- Associated Press - Monday, January 23, 2017

MINNEAPOLIS (AP) - A federal discrimination lawsuit against a suburban Twin Cities bank could test the government’s ability to force outlying banking firms to do business in inner cities.

The Justice Department has filed a dozen similar lawsuits since 2002 against banks, most located in suburban areas. A Star Tribune (https://strib.mn/2j4Yvhu ) review of federal fair lending cases shows that those cases settled quickly, with the banks agreeing to open as many as four new branches in underserved minority neighborhoods.

The Justice Department filed a lawsuit earlier this month against KleinBank, which has persistently passed federal reviews on its lending in underserved areas. KleinBank argues that the government can’t tell it how to market its services or where to build its branches.

“We will not admit to wrongdoing when we have done nothing wrong,” said Doug Hile, KleinBank’s president and chief executive. “At the end of the day, we’re confident that a fair review of our actual practices and procedures will vindicate us.”

In the previous cases, the banks agreed to set aside $25 million in below-market loans for minority borrowers and to aggressively promote those new lending opportunities in addition to opening the new branches.

Civil rights activists say such actions are vital in rebuilding minority communities that have been devastated by decades of neglect and predatory lending practices. Advocates say residents of such communities are often forced to obtain high-interest loans at pawnshops, payday centers and check-cashing services because banks won’t do business with them.

“If you don’t have access to quality credit, your community is going to decline,” said Lisa Rice, executive vice president of the National Fair Housing Alliance, a nonprofit dedicated to ending discrimination in housing. “It is not going to grow and thrive like it should. Communities without credit are communities without hope.”

Justice Department officials declined to comment.


Information from: Star Tribune, https://www.startribune.com

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