by Charlene Crowell, Special to The Informer<\/p>\n\n\n\n
As 2023 begins, a key anti-financial discrimination initiative is expanding million-dollar penalties and the kinds of businesses found to violate fair lending laws. The Combatting Redlining Initiative<\/a> that since 2021 has combined resources and efforts of the Department of Justice (DOJ), Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC) is now holding a social media giant as well as another bank accountable for violations of fair credit and lending laws. <\/p>\n\n\n\n A Jan. 9 settlement with Meta Platforms \u2014 formerly Facebook, Inc. \u2014 marks the first time that a social media platform will be subject to court oversight for its advertising targeting and delivery system. As the world\u2019s largest\u00a0social media platform<\/a>, the enforcement action will affect its 264 million users in the United States and Canada, as well as 10 million advertisers that in the third quarter of 2022 generated $27.71 billion in revenues.\u00a0<\/p>\n\n\n\n According to settlement terms, Meta\u2019s new system will measure algorithmic discrimination that violates the Fair Housing Act. Meta will be subject to federal court oversight monitoring and regular reviews through June 26, 2026, to determine whether all terms of the settlement are honored. Guidehouse, Inc., an independent third-party reviewer will verify Meta\u2019s adherence to settlement metrics. Meta must provide this monitor with regular compliance reports and any necessary information. <\/p>\n\n\n\n \u201cFederal monitoring of Meta should send a strong signal to other tech companies that they too will be held accountable for failing to address algorithmic discrimination that runs afoul of our civil rights laws,\u201d said<\/a> Assistant Attorney General Kristen Clarke of the Justice\u2019s Civil Rights Division. <\/p>\n\n\n\n The Justice Department also continues to move against lenders who allow discrimination in their lending practices. On Jan. 12, Los Angeles-based City National Bank, with 58 California locations as well as branches in nine other states and the District of Columbia, reached a $31 million settlement with DOJ\u2019s Redlining Initiative, the largest such agreement in DOJ\u2019s history. <\/p>\n\n\n\n According to DOJ, from 2017 until at least 2020, City National failed to provide mortgage lending in Los Angeles County\u2019s majority-Black and -Latino neighborhoods. Further, during more than 20 years when the bank either opened or acquired 11 additional branches, only one was located in a majority-minority neighborhood. And unlike branches located in majority-white areas, City National did not assign any employee at that one branch to generate mortgage lending. <\/p>\n\n\n\n \u201c[E]nding redlining is a critical step to closing the widening gaps in homeownership and wealth, especially in a city as large and diverse as Los Angeles,\u201d said<\/a> U.S. Attorney Martin Estrada for the Central District of California. \u201cIt is unacceptable that redlining persists into the 21st century. \u2026 Through this agreement, we are taking a major step forward by removing unlawful and discriminatory barriers in residential mortgage lending, and meeting the credit needs in Los Angeles.\u201d <\/p>\n\n\n\n According to settlement terms, City National will now implement multiple and measurable actions in Los Angeles County that include: <\/p>\n\n\n\n The Redlining Initiative also reached a $20 million settlement with Trident Mortgage benefitting consumers in the Philadelphia metro area, and a $13 million settlement with Lakeland Bank located in Newark, Passaic, Somerset and other nearby communities. <\/p>\n\n\n\n \u201cIf we allow racist and discriminatory policies to persist, we will not live up to our country\u2019s ideals,\u201d\u00a0said<\/a>\u00a0CFPB Director Rohit Chopra. \u201cWe need a fair housing market that is free from old forms of redlining, as well as new digital and algorithmic redlining.\u201d<\/p>\n\n\n\n\n