DOJ settles discrimination suit against First Merchants Bank

INDIANAPOLIS, Ind. — The Department of Justice (DOJ) and the U.S. Attorney’s Office for the Southern District of Indiana filed a complaint and a settlement agreement resolving allegations against First Merchants Bank on Thursday.

In the complaint, DOJ claimed that First Merchants Bank practiced lending discrimination by “redlining” predominantly African-American neighborhoods in Indianapolis from 2011 to at least 2017.

“Discriminatory race-based lending practices have no place in our District,” said Josh Minkler, U.S. Attorney for the Southern District of Indiana. “This case involving First Merchants Bank shows our commitment to ensure this reality.”

The term “redlining” describes illegal practices in which lenders intentionally avoid providing services to individuals living in predominantly minority neighborhoods because of the race of the residents in those neighborhoods.

The complaint alleged that First Merchants adopted a residential mortgage lending policy that effectively denied residents of predominantly African-American neighborhoods equal access to credit in violation of the Fair Housing Act and Equal Credit Opportunity Act.

According to the settlement agreement, pending court approval, First Merchants will expand its marketing, lending and banking services to specifically include predominantly African-American neighborhoods in Indianapolis:

  • Invest $1.12 million in a loan subsidy fund to increase credit opportunities to residents of predominantly African-American neighborhoods
  • Devote $500,000 toward advertising, community outreach, and credit repair and education
  • Open a branch and loan production office to serve the banking and credit needs of residents in predominantly African-American neighborhoods
  • Employ a director of community lending and development who will oversee these efforts with bank leadership

“We commend First Merchants for cooperatively resolving this case by taking steps to ensure that its residential lending products and services are made available to everyone in Indianapolis, regardless of race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division.

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