The Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) took disciplinary action against a bank that they allege discriminated against Black and Hispanic neighborhoods.
The CFPB and DOJ allege that Trustmark National Bank deliberately did not market, offer, or originate home loans to consumers in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area. The CFPB and DOJ also allege that Trustmark discouraged consumers seeking credit for properties located in these neighborhoods from applying for credit. This is a practice that’s commonly known as redlining.
“Trustmark purposely excluded and discriminated against Black and Hispanic communities,” CFPB Director Rohit Chopra said. “The federal government will be working to rid the market of racist business practices, including those by discriminatory algorithms.”
The settlement would require Trustmark to put $3.85 million into a loan subsidy program for impacted neighborhoods, increase its lending presence there, and implement proper fair lending procedures. Further, the order would also impose a $5 million civil money penalty against the bank and credit the $4 million penalty collected by the Office of the Comptroller of the Currency (OCC) toward the satisfaction of this amount.
“Lending discrimination runs counter to fundamental promises of our economic system. When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated,” Attorney General Merrick Garland said. “Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities. We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”
Trustmark is a national bank headquartered in Jackson, Miss., with 196 branches in five southern states, including 22 branches in the Memphis metropolitan area.
“The OCC has had a long history of strong partnership with the DOJ’s Housing and Civil Enforcement Section of the Civil Rights Division, referring potential fair lending violations and sharing our extensive examiner, economist, and legal findings, as we did in the Trustmark matter,” Acting Comptroller of the Currency Michael J. Hsu said. “Today’s announcement is important because it signifies the unified and unmitigated focus that each of our agencies has placed on the enforcement of the Fair Housing Act and the Equal Credit Opportunity Act. Our collective efforts are critical to addressing the discriminatory lending practices that create and reinforce racial inequity in the financial system.”