October 22, 2021 - Washington, DC – Attorney General Merrick B. Garland and Assistant AG Kristen Clarke deliver remarks announcing a new initiative to combat redlining.
Note: Per Merriam-Webster dictionary (definition of redline): to withhold home-loan funds or insurance from neighborhoods considered poor economic risks.
Washington, DC ~ Friday, October 22, 2021
Remarks as Delivered
Good morning. I am joined today by Assistant Attorney General for Civil Rights Clarke; Director of the Executive Office for U.S. Attorneys Wilkinson; Director of the Consumer Financial 
Protection Bureau Chopra; and Acting Comptroller of the Currency Hsu.
Welcome to the Justice Department’s Great Hall. This space and the building that we are in were constructed at the height of the Great Depression in the early 1930s. At the same time that the federal government was constructing this monument to justice, it was instituting a profoundly unjust nationwide real estate practice known as redlining.
Redlining is a process by which lenders deny services to individuals in a neighborhood because of the race or national origin of the people who live in those communities. Redlining has its roots programs that were designed to make homeownership widely available for the American people, but that purposefully excluded minority neighborhoods from accessing those benefits.
Much has changed since the federal government engaged in Depression-era redlining, but discriminatory lending practices by financial institutions still exist. Unfortunately, redlining remains a persistent form of discrimination that harms minority communities.
Lending discrimination runs counter to fundamental promises of our economic system. When a person is denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated.
We are here today to announce that the Justice Department has launched an Initiative to combat modern-day redlining. Along with our partners at the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, we are also announcing our first settlement under the Initiative and our second redlining settlement in the last two months.
Redlining contributed to the large racial wealth gap that exists in this country. The practice made it extremely difficult for people of color to accumulate wealth through the purchase, refinancing, or repair of their homes. That discrepancy in wealth is clearly reflected in current homeownership rates.
Today, a white family is thirty percent more likely to own a home than a Black family. This present-day gap in homeownership rates is larger than it was in 1960.
When lending institutions deny or avoid providing loans to minority communities because of the racial or ethnic demographics of the relevant neighborhoods, they contribute to these inequities. Such lending practices also violate federal law.
The Justice Department has authority to investigate and file fair lending lawsuits under the Fair Housing Act and the Equal Credit Opportunity Act. These laws prohibit lenders from discriminating against customers on the basis of certain protected characteristics like race, religion, age, and sex, and others.
Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities.
Through the Justice Department’s Combating Redlining Initiative, the Civil Rights Division will partner with U.S. Attorney’s Offices. They will mobilize resources focused on making fair access to credit a reality in underserved neighborhoods across our country.
The Initiative represents the department’s most aggressive and coordinated effort to address redlining. It will seek to address fair lending concerns on a broader geographic scale than the Justice Department has ever done before.
The Initiative will draw on and strengthen the department’s existing partnership with the Consumer Financial Protection Bureau and financial regulatory agencies like the OCC.
Our work will be informed by strong outreach to consumer advocates, industry stakeholders, state Attorneys General, and other agencies. Together, we will proactively seek to determine if lending institutions are engaged in redlining – and when fair lending violations are discovered, the Justice Department will act.
We are wasting no time getting to work. The Civil Rights Division currently has several open redlining investigations. And through partnerships with U.S. Attorney’s Offices, the department expects to open more in the months ahead. And our efforts are already producing results.
Today, we are pleased to announce our first settlement under the Initiative – and our second redlining settlement in less than two months.
The Civil Rights Division, working with the U.S. Attorney’s Office for the Western District of Tennessee, the Consumer Financial Protection Bureau, and the Office of the Comptroller of the Currency, has reached a settlement with Trustmark National Bank. The agreement resolves allegations that Trustmark engaged in lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Memphis, Tennessee.
We commend Trustmark for its cooperation in swiftly resolving this matter. Through this settlement, Trustmark has shown an interest in remedying past practices and in promoting equal access to credit. We recognize that our Initiative alone will not erase the full legacy of discrimination. But we will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit. To that end, you can expect more cases like the one we are announcing today.
