In a significant step against discriminatory lending practices, Citadel Federal Credit Union has agreed to a settlement with the Justice Department over allegations of redlining in predominantly Black and Hispanic neighborhoods in Philadelphia. The credit union will invest more than $6.5 million in efforts to improve credit access in these communities, marking the Justice Department's inaugural redlining case against a credit union, as reported by a Justice Department announcement yesterday.
The proposed consent order filed in court requires Citadel to establish three new branches in underserved neighborhoods over the next five years, and channel at least $6 million into a loan subsidy fund that would support home mortgage and improvement loans for residents in these areas. These measures come after findings that Citadel’s services in Black and Hispanic neighborhoods were well below the rates of comparable lenders between 2017 and 2021, with 75% of these neighborhoods being in Philadelphia, a city where Citadel lacked a significant presence. United States Attorney Jacqueline C. Romero stated to the Justice Department, "For generations, Philadelphia’s communities of color have lacked equal access to the credit needed for homeownership. We know that redlining has a devastating impact on a family’s finances and future, and results in economic and other inequalities that plague our communities for decades.”
The terms of the agreement also include a $250,000 investment in community services related to credit access and homeownership education, alongside at least $270,000 earmarked for advertising and credit counseling initiatives. Moreover, Citadel will appoint a dedicated community lending officer to monitor and support lending in communities of color. This comprehensive approach aims to rectify years of exclusionary practices that significantly hindered opportunities for homeownership and financial stability for residents in the discriminated neighborhoods, as articulated by Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. Clarke explained to the Justice Department, "This settlement will expand investment in Black and Hispanic communities, particularly in Philadelphia, and increase opportunities for homeownership and financial stability."
This legal action stems from the Justice Department's Combating Redlining Initiative, an endeavor that began in October 2021 to coordinate agency efforts in tackling enduring discrimination. The Citadel case adds to a string of 14 redlining resolutions by the Justice Department, securing over $144 million for the communities affected by these prejudiced practices. Assistant U.S. Attorneys Bryan C. Hughes and Paul Kaufman of the District of New Jersey collaborated with the Justice Department’s Civil Rights Division on this case. Romero further underscored the resolution's significance, emphasizing, "Residents of communities harmed by unlawful redlining will finally be able to access credit services from Citadel in their own neighborhoods, including at the new branches required by the settlement."
