PROVIDENCE, R.I. (WPRI) — The office of U.S. Attorney Zachary Cunha announced Wednesday that Washington Trust Company has agreed to pay $9 million to resolve allegations it engaged in lending discrimination by redlining majority-Black and Hispanic neighborhoods in Rhode Island.
Washington Trust is the oldest community bank in the nation.
“Everyone who pursues the American dream has the right to expect to be treated equally and with dignity, regardless of their race, their background, or zip code,” Cunha said in a statement.
“When communities are denied access to fair lending, families are denied the opportunity to build stability and financial success,” he continued.
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The complaint alleges Washington Trust didn’t provide mortgage lending services to majority-Black and Hispanic neighborhoods in the state from 2016 through at least 2021.
Authorities allege that the bank never opened a branch in these communities even though they expanded across the state. The complaint further alleges that even when the bank generated loan applications from majority-Black and Hispanic neighborhoods, the applications themselves were disproportionately white.
During that time, the complaint said other banks got nearly four times as many loan applications each year in majority-Black and Hispanic neighborhoods in the state.
Washington Trust told 12 News they believe they’ve been fully compliant with fair lending laws, citing corporate initiatives and multi-lingual, minority outreach staff as part of their commitment to all communities.
“Washington Trust vehemently denies the allegations and entered into this agreement solely to avoid the expense and distraction of potential ligation, and to allow the Bank to focus fully on serving the needs of its customers and communities,” the bank said in a statement.
Under the proposed consent order, Washington Trust has agreed to do the following:
- Invest at least $7 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance and home equity loans and lines of credit for residents of majority-Black and Hispanic neighborhoods in Rhode Island.
- Spend $1 million on community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods.
- Spend $1 million for advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods.
- Open two new branches in majority-Black and Hispanic neighborhoods in Rhode Island; and ensure at least two mortgage loan officers are dedicated to serving these neighborhoods.
- Employ a Director of Community Lending who will oversee the continued development of lending in communities of color.
Additionally, Washington Trust also agreed to complete a community credit needs assessment and to train staff on the bank’s obligations under the consent order.’
R.I. General Treasurer James Diossa will be announcing actions on Thursday at 10 a.m. related to the settlement.