WASHINGTON (9/25/15)--Discriminatory lending practices in majority-black-and-Hispanic neighborhoods led the Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ) to take action against Hudson City Savings Bank. A joint investigation by the two agencies alleges Hudson City illegally provided unequal access to credit to neighborhoods in New York, New Jersey, Connecticut and Pennsylvania.
The action represents the largest redlining settlement in history to provide such direct subsidies. Hudson City will pay $25 million in direct loan subsidies to qualified borrowers in the affected communities, $2.25 million in community programs and outreach and a $5.5 million penalty.
According to the CFPB, from 2004 through 2010, Hudson City embarked on a branch expansion in areas that exclude and form a semi-circle around the four counties in New York with the highest proportions of majority-black-and-Hispanic neighborhoods.
In addition, the DOJ and CFPB allege Hudson City Savings Bank:
The enforcement action is the result of a CFPB examination that began in March 2014 and was followed by a joint CFPB and DOJ investigation.