2 Cincinnati banks to invest $9 million as part of discrimination settlement

2 Cincinnati banks to invest $9 million as part of discrimination settlement
Posted at 1:26 PM, Dec 28, 2016
and last updated 2016-12-28 13:26:12-05

CINCINNATI -- Two Cincinnati-based banks will invest at least $9 million in majority African-American neighborhoods as part of a settlement over allegations of discrimination, Justice Department officials announced Wednesday.

Union Savings Bank and Guardian Savings Bank "redlined" predominantly African-American neighborhoods in Cincinnati, Columbus and Dayton, Ohio and Indianapolis, according to officials.

"Redlining" is "the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial demographics of the neighborhood in which the consumer lives," according to the Justice Department.

Officials accused the banks of discriminating on the basis of race and color in their mortgage lending practices between 2010 and 2014. The banks would serve the needs of residents or predominantly white neighborhoods "to a significantly greater extent" than for residents of majority African-American neighborhoods, according to officials.

Union will open two full-service branches and Guardian will open one loan production office to serve the residents of predominantly African-American neighborhoods as a result of the settlement. The banks will invest at least $9 million, including $7 million in a loan subsidy fund to increase the amount of credit they extend to residents of majority African-American neighborhoods and $2 million in advertising, outreach, financial education and community partnership efforts.

The banks will also have to develop internal controls to ensure future compliance.

"Lenders must treat all potential borrowers equally and fairly," Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, said. "This settlement embodies a win-win solution for all parties by increasing the volume of mortgage loans, driving economic activity and creating a level playing field for qualified borrowers."