Citadel Agrees to Pay $6.5 Million to Settle DOJ’s Redlining Claims
The US Department of Justice (DOJ) announced Thursday a $6.5 million agreement with Citadel Federal Credit Union to resolve allegations of lending discrimination in certain majority-black and Hispanic neighborhoods of Philadelphia.
This is the DOJ’s first settlement involving a credit union. The industry includes 4,600 financial institutions across America, which are subject to federal laws, including laws regarding redlining and other forms of discrimination.
According to the DOJ complaint, from at least 2017 through 2021, Citadel discouraged applications from – and failed to provide mortgage services to – the predominantly Black and Hispanic neighborhoods in the Philadelphia region. where these groups predominated.
In addition, Citadel Federal had no offices in Philadelphia, which “includes more than 75% of the predominantly Black and Hispanic neighborhoods and 34% of the total population in Citadel’s market area,” according to the complaint filed in United States District Court for the Eastern District of Pennsylvania.
In a written statement, Citadel President and CEO Bill Brown said: “While Citadel respectfully disagrees with the allegations regarding our lending practices, we view this settlement as a vital opportunity to further our commitment to proactive community engagement. ”
Brown added that this situation arose “from what we did not do, and not from intentional actions. He said the company’s focus on its digital journey in recent years has shifted its strategy away from new physical locations, impacting its ability to serve areas like Philadelphia, which remains part of its growth plan.
“We recognize that our efforts have not allowed us to reach the majority of Black and Hispanic census tracts in Philadelphia. This settlement marks an important milestone in our ongoing journey to create a more inclusive and equitable future for all communities in our service area.”
Citadel has $6 billion in assets and 263,000 members. It operates 24 locations in Greater Philadelphia.
The settlement, subject to court approval, requires the credit union to invest at least $6 million in a fund, open three new branches and hire a community lending officer to improve home lending in Philadelphia’s predominantly black and Hispanic neighborhoods.
The case makes clear “our intent to hold lenders of all types accountable for their role in today’s redlining,” Assistant Attorney General Kristen Clarke of the DOJ’s Civil Rights Division said in a statement.
“This settlement will increase investment in Black and Hispanic communities, especially in Philadelphia, and increase opportunities for homeownership and financial stability,” Clarke said. “Residents of communities harmed by unlawful redlining will finally be able to access Citadel credit services in their own neighborhoods, including at the new branches required by the settlement.”
Citadel’s settlement is the latest from the DOJ’s Combating Redlining Initiative, which has reached 14 agreements since 2021, including $144 million in assistance for communities of color.
