Dive Brief:
- Newark, Ohio-based Park National Bank agreed to a $9 million settlement with the Justice Department to resolve allegations the bank engaged in lending discrimination in the Columbus metropolitan area, the agency announced Tuesday.
- Park National failed to provide home loans in majority-Black and Hispanic neighborhoods in the Columbus area between 2015 and 2021, the DOJ said.
- The settlement is the sixth redlining-related penalty to be levied against a lender since the DOJ, in lock-step with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, stepped up efforts to crack down on the practice in 2021.
Dive Insight:
All of Park National’s branches and mortgage lenders in the Columbus area were concentrated in majority-white neighborhoods, the DOJ alleges in its complaint. The $9.8 billion-asset bank failed to take any meaningful measures to compensate for its lack of physical presence in majority-Black and Hispanic communities, the DOJ said.
As part of the consent order, Park National has agreed to invest at least $7.75 million in a loan subsidy fund to increase access to credit for home mortgage, improvement and refinance loans, as well as home equity loans and lines of credit in majority-Black and Hispanic neighborhoods in the Columbus area, the agency said.
The bank will also commit $750,000 to outreach, education and credit counseling initiatives, as well as $500,000 to developing community partnerships in majority-Black and Hispanic areas, according to the DOJ.
“When banks fail to provide equal access to lending services in neighborhoods of color, they engage in modern-day redlining and exacerbate the racial wealth gap in our country,” Kristen Clarke, assistant attorney general of the DOJ’s Civil Rights Division, said in a statement Tuesday. “The Justice Department will continue to fight to fulfill the promise of our nation’s fair lending laws while tearing down the discriminatory barriers that deny Black people and other people of color access to economic opportunity and homeownership.”
Park National said it has identified proactive steps to create more opportunities to connect with prospective borrowers and has several home lending initiatives underway.
“While we disagree with any suggestion that intentional discrimination took place, we are united with the DOJ in our commitment to ensuring equal access to credit for all consumers,” Park National CEO David Trautman said in a statement Tuesday.
In a separate statement to Banking Dive, Trautman said Park National Bank “takes pride in our heritage of corporate citizenship, philanthropy, and compassionate support for all communities.”
“We condemn discrimination in any form and stand firm in our commitment to providing equal access to credit for all borrowers,” Trautman said. “We look forward to creating even more opportunities for individuals and families to achieve the dream of home ownership.”
Tuesday’s consent order follows a $31 million settlement the DOJ reached with Los Angeles-based City National Bank in January over claims the bank avoided providing mortgage-lending services to majority-Black and Hispanic neighborhoods in Los Angeles County.
The DOJ said it has levied $84 million in penalties since the launch of its Combating Redlining Initiative.
