6 days ago
Feds look to drop oversight of bank accused of discrimination in Newark
A judge ordered federal oversight after Lakeland Bank was accused of lending discrimination in 2022 in Newark. Feds now want to end oversight. (Photo by New Jersey Monitor)
The Trump administration aims to end federal oversight a judge ordered in 2022 of a bank that avoided giving mortgages to people of color and opening bank branches in Black and Hispanic communities in the Newark area.
Lakeland Bank has substantially complied with changes required under the September 2022 consent decree to end such discrimination, which is known as 'redlining,' and agreed to carry out whatever court-ordered reforms that remain unfinished, federal prosecutors said last week in a motion asking to end oversight more than two years early.
But a nonprofit that advocates for low- and middle-income residents filed an affidavit this week calling for the consent decree to remain in place, because ending it would threaten progress made in the last two years and leave advocates with no remedy if the bank's compliance with unfinished remedies falters.
It also 'sends a very bad message,' said Leila Amirhamzeh of New Jersey Citizen Action Education Fund, a Newark-based nonprofit that does housing counseling and fair housing investigations.
'Our concern with the Department of Justice's motion to terminate the consent order really speaks more to the overall message that the administration is sending to financial institutions — that it is not going to enforce fair lending laws, that it is not going to ensure that any bad actors that do engage in discriminatory redlining practices are held accountable,' Amirhamzeh said.
Newark officials did not respond to a request for comment.
Under the decree, Lakeland agreed to open two branches in Newark communities of color and spend $12 million on a 'loan subsidy' fund to offset closing costs, mortgage insurance premiums and down payments for Black and Hispanic residents in Essex, Somerset and Union counties who apply for mortgages and home improvement and refinancing loans. The bank also agreed to spend $1.1 million on outreach, advertising, financial counseling and community development partnerships and assign at least four loan officers to serve neighborhoods they had excluded.
Lakeland merged with Prudential Financial Services last year.
Prudential opened a new branch this week on the edge of the Ironbound, a Newark neighborhood home to many immigrants and people of color.
It's unclear whether and when it will open a second branch, as ordered under the consent decree, as well as how much of the $13 million for the loan subsidy fund and outreach remains unspent.
Keith Buscio, a Prudential Bank spokesman, referred those questions to the Justice Department, and a spokesman there did not respond to a request for comment.
'Provident acknowledges the benefit of the mortgage loan subsidy to underserved communities and, in the event the DOJ's motion is granted, will commit to spending the remaining amount under the subsidy,' Buscio said.
Despite such assurances, critics remain concerned.
The move to end oversight comes just two months after federal banking regulators announced they would rescind a 2023 update meant to modernize the Community Reinvestment Act, a 1977 law passed to prevent redlining, Amirhamzeh said.
Ending oversight also fits a pattern of Trump-administration rollbacks of Biden-era policies that protect marginalized people, she added.
The Trump administration is terminating $400 million in funds for states across the country to modernize their unemployment systems, money that was authorized in the 2021 American Rescue Plan Act passed under the Biden administration.
Trump officials also recently dropped a federal civil rights investigation into police brutality and racial profiling in Trenton.
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