A community bank in Rhode Island agreed to pay $9 million to resolve allegations that it engaged in lending discrimination by redlining majority-Black and Hispanic neighborhoods, a U.S. attorney announced Wednesday.
A complaint accused Washington Trust Company of failing to provide mortgage lending services to majority-Black and Hispanic neighborhoods in Rhode Island from 2016 to 2021. The bank was founded in 1800, and according to the Justice Department is the oldest community bank in the nation.
Washington Trust CEO Edward O. “Ned” Handy III said the bank vehemently denies the allegations. The bank entered into the agreement to avoid the expense and distraction of potential litigation, and to allow the bank to focus fully on serving the needs of its customers and communities.
“We believe we have been fully compliant with the letter and spirit of fair lending laws, and the agreement will further strengthen our focus on an area that has always been important to us,” Handy said in statement.
Despite expanding across the Rhode Island, the bank never opened a branch in a majority-Black and Hispanic neighborhood, investigators said. It relied on mortgage loan officers working out of only majority-white areas as the primary source for generating loan applications.
The complaint also alleges that, compared to Washington Trust, over the same six- year period, other banks received nearly four times as many loan applications each year in majority-Black and Hispanic neighborhoods in the state.
“Everyone who pursues the American dream has the right to expect to be treated equally and with dignity, regardless of their race, their background, or zip code,” said Zachary Cunha, U.S. Attorney for the District of Rhode Island.
As part of the settlement, the bank has agreed to a series of steps, including investing at least $7 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance and home equity loans and lines of credit for residents of majority-Black and Hispanic neighborhoods in the state.
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