The Department of Justice has agreed to a settlement with a pair of Cincinnati banks accused of redlining African-American neighborhoods in four cities in Ohio and Indiana.
State-chartered Union Savings Bank and Guardian Savings Bank, which has a federal charter, share common ownership and management. Both were accused of violating the Fair Housing Act and the Equal Credit Opportunities Act.
The DOJ alleged that between 2010 and 2014, the banks’ “policies and practices had the effect of denying or discouraging an equal opportunity to the residents of majority African-American census tracts in the Cincinnati, Columbus, Dayton and Indianapolis [metro areas] to obtain residential home loans on account of the racial composition of those tracts,” the consent order said.
Union Savings and Guardian Savings “strongly deny the violations of law alleged,” the order added.
The companies reached a $9 million settlement with the government that includes a $7 million loan subsidy fund to increase the amount of credit they extend to residents of majority African-American census tracts. The other $2 million is to be spent on advertising, outreach, financial education and community partnership efforts.
Union will open two full-service branches in disadvantaged areas and Guardian will open a loan production office as well.
Louis Beck, chairman of both banks, said in an emailed statement that they “have a decades-long history of serving the needs of our diverse communities. While we strongly disagree with the government’s assessment of our activity, we entered into a cooperative agreement that creates even more opportunities to improve the financial futures of individuals, families and our communities. We look forward to creating additional initiatives for accessible and affordable lending and to the ongoing collaboration with our employees, customers and community partners.”
Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, said the 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.”