Get Started Now! Get Your Credit Repair Do It Yourself!!

Cadence Bank will pay $8.5 million to settle redlining case

The parent company of Cadence Bank agreed Monday to pay roughly $8.5 million in fines and community investments to settle charges of lending discrimination brought by the Justice Department and a federal bank regulator.

Cadence Bancorporation will pay a $3 million fine to the Office of the Comptroller of the Currency (OCC) and $5.5 million to expand credit opportunities for Black and Hispanic borrowers to resolve accusations of “redlining” minority customers in the Houston metropolitan area.

“When banks fail to provide equal access to credit in communities of color, they violate our civil rights laws and they deprive people in those communities of the opportunity to build wealth,” said Assistant Attorney General for Civil Rights Kristen ClarkeKristen ClarkeCadence Bank will pay .5 million to settle redlining case The Hill’s Morning Report – Presented by AT&T – Taliban topple Afghan government; critics blame Biden DOJ, Brown University settle case on readmitting students treated for mental issues MORE in a statement.

Redlining is a process used by banks to avoid serving nonwhite customers by tailoring or restricting their offerings based on where prospective clients live. The practice, which has been illegal since the 1970s, is one of several forms of financial discrimination behind the severe racial wealth gap in the U.S.

The Community Reinvestment Act, a landmark 1977 anti-redlining law, requires most national banks to offer and advertise banking and lending products across their entire service areas. 

Banks that fail to lend beyond majority-white neighborhoods can face penalties from the OCC, including fines and a ban on mergers and acquisitions. 

From 2013 to 2017, prosecutors alleged that Cadence Bank concentrated “nearly all its branches, loan officers, marketing and outreach in majority-white neighborhoods,” according to the Justice Department complaint, despite serving one of the most diverse metropolitan areas in the U.S..

All but one of Cadence’s 13 bank branches were located in majority-white census tracts even though 56 percent of census tracts in the Houston metro area were majority-Black and majority-Hispanic, according to the complaint. Cadence had only one branch in 2012 but gained 12 with the acquisition of Encore Bank in 2013, all but one of which were located in majority-white neighborhoods.

While Cadence did not open those branches, prosecutors alleged that the bank did not open a branch in a majority-minority area in 2018. The bank also did not assign a loan officer to its sole branch in a majority-minority neighborhood from 2013 to 2017, prosecutors alleged, severely limiting its service to nonwhite customers.

The Justice Department said Cadence received 2.5 times fewer loan applications from Black and Hispanic customers than comparable banks in the Houston area.

Along with a $3 million fine to the OCC, Cadence will pay $4.17 million to subsidize home loans for residents of predominantly Black and Hispanic neighborhoods in the Houston area, $750,000 to expand access to mortgage credit through community partnerships, and at least $625,000 for advertising, outreach, education and credit repair initiatives.

“Cadence believes that at all times it acted in compliance with our nation’s fair lending laws,” said Paul B. Murphy, Jr., chairman and CEO of Cadence Bancorporation, in a statement.

Cadence also operates 99 branches Alabama, Florida, Georgia, Mississippi, Tennessee and Texas.



Source: on 2021-08-30 18:05:22

Read More At Source Site

Add a Comment

Your email address will not be published. Required fields are marked *

6 + 3 =