HCBK (MM)

By AnnaMaria Andriotis And Rachel Louise Ensign 

The Justice Department and Consumer Financial Protection Bureau reached a settlement with Paramus, N.J.-based Hudson City Bancorp Inc. Thursday over allegations that the lender intentionally withheld giving mortgages to minorities.

Regulators described the $33 million settlement as part of a larger effort under way to stop discriminatory lending.

Between 2009 and 2013, the bank avoided locating branches and loan officers in areas with large African-American and Hispanic populations and excluded these groups from marketing strategies, a practice the Justice Department and CFPB described as redlining.

They also alleged the bank intentionally avoided inner-city areas in New York, New Jersey and Connecticut with high minority populations and instead focused on setting up locations in affluent suburbs with a predominantly white population.

Hudson City didn't immediately respond to requests for comment, though the Justice Department in a conference call said the bank neither admitted nor denied wrongdoing. If the settlement is approved by the U.S. District Court in New Jersey, Hudson City will pay nearly $33 million, including about $27 million for loan subsidy and outreach programs to minorities and a $5.5 million penalty.

The agreement represents the largest residential mortgage redlining settlement in the Justice Department's history and is the first redlining action for the CFPB, which was launched by the Dodd Frank financial law of 2010.

According to the Justice Department's announcement Thursday, "redlining" is the discriminatory practice by banks or other financial institutions to deny or avoid providing credit services to a consumer because of the racial demographics of the neighborhood in which the consumer lives.

The Hudson City case also underscores a growing focus by regulators on whether banks' lending practices are cutting minorities off from access to credit. "Banks and lending institutions should be on notice that the Justice Department continues to focus on discriminatory conduct in mortgage lending and that such conduct won't be tolerated," said Vanita Gupta, head of the Justice Department's Civil Rights Division on the conference call.

"Discriminatory practices in the mortgage market undermine people's ability to buy a home and build long-term wealth," added CFPB director Richard Cordray.

Hudson City expects to find out by the end of this month whether banking regulators will allow it to be bought by Buffalo, N.Y.-based M&T Bank Corp. The $3.7 billion tie-up was first announced more than three years ago and is now the longest-delayed U.S. bank deal on record valued at more than $100 million, according to Dealogic.

Regulators have so far declined to bless the merger, initially citing concerns about M&T's anti-money-laundering systems, which that bank then spent millions of dollars to bolster.

The two banks have said they expect the Federal Reserve to make a decision either approving or denying the deal by Sept. 30. The chief executives of Hudson City and M&T in April said that the deal remains a good one for both parties.

If the acquisition happens, M&T would become responsible for fulfilling some of the terms of the agreement, the settlement said.

Lisa Beilfuss contributed to this article.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

(END) Dow Jones Newswires

September 24, 2015 15:40 ET (19:40 GMT)

Hudson City Bancorp (NASDAQ:HCBK)
Gráfica de Acción Histórica
De Abr 2024 a May 2024

Hudson City Bancorp (NASDAQ:HCBK)
Gráfica de Acción Histórica
De May 2023 a May 2024