DETROIT BANK CHARGED WITH DISCRIMINATORY “REDLINING” LENDING

Bank Pays $3.2 Million To Settle First Ever Discriminatory Commercial Lending Lawsuit

WASHINGTON, D.C. - The Department of Justice today announced the filing and settlement of a lawsuit challenging racially discriminatory lending practices. Specifically, the suit alleges that Old Kent Financial Corporation and Old Kent Bank of Detroit, subsequently acquired by Fifth Third and Fifth Third Bank (Michigan), unlawfully avoided making business and residential loans in predominantly African-American neighborhoods, a practice commonly referred to as redlining. To settle the suit, Fifth Third will invest more than $3.2 million and open three new branches in the city of Detroit.

This lawsuit, filed under the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA), is the first lawsuit filed by the Justice Department that focuses on discrimination in commercial lending. Prior lawsuits in this area focused on residential lending.

“No individual should be denied access to credit purely on the basis of their or their neighbors’ race,” said R. Alexander Acosta, Assistant Attorney General for the Civil Rights Division. “Race discrimination in lending is every bit as reprehensible as race discrimination in employment, housing, or public accommodations. To deny African-Americans access to credit is to deny them the keys to the unfolding American promise of equal opportunity.”

“The denial of credit opportunity to a city based on its racial composition not only violates the rights of individuals based on their race, but also affects the economic stability of the entire community,” said United States Attorney Jeffrey G. Collins, the United States Attorney for the Eastern District of Michigan. “This case sends a clear message that discriminatory lending practices will not be tolerated.”

The complaint, filed today in U.S. District Court in the Eastern District of Michigan, asserts that Old Kent intentionally refused to issue loans and open branches in Detroit because of the city’s African-American population. It details a significant racially discriminatory lending pattern by Old Kent Bank to exclude the city of Detroit. Specifically, the complaint alleges that while Old Kent served largely white suburbs, it opened a branch in Detroit only after the Justice Department opened its investigation. The complaint also alleges that of the 15,473 small business and residential real estate related loans Old Kent made between 1996 and 2000 in the Detroit metropolitan area, only 335, or 2.2%, were made in majority African-American neighborhoods. The complaint further alleges that while capturing most of the greater Detroit area, Old Kent defined its Community Reinvestment Act service-area to exclude certain majority African-American areas.

The Justice Department also filed today in federal court an enforceable settlement agreement resolving the complaint. Under the agreement, which remains subject to court approval, Fifth Third will over the next three years:

• provide three million dollars for a loan subsidy program to provide Detroit businesses and residents small business loans and residential real estate-related loan products on favorable terms;
• open three new full-service branches in Detroit;
• advertise its products so as to generate loan applications from qualified businesses and residents in Detroit;
• invest $200,000 to develop and implement consumer education programs for residents and small businesses in Detroit; and,
• relocate its team of business banking lenders responsible for developing business in Detroit, the “Detroit Business Group Team,” to the city of Detroit by the end of 2004.

Fifth Third Bank cooperated fully with the Department’s investigation into lending practices at Old Kent Bank and agreed to settle this matter without contested litigation.

“We commend Fifth Third for cooperatively resolving this case by taking steps to ensure that its business and residential lending products and services are made available in minority communities on the same terms as in white communities,” added Assistant Attorney General Acosta.

This case resulted from a joint investigation conducted by the Civil Rights Division of the Department of Justice and the office of the United States Attorney for the Eastern District of Michigan. A copy of the consent decree as well as additional information about fair lending enforcement by the Department of Justice, can be obtained from the Justice Department website at www.usdoj.gov/crt/housing. <http://www.usdoj.gov>

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