UNITED STATES OF AMERICA,
Plaintiff,
CIVIL ACTION NO. 04-71879
v.
OLD KENT FINANCIAL CORPORATION
AND OLD KENT BANK,
through their Successors
in Interest,
Defendants.
___________________________________
COMPLAINT
The United States alleges:
Jurisdiction and Venue
1. The United States brings this action to enforce Title
VIII of the Civil Rights Act of 1968 ("Fair Housing Act"), as
amended by the Fair Housing Amendments Act of 1988, 42 U.S.C. §§
3601-3619, and the Equal Credit Opportunity Act ("ECOA"), 15
U.S.C. §§ 1691-1691f.
2. This Court has jurisdiction of this action pursuant to
28 U.S.C. § 1345, 42 U.S.C. § 3614, and 15 U.S.C. § 1691(h), and
venue is appropriate pursuant to 28 U.S.C. § 1391(c).
Parties
3. Defendant Old Kent Financial Corporation was a bank
holding company, which was incorporated under the laws of
Michigan in 1984 and was headquartered in Grand Rapids, Michigan,
prior to its acquisition by Fifth Third.
4. Defendant Old Kent Bank was a wholly owned subsidiary
and principal asset of Old Kent Financial Corporation.
5. Fifth Third acquired Old Kent Financial Corporation and
Old Kent Bank through an acquisition approved by the Federal
Reserve Board on March 12, 2001.
6. Fifth Third merged Old Kent Bank into First Third Bank
(Michigan) as a result of the acquisition of Old Kent Financial
Corporation by Fifth Third. The Federal Reserve Board approved
this merger on May 14,2001.
7. Fifth Third and Fifth Third Bank are successors in
interest to all assets and liabilities of Old Kent Financial
Corporation and Old Kent Bank that were procured as a result of
the acquisition and the merger described above.
8. Prior to its acquisition by Fifth Third, Old Kent Bank
offered the traditional services of a financial depository
institution, including the receipt and maintenance of monetary
deposits, and the financing of residential, commercial and
consumer loans. Old Kent Bank was established in 1853, was
incorporated under the laws of Michigan and had its principal
place of business in Grand Rapids, Michigan.
9. At the time of the acquisition by Fifth Third, Old Kent
Financial Corporation and Old Kent Bank conducted banking
business primarily in Michigan, Illinois and Indiana.
10. At the time of the acquisition by Fifth Third, Old Kent
Financial Corporation and Old Kent Bank were under the regulatory
supervision of the Federal Reserve Board. Fifth Third and Fifth
Third Bank currently are regulated by the Federal Reserve Board.
11. As of December 31, 2000, Old Kent Financial Corporation
estimated its total assets at $23.9 billion, with Old Kent Bank
maintaining an estimated $23.5 billion of those assets.
12. Fifth Third and Fifth Third Bank are, and Old Kent
Financial Corporation and Old Kent Bank were, subject to the
federal laws governing fair lending including the Fair Housing
Act, the Equal Credit Opportunity Act and the Community
Reinvestment Act, 12 U.S.C. §§2901-2906. The Fair Housing Act
and the Equal Credit Opportunity Act prohibit financial
institutions from discriminating on the basis of, inter alia,
race, color, or national origin in their lending practices. The
Community Reinvestment Act and its implementing regulations
impose on banks a responsibility to meet the credit needs of the
entire community which they serve, including the credit needs of
low to moderate income neighborhoods.
Facts
Detroit MSA Demographics
13. Detroit Metropolitan Statistical Area (hereinafter
"Detroit MSA"), as designated by the Office of Management and
Budget, contains the six Michigan counties of Wayne, Oakland,
Macomb, Lapeer, St. Clair and Monroe. These counties are located
in the lower southeast corner of the state. The City of Detroit
lies within Wayne County.
14. Demographic data compiled by the U.S. Census for the
year 2000 show that the African American population of the City
of Detroit is over 81% while the African American population of
the Detroit MSA - of which the City of Detroit is a part - is
approximately 23%. The U.S. Census data reflects the racial
segregation in the population, with the majority of the African
American population residing in the City of Detroit and the
majority of non-African American population residing in the
surrounding suburban areas. In the most recent U.S. Census
Residential Segregation Index, the Detroit MSA is identified as
one of the two most racially segregated MSAs in the United
States. See Map attached as Exhibit 1.
