Reno urges banks to market services to minority areas

Jet, Sept 12, 1994

Following a landmark lending discrimination settlement, U.S. Attorney General Janet Reno recently issued a stern warning to all banks which practice red-lining--you're breaking the law and face possible litigation.

Reno's warning came on the heels of a recent settlement of an unprecedented lending-bias case against Chevy Chase Federal Savings Bank, a suburban Washington, D.C., bank that was accused of bias in marketing services to predominantly Black and minority areas.

It was revealed that until recently, Chevy Chase had no branches located in predominantly Black neighborhoods.

As part of the settlement, Chevy Chase and its B.F. Saul Mortgage unit agreed to invest $11 million in neighborhoods that the Justice Department claims they refused to serve.

USA Today recently reported from 1976 to 1992 that Chevy Chase underwrote 97 percent of its loans in predominantly White areas.

The bank denied the charges of bias, but did agree to make $140 million in subsidized or below-marketrate mortgage loans to neighborhoods it is accused of discriminating against.

U.S. Attorney Eric Holder added the settlement is also unique because the cash will be funneled directly to the community rather than to the government.

"It provides hope that one day we can relegate red-lining...to the yellow pages of old history texts," Holder said in USA Today.