The U.S. Department of Justice is launching a nationwide Combatting Redlining Initiative to combat discriminatory lending practices, Attorney General Merrick Garland said on Friday.
Garland said the illegal practice of “redlining,” or avoiding lending to minority neighborhoods, remained a persistent problem, and the federal government was devoted more resources to identifying it and punishing lenders.
“Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities,” he said. The new initiative will tackle fair lending issues “on a broader geographic scale than the Justice Department has ever done before,” he added.
Specifically, Garland said authorities nationwide are partnering with banking and consumer regulators, including the Consumer Financial Protection Bureau (CFPB) and Office of the Comptroller of the Currency (OCC), which monitors national banks. The Initiative will:
- Utilize U.S. Attorneys’ Offices as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.
- Expand the department’s analyses of potential redlining to both depository and non-depository institutions. Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgage lending and now make the majority of mortgages in this country.
- Strengthen our partnership with financial regulatory agencies to ensure the identification and referrals of fair lending violations to the Department of Justice.
- Increase coordination with State Attorneys General on potential fair lending violations.
Garland also announced the first settlement under the initiative, of $8.85 million, with Tennessee’s TrustMark National Bank, which the government said avoided offering home loans in predominantly Black and Hispanic neighborhoods.
Officials said they would focus on modern ways lenders could discriminate against borrowers. Rohit Chopra, director of the Consumer Financial Protection Bureau, singled out “digital redlining disguised through so-called neutral algorithms.”