dr. King pivoted to what he described as the “next phase” of the movement – the fight for fair housing. But resistance to the fair housing campaign was fierce. In July of 1966, after being struck by a rock during a march through a white neighborhood in Chicago, Dr. King commented, “I have seen many demonstrations in the South, but I have never seen anything so hostile and so hateful as I’ve seen here today.”

In a speech in April of 1967, entitled “The Other America,” Dr. King concluded “the struggle for Civil Rights ... is much more difficult today than it was five or ten years ago.” He explained that it was “more difficult today because we are struggling now for genuine equality,” and he stated his belief was that it’s “easier to guarantee the right to vote than it is to guarantee the right to live in sanitary, decent housing conditions.” Dr. King called out the “need for fair housing laws all across the country,” and he called out the “trag[edy]” of Congress for their failure to pass national legislation. He warned that without action American cities were “powder kegs” on the verge of exploding – a prediction that proved all too accurate in “the long hot summer of 1967,” including here in Newark when riots broke out and 26 people lost their lives.

Nearly one year to the day after his “Other America” speech, Congress would finally pass the Fair Housing Act. But it would come at the terrible cost of Dr. King losing his life to an assassin’s bullet outside of the Lorraine Hotel in Memphis, Tennessee. President Johnson would shepherd support after Dr. King’s death to help pass the Fair Housing Act into law on April 11, of 1968. And the passage of the Fair Housing Act no doubt was a watershed moment. It banned race, color, national origin and religious discrimination in housing and was later amended to also prohibit sex, disability and familial status discrimination as well. President Johnson declared “fair housing for all” was “now a part of the American way of life.”

But we know that the passage of federal civil rights law by itself does not bring an end to discrimination and bigotry. Housing and lending discrimination, as you have heard, remain far too prevalent in every corner of our country, including here in Newark and in other communities across this state. Today, the present-day gap in homeownership rates is stark. A white family is 30% more likely to own a home than a Black family. The median wealth of a Black family is $24,000 compared to $188,000 for a white family. No doubt, discriminatory practices like redlining and appraisal discrimination and racial steering and so-called crime-free ordinances deny people access to fair housing opportunity today.

That’s why I was proud to stand with Attorney General Merrick Garland, Director Chopra and others for the launch of our nationwide initiative to take on redlining. And when we announced the initiative, we committed to taking bold, new action. And I’m pleased to stand before you and report that we have done just that each and every day. Through the initiative, we have worked with our federal and state partners to attack redlining on the broadest scale ever in the history of the Justice Department.

Since [2021], we have secured six redlining cases, more than in any other two-year period for the department. Redlining investigations and claims, I will note, take an immense amount of work and involve complex statistical analyses and grit. And I’m really proud of the lawyers – you’ve seen their hands – and staff who have been involved in this extraordinary work. And their efforts are paying off: these cases are bringing desperately-needed credit opportunities to communities of color in New Jersey and across the country, in communities from Los Angeles, Memphis, Houston, Philadelphia, Columbus. We are working to ensure that more communities of color have access to housing opportunities.

I want to zoom out for just a moment. In January of 2023, we filed a redlining resolution involving City National Bank, which is headquartered in one of the country’s largest and most diverse cities – Los Angeles, California. The resolution here included $31 million dollars in relief, the single biggest redlining settlement ever secured by the Justice Department. The settlement resolved allegations that City National redlined Black and Hispanic neighborhoods across Los Angeles. What’s more, in addition to resolving this case, City National proactively announced that they would take steps to expand lending services in other markets nationwide to provide greater access to communities of color. And they’re doing that now in Georgia, Nevada, Tennessee and New York. 

A few weeks later, in February of this year, we filed a redlining resolution with Park National Bank resolving allegations that the bank redlined Black and Hispanic neighborhoods in Columbus, Ohio. That settlement involved about $9 million of relief.

In fact, since 2021, we have secured nearly $85 million in total monetary relief through redlining settlements. And most of that money is being dedicated to “loan subsidy funds.” These are funds that can be used to help prospective home buyers from affected communities with down payments and other assistance, including helping them with home improvement loans, helping them explore refinance options and helping them to secure lower interest rates on their loans. These funds also provide critical support to people living in communities of color, helping them to buy a home, keep a home or access the equity garnered in their home. Based on our review of past cases, we have found that every dollar in subsidy amounts to about ten times that much in actual value. So, for example, a $15,000 loan subsidy to one home buyer can often enable that person to acquire a $150,000 loan that would perhaps otherwise be unattainable. So, if these numbers hold true, the value of our cases so far could approach $1 billion in total relief for affected communities. And we’re going to keep on fighting.

As mentioned a moment ago, Newark is indeed one of those communities. Last year, we filed suit against Lakeland Bank alleging that it avoided providing access to credit in majority-Black and Hispanic neighborhoods in Newark, as well as in Somerset, Union and Morris Counties. And our resolution with Lakeland includes a $12 million loan subsidy fund. Just as with our Hudson City redlining case, mentioned by U.S. Attorney Sellinger earlier, this has ultimately generated more than $515 million of total loan dollars for impacted people. And so, we are very confident that the Lakeland Bank resolution will likewise open doors of opportunity for people and families of color across this region.

While we’ve already done a tremendous amount of work to confront redlining, there unfortunately is a lot more that we need to do. In the upcoming months, we will continue to hold all types of mortgage lenders – not just traditional banks – but also mortgage companies and credit unions accountable when they engage in discriminatory redlining practices.

