City National Bank has agreed to pay $31 million to settle a U.S. Justice Department lawsuit alleging racial bias in its home mortgage lending in Los Angeles County.
\nThe government\u2019s complaint, filed Thursday in Los Angeles, accused the bank of violating federal housing and banking discrimination laws by avoiding loans to buyers of homes in neighborhoods that are majority Black or Latino.
\nCity National Bank is the largest bank headquartered in L.A., but just one of the 11 branches it has opened in the county over the last 20 years is in a predominantly Black or Latino neighborhood. The county\u2019s population of nearly 10 million is 49% Latino and 9% Black.
\nFrom 2017 to 2020, City National Bank maintained just three of its 37 branches in majority Black and Latino neighborhoods, the complaint said.
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\nThe bank relied on \u201crelationship managers\u201d to generate home loan applications from existing customers, who were predominantly white, the government alleged, and it failed to act on internal reports showing it risked running afoul of fair lending laws.
\nOther banks serving L.A. County received more than six times as many loan applications in Black and Latino areas, the government found.
\nCity National Bank denied breaking discrimination laws, but said it agreed to settle the case to avoid prolonged litigation.
\nUnder the proposed settlement, which was filed simultaneously with the complaint and requires court approval, the bank would provide $29.5 million in home loan subsidies to borrowers in Black and Latino areas, including interest-rate cuts and down-payment assistance.
\nAssistant Atty. Gen. Kristen Clarke and U.S. Atty. Martin Estrada announced the agreement at Second Baptist Church Los Angeles in Historic South Central, one of the city\u2019s oldest Black churches. Nobody from the bank participated in the event.
\n\u201cThrough this agreement, we\u2019re sending a strong message to the financial industry that we will not stand for unlawful barriers when it comes to residential mortgage lending,\u201d Clarke said. \u201cWe will not stand for unlawful modern-day redlining.\u201d
\nCity National Bank released a statement saying it supports the Justice Department\u2019s efforts to ensure equal access to loans regardless of race.
\n\u201cAt City National, we are committed to ensuring that all consumers have an equal opportunity to apply for and obtain credit,\u201d it said.
\nFounded in Beverly Hills in 1953, City National Bank has deep ties to the entertainment industry. It was\u00a0acquired\u00a0in 2015 by the Royal Bank of Canada.
\nAs part of the settlement agreement, City National Bank has agreed to spend $500,000 on advertising targeting residents of Black and Latino neighborhoods and $500,000 on a consumer financial education program to enhance their access to credit.
\nThe bank also said it planned to open a new branch in a majority Black or Latino neighborhood and ensure that at least four loan officers are dedicated to serving those areas.
\nAtty. Gen. Merrick Garland launched a program in 2021 to step up enforcement of housing discrimination laws. It has yielded $75 million in relief to borrowers in Houston, Memphis.<\/p>\n