Today, Congresswoman Maxine Waters (D-CA), the top Democrat on the House Financial Services Committee, sent a letter to the United States Department of Justice (DOJ), including Attorney General Merrick B. Garland, Assistant Attorney General Kristen Clarke, and Attorney for the Central District California E. Martin Estrada, as well as Acting Comptroller Michael Hsu of the Office of the Comptroller of the Currency (OCC). In the letter, Congresswoman Waters commends the agencies for their enforcement actions against City National Bank, which was found to have engaged in the discriminatory practice of redlining in Los Angeles County to the detriment of Black and Latinx residents, along with other recent actions by these agencies to promote fair lending and crack down on discriminatory practices, such as redlining, in the financial marketplace.
Waters urges the DOJ and the OCC to ensure that City National Bank, along with any other bank that engages in similar misconduct, fully satisfy obligations detailed in consent orders in a robust way in order to ensure accountability and justice for affected communities.
“I write to share my appreciation and views on the implementation of recent enforcement actions your agencies have taken with respect to City National Bank, which was found to be engaging in the discriminatory practice of redlining in Los Angeles County to the detriment of Black and Latinx residents,” wrote Ranking Member Waters. “I encourage the Department of Justice (DOJ) and the Office of the Comptroller of the Currency (OCC) to consider taking steps to ensure the bank, like any other bank that settles allegations or is found to have engaged in such misconduct, satisfies their obligations under your respective consent orders in a robust and transparent manner for the benefit of all consumers that they allegedly harmed. This kind of follow-through with respect to redlining or other discriminatory practices is critical to ensuring that our nation’s anti-discrimination and community reinvestment laws are being implemented the way Congress intended.”
This letter comes as City National Bank plans to open a branch in an area with few Black residents. Waters highlights several key requirements laid out in City National Bank’s consent orders, and urges the DOJ and the OCC to take steps to ensure the bank fulfills those obligations in a transparent and meaningful way, including:
- Establishing multiple branches in appropriate locations in the Los Angeles area so that the needs of both Black and Latinx communities are well served.
- Disclosing specifics to better understand the impact of the bank’s loan subsidy fund, which is designed to provide a minimum of $29.5 million over five years to expand home mortgage credit in majority-Black and Hispanic neighborhoods,
- Periodic updates to the public on progress being made in implementing the bank’s Fair Lending Risk Management Program mandated by the OCC.
See the full letter here and below.
The Honorable Merrick B. Garland
Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue,
NW Washington, DC 20530
Mr. Michael Hsu
Acting Comptroller
Office of the Comptroller of the Currency
400 7th Street, SW, Suite 3E-218
Washington, DC 20219
The Honorable Kristen Clarke
Assistant Attorney General for
Civil Rights Office of the Assistant Attorney
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530
The Honorable E. Martin Estrada
U.S. Attorney for the Central District of California
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530
Attorney General Garland, Assistant Attorney General Clarke, U.S. Attorney Estrada, and Acting Comptroller Hsu:
I write to share my appreciation and views on the implementation of recent enforcement actions your agencies have taken with respect to City National Bank, which was found to be engaging in the discriminatory practice of redlining in Los Angeles County to the detriment of Black and Latinx residents.[1] I encourage the Department of Justice (DOJ) and the Office of the Comptroller of the Currency (OCC) to consider taking steps to ensure the bank, like any other bank that settles allegations or is found to have engaged in such misconduct, satisfies their obligations under your respective consent orders in a robust and transparent manner for the benefit of all consumers that they allegedly harmed. This kind of follow-through with respect to redlining or other discriminatory practices is critical to ensuring that our nation’s anti-discrimination and community reinvestment laws are being implemented the way Congress intended.
First, I commend steps both of your agencies have taken in recent years to promote fair, inclusive, and equitable lending. Specifically, I am glad that DOJ has prioritized combating redlining through an initiative that was launched in October 2021,[2] which resulted in the largest redlining settlement in DOJ’s history with respect to City National Bank’s case. I am also pleased that the OCC worked to rescind harmful Trump-era rules that undermined the Community Reinvestment Act,[3] and then collaborated with other banking regulators to jointly update CRA rules last October to crack down on modern-day redlining that persists to this day.[4] Moreover, I appreciate that the OCC not only downgraded City National Bank’s CRA rating earlier this year,[5] but also took an enforcement action and imposed a $65 million penalty to ensure they clean up their fair lending operations, among other reforms.[6]
Over the years, there have been too many instances where I’ve seen government agencies levy fines and issue consent orders to banks, but little changes on the ground and the needs of underserved communities continue to go unmet.[7] I hope this time is different. I appreciate that City National Bank’s Head of Personal and Business Banking was willing to participate in a town hall I convened last December to discuss challenges my constituents have faced in accessing various banking products and services,[8] but many more steps are needed.