Old Kent Bank Branches and Business Strategy
15. Prior to 1995, Old Kent Financial Corporation
maintained a corporate structure that included numerous
subsidiary banks, including Old Kent Bank. In 1995, Old Kent
Financial Corporation consolidated its subsidiary banks into a
single bank, Old Kent Bank, which operated out of Grand Rapids,
Michigan.
16. Since Old Kent Bank first began operation, it has
expanded its business, including that of extending credit for
small business loans and residential real estate-related
transactions, to substantial portions of the Detroit MSA. Old
Kent Bank has engaged in a race-based pattern of locating or
acquiring new offices. It has located or acquired new branch and
other offices to serve the residential lending and credit needs
of predominantly white areas but not those of predominantly
African American neighborhoods.
17. As of January 1996, Old Kent Bank operated at least 18
branches in the Detroit MSA. Not a single one of these branches
was located in the City of Detroit. As of March 2000, Old Kent
Bank had expanded its business presence in the Detroit MSA to
include a branch network of at least 53 branches, located in
every county of the Detroit MSA. Virtually all of Old Kent
Bank's branches were located in predominantly white suburbs. As
of March 2000, Old Kent Bank still did not have a single branch
in the City of Detroit, where the population is more than 81%
African American. See Map attached as Exhibit 2.
18. In March 2000, the United States notified Old Kent Bank
of its investigation into Old Kent Bank's lending practices.
Approximately six months after receiving the notice of
investigation letter, Old Kent Bank opened a branch in the City
of Detroit.
19. In operating and extending the scope of its business,
Old Kent Bank has acted to meet the lending and credit needs of
predominantly white residential areas (census tracts with a
population greater than 50% non-Hispanic white) throughout the
Detroit MSA, including Wayne County, and has avoided serving the
lending and credit needs of majority African American
neighborhoods, which are located almost exclusively in the City
of Detroit.
20. Old Kent Bank claims that, prior to 2000, it did not do
business in the City of Detroit because it did not have any
branches there. Old Kent Bank further claims that it had not
opened any branches in the City of Detroit because its policy was
to only open or acquire new branches within three miles of
existing branches. However, since 1995, Old Kent Bank has
repeatedly failed to follow this alleged policy and has opened a
number of branches in predominantly white census tracts that were
more than three miles from existing branches.
21. Old Kent Bank declined to open branches in the City of
Detroit as described above so as to avoid serving that community.
CRA Assessment Area Delineation
22. Pursuant to the CRA, each covered financial institution
must delineate an assessment area defining the geographic region
that it reasonably believes it serves. 12 U.S.C. §§2901, et
seq., and the implementing regulations promulgated by the FRB, 12
C.F.R. §228, as amended (also known as Regulation BB). Under
Regulation BB, a bank's assessment area must consist only of
whole geographies, may not reflect illegal discrimination, and
may not arbitrarily exclude low or moderate income geographies,
taking into account the institution's size and financial
condition. Id. at §228.41(e).
23. Instead of defining its assessment area in accordance
with Regulation BB, Old Kent Bank circumscribed its lending area
in the Detroit MSA to exclude most of the majority African
American neighborhoods by excluding the City of Detroit. See Map
attached as Exhibit 3.
24. From at least 1996 through 2000, Old Kent Bank has
solicited and funded very few small business or residential real
estate-related loan applications from predominantly African
American census tracts outside its assessment area.
25. From at least 1996 to 2000, Old Kent Bank maintained a
policy and/or practice of limiting the contact of its personnel
responsible for advertising and soliciting applications for loans
with individuals and businesses located in the City of Detroit
and/or other majority African American tracts in the Detroit MSA.
Old Kent Bank's Lending Activity
26. Analyses of the geographic distribution of the number
of originations funded by Old Kent Bank demonstrate that Old Kent
Bank has served the credit needs of predominantly white
neighborhoods of the Detroit MSA to a significantly greater
extent than it has served the credit needs of predominantly
African American neighborhoods. Similar analyses of lending
activity in Wayne County also demonstrates that Old Kent Bank has
served the credit needs of predominantly white neighborhoods to a
significantly greater extent than it has served the credit needs
of predominantly African American neighborhoods in those
geographic areas.
