Source: Forbes —
The United States Department of Justice has reached a $31 million settlement with City National Bank in a historic housing discrimination case. City National, based in Los Angeles, is one of America’s 50 biggest banks. This settlement is the largest-ever in a redlining case investigated by the Justice Department.
The Biden Administration launched the Combating Redlining Initiative in October 2021. The Justice Department has since secured more than $75 million on behalf of communities that discriminatory housing practices have harmed, including a $24 million settlement with Trident Mortgage, a Philadelphia-based Berkshire Hathaway company.
Redlining is a longstanding set of policies and practices that have prohibited banks from approving mortgages for people seeking to purchase homes in neighborhoods that are largely comprised of Black and Latino residents. It originated in the 1930s and continued on for decades. Neighborhoods were rated on an ‘A’ to ‘D’ risk scale. Lenders then drew red lines around so-called “risky” neighborhoods on city maps; most banks refused to finance mortgages in those areas.
Legislation like the Fair Housing Act of 1968 and the Home Mortgage Disclosure Act of 1975 were intended to outlaw redlining. By then, hard-to-reverse damage had been done. White families had accumulated generational wealth via home ownership, while predominantly Black communities were left with lower property values, chronically underfunded schools, fewer profitable businesses, crime, and poverty. Redlining may have ended in policy five decades ago, but not fully in practice, as the recent lawsuit against City National Bank demonstrates.
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