Hudson City Settles Discriminatory Lending Charges for About $33 Million -- 2nd Update

By Lisa Beilfuss 

Hudson City Bancorp Inc. will pay almost $33 million to resolve claims that it engaged in discriminatory mortgage lending practices, the latest example of how the government is increasingly scrutinizing banks and other lenders for patterns of discrimination.

The East Coast lender will spend about $27 million for loan subsidy and outreach programs and pay a $5.5 million penalty under a settlement with the Consumer Financial Protection Bureau and the Department of Justice.

The agreement comes as the Federal Reserve prepares to rule on M&T Bank Corp.'s long-stalled acquisition of the regional bank amid concerns about M&T's anti-money-laundering process. A decision is expected by Wednesday.

The agencies claims Hudson City Savings Bank, which operates about 135 branches, provided unequal access to credit to neighborhoods in New York, New Jersey, Connecticut and Pennsylvania by avoiding placing branches, loan officers and marketing products in communities that are mostly Black and Hispanic.

For its part, Hudson City said it decided to settle the matter to avoid litigation with these agencies, though it disagrees with the statistical analysis of loans used in the investigation.

The Department of Justice said the agreement represents the largest residential mortgage redlining settlement in its history.

The case against Hudson City is the latest in a string of investigations into and settlements of discriminatory lending practices.

Cincinnati-based Fifth Third Bank has also been under investigation by the DoJ and CFPB; that case is focused on a practice in which auto dealers can mark up the rates offered on loans to consumers.

Last year, the city of Los Angeles brought charges against J.P. Morgan Chase & Co. for discriminatory lending, and in 2013 regulators reached a $35 million settlement with Cleveland-based PNC Financial Services Group, which allegedly charged higher interest rates and fees on black and Hispanic borrowers.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

September 24, 2015 13:21 ET (17:21 GMT)

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