27. Between 1996 and 2000, Old Kent Bank originated 15,423
small business, home improvement, and home refinance loans in the
Detroit MSA. Only 335, or 2.2%, of such loans were made in
census tracts which were occupied by a majority of African
American residents.
28. The U.S. Census reports that in the City of Detroit,
over 11,000 (approximately 43%) of the more than 26,000
businesses are owned by African Americans. The 1997 Economic
Census also reports that the African American firms in the
Detroit MSA generate over $3.5 billion dollars in revenue.
29. Old Kent Bank told African American business owners in
the City of Detroit that it would not make business loans in that
area and it denied applications for credit from African American
owned businesses in the City of Detroit and in African American
areas of the Detroit MSA without explanation.
30. In 2000, Old Kent Bank generated 1,977 small business
loans in the Detroit MSA, but only 87, or 4.4%, were originated
in majority African American census tracts. See Map attached as
Exhibit 4.
31. In 1998, Old Kent Bank generated 1,496 small business
loans in the Detroit MSA, but only 20, or 1.3%, were originated
in majority African American census tracts. See Map attached as
Exhibit 5.
32. In 1996, Old Kent Bank generated 913 small business
loans in the Detroit MSA, but only 19, or 2.1%, were originated
in majority African American census tracts. See Map attached as
Exhibit 6.
33. In 2000, Old Kent Bank generated 759 home improvement
loans in the Detroit MSA, but only 31, or 4.1%, were originated
in majority African American census tracts. See Map attached as
Exhibit 7.
34. In 1998, Old Kent Bank generated 1045 home improvement
loans in the Detroit MSA, but only 19, or 1.8%, were originated
in majority African American census tracts. See Map attached as
Exhibit 8.
35. In 1996, Old Kent Bank generated 715 home improvement
loans in the Detroit MSA, but only 14, or 2.0%, were originated
in majority African American census tracts. See Map attached as
Exhibit 9.
36. In 2000, Old Kent Bank generated 982 home refinance
loans in the Detroit MSA, but only 28, or 2.9%, were originated
in majority African American census tracts. See Map attached as
Exhibit 10.
37. In 1998, Old Kent Bank generated 857 home refinance
loans in the Detroit MSA, but only 10, or 1.2%, were originated
in majority African American census tracts. See Map attached as
Exhibit 11.
38. In 1996, Old Kent Bank generated 156 home refinance
loans in the Detroit MSA, but only 2, or 1.3%, were originated in
majority African American census tracts. See Map attached as
Exhibit 12.
39. Unlike Old Kent Bank, many banks and other lenders
issued loans to persons or businesses residing in the City of
Detroit.
Violations of Law
40. The totality of the defendants' policies and practices
described herein constitute the redlining of African American
residential neighborhoods of the Detroit MSA thereby severely
limiting the defendants' commercial and residential lending
business. Their policies and practices deny residents of African
American neighborhoods, on account of the racial composition of
those neighborhoods, an equal opportunity to obtain credit.
These policies and practices are not justified by business
necessity or other legitimate, non-discriminatory business
considerations. Old Kent Financial Corporation and Old Kent
Bank's actions as alleged herein constitute:
- Discrimination on the basis of race and/or color in
making available residential real estate-related
transactions in violation of the Fair Housing Act, 42 U.S.C.
§ 3605(a).
- Discrimination against applicants with respect to
credit transactions on the basis of race and/or color in
violation of the Equal Credit Opportunity Act, 15 U.S.C. §
1691(a)(1).
41. The policies and practices of Old Kent Bank and Old
Kent Financial Corporation as alleged herein constitute:
- A pattern or practice of resistance to the full
enjoyment of rights secured by the Fair Housing Act, 42
U.S.C. §§ 3601, et seq.,;
- A denial of rights granted by the Fair Housing Act to a
group of persons that raises an issue of general public
importance, 42 U.S.C. §§ 3601, et seq.; and
- A pattern or practice of activity in violation of the
Equal Credit Opportunity Act, 15 U.S.C. § 1691e(h); and
42. Persons who have been victims of Old Kent Bank and Old
Kent Financial Corporation's discriminatory policies and
practices are aggrieved persons, as defined in 42 U.S.C. §
3602(i), and have suffered damages as a result of Old Kent Bank
and Old Kent Financial Corporation's conduct as described herein.
