Assistant Attorney General Kristen Clarke Remarks Announcing $9 Million Agreement with Washington Trust Company to Resolve Redlining Claims in Rhode Island

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 join U.S. Attorney Zachary Cunha of the District of Rhode Island for today’s announcement.

I’m pleased to announce another major redlining settlement. Today, we filed a proposed consent decree that secures a $9 million dollar settlement with Washington Trust resolving our allegations that the bank redlined predominantly Black and Hispanic neighborhoods in the State of Rhode Island. Washington Trust is the oldest community bank in the nation and the largest state-chartered bank headquartered in the State of Rhode Island.

In our complaint, we alleged that, despite its expansion, Washington Trust has never opened a branch in a majority-Black and Hispanic neighborhood in the State of Rhode Island. We also alleged that the bank relied on mortgage loan officers working out of only majority-white areas as the primary source for generating loan applications and failed to conduct advertising of its mortgage services to compensate for its lack of branches and presence in majority-Black and Hispanic areas. The complaint further alleges that, compared to Washington Trust, over the same six-year period, other banks received nearly four times as many loan applications each year in majority-Black and Hispanic neighborhoods in Rhode Island. Finally, even when Washington Trust generated loan applications from majority-Black and Hispanic areas, the applicants themselves were disproportionately white.  

Under the terms of today’s settlement, Washington Trust will invest $7 million in a loan subsidy fund that will help borrowers of color access credit, and they will open two new branches to service the credit needs of the Black and Hispanic communities in the State of Rhode Island. Through this agreement, we are sending a strong message to the financial industry that we will not stand for discriminatory and unlawful barriers in residential mortgage lending. U.S. Attorney Cunha, our partner in this matter, will discuss this settlement in greater detail shortly.

Today’s settlement should send a clear message to lenders nation-wide that the Justice Department will not stand by in the wake of modern-day redlining. We will continue to devote resources to identify redlining and to bring enforcement actions. We will continue to prioritize ensuring that lenders remedy the harms created by depriving communities of color equal access to credit.

At the Civil Rights Division, we are committed to combating redlining. Redlining is the discriminatory and illegal practice of denying financial services to residents in certain communities simply because of their race or ethnicity. Redlining harms communities of color by denying them equal access to credit and the opportunity to build wealth. It also contributes to the widening racial wealth gap in the United States. Over the past 10 years, on average, a white family was 70 percent more likely to own a home than a Black family, and the median wealth of a Black family is $24,000 compared to $188,000 for a white family.

A recent study on Black home ownership in Rhode Island reveals significant home ownership gaps in the state level. While 62 percent of people in Rhode Island owned their homes, only 30 percent of Black people in Rhode Island owned a home. The median income of a Black family in Rhode Island is about 40 percent lower than the median income of a white family. No doubt, these stark gaps are a product of systemic deprivation of credit and wealth-building opportunities, including in the form of redlining.

In October of 2021, Attorney General Merrick Garland announced the Justice Department’s Combating Redlining Initiative, our most aggressive and coordinated effort to address redlining to date. At that announcement, I stated that we have a duty to act now because persisting racial inequality and widening wealth gaps make clear that staying the course is not enough.

This resolution adds to the Justice Department’s robust record of redlining enforcement. Since 2021, the department has secured agreements in eight redlining cases, resulting in relief just over $98 million dollars believed to have affected communities in Los Angeles, Houston, Memphis, Philadelphia, Newark, Columbus and now, the State of Rhode Island. Never before has the department resolved this many cases in a two-year period. Those matters also include our $31 million resolution with City National Bank, the largest redlining settlement in the department’s history.

Our settlements are providing transformative relief for impacted communities in the form of loan subsidy funds, community partnerships and targeted advertising and outreach to previously redlined communities. The loan subsidy funds are used to increase credit for home mortgage, home improvement, and home refinance loans in affected communities. This relief is generating new home ownership opportunities for borrowers of color, and providing easier access to home improvement loans so that communities of color can build equity in their homes.

We’re confident that the actions that are required by our agreement will expand credit opportunities in communities of color across the state of Rhode Island. And we encourage other lenders to be proactive in evaluating their fair lending risks and embracing opportunities to better serve all communities.

Our colleagues in U.S. Attorneys’ Offices across the country are critical partners in this work, including the District of Rhode Island. And we’re grateful to U.S. Attorney Cunha and his team for their collaboration and partnership with us in this matter.

I’ll now turn the floor over to U.S. Attorney Cunha.