The Department of Justice (DOJ) recently commemorated the third anniversary of its Combatting Redlining initiative by issuing three new consent orders in the past two months. It had been somewhat quiet since February 2024, but now settlements are back in full force. One of these recent consent orders is the first of its kind against a federal credit union and another is the first in the Birmingham, Alabama area. There have now been 15 settlements totaling more than $150 million. The recent orders were against Citadel Federal Credit Union for its lending practices in the Philadelphia area, Fairway Independent Mortgage Corporation for its lending practices in Birmingham, and OceanFirst Bank for its practices in areas of New Jersey.

The allegations in these orders, similar to those in previous orders, were largely focused on branching activities and marketing and outreach efforts.

Citadel was criticized for offering community outreach services, such as homebuyer seminars, at its headquarters in a majority-white area. The DOJ alleged that this action and its branching decisions showed that the institution had “an intent to avoid providing credit in majority-Black and -Hispanic tracts in its market area.” Similarly, OceanFirst was criticized for closing locations in majority-Black, -Hispanic, and -Asian neighborhoods and excluding those areas from its Community Reinvestment Act assessment area marketing and outreach efforts. Finally, Fairway allegedly located all its retail offices to “serve the credit needs of residents in majority-white areas and avoid serving the credit needs of residents in majority-Black and high-Black areas.”

Now is the time to review banks’ branching activities — both openings and closings. Additionally, it seems that there is a focus by the regulators on where community outreach efforts such as financial literacy classes are actually held, and efforts should be made to conduct such outreach activities in majority-minority tracts and neighborhoods rather than at the institution if the bank’s branches hosting the outreach are located in majority-white neighborhoods.