The Department of Justice, in collaboration with the OCC and CFPB, launched a major new initiative to combat redlining and discriminatory lending practices, and announced the first settlement reached under the new program.
Under the initiative, the Justice Department’s civil rights division will partner with U.S. Attorneys offices to “mobilize resources focused on making fair access to credit a reality in underserved neighborhoods across our country,” Attorney General Merrick Garland said. Garland noted that the program marks DOJ’s “most aggressive, coordinated effort to address redlining.” Several investigations are currently ongoing, he said, adding that he expects to open more in the months ahead.
During a press conference this afternoon, CFPB Director Rohit Chopra said that the CFPB would also be “closely watching for digital redlining, disguised through so-called ‘neutral algorithms.’” Chopra noted that “algorithms can help remove bias, but black-box underwriting decisions are not necessarily creating a more level playing field and may be exacerbating the biases feeding into them,” and that “the speed at which banks and lenders are turning lending and marketing decisions over to these algorithms is concerning to me.”