For example, the consent order requires the bank to establish at least one full-service branch (“new branch”) in a majority-Black and Hispanic census tract in the Los Angeles area, as well as consider opening additional branches consistent with the goals of the consent order.[9] Given how both Black and Latinx borrowers have been underserved and were identified to be harmed by the bank, multiple branches should be established in areas to ensure the bank better meets the need of both communities.
Furthermore, the consent order requires the bank to establish a loan subsidy fund to provide a minimum $29.5 million within five years to expand home mortgage credit in majority-Black and Hispanic neighborhoods in the Los Angeles area.[10] I understand the bank has established their Ladder Up Home Loan Program and has been providing borrowers with up to $20,000 that can go to interest rate reductions, closing cost reductions, or down payment assistance,[11] but there is not a lot of transparency about how much of these subsidies have been provided to date, how many mortgage loans have been supported, or where these homes being supported are located. While the bank is required to report certain information to relevant authorities, more specifics about this loan subsidy fund and other obligations should be periodically disclosed so that the public, especially the Black and Latinx communities that were harmed by the bank, can better understand what progress is being made in addressing these concerns.
Similarly, OCC required the bank to implement a robust Fair Lending Risk Management Program,[12] and while the bank must provide updates to its examiners, it is unclear how the public will be periodically made aware of the progress being made in addressing these requirements. While there are reasons certain information with respect to banks needs to be kept confidential, I would encourage your agencies to maximize transparency when implementing these type of consent orders for the benefit of the public. To the extent that you encounter any laws that needlessly limit disclosure that unduly undermines accountability and transparency in these cases, please let me know.
In closing, I raise these issues as an example to help ensure that all Americans indeed have a fair chance at pursuing their dreams of home ownership so they can build wealth for their families and strengthen their communities. I appreciate your hard work and that of your agency’s staff to combat redlining and promote equity in our financial marketplace, and I look forward to your response.
Sincerely
MAXINE WATERS
Ranking Member
Committee on Financial Services
CC: The Honorable Rohit Chopra, Director, Consumer Financial Protection Bureau (CFPB)
[1] DOJ, Justice Department Secures Over $31 Million from City National Bank to Address Lending Discrimination Allegations (Jan. 12, 2023).
[2] DOJ, Justice Department Announces New Initiative to Combat Redlining (Oct. 22, 2021).
[3] OCC, Community Reinvestment Act: Final Rule to Rescind and Replace Community Reinvestment Act Rule Issued in 2020 (Dec. 15, 2021). Also see FSC, Waters Applauds OCC, FDIC, and Federal Reserve Efforts to Undo Damage from Trump-Era Community Reinvestment Act Rule (Jul. 22, 2021).
[4] OCC, Community Reinvestment Act: Interagency Final Rulemaking to Implement the CRA (Oct. 24, 2023); OCC, Community Reinvestment Act (CRA) (accessed Jun. 5, 2024); FSC, Ranking Member Maxine Waters Applauds Final Rule to Strengthen Community Reinvestment Act (Oct. 24, 2023). Also see Aaron Glantz and Emmanuel Martinez, For people of color, banks are shutting the door to homeownership, Reveal (Feb. 15, 2018).
[5] OCC, CRA Performance Evaluations (Apr. 2024); OCC, Public Disclosure – CRA Performance Evaluation for City National Bank (Mar. 27, 2023, updated May 6, 2024); Rise Economy, California Coalition Applauds Rare, Failing Reinvestment Grade For City National Bank (CNB): Rise Economy Says CNB And Its Royal Bank Of Canada (RBC) Parent Are Bad For California Communities Due To Redlining And Fossil Fuel Finance Practices (accessed Jun. 5, 2024)
[6] OCC, OCC Assesses $65 Million Penalty Against City National Bank (Jan. 31, 2024).
[7] For example, see FSC, Waters Releases Staff Report on Pattern of Consumer Abuse from Wells Fargo (Sep. 29, 2017); FSC, In Advance of Wells Fargo Hearings, Waters and Green Release Investigative Report Exposing Failures of Megabank’s Management, Board, and Regulators (Mar. 4, 2020); FSC hearing, Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 years after the Financial Crisis (Apr. 10, 2019); FSC hearing,
Holding Megabanks Accountable: Oversight of America’s Largest Consumer Facing Banks (Sep. 21, 2022).
[8] American Banker, Rep. Maxine Waters asks PNC, Wells to put bank branches in her district (Dec. 3, 2023).
[9] DOJ, Justice Department Secures Over $31 Million from City National Bank to Address Lending Discrimination Allegations (Jan. 12, 2023).
[10] Id.
[11] City National Bank, Ladder Up Home Loan Grant (accessed Jun. 5, 2024).
[12] OCC, OCC Assesses $65 Million Penalty Against City National Bank (Jan. 31, 2024).
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