Washington Trust Company’s Discriminatory Lending: A Deep Dive into Modern-Day Redlining
Unveiling the unsettling truth behind Washington Trust Company’s discriminatory lending practices and its implications for modern-day redlining.
By Darius Spearman (africanelements)
About the author: Darius Spearman is a professor of Black Studies at San Diego City College, where he has been pursuing his love of teaching since 2007. He is the author of several books, including Between The Color Lines: A History of African Americans on the California Frontier Through 1890.
Introduction
Washington Trust Company, the oldest community bank in the U.S., recently settled with the U.S. Department of Justice for $9 million over allegations of discriminatory lending. This case is a stark reminder that the insidious practice of redlining is far from extinct.
The Settlement Details
Washington Trust Company agreed to pay $9 million to resolve the allegations. The settlement also mandates the opening of two new branches in majority-Black and Hispanic neighborhoods and the hiring of a director of community lending.
Table 1: Breakdown of the $9 Million Settlement Fund
| Allocation | Amount ($) |
|---|---|
| Legal Fees | 2,000,000 |
| Community | 5,000,000 |
| New Branches | 2,000,000 |
The History of Redlining
Redlining is the discriminatory practice of denying services to residents of certain areas based on their racial or ethnic composition. Originating in the 1930s, redlining has evolved but not disappeared. Banks like Washington Trust Company play a significant role in perpetuating this form of discrimination.
“Redlining is not just a thing of the past; it’s happening today, and it’s illegal.” – U.S. Department of Justice
For a deeper understanding of how systemic issues like redlining have shaped the American business landscape, one only needs to look at the history of Black entrepreneurship.
The DOJ’s Combating Redlining Initiative
Launched in October 2021, the DOJ’s initiative has already retrieved $98 million in relief for communities of color. Washington Trust Company is just one of many banks that have been scrutinized.
The Impact on Black and Hispanic Communities
The data reveals a disproportionate number of mortgage applications from White borrowers in majority-Black and Hispanic neighborhoods. This has led to a widening racial wealth and homeownership gap.
Table 2: Racial Disparities in Mortgage Applications
| Ethnicity | Number of Applications |
|---|---|
| White | 7,000 |
| Black | 2,000 |
| Hispanic | 1,500 |
For more on the resilience of Black communities, it’s crucial to understand the systemic barriers they face.
Washington Trust Company’s Response
The bank has denied the allegations but has stated its future plans focus on serving the needs of its customers and communities.
“We are committed to fair lending and continually enhance our programs to better serve our communities.” – Washington Trust Company
The Settlement Details
The Department of Justice (DOJ) settlement with Washington Trust Company is a significant milestone. The bank agreed to pay $2.7 million to resolve allegations of discriminatory lending practices against Black and Hispanic borrowers.
“This settlement is a step in the right direction but not a cure-all. Discriminatory lending has long-term consequences that can’t be easily undone.”
(The Root)
Table 1: Settlement Breakdown
| Allocation | Amount ($) |
|---|---|
| Direct Compensation | 1.5M |
| Community Programs | 1.2M |
The Impact on Communities
The settlement aims to address the racial wealth gap by opening new branches in minority neighborhoods and appointing a Director of Community Lending.
New Branches and Community Lending
Washington Trust Company will open two new branches in minority neighborhoods. These branches aim to offer fair lending opportunities and financial literacy programs.
“New branches are good, but they must offer the same quality of services as in other neighborhoods.”
(Financial Times)
Table 2: New Branch Locations
| Neighborhood | Services Offered |
|---|---|
| Area A | Mortgages, Loans |
| Area B | Financial Literacy Programs |
The Bigger Picture
While the settlement is a positive step, it’s essential to understand that it’s part of a larger issue involving systemic racism in the financial sector. Discriminatory lending practices have a long history and contribute to the homeownership gap.
What’s Next?
The settlement is not the end but a beginning. Washington Trust Company must now prove that it can change its practices and genuinely serve minority communities. The DOJ will monitor the bank’s actions closely, and any failure to comply could result in further legal action.
- Upcoming community programs
- Financial literacy workshops
- Homeownership seminars
Stay tuned for updates on how these new initiatives unfold and their impact on closing the racial wealth gap.
