Minnesota bank resolves DOJ redlining lawsuit

Minnesota bank KleinBank has settled a lawsuit filed against it by the Department of Justice over allegations of “redlining” predominantly minority neighborhoods in and around the Twin Cities of Minneapolis-St. Paul.

The 2017 lawsuit alleged that, from 2010 to at least 2015, KleinBank engaged in redlining in the area by intentionally avoiding providing lending services to residents of predominantly minority neighborhoods because of the race or national origin of the people living in those neighborhoods. The parties have agreed to jointly seek dismissal of the lawsuit.

The complaint alleged violations of the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and national origin in their mortgage lending services. According to the DOJ, KleinBank is the largest family-owned bank in Minnesota, with 19 branch offices in the Minneapolis-St. Paul area and assets of more than $1.9 billion.

As part of the agreement, KleinBank will expand its banking services in predominantly minority neighborhoods in the Minneapolis area to remedy the harm alleged in the complaint.

Other steps include a $300,000 investment in a loan subsidy fund to increase the amount of credit that KleinBank extends to residents of predominantly minority neighborhoods, and another $300,000 in advertising, outreach, financial education, and credit repair. The bank will also employ a community development officer and will conduct fair lending training, including training on redlining, for its employees and officers.

"While we continue to disagree with the DOJ's claim and believe that it has no basis in fact, we have decided this compromise allows us to channel our resources into serving the community, specifically where the needs are great and where our special approach to engagement and commitment will have a profound impact," KleinBank CEO Doug Hile said.