By Julie Steinberg
The city of Providence, R.I., on Thursday filed a federal
lawsuit against the U.S. unit of Banco Santander SA, accusing the
Spanish bank of discriminatory lending practices.
The city, which filed the lawsuit in the U.S. District Court for
the District of Rhode Island, alleges that the bank has reduced its
lending in Providence's minority neighborhoods and increased it in
mostly white neighborhoods. The city says the bank's allegedly
discriminatory policies have violated the Fair Housing Act and the
Equal Credit Opportunity Act.
The lawsuit alleges that mortgage applications and originations
have declined in minority neighborhoods. The decline is "due to
redlining and is a substantial obstacle to minority participation
in the housing market recovery," the lawsuit alleges.
"Santander's practices violate fair lending laws and hurt
Providence families," Providence Mayor Angel Taveras said in a
statement. "Many borrowers in minority neighborhoods are qualified
for prime loans, but Santander has written them off," he added.
"We categorically reject this accusation and will vigorously
defend ourselves against the legal action," a spokeswoman for
Santander said in a statement. "However, we are willing to work
with the City of Providence to allay its concerns. Santander is
proud to actively support the communities in which it operates. In
Providence, this support comes through our lending, our alliances
with three universities in the area, our work with more than a
dozen local charities and the more than 800 people we employ
there."
Santander gained a foothold in the city's mortgage market in
2009 when it completed a deal to buy the rest of Philadelphia
lender Sovereign Bank it didn't already own.
Santander isn't the only bank being targeted by U.S. cities. A
federal judge on Wednesday said a lawsuit filed by the city of Los
Angeles against Wells Fargo & Co. for allegedly predatory
lending practices could continue.
"The court's decision to allow the City Attorney's lawsuit to
proceed, while disappointing, in no way suggests that the claims
ultimately will prevail," a spokesman for Wells Fargo said in an
email. "We are prepared to defend our record as a responsible
lender as well as our longstanding efforts to work with customers,
credit counselors, non-profit organizations and government agencies
to expand homeownership and revitalize distressed neighborhoods in
Los Angeles."
Corrections & Amplifications
The lawsuit alleges that the bank reduced its lending in
Providence's minority neighborhoods and increased it in mostly
white neighborhoods. A previous version of the story said the suit
accused the bank of those practices throughout the state. (May 29,
2014)
Write to Julie Steinberg at julie.steinberg@wsj.com
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