In Focus: Redlining Inquiry in Ill. Likely to Repeat: Justice `Is Actively Pursuing' the Issue Again, a Lawyer Says
Garver, Rob, American Banker
An announcement last week that the Justice Department is investigating the lending patterns of a Chicago-area thrift has prompted speculation in the banking community that the long-dormant war on redlining has been renewed.
In a press release on Thursday, MAF Bancorp of Clarendon Hills, Ill., said that its principal subsidiary, Mid America Bank, was under scrutiny for making too few loans in census tracts with large minority populations. MAF's president, Kenneth Koranda, said Thursday that Justice officials had told the company that the decision to investigate was based on a "statistical analysis" of the thrift's lending patterns.
Andrew L. Sandler, a partner in the Washington office of Skadden, Arps, Slate Meagher & Flom, said that the Justice Department has opened at least one other inquiry into lending in minority-heavy communities that has not been made public yet.
"The Justice Department is actively pursuing the redlining theory again after having abandoned it for many years," he said. "They are focused both on residential and small-business lending and ... on developing these cases in cities that they believe to have highly segregated living patterns."
In several public appearances in the last year, Justice officials have indicated that the department is planning to increase its focus on housing issues. However, a Justice Department spokeswoman on Friday said that investigators were not making a "concentrated effort" to address redlining cases.
Many observers, including Robert Gnaizda, the policy director and general counsel for the San Francisco-based Greenlining Institute, said that a renewed focus on redlining would not shock them.
"The Bush administration is under tremendous pressure to address corporate responsibility and morality," Mr. Gnaizda said. "feel a pressure to examine the social consequences of corporate action," and "subprime lending and redlining are two important areas."
John P. Relman, the managing director of the Washington law firm Relman & Associates, said that the Bush administration had "deliberately put the brakes on fair-lending investigations" generated by the Justice Department's civil rights division. However, "it may well be that now there is enough pressure from below that they have to go forward with some of these investigations," he said. …