Now, what does success look like? What does the impact here look like?

We know that redlining is a problem that was decades in the making, and won’t disappear overnight. But the urgency of the work cannot be overstated. Fair housing is the building block for so many of the opportunities that are central to our lives. Where you live determines where you are able to go to school, determines the kind of job opportunities you have access to. It also determines what your relationship with law enforcement and the criminal justice system might look like, and ultimately whether you are able to build and pass wealth on to your family.

Thankfully we are starting to see meaningful change as a result of our settlements. Indeed, we believe, and we know from experience, that opening up equal access to credit opportunities can breed mutual, self-sustaining success.

I want to tell you a little bit about our redlining settlement with Midwest BankCentre in St. Louis, Missouri, to give you a feel for what change and transformation looks like as a result of this work. St. Louis is one of the most racially segregated cities in the country. The areas that Midwest BankCentre redlined in St. Louis included Ferguson, Missouri, where in 2015 then-18-year-old Michael Brown tragically lost his life at the hands of law enforcement, and we all saw the intense protests that ensued. Our settlement agreement required the bank to open a new branch in the areas that it had redlined. They opened a branch in Pagedale, a city of about 3,300 people just about five miles from Ferguson. And the investment in Pagedale spurred other commercial development, including a movie theatre, a grocery store and a credit union. It turned economic decay into economic vitality. And following the success in Pagedale, the bank partnered with a 12,000-member Black congregation – the Friendly Temple Missionary Baptist Church – to help them open a new branch on the church’s campus.

And the changes that Midwest put into place are sustainable. Even though our settlement provisions have now expired, recent mortgage lending data shows that Midwest out-performs other lenders in terms of serving communities of color in St. Louis. And building on the success of the Pagedale and Friendly Temple branches, today Midwest operates five branches in majority-Black neighborhoods in and around the City of [St.] Louis.

This is the model and the goal for all of our fair lending work.

As successful as our efforts have been, we can’t do this alone if we want to achieve the change that we know will make a real difference in communities across the country. We’ve got to work hand in hand with our law enforcement partners, with our federal financial regulators, including the Consumer Financial Protection Bureau, our U.S. Attorneys, state attorneys general, community advocates, residents and more.

The Bureau has long been one of the Civil Rights Division’s closest partners in our work to ensure fair lending. In addition to the Fair Housing Act, we rely on the Equal Credit Opportunity Act (ECOA), and we share enforcement authority of ECOA with the Consumer Financial Protection Bureau and other financial regulatory agencies. For decades, our anti-discrimination work under ECOA has included vigorous enforcement of the prohibition on discrimination, including discouraging applicants from seeking credit based on a protected characteristic of the applicant or the fact that the applicant is seeking credit in particular geographic area. The practice of discouraging applicants seeking credit was central in the history of redlining. And enforcement against discrimination through discouragement by the Justice Department and our partner agencies, including the Bureau, is key to our work in combating modern-day redlining. And we look forward to continuing to work closely with the Consumer Financial Protection Bureau to ensure robust enforcement of ECOA.

In recent years, we’ve also strengthened partnerships with other key agencies – like the FDIC, the Federal Reserve, the Office of Comptroller Currency and the National Credit Union Administration. Our close collaboration has coincided with increased referrals of bad actors for redlining investigations. And in 2022, the department received more of these referrals than we’ve ever seen previously. I know that there are dozens of people, dozens of attendees from our regulator partners who watching online today, and I want to thank you for your work and collaboration.

Our redlining enforcement work will continue to rely heavily on our 94 U.S. Attorneys office partners across the country. And I want to again acknowledge U.S. Attorney Sellinger and the office’s Civil Rights Chief Mike Campion for being extraordinary partners in this work. And we’re going to continue to look for ways to work with state AGs and others.

I also want to recognize, though, the centrality of community leaders to this work. And I am looking forward to hearing from the highly esteemed Ryan Haygood and Reverend Dr. Charles Boyer in a moment about the important work that they’re leading here on the ground. We can’t effectively do any of this work without meaningful and sustained engagement with community leaders like the both of them. In fact, community organizations have always played a critical role in successful implementation of our redlining work, helping to ensure that we are focused on the bad actors and focused on the places where we can open up the greatest possibilities for home ownership opportunities in communities across the country.

And finally, the lending community is a critical partner in this effort. I am encouraged to see that more lenders, as a result of our work, are starting to take proactive steps to increase the services that they are providing to historically underserved communities, including communities of color. In particular, I have been pleased to hear that more lenders are using Special Purpose Credit Programs to reach underserved communities. Changes in mortgage industry practices that make credit more readily available can generate meaningful change for families and communities.

But for the banks and financial institutions not motivated to voluntarily take these steps, I hope that they will take this program today as a strong message that the federal government will work to hold you accountable when you engage in modern day redlining.

To close, I want to wrap up where I began, I want to again reference Dr. King. As he concluded his remarks in “The Other America” speech that he delivered, he sounded a note of optimism. He proclaimed that he still had “faith in the future” and that he knew that even the most stubborn problems in our country could be resolved. And we believe the same at the U.S. Department of Justice. Working together, we believe that we can eradicate vile practices such as redlining and ensure that all people in this country have equal access to opportunity.

My call to action to all of you is to take the message conveyed here today and use it to advance justice and equity in your communities. Know that you have a partner in the Justice Department, and together we can work to make our nation a more perfect union and a place that is more racially just and equitable for all.

Thank you so much for being here today.