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RBC-owned U.S. bank to pay $31M fine for discriminatory mortgage lending policies

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An American bank owned by the Royal Bank of Canada has agreed to pay more than $31 million to systematically avoid mortgages in the predominantly black and Latinx community of Los Angeles.

The U.S. Department of Justice on Thursday accused Los Angeles-based City National Bank of discriminating in the predominantly black and Latinx community by refusing to underwrite mortgages and demanding payment of fines.

City National, a subsidiary of RBC based in Toronto since 2015, has in the past few years organized lending to racial and ethnic minorities, a practice known as “redlining” set in place by the Biden administration. This is the latest bank that has been found to be evasive. Launch your own task force and fight.

From 2017 to 2020, City National avoided marketing and underwriting mortgages in black and Latino-majority neighborhoods in Los Angeles County, according to the Justice Department. Other banks operating in those areas have received six times as many mortgage applications as City National’s, according to federal officials.

The term “redlining” comes from the idea that a symbolic “red line” is drawn around a particular area to avoid businesses from providing services in that area. ‘ says the Department of Justice.

The Justice Department said City National, a bank with about $95 billion in assets, was so reluctant to operate in areas where most of the residents were people of color that it opened branches in those areas over the past two decades. claims to have opened only one In contrast, City National opened or acquired 11 branches in that period. Moreover, unlike branches in predominantly white areas, the branch had no employees dedicated to underwriting mortgages.

In a statement, Assistant Attorney General Kristen Clarke, who heads the Department of Justice’s civil rights division, said in a statement, “Redlining is a practice from a bygone era, a violation of the principles of fairness and justice, and a threat to our economy today. “This settlement should send a strong message to the financial industry that lenders expect to serve all members of their community and that failure to do so will result in liability.” .”

Attorney General Merrick Garland has prioritized civil rights prosecutions since taking charge of the Justice Department in 2021, with the Biden administration’s Justice Department prioritizing the redlining of cases over previous administrations. .

Biden’s task force includes the Department of Justice, as well as bank regulators such as the Comptroller of the Currency and the Consumer Financial Protection Agency, and has not only explicitly redlined, but also computer algorithms have blacklisted banks. We also focus on cases that may discriminate Black. Latin Borrower.

Despite half a century of laws designed to combat redlining, racist practices persist across the country, and the long-term effects continue to this day. Homes in the historically red-lined communities, which are a small fraction of white households, are less valuable than those in non-red-lined communities.

As part of the settlement, City National will create a $29.5 million U.S. Loan Grants Fund to lend to Black and Latino borrowers, and $1.75 million for advertising, community outreach, and financial education programs. Spend to reach out to minority borrowers.

In a statement, City National disagreed with the Department of Justice’s allegations but “still supports the DOJ’s efforts to ensure equal access to financing for all consumers, regardless of race.” said.

The Justice Department said City National is working with them as part of a redline investigation to resolve issues in other markets as well.


For more stories about the Black Canadian experience, from anti-Black racism to success stories within the Black community, check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.

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