Washington Trust Company to Pay Millions for Redlining Against Hispanics and Blacks in Rhode Island

The Department of Justice has ordered the Washington Trust Company, the oldest community bank in the nation, to pay $9 million to resolve allegations that the company discriminated against Hispanic and Black communities through redlining practices in Rhode Island.

Redlining is the practice of discriminating or withholding services from customers who live in specific neighborhoods that are deemed undesirable. Historically, banks used redlining in the U.S. to prevent Black Americans from purchasing property in white suburbs or neighborhoods.

The federal government outlawed the practice with the Civil Rights Act of 1968.

"This settlement should send a strong message to banks regarding the Justice Department's firm commitment to combat modern-day redlining and ensure that all lenders are providing equal access to home loan opportunities to communities of color," said Assistant Attorney General Kristen Clarke of the Justice Department's Civil Rights Division.

According to the Justice Department, between 2016 and 2021, several complaints were filed against Washington Trust. The complaints alleged the bank failed to provide mortgage lending services in majority Hispanic and Black neighborhoods. The complaints also allege that Washington Trust never opened a branch in majority-Black and Hispanic communities in Rhode Island or conducted marketing or outreach for that demographic.

As part of the agreed settlement, Washington Trust will have to invest $7 million to provide home mortgages, home improvement loans, refinancing and equity loans to residents in Black and Hispanic neighborhoods. One million dollars will be spent on partnerships to expand mortgage services in affected areas, and another $1 million will go toward advertising and community outreach. The bank will open two branches in the affected neighborhoods and employ a Director of Community Lending as part of the settlement.