Washington Trust to Pay $9 Million to Resolve DOJ's Redlining Claims

By Dean Seal

The Justice Department said Wednesday that Washington Trust, the nation's oldest community bank, would pay $9 million to settle allegations of lending discrimination against minority residents in Rhode Island.

This is the department's latest action targeting "redlining," alleging that Washington Trust failed to provide mortgage lending services to majority-Black and Hispanic neighborhoods in Rhode Island for at least a five-year period that started in 2016.

Washington Trust said Wednesday that it denies the allegations and reached an agreement with the Justice Department "solely to avoid the expense and distraction of potential litigation."

In a civil complaint filed in Rhode Island federal court, the Justice Department claims that Washington Trust failed to open a branch in the state's minority neighborhoods and only had mortgage loan officers working out of majority-white areas.

The bank never trained or incentivized its lending staff, or its marketing team, to compensate for the lack of branches or presence in majority-Black and Hispanic neighborhoods, all while other banks received nearly four times as many loan applications from residents of those neighborhoods, the DOJ said.

To resolve the claims, Washington Trust has agreed to invest at least $7 million in a loan subsidy fund to expand access to mortgages and other lines of credit for residents of minority communities.

The bank also has agreed to spend $1 million on community partnerships to provide services increasing mortgage credit access for residents of those neighborhoods, and another $1 million on advertising and outreach aimed at those residents.

Washington Trust has further agreed to open two branches in those neighborhoods and assign at least two mortgage loan officers to serve those neighborhoods.

Write to Dean Seal at [e-mail]

(END) Dow Jones Newswires

September 27, 2023 11:42 ET (15:42 GMT)

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