Pressure Building on Washington Trust After DOJ Settlement on Redlining

Pressure Building on Washington Trust After DOJ Settlement on Redlining

The reaction to the U.S. Department of Justice’s action against Washington Trust Company has drawn a swift response from civil rights leaders and elected officials.

On Wednesday, the U.S. Attorney’s office announced a $9 million settlement with Washington Trust for its alleged redlining in Black and Hispanic neighborhoods.

Harrison Tuttle, the President of BLM PAC RI said in a statement, “This investigation highlights an issue that has plagued our communities for too long. Lending discrimination perpetuates economic disparities and reinforces systemic racism that disproportionately affects Black and minority communities. Access to fair and equitable lending is a right that should be enjoyed by every resident of Rhode Island, regardless of their racial or ethnic background.

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A GoLocal review of the bank's leadership executives and board members finds few Blacks and Hispanics in leadership positions.

Of the top 15 executives, only one — Rolando Lora, Executive Vice President, Chief Retail Lending Officer, and Director of Community Lending — is a Hispanic man.

And, of the 12 members of the board of the corporation, only Edwin J. Santos is a Black man.

In a state where 30 percent of the population is minority, statistically, 2 of 27 is an underwhelming 7% of the leadership.

Right after Wednesday's Justice Department press conference and the announcement of the agreement. Washington Trust denied any violations.

“We deny these allegations,” Elizabeth B. Eckel, the Executive Vice President, Chief Marketing & Corporate Communications Officer for Washington Trust, told GoLocal.

 

General Treasurer James Diossa Calls for Review

General Treasurer James A. Diossa announced that he will evaluate the Office of the General Treasurer’s banking relationship and the state’s business with Washington Trust Company ("Washington Trust" or the “Bank”) after it was revealed that the Bank has agreed to pay $9 million to resolve the allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in Rhode Island.

“Washington Trust has been a valued banking partner to the state for decades. However, the allegations presented by the U.S. Attorney’s Office for the District of Rhode Island and the U.S. Department of Justice’s Civil Rights Division are serious and disheartening. I was very disappointed to learn of this investigation and the settlement via the news yesterday. As the oldest community bank in the nation, Washington Trust must be held to a high standard,” said Treasurer Diossa. “As a result, my office will evaluate our banking relationship, and all the state’s business, with Washington Trust – and hold them accountable – going forward to ensure that they rectify the issues brought forward by the DOJ.”

“As General Treasurer, it is my duty to protect the state’s assets, strengthen the state’s financial position, and encourage financial growth for all our residents. When Rhode Island families in any zip code are denied access to fair lending opportunities, it becomes much harder for them to achieve financial success and build generational wealth—we need to be creating homeownership opportunities for all Rhode Islanders, not restricting them,” Treasurer Diossa continued.

 

 

Praise for US Attorney’s Efforts

Tuttle also commended U.S. Attorney Zach Cunha and his team. “We commend the US Attorney's Office for the District of Rhode Island for pursuing this complaint and holding a local and prominent banking institution accountable for bad practices in the state. The findings of these complaints show that the fight for racial justice is ongoing, and known tactics of systemic racism are still in effect and harming our communities,” said Tuttle.

According to the Department of Justice’s complaint against Washington Trust, “Washington Trust’s conduct and practices were intended to deny, and had the effect of denying, equal access to home loans for those residing in, or seeking credit for properties located in, majority-Black and Hispanic neighborhoods, and otherwise discouraged those individuals from applying for home loans on the basis of the race, color, or national origin of the residents of those neighborhoods.”

Further, the government claims, “Washington Trust’s conduct was not justified by a legitimate, nondiscriminatory reason or business necessity and was not necessary to achieve a substantial, legitimate, nondiscriminatory interest.”

In addition, the Department of Justice found a pattern, “Washington Trust’s lending demonstrated a pattern of disproportionately failing to serve majority-Black and Hispanic neighborhoods in Rhode Island, when compared with its peer lenders. Washington Trust’s policies and practices alleged herein—including the concentration of all its branches, mortgage loan officers, marketing, and outreach in majority-white neighborhoods—have discriminated against and discouraged applicants and prospective applicants in majority-Black and Hispanic neighborhoods in Rhode Island from applying for and obtaining home loans and other mortgage-related services.”

The 45-page complaint has numerous other examples.

Specifically, Justice asserts Washington Trust knew of these non-compliance issues for more than a decade.

“Washington Trust’s policies and practices alleged herein—including the concentration of all its branches, mortgage loan officers, marketing, and outreach in majority-white neighborhoods—have discriminated against and discouraged applicants and prospective applicants in majority-Black and Hispanic neighborhoods in Rhode Island from applying for and obtaining home loans and other mortgage-related services.”