The Justice Department on May 8 settled its suit against KleinBank, resolving allegations that the bank engaged in lending discrimination by “redlining” predominantly minority neighborhoods in and around the Twin Cities of Minneapolis-St. Paul, Minn. KleinBank is a $2 billion bank based in Chaska, Minn.
As part of the settlement, the parties have agreed to jointly seek dismissal of the lawsuit, which the Department of Justice filed in the U.S. District Court for the District of Minnesota in January, 2017. The DoJ’s complaint alleged that KleinBank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and national origin in their mortgage lending services. The lawsuit alleged that, from 2010 to at least 2015, KleinBank engaged in unlawful redlining in the Twin Cities area by intentionally avoiding providing lending services to residents of predominantly minority neighborhoods because of the race or national origin of the people living in those neighborhoods.
KleinBank is the largest family-owned bank in Minnesota with nearly two dozen branch offices in the Minneapolis-St. Paul area. Under the settlement, KleinBank will take a number of steps to remedy the harm alleged in the complaint and to ensure that its mortgage lending services are made available on a non-discriminatory basis.
KleinBank will expand its banking services in predominantly minority neighborhoods in the Minneapolis area in a variety of ways. For example, it will invest $300,000 in a loan subsidy fund to increase the amount of credit that KleinBank extends to residents of predominantly minority neighborhoods, and another $300,000 in advertising, outreach, financial education, and credit repair in order to improve the bank’s visibility in, and successful expansion into, its new service area. The bank will employ a community development officer to oversee the development of the bank’s lending in predominantly minority neighborhoods, and will conduct fair lending training, including training on redlining, for its employees and officers.
“Federal law prohibits lenders from discriminating against mortgage applicants and other potential customers based on race or national origin,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “The Justice Department will continue to use its enforcement authority to combat this illegal discrimination.”
The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section.