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Discriminatory Lending Allegations Leads Rhode Island Bank To Pay $9 Million In Restitution

Washington Trust Company, the oldest community bank in the U.S. and headquartered in Rhode Island, has reached a $9 million settlement to address allegations of lending discrimination involving redlining in predominantly Black and Hispanic neighborhoods. The U.S. Attorney for the District of Rhode Island announced this development on Wednesday.

The complaint asserted that between 2016 and 2021, Washington Trust failed to offer mortgage lending services to majority-Black and Hispanic neighborhoods within Rhode Island, despite its expansion throughout the state. The bank chose not to establish branches in these communities and primarily relied on mortgage loan officers operating exclusively in majority-white areas for loan applications.

CEO Edward O. "Ned" Handy III vehemently denied the allegations but expressed the bank's willingness to enter into the agreement to avoid potential litigation expenses and distractions. He emphasized their commitment to complying with fair lending laws and the importance of focusing on community service.

Comparatively, other banks in Rhode Island received nearly four times as many loan applications in majority-Black and Hispanic neighborhoods over the same six-year period, as stated in the complaint.

In response to the settlement, Washington Trust has agreed to take several measures, including investing a minimum of $7 million in a loan subsidy fund. This fund aims to enhance access to various home loan and credit products such as home mortgages, home improvements, home refinancing, and home equity loans for residents residing in majority-Black and Hispanic neighborhoods within the state.

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Link: NBCNews


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