I will now turn the podium over to Assistant Attorney General Clarke to provide more information about the settlement with Trustmark.
Assistant Attorney General Kristen Clarke Delivers Remarks Announcing a New Initiative to Combat Redlining
Washington, DC ~ Friday, October 22, 2021
Thank you, Attorney General Garland. I am proud to be here today with you, Director Wilkinson, Director Chopra, and Acting Comptroller Hsu to announce this unprecedented enforcement 
effort to combat redlining, one of the most longstanding and pernicious forms of lending discrimination.
Redlining is alive and well, and it has had a lasting negative impact. For American families, homeownership remains the principal means of building wealth. Deprivation of investment in and denial of access to mortgage lending services have contributed to families of color persistently lagging behind in homeownership rates and net worth compared to white families.
The extent of the disparities is staggering. The median family wealth of a black family is $24,100 compared to $188,200 for a white family; that is about seven and a half times less. As the Attorney General said, the homeownership gap between white and Black families is larger today than it was in 1960, before the passage of the Fair Housing Act of 1968.
Ending redlining is a critical step in closing the widening gaps in wealth between communities of color and others.
We have a duty to act now. Persisting racial inequality and widening wealth gaps makes clear that simply staying the course is not enough. We must take bold, new action if we are ever going to eradicate redlining, and achieve the goal of equal opportunity in our country. That is why we are launching the Combatting Redlining Initiative now.
The department analyzes several factors to determine whether a lender has engaged in redlining. We conduct statistical analysis on loan data and compare the lender’s rate of applications and loans in minority neighborhoods to the lending of “peer banks” that are similar in terms of loan volume and profile. We also consider other factors such as service areas that carve out communities of color, avoidance of minority neighborhoods when deciding where to place branches, and marketing efforts that largely avoid communities of color.
We know that most lenders want to do the right thing and have undertaken efforts to expand credit to all communities. We commend those efforts. But if a financial institution is engaged in redlining, we will marshal our resources to root out the discrimination and stop it.
U.S. Attorneys’ Offices will act as force multipliers on this initiative, and we are pleased about the enthusiasm and commitment so many U.S Attorney districts demonstrated for this Initiative. Their participation will ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color. Their understanding of demographic shifts and relationships with community groups have proven quite valuable in previous redlining investigations. Our partnership will allow us to analyze lending patterns by all types of lenders of all sizes, including non-depository institutions and credit unions.
Our commitment to combatting redlining is evident in the settlement against Trustmark. The resolution we achieved jointly with the Bureau resolved the government’s allegation that Trustmark engaged in lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Memphis, Tennessee. The bank is working now to improve its fair lending compliance and has demonstrated a commitment to the terms and goals of this settlement.
Under the proposed consent order that we’ll be filing today, Trustmark will invest $3.85 million in a loan subsidy fund to increase credit opportunities for residents of predominantly Black and Hispanic neighborhoods in the Memphis area. Loan subsidy funds help level the playing field so that every qualified applicant has an equal opportunity to obtain credit.
They will dedicate mortgage loan officers or community lending specialists to these neighborhoods and open a loan production office in a majority-Black and Hispanic neighborhood in Memphis.
Trustmark will devote $400,000 to develop community partnerships that provide residents of majority-Black and Hispanic neighborhoods in Memphis with services to help increase their access to residential mortgage credit. It will devote at least $200,000 per year to advertising, outreach, consumer financial education, and credit repair initiatives in and around Memphis.
The department opened its investigation after one of Trustmark’s regulators, the OCC, referred the matter. This settlement is the culmination of joint enforcement by the Department and the Consumer Financial Protection Bureau, and I want to thank our partners for their work in securing this resolution.
Ensuring that lenders comply with fair lending laws is not just good law enforcement. The relief awarded in these cases expands financial opportunities for historically underserved residents in communities of color and also improves lenders’ compliance management systems, expanding their lending opportunities and often leading to increased profits for the banks. That is a win for residents in redlined areas and for financial institutions.
The Justice Department, working with our partners, is proud to launch this effort. Thank you.
Source: DOJ Release
