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Assistant Attorney General Kristen Clarke Delivers Remarks Announcing a New Initiative to Combat Redlining


Washington, DC
United States

Thank you, Attorney General Garland. I am proud to be here today with you, Director Wilkinson, Director Chopra, and Acting Comptroller Hsu to announce this unprecedented enforcement effort to combat redlining, one of the most longstanding and pernicious forms of lending discrimination.

Redlining is alive and well, and it has had a lasting negative impact. For American families, homeownership remains the principal means of building wealth. Deprivation of investment in and denial of access to mortgage lending services have contributed to families of color persistently lagging behind in homeownership rates and net worth compared to white families.

The extent of the disparities is staggering. The median family wealth of a black family is $24,100 compared to $188,200 for a white family; that is about seven and a half times less. As the Attorney General said, the homeownership gap between white and Black families is larger today than it was in 1960, before the passage of the Fair Housing Act of 1968.

Ending redlining is a critical step in closing the widening gaps in wealth between communities of color and others. 

We have a duty to act now. Persisting racial inequality and widening wealth gaps makes clear that simply staying the course is not enough. We must take bold, new action if we are ever going to eradicate redlining, and achieve the goal of equal opportunity in our country. That is why we are launching the Combatting Redlining Initiative now.

The department analyzes several factors to determine whether a lender has engaged in redlining. We conduct statistical analysis on loan data and compare the lender’s rate of applications and loans in minority neighborhoods to the lending of “peer banks” that are similar in terms of loan volume and profile. We also consider other factors such as service areas that carve out communities of color, avoidance of minority neighborhoods when deciding where to place branches, and marketing efforts that largely avoid communities of color.

We know that most lenders want to do the right thing and have undertaken efforts to expand credit to all communities. We commend those efforts.  But if a financial institution is engaged in redlining, we will marshal our resources to root out the discrimination and stop it.

U.S. Attorneys’ Offices will act as force multipliers on this initiative, and we are pleased about the enthusiasm and commitment so many U.S Attorney districts demonstrated for this Initiative. Their participation will ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color. Their understanding of demographic shifts and relationships with community groups have proven quite valuable in previous redlining investigations. Our partnership will allow us to analyze lending patterns by all types of lenders of all sizes, including non-depository institutions and credit unions.  

Our commitment to combatting redlining is evident in the settlement against Trustmark. The resolution we achieved jointly with the Bureau resolved the government’s allegation that Trustmark engaged in lending discrimination by redlining predominantly Black and Hispanic neighborhoods in Memphis, Tennessee. The bank is working now to improve its fair lending compliance and has demonstrated a commitment to the terms and goals of this settlement.

Under the proposed consent order that we’ll be filing today, Trustmark will invest $3.85 million in a loan subsidy fund to increase credit opportunities for residents of predominantly Black and Hispanic neighborhoods in the Memphis area. Loan subsidy funds help level the playing field so that every qualified applicant has an equal opportunity to obtain credit. 

They will dedicate mortgage loan officers or community lending specialists to these neighborhoods and open a loan production office in a majority-Black and Hispanic neighborhood in Memphis. 

Trustmark will devote $400,000 to develop community partnerships that provide residents of majority-Black and Hispanic neighborhoods in Memphis with services to help increase their access to residential mortgage credit. It will devote at least $200,000 per year to advertising, outreach, consumer financial education, and credit repair initiatives in and around Memphis. 

The department opened its investigation after one of Trustmark’s regulators, the OCC, referred the matter. This settlement is the culmination of joint enforcement by the Department and the Consumer Financial Protection Bureau, and I want to thank our partners for their work in securing this resolution. 

Ensuring that lenders comply with fair lending laws is not just good law enforcement. The relief awarded in these cases expands financial opportunities for historically underserved residents in communities of color and also improves lenders’ compliance management systems, expanding their lending opportunities and often leading to increased profits for the banks. That is a win for residents in redlined areas and for financial institutions.

The Justice Department, working with our partners, is proud to launch this effort.  Thank you. 

Civil Rights
Updated October 22, 2021