43. Persons who have been victims of Old Kent Bank and Old
Kent Financial Corporation's discriminatory policies and
practices are aggrieved applicants, as defined in 15. U.S.C. §§
1691a and 1691e and interpreted through Regulation B, 12 C.F.R.
§§ 202, et seq., and have suffered damages as a result of Old
Kent Bank and Old Kent Financial Corporation's conduct as
described herein.
44. The discriminatory policies and practices of Old Kent
Bank and Old Kent Financial Corporation were intentional, willful
and implemented with reckless disregard for the rights of African
American business owners and home owners and those who are
located in majority African American communities throughout the
Detroit MSA.
WHEREFORE, the United States prays that the Court enter an
ORDER that:
(1) Declares that the policies and practices of Old Kent
Bank and Old Kent Financial Corporation constitute violations of
the Fair Housing Act, 42 U.S.C. §§ 3601-3619 and the Equal Credit
Opportunity Act, 15 U.S.C. §§ 1691-1691f;
(2) Enjoins the defendants, their agents, employees and
successors, specifically all those previously employed or working
as agents of Old Kent Bank and Old Kent Financial Corporation,
and all other persons in active concert or participation with
them, from:
(a) discriminating on the basis of race and/or color
in any aspect of their business practices or
transactions;
(b) failing or refusing to take such affirmative steps
as may be necessary to restore, as nearly as
practicable, the victims of the Old Kent Bank and
Old Kent Financial Corporation's unlawful
practices to the position in which they would have
been but for the discriminatory conduct;
(c) failing or refusing to take such affirmative steps
as may be necessary to prevent the recurrence of
any discriminatory conduct in the future and to
eliminate to the extent practicable, the effects
of Old Kent Bank and Old Kent Financial
Corporation's unlawful practices; including
redefining its CRA assessment area to include the
City of Detroit and to service the entire
delineated assessment area without regard to any
prohibited characteristics, specifically including
an applicant's race or the race of the area in
which he or she resides or does business;
(3) Awards such actual and compensatory damages that fully
compensate all the victims of Old Kent Bank and Old Kent
Financial Corporation's unlawfully discriminatory policies and
practices for the injuries caused by Old Kent Bank and Old Kent
Financial Corporation, pursuant to 42 U.S.C. § 3614(d)(1)(B)
and/or 15 U.S.C. § 1691e(h);
(4) Awards such punitive damages to all victims of Old Kent
Bank and Old Kent Financial Corporation's unlawfully
discriminatory policies and practices for the injuries cause by
Old Kent Bank and Old Kent Financial Corporation, pursuant to 42
U.S.C. § 3614(d)(1)(B) and/or 15 U.S.C. § 1691e(h); and
(5) Assesses a civil penalty against the defendants for the
actions of Old Kent Bank and Old Kent Financial Corporation in an
amount authorized by 42 U.S.C. § 3614(d)(1)(C), in order to
vindicate the public interest.
FURTHER, the United States prays for such additional relief
as the interests of justice may require.
|
JOHN ASHCROFT
U.S. Attorney General |
|
_______________________
Jeffrey G. Collins
United States Attorney
Eastern District of Michigan
U.S. Department of Justice |
_________________________
R. Alexander Acosta
Assistant Attorney General
Civil Rights Division |
______________________
Pamela J. Thompson
Executive Assistant U.S.
Attorney
Judith E. Levy
Assistant U.S. Attorney
Eastern District of Michigan
Suite 2001
211 W. Fort St.
Detroit, Michigan
(313) 226-9770
|
_________________________
Steven H. Rosenbaum
Chief
Timothy J. Moran, Deputy Chief
Valerie R. O'Brian, Attorney
Housing & Civil Enforcement
Section - NWB
Civil Right Division
U.S. Department of Justice
950 Pennsylvania Avenue
Washington, D.C. 20530
(202) 514-3510 |
|
Document Filed: May 19, 2004
