Justice Department Reaches Settlement with Citizens Republic Bancorp Inc. and Citizens Bank Regarding Alleged Lending Discrimination in Detroit

WASHINGTON – Citizens Republic Bancorp Inc. (CRBC) and Citizens Bank of Flint, Mich., will open a loan production office in an African-American neighborhood in Detroit, invest approximately $3.6 million in Wayne County, Mich., and take other steps as part of a settlement to resolve allegations that they engaged in a pattern or practice of discrimination on the basis of race and color, the Justice Department announced today.

The settlement, which remains subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Eastern District of Michigan. The complaint alleges that CRBC, as the successor to Republic Bank, and Citizens Bank violated the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices.

The lawsuit alleges that Citizens Bank, and Republic Bank before it, have served the credit needs of the residents of predominantly white neighborhoods in the Detroit metropolitan area to a significantly greater extent than they have served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because t he Detroit metropolitan area has long had highly-segregated residential housing patterns, especially for African-Americans.

“Discrimination in the provision of lending services based on race deprives communities of access to credit and leaves the residents of minority neighborhoods vulnerable to predatory lenders. This type of discrimination is part of the web of intolerable practices that stripped vast amounts of wealth from communities of color in the last decade,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. “We are pleased that Citizens Bank will partner with the Detroit community to invest in an area that was long neglected, particularly by the former Republic Bank.”

U.S. Attorney for the Eastern District of Michigan Barbara McQuade added: “Today’s settlement will bring badly needed resources to Detroit and surrounding areas in Wayne County to assist in neighborhood stabilization. It will also broaden opportunities for home ownership for families who have been unlawfully denied credit. We applaud the bank’s cooperation and commitment to community development.”

“Racial or other illegal discrimination has no place in our credit markets,” said Federal Reserve Governor Sarah Bloom Raskin. “We are pleased that this settlement is designed to increase fair access to credit.”

Under the settlement, CRBC and Citizens Bank will invest $1.625 million in a partnership with the city of Detroit to aid in neighborhood stabilization by providing existing homeowners with matching grants of up to $5,000 to fund exterior improvements, $1.5 million in a special financing program to increase the amount of credit the banks extend to majority African-American areas in Wayne County, and spend $500,000 for outreach to potential customers, promotion of their products and services, and consumer financial education. Citizens Bank also will open a loan production office in a majority African-American area in Detroit and conduct fair lending training for its employees. The agreement also prohibits CRBC and Citizens Bank from discriminating on the basis of race or color in any aspect of a residential real estate-related or credit transaction.

The lawsuit originated from a 2010 referral by the Board of Governors of the Federal Reserve System to the Justice Department’s Civil Rights Division. Citizens Bank is a member of the Federal Reserve System.

Comments