DOJ will expand its redlining probe effort
WASHINGTON — The Justice Department announced Friday a cross-government effort to investigate and prosecute redlining, the practice of banks discriminating against racial minorities or certain neighborhoods. It is the first major expansion of redlining investigations since the Obama administration.
As part of the effort, the Justice Department as well as the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency also announced a new redlining case against Trustmark Bank for its treatment of Black and Hispanic borrowers in Memphis, Tennessee.
Despite a half-century of laws designed to combat redlining, the racist practice continues across the country and the long-term effects of redlining are still felt to this day. The average net worth of a Black family is a fraction of a typical white household, and homes found in historically redlined neighborhoods are still worth less than homes found in non-redlined communities.
“Lending discrimination runs counter to fundamental promises of our economic system,” Attorney General Merrick Garland said in a statement. “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.”
Garland said the department is currently investigating several redlining cases and expects it will be opening more in the coming months.
The Biden administration is focusing a significant part of this effort on modern-day redlining, which can often come from the algorithms and software banks use to decide whether to approve a loan.